Have to eliminate payroll tax preference for health care services. Having pre-allocated income designated to a specific industrial segment means healthcare providers don't have to compete for customer dollars outside the industry. And because employees lose that income unless they have a medical event, it creates moral hazard on the demand side.
We have gotten the incentives wrong and distorted markets for more than 70 years. Every "fix" brings us further from "free" market.
And to those who say "health is too important to leave to free market" - I'd say it's too important NOT to leave it to free markets.
This all makes a lot of sense. That is, until you remember the glaring reality that that's exactly how health care was apportioned for the vast majority of history until the last 100 year or so - and with pretty abysmal results if we can go by life expectancy data.
I think there's a pretty bad case of ignoring Chesterton's Fence here.
What exactly does this mean?: “ how health care was apportioned for the vast majority of history until the last 100 year or so”
Before 1924 there basically was no modern medicine and what little there was was not apportioned by one person or institution. And much of it was done outside market exchange by whoever happened to be nearby according to local customs.
No one is claiming that we should roll back modern medicine until we get life expectancy similar to 1924.
Yes. I'm tired of hearing this lazy argument. A couple of days ago in the WSJ comments, someone responded to my free market health care reforms with: "You want to take us back to the time of patent medicine." Like nothing else had changed.
Try to make a very long story short. I am very familiar with the Swiss Medical System. Exposed to it for over a decade. It is a ‘socialized system’ in that all citizens and their families are required to have a “Medical Insurance Policy.” If they cannot afford it, it is DIRECTLY SUBSIDIZED BY THE GOVERNMENT (CANTONAL GOVERNMENTS). It is privately run. There is a whole network of Medical Insurance Companies, the very best in the world. And a robust system of medical services provided by ‘private’ entities (hospitals, medical clinics, doctors etc.).
It is NOT a ‘third party payer system’ like in the United States – the main problem with our system. For long and significant hospital stays, one’s insurance company will directly pay the hospital or provider (say it will be a $400,000 hospital stay). But for ALL normal care (physicals, doctor visits, clinics etc.) one pays directly, then files a claim, and is then reimbursed by the insurance company (typically would take 3 to 4 weeks). Everyone is aware of the price of the medical care they receive. And it is a truly socialized medical system – in how it is paid for.
The Swiss people made this ‘deal.’ We pay our income taxes to the Canton (not the Federal Government in Bern). We will happily use some of our tax money for the Canton (State) to pay for medical policies for the ‘poor and needy.’ It is an explicit social bargain. It is explicit social medicine. As for most of us who can afford to buy the high quality polices, the Government plays no part in our health insurance. Their deal was this: “We will happily pay taxes so truly needy have high quality care – but other than that, we want the Government to keep their ‘stinking hands’ off our wonderful health care delivery system. The Government does indeed regulate the health insurance companies and make decisions about what minimum care is required in all policies.
But the problem is this. For the Democrats, health care is not REMOTELY about designing the best possible system. The worse the better. Don’t believe this, look at the ‘Rube Goldberg’ monstrosity called Obama care – designed exclusively by the Democrats. The Democrats will never be happy until they completely socialize the whole system, and people get their health care directly from the ‘Government.’ It’s simply a way to buy votes from the clueless and keep them in line. The Democrats say this: “We are giving you wonderful ‘free’ healthcare – paid for by the evil rich people. Thanks to us, you get this for ‘free,’ and it would surely be ashamed if you did not bow down and ‘smooch our posteriors.’ Other problem as the Democrats will screech – “The people are too poor and stupid and undisciplined to pay up front and get reimbursed. They don’t have any money.” OK – adopt this system and give everybody a $3,000 ‘float’ account to pay for medical care in advance, and have the account reimbursed. Problem solved.
Sadly, the Leftist Progressive Democrats will never, ever go for this. The people must ‘worship’ the Democrats for giving them ‘free stuff.’ It makes the ‘rubes’ a lot easier to control. The Swiss System works well – check it out if you don’t believe me. In the US, the Democrats think that to sell socialized medicine – everybody has to get ‘free stuff.’ Why would they like our system unless they get ‘free stuff.’ The Swiss are the true socialist – they will subsidize policies for the ‘poor’ – but they don’t demand ‘free stuff.’ They know there is NO such thing as ‘free stuff.’ If a private system, with high quality health insurance policies DIRECTLY SUBSIDIZED by the Government for those who can’t afford it really works – who needs the Democrats? Despicable – but a lot of the ‘clueless sycophantic sheep’ seem to go for it. Truth – the only way to get ‘free health care’ is for all the providers to work for free!
One has to try very hard, furrow-the-brows hard, to conceive of an such an untested and untried health care system for the masses when such systems already exist and deliver high rates of care to their “customers”.
But of course such highly successful systems exist in places like Australia so, you know, they reek of socialism and can be safely ignored.
To get to a functional free-market (instead of a dysfunctional one), we need the opposite of universal health insurance. We need to get to a world with NO health insurance, or as little as possible.
An old post of mine on why free markets will naturally move in this direction:
[New Republican alternative to Obamacare is another wrong-direction big-government boondoggle: the proper long-term goal is health insurance for NOBODY]
We just have to deal efficiently with the question of how to get high-benefit-per-dollar care to people who can't afford it. The key here is, subsidization does not require socialization!
In some sort of a perfect world, I guess. But we don't live in a perfect world. Yes - true catastrophic health insurance is very important - and pretty cheap actually. We had that before the Monstrosity called Obama Care was rammed down our throats. Please check my comment about the Swiss Medical System. And 'subsidization' does not require socialism? Where does the money for subsidization come from? I get you on a theoretical level - but you will never sell that to any Leftist Progressive type. Just a fact.
Catastrophic medical insurance still makes sense, and wouldn't be likely to distort the market. The biggest trap seems to be the social idea that people who have no such insurance and cannot pay for their own care should be taken care of by the nation anyway. Unless you can actually sell the seemingly heartless idea that nobody is owed free medical care, the whole system would likely reemerge.
Don't make it free for anyone. Bill any high-benefit-per-dollar aid to the account of the recipient, to be paid back, with accumulated interest, over the rest of their lives, according to an ability-to-pay formula.
Some will never be able to pay if off, so some subsidization will occur, but this subsidization for the needy is what a large majority wants, and in a democracy, it is what we will get. There is no way around it.
The question is how best to handle this requirement. What is the most efficient, least destructive, way to provide this subsidy?
Billing aid to the account of the recipient keeps incentives as intact as possible while still affording some aid. That makes it the most efficient way to provide aid, which means that whatever aid is given, it should be given this way.
How MUCH aid to give is another question, but how to give it is a purely economic question, and getting the how right is enough.
Once aid to the needy is handled the right way (by billing aid to the account of the recipient), we can have a pure free market, which will lead, before long, even to the end of catastrophic health insurance, in my opinion.
Health care costs will fall every year as the product gets better and better, just as with computers and other industries. At the same time, people will get rapidly more prosperous.
The combination of rising incomes and falling prices will bring more and more health costs within the range of the much more efficient self-insurance.
I would agree with your assessment of the ills of the US free market health care system. As currently construed, it works poorly (based on population metrics with hard endpoints, like life expectancy) and inefficiently (or at least being NOT cost effective) based on per capita cost or %GDP expenditure.
I also agree that morally, it would be more justifiable to remove entitlements like Medicare, and replace with a system of “free” healthcare for all minors (it’s one way to put money where the ”equality of opportunity” mouth is). But that’s a third rail thing, and never gonna happen.
I live in Canada where we have a single-payer (or “socialized”, for those who wish to disparage it) system. It certainly has its own problems in different ways (we have access, but it’s often not “timely” especially for “elective” issues). And single (government)- payer is as centralized as one could ever get.
Personally, I think a public-private mix is the way to solve the most problems for the most people, accepting that no system will satisfy or fully serve everyone.
Surely you understand that you cannot compare life expectancies across countries and attribute all the difference to the health care system? Different levels of obesity, lack of exercise, murder, drug addiction, and suicide all make a difference. The Swiss system seems to be better than ours, although could be improved upon if you could get reforms that move you nearer to a real market system.
Life expectancy as an endpoint is obviously not mono-causal. However, what other metric for evaluating health systems would you propose that isn’t a mere surrogate outcome?
And obviously, I’m no TFM fanboy. It’s got strengths, and tradeoffs, just like everything else.
What are the necessary and sufficient conditions for Annie to be justified in interfering with a voluntary exchange between Bobbie and Callie? Write those down; see if they apply to health care.
Have to eliminate payroll tax preference for health care services. Having pre-allocated income designated to a specific industrial segment means healthcare providers don't have to compete for customer dollars outside the industry. And because employees lose that income unless they have a medical event, it creates moral hazard on the demand side.
We have gotten the incentives wrong and distorted markets for more than 70 years. Every "fix" brings us further from "free" market.
And to those who say "health is too important to leave to free market" - I'd say it's too important NOT to leave it to free markets.
This all makes a lot of sense. That is, until you remember the glaring reality that that's exactly how health care was apportioned for the vast majority of history until the last 100 year or so - and with pretty abysmal results if we can go by life expectancy data.
I think there's a pretty bad case of ignoring Chesterton's Fence here.
What exactly does this mean?: “ how health care was apportioned for the vast majority of history until the last 100 year or so”
Before 1924 there basically was no modern medicine and what little there was was not apportioned by one person or institution. And much of it was done outside market exchange by whoever happened to be nearby according to local customs.
No one is claiming that we should roll back modern medicine until we get life expectancy similar to 1924.
Yes. I'm tired of hearing this lazy argument. A couple of days ago in the WSJ comments, someone responded to my free market health care reforms with: "You want to take us back to the time of patent medicine." Like nothing else had changed.
Try to make a very long story short. I am very familiar with the Swiss Medical System. Exposed to it for over a decade. It is a ‘socialized system’ in that all citizens and their families are required to have a “Medical Insurance Policy.” If they cannot afford it, it is DIRECTLY SUBSIDIZED BY THE GOVERNMENT (CANTONAL GOVERNMENTS). It is privately run. There is a whole network of Medical Insurance Companies, the very best in the world. And a robust system of medical services provided by ‘private’ entities (hospitals, medical clinics, doctors etc.).
It is NOT a ‘third party payer system’ like in the United States – the main problem with our system. For long and significant hospital stays, one’s insurance company will directly pay the hospital or provider (say it will be a $400,000 hospital stay). But for ALL normal care (physicals, doctor visits, clinics etc.) one pays directly, then files a claim, and is then reimbursed by the insurance company (typically would take 3 to 4 weeks). Everyone is aware of the price of the medical care they receive. And it is a truly socialized medical system – in how it is paid for.
The Swiss people made this ‘deal.’ We pay our income taxes to the Canton (not the Federal Government in Bern). We will happily use some of our tax money for the Canton (State) to pay for medical policies for the ‘poor and needy.’ It is an explicit social bargain. It is explicit social medicine. As for most of us who can afford to buy the high quality polices, the Government plays no part in our health insurance. Their deal was this: “We will happily pay taxes so truly needy have high quality care – but other than that, we want the Government to keep their ‘stinking hands’ off our wonderful health care delivery system. The Government does indeed regulate the health insurance companies and make decisions about what minimum care is required in all policies.
But the problem is this. For the Democrats, health care is not REMOTELY about designing the best possible system. The worse the better. Don’t believe this, look at the ‘Rube Goldberg’ monstrosity called Obama care – designed exclusively by the Democrats. The Democrats will never be happy until they completely socialize the whole system, and people get their health care directly from the ‘Government.’ It’s simply a way to buy votes from the clueless and keep them in line. The Democrats say this: “We are giving you wonderful ‘free’ healthcare – paid for by the evil rich people. Thanks to us, you get this for ‘free,’ and it would surely be ashamed if you did not bow down and ‘smooch our posteriors.’ Other problem as the Democrats will screech – “The people are too poor and stupid and undisciplined to pay up front and get reimbursed. They don’t have any money.” OK – adopt this system and give everybody a $3,000 ‘float’ account to pay for medical care in advance, and have the account reimbursed. Problem solved.
Sadly, the Leftist Progressive Democrats will never, ever go for this. The people must ‘worship’ the Democrats for giving them ‘free stuff.’ It makes the ‘rubes’ a lot easier to control. The Swiss System works well – check it out if you don’t believe me. In the US, the Democrats think that to sell socialized medicine – everybody has to get ‘free stuff.’ Why would they like our system unless they get ‘free stuff.’ The Swiss are the true socialist – they will subsidize policies for the ‘poor’ – but they don’t demand ‘free stuff.’ They know there is NO such thing as ‘free stuff.’ If a private system, with high quality health insurance policies DIRECTLY SUBSIDIZED by the Government for those who can’t afford it really works – who needs the Democrats? Despicable – but a lot of the ‘clueless sycophantic sheep’ seem to go for it. Truth – the only way to get ‘free health care’ is for all the providers to work for free!
One has to try very hard, furrow-the-brows hard, to conceive of an such an untested and untried health care system for the masses when such systems already exist and deliver high rates of care to their “customers”.
But of course such highly successful systems exist in places like Australia so, you know, they reek of socialism and can be safely ignored.
Good job.
Or you could look at the UK or Canada.
Bryan, please provide links to the piles of research showing that we overestimate the value of medicine. Thx!
You lost me at Let's Open the Borders in Exchange for our Health Freedom. Let's not.
To get to a functional free-market (instead of a dysfunctional one), we need the opposite of universal health insurance. We need to get to a world with NO health insurance, or as little as possible.
An old post of mine on why free markets will naturally move in this direction:
https://errortheory.blogspot.com/2014/01/the-new-republican-alternative-to.html
[New Republican alternative to Obamacare is another wrong-direction big-government boondoggle: the proper long-term goal is health insurance for NOBODY]
We just have to deal efficiently with the question of how to get high-benefit-per-dollar care to people who can't afford it. The key here is, subsidization does not require socialization!
In some sort of a perfect world, I guess. But we don't live in a perfect world. Yes - true catastrophic health insurance is very important - and pretty cheap actually. We had that before the Monstrosity called Obama Care was rammed down our throats. Please check my comment about the Swiss Medical System. And 'subsidization' does not require socialism? Where does the money for subsidization come from? I get you on a theoretical level - but you will never sell that to any Leftist Progressive type. Just a fact.
Catastrophic medical insurance still makes sense, and wouldn't be likely to distort the market. The biggest trap seems to be the social idea that people who have no such insurance and cannot pay for their own care should be taken care of by the nation anyway. Unless you can actually sell the seemingly heartless idea that nobody is owed free medical care, the whole system would likely reemerge.
Don't make it free for anyone. Bill any high-benefit-per-dollar aid to the account of the recipient, to be paid back, with accumulated interest, over the rest of their lives, according to an ability-to-pay formula.
Some will never be able to pay if off, so some subsidization will occur, but this subsidization for the needy is what a large majority wants, and in a democracy, it is what we will get. There is no way around it.
The question is how best to handle this requirement. What is the most efficient, least destructive, way to provide this subsidy?
Billing aid to the account of the recipient keeps incentives as intact as possible while still affording some aid. That makes it the most efficient way to provide aid, which means that whatever aid is given, it should be given this way.
How MUCH aid to give is another question, but how to give it is a purely economic question, and getting the how right is enough.
Once aid to the needy is handled the right way (by billing aid to the account of the recipient), we can have a pure free market, which will lead, before long, even to the end of catastrophic health insurance, in my opinion.
Health care costs will fall every year as the product gets better and better, just as with computers and other industries. At the same time, people will get rapidly more prosperous.
The combination of rising incomes and falling prices will bring more and more health costs within the range of the much more efficient self-insurance.
Details at the link in my original comment.
I would agree with your assessment of the ills of the US free market health care system. As currently construed, it works poorly (based on population metrics with hard endpoints, like life expectancy) and inefficiently (or at least being NOT cost effective) based on per capita cost or %GDP expenditure.
I also agree that morally, it would be more justifiable to remove entitlements like Medicare, and replace with a system of “free” healthcare for all minors (it’s one way to put money where the ”equality of opportunity” mouth is). But that’s a third rail thing, and never gonna happen.
I live in Canada where we have a single-payer (or “socialized”, for those who wish to disparage it) system. It certainly has its own problems in different ways (we have access, but it’s often not “timely” especially for “elective” issues). And single (government)- payer is as centralized as one could ever get.
Personally, I think a public-private mix is the way to solve the most problems for the most people, accepting that no system will satisfy or fully serve everyone.
Surely you understand that you cannot compare life expectancies across countries and attribute all the difference to the health care system? Different levels of obesity, lack of exercise, murder, drug addiction, and suicide all make a difference. The Swiss system seems to be better than ours, although could be improved upon if you could get reforms that move you nearer to a real market system.
Life expectancy as an endpoint is obviously not mono-causal. However, what other metric for evaluating health systems would you propose that isn’t a mere surrogate outcome?
And obviously, I’m no TFM fanboy. It’s got strengths, and tradeoffs, just like everything else.
What are the necessary and sufficient conditions for Annie to be justified in interfering with a voluntary exchange between Bobbie and Callie? Write those down; see if they apply to health care.