Fareed Zakaria neatly explains the problem with the healthcare reform that is now the law of the land:
Most Americans have health care. What they worry about is the cost of insuring 20 million to 30 million more people. Unless the meteoric rise of health-care costs is slowed, a big expansion of coverage might well remain unpopular, no matter how it is explained.
but then continues as though there were a method of allocating the scarce resource, i.e. healthcare, other than by market or by fiat:
Republican alternatives to Obamacare, such as Rep. Paul Ryan’s plan, don’t bother with expanding coverage, which is a mistake because they leave in place a broken insurance model in which people can freeload. But most do have a strategy to control costs — get consumers to pay for more of their health care. The basic idea is intuitively appealing. Markets produce efficiencies; they presumably would do the same thing in health care.
But the situation on the ground suggests that markets work imperfectly in this realm. A new study conducted by the pharmaceutical company Novartis and McKinsey and Co. shows a stunning difference among countries with regard to health-care efficiency.
citing the examples of the United Kingdom and France. The problem with this is that healthcare costs are rising at an unaffordably rapid rate in the United Kingdom and France, too. Any fiat system however well-intentioned will inevitably result in misallocation, less healthcare, and less total happiness. The problem with a market system is that in the case of healthcare the best that can be done is not good enough. We constrain the supply because we are concerned about the quality of care. As long as that’s the case (and I don’t recommend doing otherwise) there is no market system to defend.
The choice, then, is among a variety of sub-optimal fiat systems. Claiming otherwise is a lie.
I continue to believe that the problems with the U. S. healthcare system will only get worse until the incentives are properly aligned with what we’re trying to accomplish. As long as the incentives call for care rather than health, care we will get. Even if it doesn’t make us healthier. Even if it accomplishes nothing other than to increase the costs.
“The problem with a market system is that in the case of healthcare the best that can be done is not good enough. We constrain the supply because we are concerned about the quality of care.”
I think this is a incorrect. We provide transfer payments for food, clothing and shelter. We can do the same for healthcare. And unless I’m mistaken, you can die more quickly from starvation or homelessness than suboptimal healthcare. Shorter: his argument is a red herring for intervention. And we know where that leads.
I’m not sure where Dave is going with his position. First a declaration that the only alternatives are suboptimal fiat systems, then a lament that fiat systems inevitably result in provision of care procedures vs necessarily “health.”. I find myself asking “and who is surprised?”.
We are all familiar with the eye procedure called LASIK. It’s cost has declined markedly. It’s not covered by government or private insurance. I of course know why. I’d be interested to know why others feel that all other health care activities are different, and must be governed by fiat systems.
Here’s the distinction I’m trying to make. We constrain the supply of healthcare in all sorts of ways: medical licensing, the gatekeeper function of physicians with respect to pharmaceuticals, physician autonomy, patents, certificates of need, and so on and so on. The notion that you can marketize the consumer side, leave the constraints in place on the supply side, and then have the government pump money into the system for “the needy” (however defined) and retain market discipline is illusory. Can’t be done.
“We are all familiar with the eye procedure called LASIK. It’s cost has declined markedly. It’s not covered by government or private insurance. I of course know why.”
Me too. Because it is more like getting a tattoo than medicine. It is a transaction where both parties are free to walk away and no harm ensues from not having the procedure. You dont need a hospital of people on call 24 hours to deal with the resultant problems. There is a viable and well tested substitute. For every procedure in medicine that fits this description, we can easily reduce costs. (They still make a lot of money on them.)
Steve
“medical licensing, the gatekeeper function of physicians with respect to pharmaceuticals, physician autonomy, patents, certificates of need,”
Does anyone still have a certificate of need? Thought they were gone.
Steve
Actually, all but 14 states still require them for at least some things. Pennsylvania is one of the fourteen.
New York, Illinois, Florida, and Massachusetts are among the states that continue to require CONs for some purposes.
Gammon’s Law. Applies to other things too, like education.