Who Wants Market-Based Health Care?

Does anybody? I rarely read John Stossel’s pieces because he is just too much of an anarcho-capitalist for my taste. He promotes the operation of the market but with peculiar blinders which I’ll expand on later in this piece. However, his assessment of single-payer health care in this piece is correct:

“In Germany, employers provide most of the health care … just as they do in the United States,” he says. France and Switzerland also offer multiple options, public and private, and most people buy private health insurance. Some of the Swiss government subsidies are similar to those of Obamacare.

But Canada, England, Norway, Cuba and a few other countries do have genuine single-payer. I’m constantly told that it works well — people get good care and never have to worry about a bill. They spend less on health care and live longer.

Pope says that claim is naive.

They do live longer in many of those countries, but it’s not because they get superior health care; it’s because fewer of them are fat; fewer crash cars; and they shoot each other less often. “Take out (obesity), car accidents and gun violence, the difference in life expectancy disappears entirely,” Pope says.

up to a point. That point is his prescription. He thinks that competition among hospitals and among insurance companies would make health care affordable. There are several problems with that. The most serious is that to the best of my knowledge that is supported by no studies. When Americans have responsibility for paying for their own care they do economize but they do not necessarily economize in an informed manner which will actually result in savings.

The second problem is that he considering only one side of the subsidy equation. For the U. S. actually to have a market-based system we would need to eliminate professional licensing, patents, royalties, and mandates (like requiring hospitals to provide care regardless of ability to pay, something that has only been the case for the last 35 years). Additionally, we’d need to stop determining the relative value of procedures bureaucratically as is the case now. The problems with our health care system did not start in 1965. They started in 1906.

What would such a system look like? The well-to-do, about 3% of the population, would continue to receive whatever health care they wanted because they could pay for it. Those who had the knowledge and prudence to manage their own health care (those able to “advocate for themselves” in the common parlance) would receive health care that was more affordable than at present. Those two groups, which have substantial overlap, account for about 10% of the population all told. The rest would receive substandard health care or be swindled by huckstsers. The poor would not receive health care at all.

I think that very few want that sort of health care system.

Who wants single-payer?

Arguendo, let’s assume that the form that a single-payer system would take would be along the lines submitted as legislation by Democrats in the House in the last Congress. Private health care insurance would become illegal (that’s one of the ways in which they intend to pay for their system). Additional money required would either be obtained through a payroll tax, a tax on work which would reduce the number of jobs and increase unemployment, or through the general fund which means that the entirety of health care in the U. S. would be paid for by the highest quintile of income earners. I don’t think the numbers add up. If from the general fund, it would mean an additional $1 trillion in taxes levied on families earning $100,000 or more. Those families presently account for about 50% of all income or $6.5 trillion, i.e. additional income taxes of about 15 percentage points on those families would be required.

Since money is fungible, that would mean $1 trillion less spent on houses, cars, clothing, food, and other consumer goods. It would not merely mean moving money from one pocket to another as is claimed by some. It would be a major redistribution of income from to pharmaceutical companies, hospitals, health care providers, and other people working in health care from the other people in the top 20% of income earners.

Additionally, care that is not deemed worthy by federal bureaucrats would need to be paid for out of pocket. So much for not getting between patients and their doctors. Or physician autonomy.

I don’t think that’s what most of its advocates think of when they imagine a single-payer system. I think they mostly think of health care that is more affordable and, if that occurs after implementing such a system, it would be a coincidence.

We cannot make health care more affordable without reducing the wages of people in the health care sector, rationing care, or both.

I think I’m going to wrap this post up there. All I have to add is that the idea that there is a right to health care is the moral equivalent of saying that there is a right to Hennessy Ellipse. It’s a slogan—easy to say but impossible to deliver.

21 comments… add one
  • Jimbino Link

    For the U. S. actually to have a market-based system we would need to eliminate professional licensing, patents, royalties, and mandates (like requiring hospitals to provide care regardless of ability to pay, something that has only been the case for the last 35 years).

    Sounds like what Nobelist Milton Friedman advocated.

  • Gray Shambler Link

    Ne. fought tooth and nail to stay out of Obamacares’ expanded Medicaid, citing costs. But surprisingly when put to a vote, about 2/3 voted to approve expanding Medicaid to low income working age adults. So it looks like that’s the way it will be. Private Insurance if you can afford it, with fallback inferior care paid by Govt. if you can’t.
    Yes, Inferior, long waits for appointments, long waits at the office. and seven minute, one topic office visits.
    We recently transitioned to Medicare with a supplemental. I went with my wife to our long term PCP for a med check and refills, when she mentioned her leg pain, turned out to be diabetic staph that landed her in the hospital. Grateful for the help, but guess what? No refills. Medicare reimbursement is so low it took a second appointment after the hospital for that.
    But I guess a two tiered system is better than none. Possibly if you are retired, a concierge program is the way to go. (Extra seven minutes).

  • If the House Democratic plan was anything but posturing, under their version of single-payer private insurance would be outlawed. The two-tiered system would be concierge medicine for the very wealthy and the public single-payer system for everybody else.

  • Gray Shambler Link

    Divided Government in Washington is probably best.

  • walt moffett Link

    Two tier medicine is the rule even in progressive single payer states, interesting faq from a Cuban clinic advertising to Canadians.

    Surprised they haven’t pulled out the Economic Impact of Medicaid Expansion in Montana study. It reports by expanding medicaid, Montana can pay its share by virtue of increased economic activity and resulting tax revenue.

  • steve Link

    “Yes, Inferior, long waits for appointments, long waits at the office. and seven minute, one topic office visits.”

    If you are talking about the time you wait tin an office, that is true but the difference is pretty trivial.

    “On average, Medicaid patients waited 4.6 minutes for an appointment whereas private insurance patients waited 4.1 minutes.”

    https://www.bizjournals.com/charlotte/bizwomen/news/latest-news/2017/05/medicaid-patients-face-longer-waits-to-see-a.html

    If you are referring to wait times to get to the office, there are tons of studies on the topic. First wait times for single payer vs our system are about the same around the world. Many countries have shorter times and many longer than ours. In general, you get to see specialists doing procedures in our country faster, you get to see primary care faster in single payer countries.

    Next, people arent really proposing universal Medicaid but rather Medicare. Tons of studies on this and people on Medicare dont generally have any more problems finding care or have wait time issues that with private insurance. Finally (almost), on Medicaid there are also a lot of studies, and you need to know the literature pretty well and the pitfalls of different methods. In general, wait times for primary care are also about the same, but longer for specialists. Just to go over one area where you need to know the literature well, critics of Medicaid like to cite secret shopper studies. They show a big difference. However, when you ask patients directly, the times they give show little difference.

    Health Affairs in June (?July) of this year published a bunch of the early studies on the facts of Medicaid expansion due to the ACA. Access and wait times were pretty much unaffected.

    So, wait times are kind of a zombie idea. If you factor in the infinite wait times that result from a private system, they are longer but those with insurance dont really care. That aside what we really see is the different systems value different things so that shows up in wait times, costs or whatever.

    Steve

  • steve Link

    DAVE- Help me out with the math here. (Up all night so still tired.) Let’s say we get that trillion by taxing families with an income above 100k. At the lower end that would mean more tax of about 15 k, but wouldn’t they also not have to pay for their health insurance anymore? Given the average cost of a family plan now, which I think is running about 26k. Dont they save money?

    Also, IIRC, the plan that was proposed had no deductibles. I dont think that stands.

    “Additionally, care that is not deemed worthy by federal bureaucrats would need to be paid for out of pocket. So much for not getting between patients and their doctors. Or physician autonomy.”

    At present, this problem is much worse with private insurance than with Medicare. This likely improves. Same with drugs where Medicare has to pay for everything. Privates dont. (I actually see this as a problem.)

    Steve

  • Gray Shambler Link

    Well Steve, I know you are a medical professional, I’ll fess up about the wait time, that was an exaggeration, the one topic is definitely not. When I see a bill, It’s from my supplemental, State Farm. They list provider billing, medicare approved (15%-20%) of billed amount, and then co-pay, a surprisingly small figure, sometimes $1-$2, that my supplemental pays. For you: are doctors not disincentivized to see Medicare or Medicaid patients?

  • wouldn’t they also not have to pay for their health insurance anymore?

    Presently their employers are providing a good chunk of their health care insurance and in many cases their employers are self-financing. In other words there’s less out of pocket for both employers and employees. Under the House Democrats’ plan that wouldn’t be the case and, assuming it’s paid for from the general fund rather than a payroll tax, they’d be bearing the whole freight. Contrary to what many free market types believe I’m skeptical that wages would rise to make up the difference.

    Also, IIRC, the plan that was proposed had no deductibles. I dont think that stands.

    That’s correct. No deductibles or co-pays.

  • steve Link

    “Contrary to what many free market types believe I’m skeptical that wages would rise to make up the difference.”

    Not me. I don’t think this is really a free market thing, just a basic economics thing. Employees are very aware of their total compensation package. So am I.

    Gray- There just aren’t enough of the private insurance patients to go around. Docs would, by and large, rather work and make less money than not work at all and make even less. So, with some specialty exceptions, almost everyone really takes Medicare. A bit lower percentage take Medicaid. A tiny percentage in some specialties live in certain areas where they have enough private insureds that they choose to see only private patients. For most docs that would mean not seeing a lot of the patients they trained to care for, as sick people tend to be older and often poor.

    So in short, it is a fairly minor incentive for most of us, and most of us work at more than one place, so we end up working somewhere that it is required to care for Medicaid patients. (Without going too much into the weeds, it is pretty hard to cover night time and weekend call for most specialties if you are not going to see Medicaid patients. I know of some orthopedic groups who dal with this by refusing to take call and they make the hospital hire separate docs just to cover call. Very costly and drives up spending a lot.)

    Steve

  • Well Dave, interesting as always.
    Nationally guaranteed government single payer healthcare sounds lovely but it’s bureaucratic in the extreme, the care tends to be quickie and substandard (ever seen National health teeth in the UK?)
    and it can take forever to get a process done. Most people in the UK who can afford it have private insurance or fly overseas and have work done. And just checkout the lines on our northern borders and see how many Canadians come to America for private treatment for the same reason. And even our own Medicare is rife with fraud and waste. The only country I know for sure with government guaranteed and mandated insurance where it works superbly well is Israel, and if anyone wants to know why, just ask me.

    Here’s my approach. When prices are too high, take a look and find out why,

    Why of course is several factors in America that so far, our government has refused to deal with. My apologies if this gets too long, I’ll do my best to be brief.

    I) A shortage of doctors and medical personnel. Here’s why…
    the education is incredibly expensive today, and to be honest, a lot of what’s coming out of today’s universities opt for softer less expensive fields. When a doctor gets out of school and prepares to take his or her internship, they usually have racked up a six figure loan, to which you can add a five figure sum for malpractice insurance.

    There are three ways I’d fix this ; (a) have the government subsidize medical education for QUALIFIED applicants. (b) provide very low interest government student loans specifically for the above or (c) banish about half of America’s lawyers to someplace like Somalia. More on (c) in a bit.

    (2) While I agree that hospitals should provide care regardless of ability to pay, keep in mind that somebody has to pay for them. Usually, it’s you, because the hospitals, like any business raise their rates to cover the freebies and your insurance premiums group to cover the increased cost.

    There are far too many people here illegally who are a huge part of this problem. The old number we kept hearing was 11 million. Now it’s twenty million and I’d hardly be surprised to see that the real number was closer to 30 million. Aside from repatriating most of these people who don’t meet certain criteria back to their home countries, there are other ways to deal with the indigent poor.

    At one point, I had a bad abscess on one of my teeth. My right cheek was literally sticking out 3 inches or so, and I didn’t have money for a dentist. My first thought was medicaid, but when I was told I’d have to signup to get welfare as well and that it would take weeks for me to get approves and even have a dentist see me to make sure I warranted care, I told them I didn’t want welfare, but they insisted so I told them to forget about it, and not in exactly a polite way, I tell you.

    Instead, I went to the Hollywood Free Clinic, a place where doctors, dentists and nurses donated their time. I had to wait awhile, but a dentist saw me, gave me some Novocain,pulled the tooth, drained the abscess, gave me a few antibiotics and told me how to take care of things. It didn’t cost me a penny, but I still give them a donation every year.

    Imagine if we had more of these clinics, nationwide. Imagine if we gave the personnel donating their time and skills something off of their student loans in exchange? Imagine if we used clinics like this to gradually get addicts detoxed from heroin or other drugs?

    It would definitely save quite a bit of money and lower heathcare costs.

    3) Ahh, now back to (c), my bit about the lawyers, remember? One of the chief reasons for the high cost of both insurance and medical care is predatory lawyers who literally troll for people willing to pursue a lawsuit no matter how trivial or unfounded against hospitals and medical practitioners. Yes some tort litigation is justified, but lots of it isn’t. And it costs money not just in legal costs but in time wasted on unneeded tests and double checks just to keep the lawyers at bay, just in case. Maybe we can’t send half of them to Somalia (although it would certainly make for a better society) but we can make the rules for tort litigation and filing lawsuits far more stringent, with the loser paying legal and court costs. We would definitely see costs and insurance rates lowered.

    Ditto if we simply allowed more competition in health insurance nationwide.

    And as for pre-existing conditions, I’ve always seen that a bit like auto insurance. If you have a poor driving record don’t you expect to pay a bit more? To keep people from getting gouged, would it be a problem to do what auto insurance companies do with people with poor driving records?They put them in a pool called assigned risk and each company takes their share which actually lowers rates somewhat. Some companies might even make ‘no extra charge for pre -existing’ or ‘best rates for pre -existing’ part of their ads to beat the competition..it might even become standard.

    Sorry about rambling on Dave…have a good week.

  • TastyBits Link

    I hate insurance, insurance companies, and anything related.

    Over the years, we have paid out of pocket for my wife. Then, she got a job with health benefits, and now she is on Obamacare. I am with the VA, and they take care of all my medical except dental.

    The ‘free-market’ is pay out of pocket, and it ain’t what it is cracked-up to be. Because you have not and can not negotiate lower rates, you pay the manufacturers suggested retail price or in simple terms – higher prices.

    Insurance through an employer is better. The employer paid portion is tax-free, and most likely, they get a group discount. I know this may surprise @steve and John Stossel, but I do not have $26,000 a year waiting to be spent on healthcare.

    Obamacare is a joke, but I suspect that pre-Obamacare was a joke as well. The insurance company has negotiated prices for in-network medical care, but anything outside the network is not cheap.

    For Obamacare, you can shop for the best network, or you can shop for price. The network you choose determines your insurance company. The a platinum policy gets you the same medical care as a bronze policy, but your deductible and out-of-pocket limits are the cost difference.

    For the first year of Obamacare, I paid for a platinum policy with one of the two insurance companies, and I thought it would allow my wife to go anywhere. Nope. The second year, the policy increased 25%, but the coverage went down. I have a silver plan with the other insurance company, and it is as worthless as the other one.

    At the VA, I have socialized medical care. Except for the chow hall, everything in the hospital is free. They are still not fully functional, and for some tests, I was outsourced for some tests. I am getting bills from these companies that have contracts with the VA. I assume they have decided the VA rate is too low, and now, they are trying to screw me.

    I have a feeling that John Stossel and his ilk have double platinum policies. I would love to see them eat their own dog food.

  • steve Link

    Rob- Almost everything you cite above is wrong. Canadians seldom come to the US, and when they do get care here it is mostly in places like Detroit, where they cross over to work so they get care where they work, like most medical people. Yes, the UK has dental issues, but as you have experienced so does the US. No one wants to pay for it. Malpractice costs add minimally to medical care costs.

    There are way more people who want to go to medial school and residency that there are openings. The cost is not stopping people. The cost probably does push people into specialty care, which ups costs.

    Steve

  • I would add that the cost of med school is a consequence of high salaries not their cause.

  • James Kirby Link

    No drastic measures need be imposed in order to rationalize our medical care system. A couple of simple rules will suffice:

    1. All medical providers must post all prices on the Web. That includes docs, dentists, hospitals, clinics and pharmacies and offer MFN status to all comers.

    2. All insurance must cover products and services performed in Mexico and other countries on the same basis as they do domestically.

    3. Abolish professional certification à lá Milton Friedman and instead rely on private certification by way of Consumer Unions, Amazon Reviews and the like. As it is, the gummint forces us to subsidize quackery such as Naturopathy, Homeopathy, Chiropractice, Osteopathy, Acupuncture and other forms of CAM. Before long, it will probably cover Christian Science and prayer.

  • TastyBits Link

    1. All medical providers must post all prices on the Web.

    Which prices – retail, discount, insurance company negotiated, or other? How does this help me? Each year, I can try to create a spreadsheet with the numbers for each insurance company and enter all the numbers.

    Frankly, trying to pick the best policy for my wife was a joke. I would have done just as well with a coin toss.

    2. All insurance must cover products and services performed in Mexico and other countries on the same basis as they do domestically.

    I realize that I am to blame, but nonetheless, I do not speak Spanish. In any case, I do not have the foggiest idea of where to find a doctor in Mexico. I could use the insurance trick and pull a name from a hat.

    3. Abolish professional certification à lá Milton Friedman and instead rely on private certification by way of Consumer Unions, Amazon Reviews and the like.

    Now, we are getting somewhere. I can use Google to find the best products, and except for the rigged results, that is a grand idea. But, I could rely on Facebook and Twitter, and except for the rigged results, that is a grand idea. But, there is always Yelp, and except for the results based upon politics or cause, that is a grand idea.

    I am sure that a world controlled by private companies according to Social Justice rules would be wonderful. If I hold my breath long enough, I am sure that capitalism will solve the problem.

    With Amazon, you need to find the right item. For some reason, they list the same items multiple times, and half of them are priced at multiples of others. The supposedly exact same item is priced at $1.00 & $100.00. How does capitalist market theory explain this?

  • James Kirby Link

    @TastyBits

    Which prices – retail, discount, insurance company negotiated, or other? How does this help me?

    You don’t seem to get the idea: Putting all clients on an MFN basis means that there is only one price for any product or service. No discounts based on type or identity of the client. Maybe volume discounts and the like. And the client who pays with a credit card pays the convenience costs too, of course.

    It’s your fault for not finding good bargains because of your inability to speak Spanish! If you speak Spanish or Portuguese, you can find pricing for boob jobs in Rio, Buenos Aires or Guadalajara, posted right there on the Web, which you can’t find in Amerika in English! That’s the point. Education gives you more choices in life.

  • TastyBits Link

    @James Kirby

    Let me get this straight. You are going to make the market more free by eliminating pricing options. Just to be sure, no health care provider can sell a product or service lower than the set price, with the exceptions of volume pricing. I am sure that Milton Friedman would be proud.

    This Web thing is this the same one that Google, Twitter, Facebook, Yelp, and others use to control what I am allowed to learn. Great.

    Just to be clear, I am supposed to travel to the same countries that the thousands of people are walking months to get as far away as possible.

    This medical tourism is nonsense for the vast majority of US citizens. The people on the border may be able to get there. Most everybody else cannot afford to travel wherever the cheapest price is, but those who can afford the travel expenses can afford the medical expenses.

    If insurance companies are willing to pay for foreign medical products and services, I am all for it, but there is some reason why they do not. If the government is preventing it, I am all for getting rid of regulations, but I suspect that you know as well as I that the last thing the insurance companies or the healthcare industry want is fewer regulations.

    … Amerika …

    I would think you were somebody else, but you have not brought up the ‘breeders’, yet.

    If “Amerika” is so horrible that you cannot spell it correctly, why not leave? And, don’t let the door hit you in the ass on your way out. Adios.

  • steve Link

    “All medical providers must post all prices on the Web.”

    While I think transparency is a good thing, when this has been studied it has not been shown to lower costs. Most people never bother to check prices, even when they know the prices are available, even when they know they can save money if they check.

    “All insurance must cover products and services performed in Mexico and other countries on the same basis as they do domestically.”

    Insurers negotiate prices with providers. As a practical matter, how is every insurance company going to go negotiate prices in every other country? Next, this isn’t going to work. My hospital publishes its costs, on the web, and they run 20%-30% lower than our competitors. This has resulted in very little change in market share, a little, but not much. It is hard to get people to cross town, so going to another country isn’t going to happen much. (Talk to some actual sick people and this makes more sense.) You have to remember that flying to Mexico three times a week for your chemo is a real hassle.

    ” Consumer Unions, Amazon Reviews and the like.”

    This is so cool. So anyone can go operate and then after a few hundred surgeries we can finally start rating them? How do you know if they are any good before then? BTW, how much expertise does Consumer Unions have in rating physicians? What metrics do they use? Do you ever actually read Amazon reviews? Would you be surprised if I told you that one of the docs I know with one of the worst complication rates in our state also has one of the highest ratings on consumer sites and off the wall satisfaction scores? Most charming, nicest guy you would ever want to meet. His office staff really go all out to keep patients happy. Great service! You just dont want him to operate on any of your family. This is a long winded and cranky way of telling you that these ratings sites, if consumer oriented, will mostly be popularity ratings sites.

    Which gets to me to one of my favorite stories to drive the point home. A few years ago, my department rated in the 99th percentile nationally on quality when it came to OB care. However, our satisfaction scores were 20th percentile. We had a bunch of cranky old guys, who were really good at what we were doing. Not keeping the consumer happy, just safe.

    Steve

  • James Kirby Link

    @Tasty Bits

    no health care provider can sell a product or service lower than the set price, with the exceptions of volume pricing.

    Your problem is reading into what’s written. Nobody spoke of a “set price.” What was promoted is an MFN (Most Favored Nation = “treat all comers the same”) price, like Amazon, Walmart and Home Depot do in the offers on their websites. As far as I know, whether you call yourself an “insurance company” or “agent” or anything else, you pay the same price as anyone else for products on those sites. There are no negotiations and no secret gag-rules like those imposed on pharmacists and healthcare providers. I merely suggest forcing the Amazon practice on to the healthcare industry.

    @steve

    You, on the other hand, show two different problems. The first a type of Argument from Ignorance: So anyone can go operate and then after a few hundred surgeries we can finally start rating them? How do you know if they are any good before then? BTW, how much expertise does Consumer Unions have in rating physicians? What metrics do they use? Do you ever actually read Amazon reviews? Would you be surprised if I told you that one of the docs I know with one of the worst complication rates in our state also has one of the highest ratings on consumer sites and off the wall satisfaction scores?

    Your second problem is that you think Anecdote is Evidence: Would you be surprised if I told you that one of the docs I know with one of the worst complication rates in our state also has one of the highest ratings on consumer sites and off the wall satisfaction scores?

  • TastyBits Link

    @James Kirby

    MFN (Most Favored Nation = “treat all comers the same”) price, like Amazon, Walmart and Home Depot do in the offers on their websites.

    Do you have any idea of how they work?

    As far as I know, Home Depot carries their merchandise, only. Walmart carries their merchandise, but they have a marketplace, also. Amazon is a marketplace that is beginning to carry their own merchandise.

    At Amazon, Walmart marketplace, eBay, NewEgg marketplace, garage sales, flea markets, swap meets, etc., there are no fixed prices. The same item is offered by multiple sellers, and the differences are minor at best.

    Like airline tickets, the prices are constantly changing. On Amazon, I have seen the price increase as soon as I bought a product. Unless “the gummint forces” Amazon to have fixed prices, there is no “treat all comers the same” pricing.

    @steve is 100% correct on Amazon reviews. Like Wikipedia, they can be useful, but they are far from authoritative. Let me predict that all Amazon and Wikipedia will soon be implementing the same form of ‘free-market capitalism’ as our leading free-market capitalist companies – Google, Facebook, Twitter, etc.

    Using the Amazon model, you would need to calculate how much blood you could lose waiting for the prices to drop, or you could slap on a tourniquet and wait for Amazon Day.

    Me, I will take my socialized healthcare. It may not be top tier, but at least, I do not have to wait for the Memorial Day appendectomy sale – buy two and get one free. Or, I could buy one Ronco Self-Appendectomy Kit and get the second free after paying for the shipping & handling charges.

    FYI: Home Depot does not “treat all comers the same”, unless you do not consider contractors as “comers”.

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