I found the post at Global Macro Monitor on the role of health care in the economy interesting:
It is probably true to say that the U.S. spends 18 percent of GDP on health care, but it is not true to say health care is 18 percent of the U.S. economy. In fact, on a value added basis health care is only 7.4 percent of U.S. GDP, smaller than the real estate sector, for example, which is now the largest subcomponent of GDP.
but it leaves me with several questions. First, is it really relevant that a lot of people want free health care? I suspect they’d like just about anything if it were free. The sad reality is that care must be paid for and even Jeff Bezos’s income isn’t growing fast enough to pay for all of the care that Americans seem to want at the rate at which costs and prices are increasing. Some discipline must be imposed. That’s a practical necessity. It will either be market discipline or fiat or a combination of both. Right now we have neither.
The second question is how does one conclude from the enormous gap between spending and value added in health care anything other than that prices are too high?
So, I agree that the prices are too high and that this comes from a dearth of restraints. Medicare imposes some price constraints and do insurance networks, but they’re inefficient at best. But the “value added” discussion in the linked post confuses me. It seems that their argument is that, because a large chunk of “health care” expenditures are accrued to industries, such as “chemicals,” that do things in addition to health care in GDP calculations, we can’t count those as “health care” in calculating value-added. But that’s sheer accounting, not a measure of value.
The sad thing to me are that prices/costs are not even part of the larger health care conversation – these terms are generally used only in reference to premiums.
I dont think you are confused, James. I think you hit the nail on the head. They engaged in some sophistry by playing definitional games enabled by judgment on “final products.”
A stereo amplifier is manufactured with capacitors, copper wire transformers, tubes or transistors, machined aluminum casing, fasteners and some plastic. An exotic amp might sell for $20,000. And audiophile demand drives that full $20k. But do we want to say that the real audio driven portion of GDP is only design and final assembly by Acoustic Research, and that, say, screws, although driven by amp sales would be alternatively used and should be accounted for in the fastener industry just like roofing nails? No. It’s the practicality of a cost accountants mentality vs a theoretical economist.
“Some discipline must be imposed.”
Indeed. I am always shouted down for calling for the market concept of price exposure to consumers. Health care is different, health care isn’t currently a free market or health care decisions can’t be made on an ambulance ride are often thrown out as arguments. I’m not persuaded and know of only the case of vanity goods where price doesn’t matter. I sure do know that all the other schemes haven’t worked, and that the model of other people spending other people’s money on yet other people with the driver of pleasing for votes doesn’t sound like a cost controlling winner to me.
Before Obamacare, before Medicaid, before Medicare, before tax free employer provided health insurance, there was a free-market capitalist medical health care system, and if I understand correctly, we need to get back to those simpler and better times. Got it.
If I am not mistaken, there were quite a few differences between those idyllic times and now – no board of health, no Boiler & Pressure Vessel Code, and no Fed. Those were the good old days. Real men would eat salmonella for breakfast, botulism for lunch, and E. coli for dinner. People had no qualms about dying from a boiler exploding or in a Molasses Flood. And, free-market capitalists used real money to create wealth.
Nostalgia has overwhelmed me, and I am going to rip out the air conditioning and build an outhouse.
“Those Were the Days” (All in the Family Theme Song)
We haven’t had a free-market capitalist medical health care system since 1905. I doubt that anybody really wants to go back.
However, the reforms introduced during the first progressive era made additional regulation to keep costs down necessary. It wasn’t acutely necessary until the mass use of antibiotics which made health care much safer and more effective. That wasn’t done and the situation has been aggravated by Medicare, Medicaid, and now the PPACA.
I am tired of free-this and free-that. This is a regulated country, and the only disagreements can be about the quality of the regulation. The system can be regulated poorly, well, or somewhere inbetween. For most people, the difference between poor and well is subjective. What affects me negatively is poorly-regulated, and what affects me positively is well-regulated.
It is not the hypocrisy. It is the intellectual dishonesty of twisting, distorting, and misrepresenting an argument that bothers me. I am mean enough to survive (and thrive) in an anarcho-capitalist world, but I would rather not. I know all the pablum spouted by the libertarians and the like, but I can support the arguments from the ground-up.
For those playing the “home game”, the libertarian, free-market capitalist argument must be grounded on one of two premises. Humans have worth, or humans are worthless. Sorry, that is it, and they are mutually exclusive.
Anybody who believes that humans are worth more than animals has a fundamental responsibility to ensure their fellow humans have the basic necessities to live. As you noted, basic health care is all that is needed. After that, everything is a luxury, and it should not be difficult to make a list. There will be some disagreements – abortion, contraceptives, Viagra, bionic limb replacements, cosmetic surgery, wards, etc., but most of the agreeable parts could be knocked-out quickly.
Instead, we get dumb-assed morons on both sides, and yes, a lot of you progressives are f*cking morons. NOTE: If you are not willing to pay for the sh*t you think everybody needs, you are shirking your responsibility. Having the wealthy pay your fair share is not caring.
We have persuaded ourselves of a lot of bizarre things. Among them is that physicians have satisfied their ethical responsibility by accepting Medicaid or Medicare patients.
“I sure do know that all the other schemes haven’t worked”
They work much better everywhere else. We also know that not many places, including red states like Texas, have even made an effort towards markets in health care. They made an effort in Singapore and the result was soaring prices.
The prices are too high, but so is utilization in many areas.
Steve
I think that’s overwrought, Tasty. Many things have improved over time. It’s not just a nostalgic those were the days issue. The real question is whether the rate of progress has, for any issue you would like to consider, been superior in a relatively free market, or in a state run market.
I’ll make popcorn while people come up with their state run lists.
@Drew
Again, we have regulated markets. There is and has been no free-market for a long, long time. The one almost totally state-run/directed entity is the Fed, and except for the libertarians, I never hear any calls to abolish the state-run Central Bank. Where are the calls for free-market dollars. Yeah, that’s what I thought.
As to regulations, I doubt many free-marketeers would ride on a non-FAA regulated plane, consume non-FDA drugs, eat at a non-board-of-health eatery, live/work in a non-building-code structure, and the list could go on all day.
When I list alternative places to move, the common denominator is no or lax regulations. In the US, earthquakes do not kill 10,000+ people, and the reason is not good luck. If the World Trade Towers had been located in Iran, they would have collapsed immediately. As an engineer, you know or should know that most structures exceed their specifications (or at least they did).
The actual “good old days” were from about 25 years somewhere between 1942 and 1972, but there was no free-market. The pre-1900’s were the freest-market era, but I do not hear any clamor to re-establish those times.
Few of the wealthy would survive ten minutes in that world. As I have said, I am mean enough to not only survive but also thrive. If you want a free-market experience, you and others should move into the crime ridden neighborhood shitholes. There is not much being regulated there.
(FYI: I have lived in them. The rent is cheap, and not many people want to f*ck with me. If you try it, do not own too many things, and do not worry about a carry permit.)
Regarding health care/insurance, it is not the regulations that have it totally screwed up. The regulated market is distorted by the government money pumped into it, and the free-market is not going to remove the distortions. (The housing boom was the same, and Dodd-Frank cannot remove the distortions by enacting additional regulations.)
The financial industry is a combination of state-run, crony capitalism, and socialism, but again, I do hear the calls to abolish it. No, the people whining about “free stuff” have no intention to give up their “free-stuff”.
For our home viewers, this is how the game works. Raising taxes on the rich never works because most of their wealth is artificially created through the financial system. The rich get more “free-stuff” than most people can fathom, and therefore, they assume that “free-stuff” for the rich is impossible. (NOTE: This does not mean that they did not work for the money. I have no doubt that Bernie Madoff worked hard.)
For our less wealthy progressives, why do you think wealthy progressives buddies never complain, and like their conservative counterparts, they do not even want to return to the mostly well-regulated years between 1942 and 1972. You may want to ask yourself, “Why?”
Please, eat your regulated-market popcorn, on your regulated-market sofa, in your regulated-market built house that you bought with your state-run-market money.
“I’ll make popcorn while people come up with their state run lists.”
In the US, there is no purely state run list, but there are state/private collaborations. On that list we would include…..
Computers (including the microchip)
Antibiotics
Fracking
Atomic energy
Cell phones (and the internet)
GPS
MRIs
Vaccines
Baby food
Really, too many to list.
Steve