Flowers for the Sick

January 28, 2010

Margaret Flowers, M.D. responds to the SOTU in an open letter to Barack Obama:

There was an opportunity this past year to create universal and financially-sustainable health care reform rather than expensive health insurance reform.

Flowers is talking about single-payer or as she likes to call it (in a move I suppose she intends to be an argument in its favor) “Medicare-for-All.” This was followed closely by:

This poor value for our health care dollar is due to the waste of having so many insurance companies.

So on the one hand, Flowers gets that health care and health insurance are two different things. But then she thinks that health care value is bad because of health insurance competition.

Now ask yourself this question: do you feel that you have poor value car care because there are too many auto insurance companies? Even if I thought car maintenance was too expensive, I certainly don’t see what State Farm has to do with it. I suppose she might say something like “Well, the more insurance companies there are, the more different forms health care providers must deal with and administrators have a harder job keeping it all straight.” That may very well be true but – and this will be sort of a theme in this post – what is the other side of the cost equation? What do you lose on the other end (e.g. insurance premiums) by affecting the number of firms?

Speaking of what the number of insurance firms means for insurance premiums, how exactly does one come to the conclusion that too many insurance companies make for a bad value in insurance market? I suppose I shouldn’t be surprised since her eventual point is to argue for a monopoly but I don’t understand the economic principles behind such an argument. Here is the gist of it for Flowers:

At least a third of our health care dollars go towards activities that have nothing to do with health care such as marketing, administration and high executive salaries and bonuses. This represents over $400 billion per year which could be used to pay for health care for all of those Americans who are suffering and dying from preventable causes.

But this forgets a very important point: health care doesn’t spring from the ether. Despite being intimately tied to living and dying, it is a product of industry that must be produced and sold. Separating “production costs” from “selling costs,” as if the latter were optional, is fallacious, as Walter Block points out:

This is an entirely misbegotten view of economics. Unless and until the product is brought to the final consumer, it might as well not have been produced at all, as far as the latter is concerned. What is the good of producing shoes or cars, if they are not made available to the consumer, and this can never occur unless the product is actually sold, and this cannot take place in the absence of selling costs such as marketing or advertising?

Or administration. Does Flowers think that one doesn’t have to administer a single payer system and that doing so requires actual resources and the need to compensate administrative workers? Yes, one doesn’t really need to advertise in a monopoly context but if you are going to count those savings, you also need to talk about the costs of removing competition, both to prices and to innovation.  You also need to talk about the costs of increased government paperwork which comes with little incentive to keep in down. Flowers doesn’t do that.

Flexing my lefty muscles, if the smell of money in the waiting room is making you nauseous, consider the informal sectors ability in a freed market to eliminate money and ad men from many of the day-to-day needs of health care that are closed off now.

You said that you wanted to “keep what works” and that would be Medicare.

As Sheldon Richman points out, can “a program with a $37 trillion unfunded liability…be said to be working”? But beyond that, it seems a failure on just about any measure except the superficial one that it provides health care. OK, but what kind and at what cost?

Remove all of the industries who profit off of the American health care catastrophe from the table. Replace them with those who are knowledgeable in designing health systems and who are without ties to the for-profit medical industries.

I think Flowers, like Michael Moore, doesn’t appreciate the difference between profit per se and the returns to power inherent in existing state capitalism. The conflation is at the heart of her argument and thus her argument is misguided. I trust we all think it’s a good idea to have shoes but would Flowers suggest a single-payer shoe system as the best way to tackle shoes. If so, I think she would have a hard time convincing people. If she wants to argue that there is a fundamental difference between producing shoes and producing health care, let’s hear it. If she further wants to help me understand how computer technology has gotten cheaper and better but health care can be expected to get worse and more expensive under a profit system, I’m very interested.

All of the benefits she wants, including less corporate influence, can be accomplished by other means once you get the confusion out of the way, such as those suggested by Roderick Long:

At a minimum a health care policy would have to include:

1. Repealing laws that have the effect of cartelising the medical industry (e.g., the licensure monopoly granted to the A.M.A.), thus artificially boosting the cost of medical care.

2. Repealing laws that have the effect of rendering the labour market oligopsonistic, thus artificially lowering people’s ability to pay for (and collectively negotiate for) medical care.

3. Repealing laws that shift health care funds from the 25%-devoured-by-overhead voluntary sector to the 75%-devoured-by-overhead coercive sector, thus decreasing the amount of health care that gets to needy recipients.

4. Repealing laws that transfer the power to make medical decisions for individuals from those individuals to centralised bodies, thus increasing the impact and scope of fatally bad decisions and suppressing the competitive signals that allow the identification of better and worse policies.

5. Repealing laws that wiped out the old mutual-insurance systems (basically HMOs run by the patients instead of by corporations) and empowered insurance companies at the expense of patients.

6. Repealing laws that suppress innovation and distribution in the pharmaceutical industry in the name of “intellectual property.”

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10 Responses to “Flowers for the Sick”

  1. Lauren Serven Says:

    Health care is a human right and until we establish that principle in the public’s mind the profiteering and flesh easting will continue.

    Your point about competition is shallow. Who benefits from such activity among the health insurers? Competition is NOT resulting in lower premiums. Many feel that interstate access to consumers would result in lower costs, when in reality all insurers will base their models in the states with the lowest common denominator for consumer protections.

    Your idea of a single payer system is flawed. Single payer is just that. One payer. Of course there will be administrative needs to be filled (right now Medicare uses private companies to administrate). Under Single Payer (as with Medicare) administrators will be limited in their ability to siphon premiums away from compensating health care delivery to Wall Street shareholder accounts.

    The record profits and salaries of the health insurance industry is testament to the disgusting nature of our system that leaves millions unable to afford insurance and millions more struggling to meet the monthly premium. Not to mention, health dollars are rewarding insurance company shareholders and executives rather than the medical professionals who actually service the sick and save lives. There really is no choice here. Profit making in the health care sector is immoral and increasingly more Americans are demanding that out Congress make it illegal.

  2. orangutan Says:

    You are drowning in your ‘free market’ ideology. You do not respond directly to list of points that Dr. Flowers concludes with. Instead, you look for little semantic sneak attacks. The simple truth is that single payer systems deliver health care that is high quality and universally available for far less cost. That is why so many other countries have chosen single payer and would never dream of going back to ‘free market’.

    The reason I put ‘free market’ in scare quotes is because health care is fundamentally unlike shoes. You don’t need 12 years of post-secondary training to know which shoes are best. You don’t need 12 years of post-secondary training to make shoes. You don’t wake up one day and find that you have to buy shoes, or you die. Health care cannot be manufactured in a third-world country for twenty cents an hour. The maximum cost of shoes that you may be forced to purchase in a given year does not exceed your salary. The cost of shoes is not decreased by taking preventative measures.

  3. Neverfox Says:

    Hi, Lauren. Thanks for stopping by and sharing your thoughts.

    Health care is a human right and until we establish that principle in the public’s mind the profiteering and flesh easting will continue.

    I think you have it exactly backwards. It’s only to the degree that we declare health care a right that we encourage rent-seeking behavior. I don’t think you’ve really taken the time to consider what exactly it means to call something a right. Because something is important – even vital – doesn’t translate it into a right. There are people far more eloquent than I on this very topic so I’ll direct you to two of them. The first is a piece by Sheldon Richman. The second is a video lecture (part of a “Is Health Care a Right?” debate) by Stephen Landsburg. Please have a read and a listen then feel free to come back and comment.

    Who benefits from such activity among the health insurers?

    The poor mostly, but in general we all do.

    Competition is NOT resulting in lower premiums.

    But my core message is that we don’t have and haven’t really ever had anything approaching competition. See the points listed at the end of my post to see the major reasons why. Don’t conflate currently existing capitalism or the so-called “privatization” idealogy with truly freed-with-a-D markets.

    Many feel that interstate access to consumers would result in lower costs, when in reality all insurers will base their models in the states with the lowest common denominator for consumer protections.

    As Richman says in the piece above, “What they mean is that it would permit people the freedom to tailor policies to their personal requirements.” Before your argument can be compelling, you need to convince me that “consumer protections” are a good thing. I think they are one of those “obvious” things that aren’t so obvious when you start to think about it. “Consumer protections” are code for “I know better than you how to spend what little money you have.”

    Single payer is just that. One payer.

    It is a fundamental mistake to describe single-payer as just a simplification of the insurance system from many to one. It ignores both the fact that you are forced to pay into the system and the fact that by shifting your costs to other people, you distort consumption patterns, which has real effects on the prices of the provider side of health care. Treating it as an isolated layer is bad economics. Under such a program, everyone who pays taxes pays. A better name is hundreds-of-millions-of-payers.

    The record profits and salaries of the health insurance industry is testament to the disgusting nature of our system that leaves millions unable to afford insurance and millions more struggling to meet the monthly premium.

    We agree. But I thought I was clear that the insurance industry is primarily the result of a corporate-state marriage that rent-seeks. You are confusing profit per se with artificial privilege. Richman again,

    To the extent that intervention hampers competition by erecting barriers to entry — which is the usual effect, intended or not — protected firms are free to charge higher prices and reap more profits than would have been the case in an open market. Corporate power and privilege derive from political power and can’t exist without it. In contrast to existing capitalism, the truly free market would have no legal barriers to competitive entry, assuring that prices and returns are economically justified and not the fruits of privilege. Strictly speaking, entrepreneurial profit in a true market gets competed away because the very process of capturing them reveals valuable information to others and invites imitation. It takes innovation and efficiency — that is, superior service to consumers — to create new profits. Only the State permits business to make profits by withholding benefits from consumers.

  4. Neverfox Says:

    orangutan, welcome.

    I did not respond to that list because that list is simply a list of good outcomes that most people who talk about health care reform share. It’s not Dr. Flowers argument for why single-payer would lead to those things and I don’t expect it to be. I’m sure she has one but her letter was meant only as a request for further discussion. I did however acknowledge it as a set of shared goals and address what she did include as reasoning why single-payer might work. I think that’s fair.

    I’m not sure how you see my post as a semantic argument. I’m stating that she is committing certain economic fallacies with real consequences for her policy recommendation. That’s not what a semantic argument is.

    Also, no one can go back to a free market that they never had. Countries have gone to it because it’s politically popular and concentrates power. Prof. Landsburg, whom I linked in the above comment, makes it pretty clear just how nefarious and rent-generating the system can be. Of course, it’s popular….with the ruling class.

    All you’ve done with your attempt at undermining the shoe analogy is to a) miss the point in general and b) strengthen my case in a few particulars. To the former, the point is not that they differ on a scale of seriousness or importance. The point is that they are both private goods produced from scarce resources. If you don’t like shoes, plug in shelter, food, water, education etc. To the latter, saying that is takes “12 years of post-secondary training” only serves to underscore the scarcity and preciousness of the resource. The more education a service provider needs, I think the stronger a case for markets becomes.

  5. orangutan Says:

    Neverfox, thank you for your reply. The reason that I called your original post a semantic sneak attack is because much of it attacks Dr. Flowers for her statement that there is waste in having “so many insurers”, a statement that you interpret as her advocacy for greater monopolization of health care insurance. But you must realize that single-payer advocates do not clamor for reducing competition among insurance companies. I believe that what she really meant with that sentence is that too much of our health care spending is going to support the insurance industry.

    Advocates of a pure free market often ignore or underplay the reality that a ‘pure’ free market has never existed, and can never exist. Let’s begin with the assumptions in free market theory that every participant in the market always has all the knowledge that they need, always acts in their own best interest, faces no barriers to entry and can exchange goods and services freely. None of these are 100% true in any market, and most are especially untrue in the health care market. Second, the structure of the planet distorts any free market, what with the continents being separated by oceans, some places being colder, and the fact that some countries have no iron ore. Third, establishment of any government creates a distortion in the free market. If a government is to do anything, it must raise revenue by selectively taxing the market (can any tax be absolutely uniform?) then spend that revenue in a collectivist way (to benefit ‘society’, not individuals). Most intractably, even if my first three points were not a problem, the operation of a free market distorts itself because present winners enjoy a future advantage, monopolies tend to form, and no sort of ‘dealing’ is considered (at least by some participants) to be unfair. (Is it permissible to offload waste-disposal costs into the common atmosphere, murder the CEO of a rival company, buy off a congressman?)

    At best, we can agree that free market forces can have great value, but they will always (and necessarily) be embedded in greater organizational schemes (rule of law, human values, protection of the commons: things that government is supposed to protect because the market does not).

    My point in contrasting health care to shoes is equally valid for shelter, food, water and education. Each of these things has their own, unavoidable market distortions, and therefor the ‘practical’ market for each operates differently.

    Clearly, the real number of health insurance companies that Dr. Flowers would prefer to see is zero. If I can anticipate your response, it will be that no, she doesn’t want zero, she wants one: the government, a monopoly. But there is a fundamental difference between single payer health care and insurance companies. Insurance companies are middlemen sellers. They sell us access to health care, and protection from the risk of catastrophic expense. They will be most successful (in the eyes of their owners, the shareholders) if they provide the least amount of health care for the most amount of money. They have an advantage because they are few (barrier to entry) and the purchasers are many. You get a better deal on health care insurance if you belong to a union, or if a big employer buys health care in large lots, because the purchaser becomes more powerful by being larger.

    In single payer health care, the government is the buyer, not the seller. The sellers are now the multitude of doctors, nurses, hospitals, pharmaceutical companies and X-ray labs. (A government run health care provider, such as the UK, is completely different.) As a single purchaser dealing with may providers, the government is now in the best position to get the best deal: the most health care for the least money. The experiment has already been done. The single payer governments purchase health care with just as high quality, but for more (all) of their citizens, at a substantially lower cost. (What is it, 30% overhead for insurance companies, 3% overhead for Medicare?) Just as Adam Smith would predict.

    You say that countries that have adopted single payer have done so because it’s politically popular, because it concentrates power and because it is favored by the ruling class. Yes, it is politically popular. Sometimes democracy actually works. Concentrates power? Well, it certainly takes the power to set the price of our health care away from an oligarchy of mega-corporations. And where does this power go? To a body that is accountable to voters (who also happen to be both the ultimate payers and the ultimate consumers), not shareholders. But really, favored by the ruling class? In what universe?

    Incidentally, I share your disagreement with Lauren about whether healthcare is a right. Perhaps it should be a right, but no ‘right’ exists in a ‘free’ market. Rights only come about when the are granted by a protector, and exist only to the extent that they can be enforced. Single payer health care is the way that market forces can be used to make health care a ‘right’ in the US, as it already is in other (more civilized) countries.

    I gather that much of the opposition to single payer health care comes from discomfort that everyone will get the same basic health care, but that the price people will pay is uneven. Through taxes, the rich will pay more, and the poor will pay less. Of course, that’s the way it already is for national defense, the police, the fire department, the highways, the NIH, the EPA, etc. Why do we choose to make health care less of a ‘right’ than highways?

    I have no expertise in economics, and I did not understand some of the terminology you used, such as ‘rent-payer’. I am sure that you must have previously encountered these arguments about the inadequacy of the free market to solve all problems. I’d be interested to know if you agree that sometimes the market fails, and must be corrected, or whether you think that all aspects of human interchange and development are best left to the market.

  6. James Says:

    “Advocates of a pure free market often ignore or underplay the reality that a ‘pure’ free market has never existed”

    Actually we (by which I mean me, neverfox and some others) probably spend a disproportionate amount of time discussing this.

    “Let’s begin with the assumptions in free market theory that every participant in the market always has all the knowledge that they need, always acts in their own best interest, faces no barriers to entry and can exchange goods and services freely.”

    That may be true of some free market theories but not all of them. I reject all the above statements and it hasn’t changed my opinion of markets. This sounds more like “perfect competition” theory than “free market” theory. For one thing all these things are objective factors so affect any economic system. Dispersed knowledge is why stuff like advertising exists and taking advantage of the division of knowledge is something markets can do via price signals whereas when something is run by the government this mechanism is purposefully removed (http://www.virtualschool.edu/mon/Economics/HayekUseOfKnowledge.html). I’m not gonna bother arguing that governments are also prone to irrationality and acting against people’s best interests. Barriers to entry are caused by either greater opportunity costs in this particular industry, in which case it’s rational for people to invest elsewhere, or caused by the state. There’s a guy called Kevin Carson who writes a lot about how freed markets would result in lower barriers to entry, you can read some of his stuff here http://homebrewindustrialrevolution.wordpress.com/
    and neverfox has some decent links on here I reccomend you look at. One thing I should make clear is that we aren’t your average supporter of “free” markets and we’re very much opposed to a lot of the stuff that’s justified under what some people call free trade.

    “Second, the structure of the planet distorts any free market, what with the continents being separated by oceans, some places being colder, and the fact that some countries have no iron ore.”

    Similar to the above point really. If this causes a significant change in the market it’s because the cost makes it an unjustified use of resources.

    “Third, establishment of any government creates a distortion in the free market. If a government is to do anything, it must raise revenue by selectively taxing the market (can any tax be absolutely uniform?) then spend that revenue in a collectivist way (to benefit ’society’, not individuals).”

    We’re anarchists (or polycentric law-ists if that sounds less chaotic) so I can’t find anything to fault in this statement.

    “Most intractably, even if my first three points were not a problem, the operation of a free market distorts itself because present winners enjoy a future advantage, monopolies tend to form, and no sort of ‘dealing’ is considered (at least by some participants) to be unfair. (Is it permissible to offload waste-disposal costs into the common atmosphere, murder the CEO of a rival company, buy off a congressman?)”

    No of course these things aren’t permissible. I don’t see any argument to back up “monopolies tend to form” or explaining why the existence of “past winners” is a bad thing. Past winners gain an advantage because they produced something useful, by doing so everyone has gained an advantage. That’s the whole point (http://c4ss.org/content/1409).

    “At best, we can agree that free market forces can have great value, but they will always (and necessarily) be embedded in greater organizational schemes (rule of law, human values, protection of the commons: things that government is supposed to protect because the market does not).”

    Your conflating order with law, law with coercive law and coercive law with monocentric coercive law. However you are correct that markets are neccessarily a subset of organisation in general. So what?

    “Insurance companies are middlemen sellers. They sell us access to health care, and protection from the risk of catastrophic expense. They will be most successful (in the eyes of their owners, the shareholders) if they provide the least amount of health care for the most amount of money.”

    Maybe if they had a monopoly, but even then it depends on how elastic a given demand curve is, but when they face competition it’s the other way round. They will recieve the most sales if they provide the best service and/or at the lowest price. Also one of the points Neverfox raised was that before the AMA used the state to ban them mutual-aid based healthcare was very popular. This could be considered voluntary socialism rather than your typical market but still.

    “As a single purchaser dealing with may providers, the government is now in the best position to get the best deal: the most health care for the least money. The experiment has already been done. The single payer governments purchase health care with just as high quality, but for more (all) of their citizens, at a substantially lower cost. (What is it, 30% overhead for insurance companies, 3% overhead for Medicare?)”

    That may well be true but misses the point. I agree that the american healthcare system sucks and to my knowledge so does Neverfox. What we are contesting is that free market healthcare=american healthcare. Have you read the links at the end of the post? None of that stuff exists so a comparison can’t be made. As well as those points there are numerous things the state does to increase overhead costs.

    “Concentrates power? Well, it certainly takes the power to set the price of our health care away from an oligarchy of mega-corporations. And where does this power go? To a body that is accountable to voters (who also happen to be both the ultimate payers and the ultimate consumers), not shareholders. But really, favored by the ruling class? In what universe?”

    Well for one thing your assuming mega-corporations are opposed to it, but socialising the cost of maintaining their work force is surely a great benefit to them at everyone else’s expense (http://www.mutualist.org/id84.html). Democracy itself also tends to favour concentrated groups because democracy is based on collective action so picking a good government is a public good meaning free rider problems. Free rider problems are much easier to get around when the group is small enough for individual actions to probably benefit the actor. The smaller the better and the more they stand to gain the better. It also serves to legitimise the other things the state does that benefit the ruling class. Finally the state (and it’s cronies) ARE the ruling class because unlike trading, sharing, gifting etc. they rely on force which they wouldn’t have to if their actions were mutually beneficial.

    “no ‘right’ exists in a ‘free’ market.”

    Yes they do. For one thing you have to have ownership rights for a market to work but also we’re arguing for markets based on an underlying ethical theory.

    “Why do we choose to make health care less of a ‘right’ than highways?”

    Socialised transportation costs for the ruling class?

    “I’d be interested to know if you agree that sometimes the market fails, and must be corrected, or whether you think that all aspects of human interchange and development are best left to the market.”

    The market fails sometimes, there’s no question about that, but to argue that this justifies government intervention is to commit a nirvana fallacy. As to whether it should be corrected at times that’s a good question but IMO (which I assume neverfox shares) “we ARE the market” so we can and should change it whenever we feel, but only through voluntary means. Broadly speaking that means I (we?) think everything is better left to the market but only if “the market” means any voluntary association which is a definition i’m sure would annoy many people.

  7. Neverfox Says:

    But you must realize that single-payer advocates do not clamor for reducing competition among insurance companies. I believe that what she really meant with that sentence is that too much of our health care spending is going to support the insurance industry.

    Dr. Flowers is a member of Physicians for a National Health Program. Their website clearly states that a “single-payer system would be financed by eliminating private insurers” and would instead provide a “single insurance plan in each region, administered by a public or quasi-public agency.”

    I have no doubt that insurance premiums are higher than they would be in a freed market (I’ll use that term to differentiate my position from “privatization” crowd) because costs are higher than they would be in a freed market, primarily due at least to the seven sets of laws that need repealing.

    James is correct to point out that the characteristics of a free market that you list come from neoclassical economics, which I reject. As for the structure of the planet, I would start by examining how borders and immigration laws lower labor and capital mobility. This underscores a very important point: people think they are having a debate about states vs. markets yet both sides take so many things for granted that are not free-market entities, e.g. borders, the FDA, corporate law. As long as those are assumed in the free market side of the debate, you aren’t debating about the free market. So when you say, “[E]stablishment of any government creates a distortion in the free market,” I say, “Exactly!”

    Most intractably, even if my first three points were not a problem, the operation of a free market distorts itself because present winners enjoy a future advantage, monopolies tend to form, and no sort of ‘dealing’ is considered (at least by some participants) to be unfair. (Is it permissible to offload waste-disposal costs into the common atmosphere, murder the CEO of a rival company, buy off a congressman?)

    Monopolies (in the coercive sense, which is the only sense worth condemning) are, by definition, impossible in a freed market. As for unfair dealings, I think you are making a bad assumption: that anarchy means no law or dispute resolution. Development of free markets, in fact, depends on the simultaneous growth of a legal order (not the same thing as a state) and a theory of private property.

    But there is a fundamental difference between single payer health care and insurance companies. Insurance companies are middlemen sellers. They sell us access to health care, and protection from the risk of catastrophic expense.

    A person pays a premium (taxes) to have someone else pay for the health care they consume. Insurance companies aren’t gatekeepers to access because nothing prohibits you from paying out of pocket. They are, in the fundamental mode of operation, no different. That’s why insurance companies are called “payers” and a “single-payer” is just that: a single insurance “company”. In fact, the PNHP calls their proposal “Single-Payer National Health Insurance“.

    They have an advantage because they are few (barrier to entry) and the purchasers are many. You get a better deal on health care insurance if you belong to a union, or if a big employer buys health care in large lots, because the purchaser becomes more powerful by being larger.

    But why should be assume that people will not organize outside of government and why should we ignore state-instituted barriers of entry into the insurance industry or alternative solutions?

    As to why it’s popular, I’ll quote Dale Steinreich:

    First, the wealthy and politically connected can manipulate the system to jump waiting lines and acquire special accommodations such that they never incur the most damaging costs inflicted by their system. Thus those in positions of power who could reform the systems have no incentive, especially personal, to do so. If British CEOs, Queen Elizabeth, and Tony Blair were all forced to use only the British NHS and they received the same standard of care as the average Briton, the NHS “would not last a week”.

    Second, those at the end of long single-payer cues are ignorant of treatment alternatives that would be available in a freer market and suppliers have no incentive to alert them to these unavailable treatments. Third, in this information vacuum, single-payer patients undergo “serfification:” they become grateful to be on the receiving end of even the rudest, unpunctual, and poorest-quality care.

    Then there is always the myth of the rational voter….

    Perhaps it should be a right, but no ‘right’ exists in a ‘free’ market. Rights only come about when the are granted by a protector, and exist only to the extent that they can be enforced.

    Don’t mix up de facto rights with normative rights.

    Of course, that’s the way it already is for national defense, the police, the fire department, the highways, the NIH, the EPA, etc. Why do we choose to make health care less of a ‘right’ than highways?

    Highways aren’t a right either. And incidentally, I think all of those state entities would find better and more just solutions under anarchy so I’m not particularly moved by the comparison.

    I’d be interested to know if you agree that sometimes the market fails, and must be corrected, or whether you think that all aspects of human interchange and development are best left to the market.

    That depends on what one means by failure. In one sense, I think that terms is loaded and value-laden in a way as to beg the question. Also, when used in that sense, it often assumes economics concepts like equilibrium and efficiency that are products of neoclassical thinking. But if all you mean is that markets are never settle and are in a constant state of dynamic movement, then yes, thank goodness they fail; that’s what makes for innovation.

    See here and here for more on ‘market failure’.

  8. johanna Says:

    As a life-long left-winger, I’m disappointed at how much effort is spent on my side of the aisle debating the merits of single-politically-privileged-payer vs. few-politically-privileged-payers rather than asking the hard question, why is health care so damn expensive in the first place. We just assume the high cost is natural, but why should we? Computing technology naturally got much cheaper over time in spite of having become utterly necessary for almost everything we do. In fact, it is cheap computing technology that is behind practically every health care innovation out there (pharmaceuticals included). This ought to have translated to lower costs in health care but it hasn’t. I urge my fellow travelers to turn a critical eye to the cost issue and not get caught up so much in the who-will-be-the-payer debate which is largely, IMO, a red herring. Roderick Long’s six points are a good place to start.

  9. Neverfox Says:

    Hear, hear, johanna. In that spirit, I hope you’ll enjoy my new post on generic drug cost. It is my firm belief that if we achieved those points that the debate over single-payer will be moot. I could take them more seriously (or any proposal) if it simply acknowledged the regulatory and patent influence in keeping prices (and thus insurance) high.

  10. Lauren Serven Says:

    I just returned from visiting an old client of mine whom I have not seen in about 5 years. Nick (not his real name) has worked for a defense contractor for years and is a union member. He has health coverage and it is a good thing he does. You see, Nick has had diabetes since he was 17. Well over 50 now, Nick’s body is showing signs of the disease and along with his insulin pump he now wears a prosthetic to replace the foot he lost last year.

    I was quite surprised to hear that Nick has incurred major medical expense from his ordeal and the ensuing complications after his amputation. MRSA set in the wound which was a major setback requiring months in and out of the hospital. They are paying down the medical debt incurred from this infection which was not Nick’s “fault”….and remember, Nick has health insurance, through a union, we are talking major benefits. Now Nick’s team where he has received his prothesis are doing major battle with his health insurance company because of the nature of his device. I guess the insurer just doesn’t see the utility of Nick’s device being waterproof. In addition, Nick’s out of pocket expense for the device that enables him to walk and return to work and continue being a productive tax paying citizen is considerable. Not to mention, Nick is now receiving calls from his insurance carrier, just checking in to see how he is feeling and getting along. Nick told me that a coworker has also received such calls and when this particular co-worker injured his back at work, he was told by the carrier that he had reported his back bothering him a few months prior…on the phone…to a nurse…who worked for the insurance company who held his health insurance policy. Nice.

    Nick has insurance. His company and his union pay a lot for it yet he is still faced with incredible medical expenses. Why is he paying for protection he is not receiving? How does a person pay (either through his company or union) over $15,000/yr and still incur medical expenses high enough to leave him financially vulnerable (and subject to the harassing phone calls of bill collectors)? And let’s not forget, Nick is sick, has lost a foot, and learning to deal with a device that has replaced that loss.

    Free market approaches to health insurance are great revenue generators, but as long as these mechanisms are allowed to funnel health dollars away from care and into Wall street shareholder accounts we are all vulnerable. Insurance pools exist to spread the risk. The bigger the pool the smaller the risk. Granted, competition among insurers may result more efficient means of expediting payment, but if these efficiencies do not result in reducing overall premiums to the people who are purchasing coverage, than really what is the point of insurance? I know it’s a hard question. I know it means viewing health insurance a bit out of the context of free market capitalism and that is exactly why health coverage needs to be interpreted in the realm of human rights, the common good, You can gerrymander and think your way around this argument all you want, but in the end, sick vulnerable people are being taken advantage of in the worst conceivable way. Few of us are truly protected from financial ruin under this system. Really, isn’t there are better way to make a buck?

    So there’s my reasoning with all those “human rights” issues you guys are so confused about. Buying insurance should NOT be the same as buying a car, a house, a bout, a moat, or any other consumer item this wonderful free market of ours can convince people they need to have a happy productive life. But to truly have a happy life, you need your health. To me that is an essential part of life, liberty and the pursuit of happiness.

    Maybe I should put the human rights thing in another context. During my 23 years of Buddhist practice I have come to discover that Human Rights can be defined as the potential for human beings to flower and reveal their full potential as human beings. It is hard to reveal one’s full potential when one is suffering from what Buddhism defines as one of the four sufferings, illness in this life. The free market middlemen we call the Health Insurers stand in violation of this right by developing mechanisms that serve to isolate the sick from the healthy in order to increase profits for shareholders rather than to protect and serve the sick they have promised to protect from financial risk. Yes, I consider this a violation of someone’s rights. To expect someone to “pay” for health care is not the point. We all pay for everything. The expectation that it is somehow “okay” to profit from the sickness of others by using medical fear mongering is tantamount to criminal insanity.

    The high cost of medical care nationwide is a burden we all share and we all need to face up to our role in it. The expectation that we can lead lives of virtual self destruction through unhealthy eating, drinking and lifestyle habit need to be addressed. The expectation that a pill or a device or an implant can fix that which we have broken in ourselves is not a recipe for fiscal medical success. Nor does such thinking enhance anyone’s quality of life. We are all responsible for our health, but that does not mean we should be responsible to a system that replaces patient well being with shareholder corporate prosperity.

    In the end, reform is really a matter of doing the right thing. All of our moral teachings emphasize care for the sick and dying. This action is based on the idea of brotherhood, compassion, love for our fellow human beings. All men are brothers. Access to affordable health care is their human right.


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