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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 23781  
Subject: Economics and Health Care Date: 6/19/2004 7:56 PM
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I have been involved with multiple discussion on the economics of health care on multiple boards in the last couple of weeks. As a result, I have attempted to gather my thoughts in one place. This is my attempt, with substantial background included:

Elasticity

The first principle that needs to be understood is the concept of elasticity. This is a measure of how much a change in price will effect a change in demand. It is affected by a wide variety of things which can be generally stated as the aggregrate of each person's assessment of the item's relative value and the cost that he is willing to bear in order to obtain that value.

In the case of health care, the value of the service provided is generally proportionate to the seriousness of the malady. While no one would pay $1000 to have a cold treated, that price would be considered a bargin for the successful treatment of cancer. The underlying value is the sustaining of the patient's life, the reduction of morbidity, or the easing of discomfort.

Supply, Demand, Profit and Shortages

The purpose of any economic system, whether government directed or the free market, is to allocate available resources. In the free market, this is done using price. As the aggregate demand increases, the price goes up, producing an incentive for others to enter the market. The entry of new participants increases the aggregate supply dropping to price back down to its equilibrium point where supply and demand at that price are equal. The reason that new participants enter a market is in expectation of making a greater profit than if they pursued another course.

Government interference does a number of things. If the government interference is in the form of regulations and compliance costs, this will reduce the supply. People will not continue to produce a product or provide a service where their income does not provide a sufficient return on their investment of time or capital. This reduction in the supply results in higher prices, which reduces the demand creating a new equilibrium point.

Note that there is no external action required to be sure that the demand at the current price is met. There cannot be any shortages in a free market by definition. The profit motive encourages others to move into a field if the price is higher than a product could effectively be produced. This produces an efficient mechanism for allocation of all resources - raw materials, capital, and individual efforts. In short, profit is the price tag of efficiency.

Enter the government. If the government passes laws to reduce prices, the inevitable result will be a reduction in profits. Many people will no longer find it profitable to continue in the field and move to something that is more profitable. This will reduce the supply. But at the same time, since the price is lower, the the demand will increase. So you have a gap between the aggregate supply and the aggregate demand; the result is a shortage. In the old Soviet Union this was commonplace; but it is also common in the U.S. where the government has interefered.

Once the government has intervened in the free market and created a shortage, there are two options. The government solution of rationing and the adaption of the free market to the regulation. A perfect example of both was in the 1940's when the government instituted wage and price controls during World War II. This created an increased demand for workers and a for products, while there was a shortage of both. The government solution was applied to things such as gasoline. There was a shortage of gasoline, and the price was controled, resulting in rationing. In many places, gasoline ration coupons were used in trades; almost as a secondary currency. The effect on manufacturing was mixed - A substantial portion of the manufacturing base was converted to making war supplies (e.g tanks, guns, artillary, munitions, etc.) limiting the availability of the goods previously produced. The market was allowed to respond with higher prices due to a decreased supply. Unlike manufacturing where there was central coordination of what would be manufactured, the allocation of the labor pool was left up to the free market exclusive of controls on wages. This created a huge loophole; while wages counld not go up, fringe benefits could be increased. A major fringe benefit that was added was health insurance. By competing on fringe benefits, women who would otherwise stay at home were encouraged to enter the job market, and they responded, giving us "Rosie the Riveter". More on this later.

Far reaching effects

But interference by the government in the free market can have even more far reaching effects. Take, for example, rent controls. When rent controls are imposed, they have multiple effects. While they hold down prices, this ends up producing a gap between supply and demand. Note that before rent controls are applied (absent other government interference) the problem is not a lack of housing at the current price, but a lack of some arbitrarily defined "affordable housing". Housing is priced as it is because of supply and demand. The return on investment (which is directly related to the profit margin) is, on average, about the same as expected return from other areas where one's time and capital could be invested. If the profit margins were higher, more people would build housing increasing the supply and reducing the demand. If the profit margins were lower, people would move to other areas where they can generate a greater return on investment, decreasing supply and increasing profit margins.

When the rent controls are instituted, a number of things happen. First, new contruction slows. Why invest in a new building if you will not be able to generate the return on investment that you could if you invested elsewhere? Second, in an effort to sustain the profit margin, service is reduced. In an upscale building, the doorman may be let go, or private security eliminated. Alternatively, the amount of money spent on upkeep might be reduced. Eventually the service will drop to nothing, and the upkeep will be the minimum possible. This is all obvious expected results. But there are less obvious results, too. People who would otherwise move out of larger apartments stay because the cannot find comparable smaller ones at a lower cost. So a couple whose kids are on their own will continue to keep their 3 bedroom apartment. This aggrevates the housing shortage even more. The end result of all the activities is that the resources (apartment space) is inefficiently used (couples living in a three or four bedroom apartment), the curtailing or complete absence of new contruction, and the reduced quality of the housing that exist. The latter is especially troublesome because eventually the cost of maintaining the property on even a rudimentary level (e.g. providing heat) becomes greater than the receipts and the property is abandoned.

Subsidization & Regulation

There have been multiple attempts at partially regulating areas of the economy. They have been uniform failures. In the 80's Savings and Loans (remember them) were partially deregulated. The risk was deregulated, the insurance was not. So there was all sorts of incentives to speculate. Worse case, the FSLIC would bail you out. The result was obvious to anyone who cared to look. Paul Pilzer (a member of the Reagan's board of economic advisors) even warned about prior to it happening. When Congress ignored him, he wrote a book, Other People's Money which came out shortly before the S&L debacle and bailout. Similarly, California partially deregulated the electrical industry - and the result was the disaster of a couple of years ago.

While it is true that all industries are regulated to some extent, the primary problem comes from the regulation of one part of the equation, but not regulating a counterbalancing area. The risks that the S&L's could take were deregulated; but the cost to the S&L's for taking risks continued to be regulated, and by doing so, shifting the cost to others. The result is generally converting from a fully regulated industry to a highly industry where risk is highly subsidized, leading to unnecessary risks. This meant that the S&L's could take increased risk, but would not have to bear the cost of the increased risk; they would receive the benefit if they were right, they would lose nothing if they were wrong - FSLIC would pick up the tab. This is not unlike flood insurance, where people are subsidized to live in areas prone to flooding.

Partial regulation can work to an extent, but self regulation is always more effective. McDonald's makes sure that its restaurants are clean, not because the law requires it (though it does), but because they will not stay in business long if the customers keep getting food poisioning. This becomes abundantly clear when one looks at a case in Atlanta. There is a water park that several years ago was independent. One kid with diarrhea pooped in one of the pools, and the ultimate result was two or three cases of E. Coli meningitis and two or three deaths. The water park basically went out of business, but was bought out by Six Flags theme parks. Yet they were following all of the government regulations.

Partial regulation creates problems when it creates perverse incentives, as in the case of the S&L's, the California Electricity crisis, or flood insurance. These perverse incentives result in effective, if not direct subsidies and are caused by the government tends to relinquish authority while maintaining ultimate responsibility. While regulation in general is usually counter-productive (I can't think of an example where it is not, though I'm sure there is one or two examples out there), partial regulation, when resulting from partial deregulation, is almost always a problem because of the incentives created.

Health care is a perfect example; perverse incentives in health care abound, which will be discussed next.

Rosie's Effect on Health Care

The far reaching effects of government interference become apparent when we examine Rosie the Riveter's effect on modern health care. As discussed previously, the wage and price controls of World War II resulted in companies competing for labor via fringe benefits, one of the most popular ones being health benefits. Once the war was over, it is pretty hard to eliminate benefits from workers, just as it is difficult to cut their pay. As a result, health benefits became the norm. At that time, all that was provided was catastrophic care. This was generally reflected in a $250 deductable and a 20% copayment on the next $5000, or some similar type plan. Since office visits were generally less than $10, and a night in the hospital less than $100, in any given year most people never received any benefit.

During the time where most people in a given year did not receive any real benefit from medical insurance there was a huge incentive to keep the price down. Since people would be paying out of pocket for just about anything that was done, the elasticity of care for minor problems was fairly high; a significant increase would substantially reduce visits and therefore profits. Major problems involving long hospitalizations, or other expenses were generally kept in check indirectly. Since the cost of one night in the hospital would often be paid out of pocket, there was a need to keep that price down; ditto for medical fees. Insurance companies would not pay more for single visit of ten nights in the hosptial than it would be charged for ten visits of one night each.

Over the next several years, the combination of inflation and advances in medicine created a situation where it was quite common for people to spend more than $250/year on medical care. (This was further aggrevated by other government interferences discussed below.) If the expectation was that the deductible would be used up anyway, the patient would consider only the cost of the co-payment, which would tend to be 20% of the actual bill. This means that if the bill for an office visit was $30, the increased cost to the patient was only $6. The remainder of the tab would be picked up by his insurance company who would pass it on to his employer. Since there was a cost to the patient, this wasn't a "free lunch", but it was a highly subsidized one. This lead to the elasticity changing; the drop in demand that would have previously resulted from a $10 increase in costs would now require a $50 increase in costs. This meant that doctors could increase their charges five fold, were it not for the restriction on charges being "usual, customary, and reasonable" (UCR). This restriction was generally interpreted as any amount up to 10% over the average charge. Once the average charge was determined, however, it would lead to doctors increasing their rates to 10% above that, pushing the UCR rate up rapidly.

Two other factors also were involved in the increasing cost of medical care. In 1964, in an effort to correct some of the problems which were created by prior government interference, the government passed the Medicare authorization bill and Medicaid followed soon thereafter. The result was that Medicare started setting defacto prices for many things. The Medicare prices were heavily weighted toward procedures rather than thinking. The market respondes as one might expect: Since doctors had a financial incentive to perform procedures, they performed any procedure that could be justified. This increase in procedures being performed substantially increased health care costs, with minimal benefit to the patient. Furthermore, it was rare that the government would reevaluate their payments; generally just indexing them to inflation. This created some really unusual incentives, too.

One such example of perverse incentives occured with the advent of flexible colonoscopies (numbers are approximates). When the units first became available, they cost close to $100,000 and the cost per use was in the hundreds. Medicare, as a result, agreed to pay $1000 for each procedure. They indexed it for inflation using the CPI, but did not take into account the reducing cost of the technology. In a few years, it was possible to buy a unit for less than the reimbursement from a single procedure. This created such an incentive that papers were published which attempted to find any possible reason to do the procedure. Standards of care were developed calling for one procedure per year in those over 65 (e.g. in those on Medicare).

The other factor increasing the cost of medical care was the breakdown in our tort system. This resulted in a substantial increase in lawsuits, payments to get rid of nusience suits, increasing malpractice insurance premiums, and ultimately increases in actual costs to the doctor which are passed on to the patient. But what is missed is that the psychological toll causes otherwise better qualified individuals not to pursue a medical carreer and current doctors to leave the field. This reduces the quality of care marginally and increases the risk of real malpractice. Futhermore it has the cost of doctors being unwilling to go into certain fields, such as obstetrics and trauma. The lack of the former can result in long drives to hospitals where there is care and subsequent harm to the baby (increasing infant mortality); the latter can result in the lack of available care for victims of serious accidents. In both fields, there are areas where it is a four or five hour drive to the nearest qualified specialist. Neither of these can be solved by further government intervention in health care; only by correcting the abuses in tort law (loser pays is probably the best solution).

However, with the continued increase in cost, in the late 1970's the government decided that it had a fix for the problem. It was going to start encouraging Health Maintenance Organizations (HMOs). The theory was that by emphasizing preventative care, costs would drop. This HMO model, however, calls for a large monthly payment and a very small co-pay, often $2 or $3, with each office visit. Now the subsidized lunch has become practically free. When previously a mother would go to the drug store and pick up a $5 bottle of Dimetapp for her child, she now runs to the doctor, pays $2, and has a prescription equivalent given to her, along with the added assurance that there was nothing seriously wrong. Ditto for adults. If it is inconvient to get off work, just head down to the Emergency Room. It doesn't matter, after all, someone else is paying the bill. At this point, the elasticity is essentially 0. The patient is immune to the cost of health care.

At this point the connection between seeing a doctor and the cost of care has been totally seperated for many. Even though co-payments have increased to $20 in many cases, there is little disincentive left to take up the doctor's time with nuisance complaints. Imagine As a result, the cost of medical care has grown rapidly. This is an inherent problem with third party payers - the one initiating the expense has no apparent incentive to hold it down. Medical insurance has mutated from a catastrophic care policy to virtually full coverage. Imagine if you had full coverage on your automobile; when you had the oil changed or a tune up done it was paid by your insurance company. Imagine the cost of your homeowners policy if it covered routine lawn care. Automobile and homeowners insurance is as low as it is specifically because they are both catastrophic coverage, as all insurance should be.

All this is a series of attempts to correct one stupid policy in the 1940's - controls on wages. Had the controls never been placed, the actual cost of hiring an employee would have been lower, and we would not have this mess we have now. Because of the previous government intervention, we have people receiving medical services for pennies on the dollar, with the balance picked up by third parties; people sticking with current jobs because of pre-existing conditions; and people overusing what are essentially free services creating huge, unnecessary expenses. The solution is to eliminate incentives to continue the current third party payer system, not to replace it with a government run third party payer. Adopt laws that favor individual policy ownership with protections and create a disincentive to be a third party payer, transfering the cost of insurance and medical care to the insured, rather than insulating him from it. The first part has been done though the formation of Health Savings Accounts (HSA) in the recent Medicare bill. The latter has yet to be even seriously discussed in Washington.

"But," you ask...

"Isn't Health Care to precious to be left to the marketplace?" The response is obvious. What is more important to sustaining life, food or health care? Without food you will die in a few weeks at best. Without health care, you may live for many years. Yet food is provided in such abundance through the free market that one of our major chronic health problems is obesity, too much food.

"Aren't government run programs better and more efficient?" This depends on how you answer the question. In Canada, there is a two tiered system. Those who use the government run system and those like fromer Prime Minister Pierre Trudeau who came to the U.S. in order to get his heart surgery. There are those who spend months in bed waiting for surgeries such as hip replacements and bypasses who would get it within 24 hours in the U.S. The government, unable to allocate based on price, is forced to allocate via rationing. A graphic example of this is the case of a baby born in Toronto with a heart disorder called Transposition of the Great Arteries (TGA). If not treated immediately, it is a lethal defect, usually by one week old. If surgically corrected promptly, the children can lead long lives. The parents of this child were told that the child could get the surgery in three weeks - two weeks after he most likely would have been dead. The only reason the child survived is the parents contacted Children's Hospital of Philidelphia who agreed to do the surgery. Only after this hit the newspapers did the Toronto Hospital for Sick Children suddenly find they could squeeze the child in.

"If government run programs are not better, aren't they more humane to cover everyone?" This is a common falsehood. It is true that if two people are the same demographically and have the same illness, if one gets treatment, so will the other. However, there are treatments that are either not made available to everyone. Just ask anyone who needed dialysis in Britain and reached 65 prior to the legalization of a private health care system outside of the government run program. Wait... You can't. They are all dead. This is because in an effort to save money, there was no funding for dialysis for patients over 65. Anyone with kidney failure who could not move out of the country died shortly after turning 65. This is humane?

"But won't the cost savings to business make them more competative?" Someone has to pay. And government enterprises are notorious for being inefficient. Just compare any government school system to a private schools of the same quality. The private schools operate for much less. Someone will have to pay, and whether it comes out consumers through higher prices at the checkout line as it does now, or whether it comes through higher taxes taken out of your check giving you less to spend in the checkout line is irrelevant. The cost must be paid. And if you are a student of history, government, or economics, you know that the cost will be higher if it is first filtered through the government. Let's face it, it was the Air Force, not United Airlines that spent $400 for a toilet seat.

Conclusion

Government interference in the economy has never worked. It has not worked for housing, it has not worked for for wages, it has not worked for manufacturing, it has not worked for commodities, and it has not worked for health care. There is no reason to think that it will work if only the government interference is increased.

What has worked consistantly is the free market. Allocation of all things are given to those based on how much each person values it. When the government interferes, it automatically creates problems by providing services which are not as highly valued while eliminating services which are more highly valued. But this is the precise reason for the interference. Once these problems become apparent, the government, instead of backing off completely, increases its regulation leading to even more problems. This sort of approach gave us a recurring social security "crisis", gas lines in the 70's, the S&L debacle in the 80's, and ballooning health costs becoming widely apparent in the 90's. Albert Einstein once said that the definition of insanity is doing the same thing and expecting different results. Government controls of the market have never worked. Why should the health care market be any different?

TANSTAAFL,

John
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Author: erikinthered100 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8888 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 6:07 AM
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Great post.

Its all about the basic fundamentals of supply and demand.

Government interference is THE major cause of our current chaotic healthcare market place - not the solution.

America's prosperity was built on the strength of its freedoms including free markets. Its time we applied this principle to healthcare.

wolvy

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Author: BMNEELY Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8889 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 6:37 AM
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John,

Great post. I am surprised there has been less of a response to it. I mean I would fully expect some rabid outpouring for those that feel everything is an entitlement from the government, but don't understand the consequences. I think half of them don't even realize that the money has to come from somewhere to pay for this stuff.

Now as far as this goes
Let's face it, it was the Air Force, not United Airlines that spent $400 for a toilet seat.

We have to be fair to the AF you know that was a 20 g rated toilet seat to go along with the 20G rated coffee pot...on cargo planes that would fall apart pulling more than 5g (I am guessing). I think the only things that would survive a severe crash are the toilet seat and the coffee pot.

Ben

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Author: Pituophis Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8891 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 9:29 AM
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wow JG, great post! You raise the bar for everyone!

I might quibble with some conclusions but I definitely agree with the main premise that the free market sorts things out best.

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Author: goofyinMD Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8892 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 9:39 AM
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I don't mind the fact that you've totally missed the point about health care but I refuse to allow you to revise history

1 The S&L crisis was caused by crooked and incompent bankers in league with the inept Reagan administration. Reagan removed the watchful eye of the banking regulators and the American people were stolen blind.

2 There is no "Social Security Crisis". There is the crisis of gutless Pols refus9ing to raise income or other taxes to support illegal wars, and pork barrel military spending. Social Security is in a huge surplus which is stolen for other purposes.

3
All this is a series of attempts to correct one stupid policy in the 1940's - controls on wages. Had the controls never been placed, the actual cost of hiring an employee would have been lower, and we would not have this mess we have now.

Those controls ushered in the most prosperous and fair era in US economic history. Or maybe you'd prefer th inequalities that existed in the Depression. The Depression being the exclamation point on the free markets of the 20's.

I have no doubt prices can be lowered in a free medical market. Millions would be excluded from the pricier, albeit life saving, medical treatments available now. But for thoose who could still afford tripple bypass surgery or kidney dialysis, the prices would undoubtedlt be lower. Those that couldn't can do the proper thing and die.



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Author: StringCheeseMark Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8896 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 10:53 AM
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John,

While I may disagree with you on a few points with regard to the "solutions" for the health care mess I think this is an excellent summary of the history of health care economics explaining how we got here and why there is a disconnect between health care value and health care expense. Very thought provoking.

scm

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Author: StringCheeseMark Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8897 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 11:01 AM
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I have no doubt prices can be lowered in a free medical market. Millions would be excluded from the pricier, albeit life saving, medical treatments available now. But for thoose who could still afford tripple bypass surgery or kidney dialysis, the prices would undoubtedlt be lower. Those that couldn't can do the proper thing and die.


<><><

So which is worseon an ethical basis: 1)denying life extending dialysis to those over 65 based on government decree or 2) denying any life saving procedures to anyone who can't afford to pay? One problem with a complete free market approach to health care is that physicians remain ethically obligated to provide care to those who can't afford to pay for it. We do it now. We'd just have to do it more if the market abrubptly became free.

scm

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8899 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 12:06 PM
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Great post. I am surprised there has been less of a response to it. I mean I would fully expect some rabid outpouring for those that feel everything is an entitlement from the government, but don't understand the consequences.

I expect it might come in the not too distant future. Remember, its a weekend now, and there are fewer people reading the boards; after all, they are at home, not at work. ;^)

But hey, spread the word - provide a link. I would love to have the word get out. Some of them out there just might learn something. One post on PA should do it. ;^)

John

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8900 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 12:24 PM
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wow JG, great post! You raise the bar for everyone!

Counsidering our previous discussion, coming from you this is high praise indeed, and very much appreciated.

I might quibble with some conclusions...

That's what makes the world work. If everyone agreed on everything, the world would be a very boring place to live.

...but I definitely agree with the main premise that the free market sorts things out best.

Out of curiosity, where is the disagreement? This sounds to me like you generally agree, but have some minor disagreements. Is it something along the lines of erroneous dates, or is it more significant? If you want to reply via e-mail, that's fine with me too.

John

P.S. Where did you get your screen name? If I remember correctly "Pituophis" is a genus of snakes.

<posted and e-mailed>

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8901 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 12:55 PM
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I don't mind the fact that you've totally missed the point about health care but I refuse to allow you to revise history

You might want to try and read what I wrote, instead of what you wanted me to write. Let's take your complaints one-by-one:

The S&L crisis was caused by crooked and incompent bankers in league with the inept Reagan administration. Reagan removed the watchful eye of the banking regulators and the American people were stolen blind.

Ignoring the superfluous vitriole directed at Reagan, you will get no disagreement from me. If fact, I stated as much:

The risk was deregulated, the insurance was not. So there was all sorts of incentives to speculate. ... Paul Pilzer (a member of the Reagan's board of economic advisors) even warned about prior to it happening. When Congress ignored him, he wrote a book, Other People's Money which came out shortly before the S&L debacle and bailout...

The risks that the S&L's could take were deregulated; but the cost to the S&L's for taking risks continued to be regulated, and by doing so, shifting the cost to others. The result is generally converting from a fully regulated industry to a highly industry where risk is highly subsidized, leading to unnecessary risks. This meant that the S&L's could take increased risk, but would not have to bear the cost of the increased risk; they would receive the benefit if they were right, they would lose nothing if they were wrong - FSLIC would pick up the tab....

...These perverse incentives result in effective, if not direct subsidies and are caused by the government tends to relinquish authority while maintaining ultimate responsibility. While regulation in general is usually counter-productive (I can't think of an example where it is not, though I'm sure there is one or two examples out there), partial regulation, when resulting from partial deregulation, is almost always a problem because of the incentives created.


The only thing that is lacking for my discussion that was present in yours is a deep seated need to blame everything bad on Republicans and the successful.

There is no "Social Security Crisis". There is the crisis of gutless Pols refus9ing to raise income or other taxes to support illegal wars, and pork barrel military spending. Social Security is in a huge surplus which is stolen for other purposes.

This would make sense were it not for the fact that the money was being used for other purposes long before any so-called "illegal" wars. The money has been "stolen" since Social Security was founded in the 1930's in order to pay for the nanny state and other collectivist agendas. To attempt to blame Bush for problems that started before he was even born is absurd.

JG: All this is a series of attempts to correct one stupid policy in the 1940's - controls on wages. Had the controls never been placed, the actual cost of hiring an employee would have been lower, and we would not have this mess we have now.

GoofyMD: Those controls ushered in the most prosperous and fair era in US economic history. Or maybe you'd prefer th inequalities that existed in the Depression. The Depression being the exclamation point on the free markets of the 20's.

Actually, if you bothered to examine the actual data, you will find this is patently false. The Unemployment was recovering in 1933 until the minimum wage law was passed; then it went back up. When the law was struck down by the courts, unemployment again started to recover. After FDR appointed enough justices who would uphold the New Deal programs, it was passed again, and unemployment again went up.

GDP was recovering before any New Deal program was passed, having turned the corner in 1933. After reaching a low of $56.4 billion it rose to $91.9 billion in 1937, when the courts upheld the intrusions in the free market. Then it dropped again the following year by over 6%.

I have no doubt prices can be lowered in a free medical market. Millions would be excluded from the pricier, albeit life saving, medical treatments available now.

An assertion for which you have absolutely no justification other than your (apparent) belief in the failed policy of socialism.

Those that couldn't can do the proper thing and die.

That is a very cold-hearted approach for you to take, but something totally in keeping with the rest of your post. I know that I, for one, would not allow that to happen. I have a long history of providing free treatment to those who are unable to afford going to a doctor. In keeping with the tone of the remainder of your post, I can only conclude that if the government is unwilling to force the costs on others against their will, you are unwilling to use your own time and money to do what you believe is right.

John


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Author: alchook Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8902 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 1:12 PM
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While no one would pay $1000 to have a cold treated, that price would be considered a bargin for the successful treatment of cancer.

I would pay $1000 to have a cold treated, if by treated you mean cured immediately.

So would lots of people.

In Canada, there is a two tiered system. Those who use the government run system and those like former Prime Minister Pierre Trudeau who came to the U.S. in order to get his heart surgery. There are those who spend months in bed waiting for surgeries such as hip replacements and bypasses who would get it within 24 hours in the U.S.

I'm not sure the comparison is valid. Canada, when I last checked, was spending about a third less per capita on health care. The question, then, is whether the shortages you describe are caused by the system or by the fact that the system spends less money.

In other words, how would the Canadian health care system function if it were funded to the same extent the American system is funded?


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Author: MasonMcDan Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8903 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 1:12 PM
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I know that I, for one, would not allow that to happen. I have a long history of providing free treatment to those who are unable to afford going to a doctor.

Aside from poor people (who will have free health care) and rich people (who can afford any kind of health care), how about people that can marginally afford to go to the doctor, and maybe own enough assets to just cover a catastrophic illness like cancer or heart surgery? I have a gut feeling that's most of America.

But considering that most of America will have more than one catastrophic health crisis in their family during their lifetime (if they are a family of more than one person), how do we help those that can marginally afford health care?

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Author: MSHH Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8905 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 1:33 PM
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In other words, how would the Canadian health care system function if it were funded to the same extent the American system is funded?

You are wasting your time. Libertarians aren't interested in facts. Ideology is all that's important.

They obviously know nothing about the Canadian healthcare system and how it works.

Even most conservatives long ago realized that the best way to pay for a lighthouse is not to have the keeper row out to collect a toll from every passing ship that has been kept off the rocks by the light.

Libertarians still have that discovery ahead of them.


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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8908 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 1:59 PM
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While I may disagree with you on a few points with regard to the "solutions" for the health care mess I think this is an excellent summary of the history of health care economics explaining how we got here and why there is a disconnect between health care value and health care expense. Very thought provoking.

Considering it was your post on the Physician's board, and the post to which you linked on the Foolish Collective board that was the "straw" that caused me to expound at length on the topic, I greatly appreciate your response.

Hopefully, the thinking that was provoked will cause you to eventually agree with my proposed solution. ;^)

John

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Author: eboller Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8909 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 2:11 PM
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I'm not sure the comparison is valid. Canada, when I last checked, was spending about a third less per capita on health care. The question, then, is whether the shortages you describe are caused by the system or by the fact that the system spends less money.

In other words, how would the Canadian health care system function if it were funded to the same extent the American system is funded?


Nearly anything can work if it can be properly funded. If the Canadian system isn't being properly funded then why is that?

Eric

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Author: eboller Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8910 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 2:12 PM
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They obviously know nothing about the Canadian healthcare system and how it works.

Please enlighten us.

Eric

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8911 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 2:13 PM
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So which is worseon an ethical basis: 1)denying life extending dialysis to those over 65 based on government decree or 2) denying any life saving procedures to anyone who can't afford to pay?

This is an easy question. (1) is worse. If government decree is used, there is no possibility of getting what you need. If the government regulations (or worse, a mid-level bureaucrat with discretion whom you can't convince with reason or bribe) say you cannot get the care, you cannot get the care - it necessarily excludes alternative options for obtaining medical care. (2), a distorted representation of the free market approach (as you subsequently pointed out) allows for the possibility of care through charity. This could be charity provided by the doctor ("I'll treat you at no cost"), through the pharmacuetical industry ("Here are your meds"), through friends or charities ("We'll cover his costs"), or through some other voluntary means. Under a free market system there is substantial hope and expectation that you will get what you need. The major difference is that under a free market, you will not be able to run up a $300 ER bill for your kid's earache or otherwise waste money, there will be much lower compliance costs, and most importantly, there will be less waste of services; those who are receiving the service will be footing the bill and keeping a closer eye on it than any third party.

John

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8912 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 2:33 PM
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The question, then, is whether the shortages you describe are caused by the system or by the fact that the system spends less money.

The two are inseperable. The system is why the system spends less money.

In other words, how would the Canadian health care system function if it were funded to the same extent the American system is funded?

This is theoretical, but probably not as well. With government controls comes waste, rationing, and worse still, a one-size-fits-all approach. Is it possible for a government bureaucracy to do the following and still provide the same level of care?

* Pay doctors, nurses, etc. a competative wage to keep the good ones from seeking greener pastures.
* Provide flexability in pricing and payments that respond as quickly as the free market
* Allow for personal choice
* Allow for individuals to sidestep the government decrees as to what is best for them
* Not impose a regulatory burden with violations punishable by loss of freedom and/or ability to practice and still maintain control
* Support the government bureaucracy

I don't think it is posible, especially considering the last point. Remember:

* If a private enterprise spends too much, the solution is to cut costs; if a government enterprise spends too much the solution is to increase the budget.

* If a private enterprise fails to provide a wanted service, it goes out of business; if a government enterprise fails to provide a wanted service, it increases its staff.

* If a private enterprise wants to reduce spending, it increases efficiency; if a government enterprise wants to reduce spending, it issues a mandate and uses its monopoly to force others to accept less pay (price controls) or less service (rationing).

* If a private enterprise wants to increase profits, it strives to increase its efficiency; a government enterprise has no profits, so it has less incentive to strive for efficiency.

* A private enterprise strives for efficiency in meeting the goals of its customers (or patients in this case) so that it may grow more profitable; a government enterprise strives for increasing its budget under the guise of meeting the goals of its customers so that it may maintain its power and grow more powerful.

In short, the very nature of private vs. government enterprises makes it very unlikely that, given the same per capital expenditures, the Canadian system would be as efficient and capable as the American one. But due to the very nature of a governmental system, it never will be.

John

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8913 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 2:38 PM
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Aside from poor people (who will have free health care) and rich people (who can afford any kind of health care), how about people that can marginally afford to go to the doctor, and maybe own enough assets to just cover a catastrophic illness like cancer or heart surgery? I have a gut feeling that's most of America.

It is called insurance. The cost of catastrophic care is surprisingly affordable. I am currently paying about what I would pay for cable with the premium channels and internet access (I don't actually have cable, BTW), or about half of my summer electric bill or winter gas bill. This was addressed in the essay.

John

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Author: alchook Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8919 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 5:15 PM
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The two are inseperable.

They aren't.

If desired the Canadians could vote tomorrow to increase spending by 35%. Okay, maybe not tomorrow. But they could sometime.

With government controls comes waste, rationing, and worse still, a one-size-fits-all approach. Is it possible for a government bureaucracy to do the following and still provide the same level of care?

* Pay doctors, nurses, etc. a competitive wage to keep the good ones from seeking greener pastures.
* Provide flexibility in pricing and payments that respond as quickly as the free market
* Allow for personal choice
* Allow for individuals to sidestep the government decrees as to what is best for them
* Not impose a regulatory burden with violations punishable by loss of freedom and/or ability to practice and still maintain control
* Support the government bureaucracy

I don't think it is possible, especially considering the last point.


The last point is the least valid, and is, in fact, completely incorrect. US Medicare administrative costs are about a fourth of those in the private sector.

http://www.medicarewatch.org/2001Basic/Whats_Right-5.html

In short, the very nature of private vs. government enterprises makes it very unlikely that, given the same per capital expenditures, the Canadian system would be as efficient and capable as the American one. But due to the very nature of a governmental system, it never will be.

It depends what you mean by “efficient” and “capable.” If you walk into my office tomorrow with a hernia I can probably get it fixed for you within a week. In Canada, I hear, you might be put on a waiting list for a year or more.

So which system is efficient? It sounds as if we get the efficiency nod, because we can cure your problem much more quickly. The reason we can do that, though, is because we have a huge surplus of operating room time, with built-in excess capacity, leading to equipment and personnel being under utilized. That's not exactly efficient.

Much is made of stories involving Canadian hospitals shipping patients to the US for heart surgery. In fact, from a strict business perspective, that's probably an economically sound move. Heart surgery, unlike hernia surgery, may not be a possible to put off for a year or more. And because of the emergent nature of many of the procedures, the only way to guarantee that a community can serve a sudden increase in demand for heart surgery is to have an excess capacity, which, again, is inefficient.

Of course, if I were trying to develop a heart surgery system in say, Windsor, Ontario, I might take into account the number of idle operating suites across the river in Detroit. The financially savvy call may be to produce a system that can handle the average volume of heart surgery Windsor can expect, knowing full well that should we suddenly have a need that our hospitals cannot meet we can make use of the over supply in Detroit, whose hospitals and surgeons will be only too glad to take care of our overflow.

There are, of course, other considerations, namely productivity and quality of life. For instance, my health wouldn't be impaired if I had to put off a hernia repair for a year. On the other hand, if that meant losing a year of golf and snowboarding my life wouldn't be as good as it might be otherwise. Is that type of thing worth spending a third more money on health care? I guess, frankly, I think that it is. Maybe Canadians don't.

But some of that is subjective and depends on what your goals are.

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Author: AjaxofTelamon Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8920 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 5:20 PM
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Supply, Demand, Profit and Shortages [SNIP]

Government interference does a number of things.

But we also have the American Medical Association controlling and limiting the number of Medical Schools - and therefore the supply of physicians - in the USA.

As a result, the practice of medicine is not part of a free market system.

Consequently, government controls and regulations are unavoidable.


-=Ajax=-


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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8922 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 6:38 PM
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The reason we can do that, though, is because we have a huge surplus of operating room time, with built-in excess capacity, leading to equipment and personnel being under utilized.

Where? Every hospital that I've ever worked in, been in, etc, excluding tiny rural hospitals, use their operating rooms all day, every day. The tiny rural hospitals usually have one operating room. Since emergency surgeries during the day invaritably result in delays in scheduled surgery, these ORs clearly do not have excess capacity.

Much is made of stories involving Canadian hospitals shipping patients to the US for heart surgery.

And if we followed the Canadian model, where would the Canadians send them, and where would we?

In fact, from a strict business perspective, that's probably an economically sound move. Heart surgery, unlike hernia surgery, may not be a possible to put off for a year or more.

Yet some how the Canadians seem to do that too. It increases morbidity, but if you want to call that economically sound, I won't argue. It is, however, inhumane.

And because of the emergent nature of many of the procedures, the only way to guarantee that a community can serve a sudden increase in demand for heart surgery is to have an excess capacity, which, again, is inefficient.

I've been working in hospitals and doctors offices for over 12 years. The demand for heart surgery is fairly constant, and it is easy to determine the number of operating rooms that will be needed. Canada, in an effort to control costs, elects not to provide the needed rooms, causing long waits. There is no excuse for long waits (more than a couple of weeks) for any surgery. Excessive waits are inhumane attempts to restrict access to medical care.

But some of that is subjective and depends on what your goals are.

In America, you can make the choice. In a government monopolized medical system, you can't. That is the difference.

John

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8923 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 6:44 PM
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But we also have the American Medical Association controlling and limiting the number of Medical Schools - and therefore the supply of physicians - in the USA.

As a result, the practice of medicine is not part of a free market system.


I agree the practice of medicine is not pure free market; there is government enforced restraint of trade. (It is against the law to practice medicine without a license.) The government should get out of licensing of doctors, and allow for private organizations to do certification (as it currently done for all specialties). But this is yet another example of trying to fix government interference in the market through additional interference.

Consequently, government controls and regulations are unavoidable.

They are quite avoidable. They government just does not want to give up their power, and the AMA is lobbying to keep from losing the control they have over the profession. The complicity is harmful to consumers, but requires the aid of the government. The government should stop providing it.

John

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Author: JustCallMeTodd Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8925 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 7:27 PM
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Good post John. And I only had to use my p-box twice!

Todd

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Author: alchook Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8927 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 8:33 PM
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Every hospital that I've ever worked in, been in, etc, excluding tiny rural hospitals, use their operating rooms all day, every day. The tiny rural hospitals usually have one operating room. Since emergency surgeries during the day invariably result in delays in scheduled surgery, these ORs clearly do not have excess capacity.

That's not been my experience. I'm a shareholder of the busiest surgery center in Illinois. Or maybe it's second busiest, I forget. But it does about 10,000 cases a year. In the morning the rooms run to capacity, but there's always plenty of open time in the afternoons.

I've been practicing surgery for 20 years now and can't ever remember a time when it took more than a week to schedule an elective case. That wouldn't be the case if everything were running at full capacity.

And if we followed the Canadian model, where would the Canadians send them, and where would we?

Obviously that wouldn't work here. It may be a smart move for the Canadians, though.

There is no excuse for long waits (more than a couple of weeks) for any surgery. Excessive waits are inhumane attempts to restrict access to medical care.

I do bariatric surgery in America. Long waits are the rule, as private insurance companies do everything they can to prevent access to the procedures.

Interestingly, the only patients I can get scheduled quickly have either Medicare or Medicaid. As a result, about 90% of my volume for this operation is Medicaid.

If you want to see red tape, bureaucracy, and stonewalling in play look at how the private sector approaches these patients.

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Author: MadCapitalist Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8928 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 9:18 PM
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I don't mind the fact that you've totally missed the point about health care but I refuse to allow you to revise history

I can't believe that this post got so many Rec's. When worthless rhetoric gets that many Rec's, it would suggest that a lot of people from the Political Asylum board must have stopped by.

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Author: MadCapitalist Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8929 of 23781
Subject: Re: Economics and Health Care Date: 6/20/2004 9:21 PM
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You are wasting your time. Libertarians aren't interested in facts.

It sometimes appears that we are the only ones that are. Liberals certainly aren't.

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Author: AjaxofTelamon Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8930 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 12:27 AM
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I agree the practice of medicine is not pure free market; there is government enforced restraint of trade.

Historically, it is the American Medical Association that is lobbying for such "restraint of trade" - mostly in the name of quality health care and somehow ending with a monopoly for its members.

It is for this reason that I have no problem with regulation of the medical industry.

As an aside, the following is from:

http://www.ama-assn.org/amednews/2002/01/21/prl20121.htm

If the pace of medical education remains unchanged, the United States soon will be facing a shortage of physicians that will become progressively more severe, leading to a deficit of 200,000 physicians by 2020, according to a study in the January/February Health Affairs.

Using a newly developed physician supply trend model, researchers said the data debunk predictions over the past 20 years that there would be a 15% to 30% surplus of specialty physicians by 2000. A surplus of physicians, previous studies warned, could increase health expenditures and have a negative impact on the economy.



-=Ajax=-


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Author: StringCheeseMark Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8936 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 12:55 AM
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Hopefully, the thinking that was provoked will cause you to eventually agree with my proposed solution. ;^)

<><>

I don't know if I'll end up agreeing with you but one cannot ever be certain about one's hypothesis if one never considers the opposing view. Our current health care system and the byzantinne method of financing it is so messed up that we can ill afford to consider all views on the matter.

scm

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8938 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 1:57 AM
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I've been practicing surgery for 20 years now and can't ever remember a time when it took more than a week to schedule an elective case. That wouldn't be the case if everything were running at full capacity.

If you can't schedule the surgery by close of business tomorrow, it is running at capacity. If it was not running at capacity, you would typically be able to schedule on a day's notice.

If you want to see red tape, bureaucracy, and stonewalling in play look at how the private sector approaches these patients.

No doubt about it. However, the problem is due to a third party paying the bills. When the government is paying the bill, it is someone else's money, so controlling costs is not a significant issue; therefore Medicare and Medicaid often don't try to control costs. (In Georgia, getting Medicaid approval is easy, getting the money is hard.) The senior lobby (e.g. the AARP) is a powerful lobby, so Medicare is generous.

OTOH, private insurance if funded, for the most part, by private companies. These companies want to provide medical coverage as cheap as possible. Remember, the insurance company's customer is not the patient, but the employer in these cases. And the employer is not concerned about the employees getting top quality service, but are concerned about keeping the cost down while offering medical coverage. This is the essence of the problem, and this is why the government should stop providing incentives for employer provided insurance, and start providing incentives (if it is going to provide any at all) for individual ownership of insurance. The patient should be the insurer's customer; if service is lousy, they can change companies.

John

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8939 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 2:07 AM
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Historically, it is the American Medical Association that is lobbying for such "restraint of trade" - mostly in the name of quality health care and somehow ending with a monopoly for its members.

It is for this reason that I have no problem with regulation of the medical industry.


While it is true that the AMA has lobbied for restraint of trade (for that and other reasons I refuse to join), there is no requirement like there is in law for practicing doctors to be a member. As I have stated, I don't agree with such regulation. However, I don't see how it follows because there is that element of interference with the free market necessitates all of the other myriad of regulations. Why does the licensing and accredidation requirements justify CLIA, HIPPA, and the many other restrictions?

John

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Author: zsimpson Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8940 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 2:11 AM
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They obviously know nothing about the Canadian healthcare system and how it works.

The one thing I know about the Canadian system is that I see a lot of Canadians coming to the US for treatment, but I don't see Americans going to Canada for treatment.
That says it all.


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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8941 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 2:15 AM
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Our current health care system and the byzantinne method of financing it is so messed up...

Agreed

...that we can ill afford to consider all views on the matter.

Don't you mean "...that we can ill afford not to consider all views on the matter"? If so, I agree. After due consideration, I have reached my conclusion, subject to change with new information.

John

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Author: zsimpson Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8942 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 2:16 AM
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Much is made of stories involving Canadian hospitals shipping patients to the US for heart surgery. In fact, from a strict business perspective, that's probably an economically sound move. Heart surgery, unlike hernia surgery, may not be a possible to put off for a year or more. And because of the emergent nature of many of the procedures, the only way to guarantee that a community can serve a sudden increase in demand for heart surgery is to have an excess capacity, which, again, is inefficient.

Of course, if I were trying to develop a heart surgery system in say, Windsor, Ontario, I might take into account the number of idle operating suites across the river in Detroit. The financially savvy call may be to produce a system that can handle the average volume of heart surgery Windsor can expect, knowing full well that should we suddenly have a need that our hospitals cannot meet we can make use of the over supply in Detroit, whose hospitals and surgeons will be only too glad to take care of our overflow.


So basically the reason the Canadian system works so well is because they are able to pawn their really sick cases to the US???

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Author: erikinthered100 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8943 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 4:08 AM
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Goofy,

You write:

"Millions would be excluded from the pricier albeit life saving, medical treatments available now."

You completely misunderstand the entire debate.

I don't think anybody is suggesting a completely unfettered free market without safety nets for those in need.

There is certainly a role for government in providing for the truly indigent in need of urgent life or limb saving medical care.

You also write:

"Those that couldn't can do the proper thing and die."

This scenario is far less likely in a system which is primarily based on a free market able to respond to changing consumer demand.

A system primarily controlled by disinterested government bureaucrats arbitrarily adjusting supply based on budget concerns and guesses at consumer demand predictably and systematically results in the heartless scenario you describe. Only free market forces are able to efficiently match supply and demand and optimize consumer satisfaction.

Give the patient control over his health care dollar - not some uncaring far away penny-counting clock-watching government or insurance company clerk!

Once the consumer has more direct control over their healthcare dollar, just watch how quickly the healthcare system jumps through hoops to deliver better care at an attractive price!

If you truly understand the basic principles of market forces, why do you persist in suggesting that we pursue health care policies in direct contradiction to these principles!!

As the entire breadth of history attests, freer markets result in both higher quality and lower priced products! Sure there may be more inequity than in a "one-size-fits-all" government controlled marketplace, but almost all would be better off. Its a matter of choosing a freer system with A,B and C levels of care over a repressive system with D level care for all.

As a healthcare professional, I can attest that the original post illustrated quite well other factors such as a chaotic and uncontrolled civil legal system and third party payment which plague the current heatlhcare system.

You are the one that totally "missed the point about health care."

wolvy



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Author: goofyinMD Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8944 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 7:56 AM
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This would make sense were it not for the fact that the money was being used for other purposes long before any so-called "illegal" wars. The money has been "stolen" since Social Security was founded in the 1930's in order to pay for the nanny state and other collectivist agendas. To attempt to blame Bush for problems that started before he was even born is absurd.

Why do you assume I am blaming Bush. Did I mention his name anywhere. We've used SS as a regressive tax from the day the revenues started to exceed the outflows. SS was meant to be a pay as you go program. The problem wiht SS is not that it is in trouble but rather it is used as a tax to support other government activities, something that its originators never intended.

The only thing that is lacking for my discussion that was present in yours is a deep seated need to blame everything bad on Republicans and the successful

This tells me all what you are about. What a sad view of th world you have. Imagine waking up everyday and thinking people resent success.





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Author: RaplhCramden Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8946 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 9:00 AM
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You are wasting your time. Libertarians aren't interested in facts.

It sometimes appears that we are the only ones that are. Liberals certainly aren't.


It doesn't seem to be WHICH label that determines whether the individual is interested in facts, but rather just how tightly they have affixed their chosen label to themselves.



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Author: LuceLu Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8947 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 9:06 AM
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John, once again you have taken on a complex subject and offered us a valuable logical analysis.

And, being a doctor, you have the misfortune of first-hand experience with reimbursement. Medicaid may as well mean free where I work--I think our doctors get $3 for each medicare patient they round on.

It is refreshing to hear from a medical professional a solution that doesn't call for socialized healthcare.

I work at a hospital that is a Level 1 Trauma Center. We are a state hospital that serves 15 counties. Believe me, there are no excess OR times available. We are lucky if our inpatients go in on time. I work in oncology but we get many off-service patients on our floor. I witness inefficiency and waste every day I work. We once had a director who was making some positive changes merely by increasing compliance to discharge times and bed availability.--Getting patients discharged home by 11 am. He was run out due to politics. You may know him by reputation and celebrity-- Dr. Roizen or RealAge fame.

I cannot say that I am totally opposed to some controls on use of services though. Personally, I have seen doctors consent to very expensive treatments on individuals who have very little chance of success merely because Medicare will compensate. For example, attempting induction for bone marrow transplant on a 92 year old woman is wasteful and irresponsible and, of course, it was a failure. BUT, there are many new innovations that we have had real success with.

For example: Gamma Knife interventions to remove brain tumors and now we have the new Intuitive DaVinci surgical robot--http://www.upstate.edu/uh/ce/cardiovascular/mis/davinci.php (which is very exciting). Innovations like this can cut down on the overall costs of healthcare by decreasing risks once the initial investment has been satisfied. In a socialized setting, where would the motivator be to create such technology? The $1.2 M DaVinci (like many other therapeutic and clinical tools, drugs etc.) was used in Europe first due to the FDA's slow regulatory process, but once approved, the US was not slow in adopting it. In 2002, the US had 50 in use, while Europe had 34. While Canada does have the DaVinci technology available to its citizens, we still get her patients for procedures. See http://www.anac.ca/messages/267.html
http://www.anac.ca/messages/234.html

Now it seems they are getting one. http://www.wd.gc.ca/mediacentre/2004/mar17-01a_e.asp

There are over 210 of these robots worldwide with the United States containing over 70% of them. Since Intuitive (out of California, and publicly traded--ISRG) has purchased it's chief rival, the field is open for some competition that could possibly decrease the cost of this technology but not anytime soon.

While the Canadian system may have less frivolous admissions, and a smaller number of unnecessary procedures secondary to defacto rationing, I think that a free market system would lead to people making those choices for themselves as long as they are provided adequate information regarding not only the straight facts about their diagnosis, but also their expected expenses and impact upon their lives. Freedom to make that decision for oneself -- regarding your health--now that is a concept I could get behind. I would love for our patients to have more self-determination rather than the entitlement -"do everything for me--I am not responsible--but if I don't like the result, I'll sue" approach.

Unfortunately, we do not even come close to giving our patients the information they need in order to make good decisions. This is something that doctors, nurses, social workers, discharge coordinators and business office professionals need to work together on. Although, I have to admit, many times they don't want the information because they are in a crisis mode and unable to comprehend the day, nevermind the future. But that is another post entirely regarding the worldview and culture of healthcare in this country.

LuceLu

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8948 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 10:22 AM
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Why do you assume I am blaming Bush.

To whom does the following statement apply:

There is the crisis of gutless Pols refus9ing to raise income or other taxes to support illegal wars, and pork barrel military spending.

To what "illegal war" were you referring?

The problem wiht SS is not that it is in trouble but rather it is used as a tax to support other government activities, something that its originators never intended.

This is a hard statement to justify, considering that it was used to support other government activities from the first dollar collected. But it would be interesting to see you try.

This tells me all what you are about. What a sad view of th world you have. Imagine waking up everyday and thinking people resent success.

I don't think that "people" do. I think you do. Go back and reread your post - my only exposure to you - and see if you can figure out why.

John

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8950 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 11:12 AM
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And, being a doctor, you have the misfortune of first-hand experience with reimbursement.

Actually, I have managed to avoid it thus far. I have never filed an insurance claim in my life, I have continually be paid a fixed rate on a contract basis, or paid cash. It has been difficult to achieve, but I refuse to link my reimbursement to the whims of some bureaucrat somewhere.

Believe me, there are no excess OR times available.

Yeah, I know. I'm reemphasizing this to point out that if DrGoofy does see excess capacity it is an exception. As usual, the remainder of your post was clear, informative, and otherwise excellent.

John

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Author: sonofed Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8951 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 11:26 AM
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1 The S&L crisis was caused by crooked and incompent bankers in league with the inept Reagan administration. Reagan removed the watchful eye of the banking regulators and the American people were stolen blind.

Around 15% of the S&L liability was the result of fraud. 85% was the result of well-intentioned government interference in the market.

The S&Ls were hobbled by regulation in a way that was making it very likely they would all fail. The interest rates S&Ls could offer depositors were capped by law. In the late 70s and early 80s, money markets began offering market interest rates and began sucking deposits away from the S&Ls. Without deposits, the insitutions couldn't lend new money.

Couple that with a decline in the value of their mortgage loan assets as interest rates rose, and you have a recipe for insolvency.

The deregulatory action taken in the late 70s was designed to address this shortcoming, essentially removing interest rate caps on S&Ls. Interest rates continued to rise, however, and the problem got worse.

Regulators took a look at the problem in the early 80s and concluded that enforcement of current regulations would have bankrupted FSLIC and required the closure of hundreds of institutions.

The alternative was to ease those regulatory requirements and allow S&Ls to diversify into other, riskier financial markets. That was the path they chose, and so the industry was "deregulated". The required minimum asset base was lowered and restrictions on investment categories were loosened.

That led S&L owners to try their hands at much riskier investments in an attemt to improve their financial positions, including speculative land development deals. Depositors didn't care because FSLIC had increased their deposit coverage from $40K to $100K, so they were funneling safe money into risky S&Ls - essentially taking a shot at higher returns with zero risk.

There were sporadic attempts to reregulate the industry to control some of the rampant speculation in 1984 and 1986, but they were too little too late and given the insolvency of FSLIC bore a serious risk of bringing down the whole S&L system. Turns out the system collapsed anyway.

It wasn't a question of fraud or being "in league" with the Reagan administration. It was a question of government regulation causing rigidity that crippled the S&Ls financially in the 70s and opened the floodgates to a disaster once the regulations were loosened in a dangerous economy.

2 There is no "Social Security Crisis". There is the crisis of gutless Pols refus9ing to raise income or other taxes to support illegal wars, and pork barrel military spending. Social Security is in a huge surplus which is stolen for other purposes.

Is Social Security in crisis? No, but the accrued Social Security liability does threaten to create a larger economic crisis when it comes time to start paying it back.

The issue is that there is no where for Social Security revenues to go except the general fund. You can't invest them in private industry without nationalizing the economy. Government debt is the only place to invest, so that's what the SS system does. Politicians have no choice but to spend the money, because again, they can't put it anywhere else.

Its not a great solution, and it has created an enormous underfunded liability in the form of promises to baby boomers that threaten to create severe economic problems when they come due. However, there isn't an alternative that I can see.

What would you suggest doing with SS revenues that would be different?



Those controls ushered in the most prosperous and fair era in US economic history.

No, they didn't and I think you need to show how that could be possible if you want to assert this point. The "most prosperous and fair era in US economic history" was a direct result of our having the only functioning industrialized economy after WWII and the economic system constructed at Breton Woods.

That period lasted until other nations rebuilt their infrastructures, and then we started to return to a more normal economy.

It wasn't wage or price controls that led to the prosperity of the 50s and 60s.

Steve

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Author: Pituophis Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8956 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 1:23 PM
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Out of curiosity, where is the disagreement? This sounds to me like you generally agree, but have some minor disagreements. Is it something along the lines of erroneous dates, or is it more significant? If you want to reply via e-mail, that's fine with me too.

A little late getting to this but - really my quibbles were more with things you didn't talk about in regard to the so-called health care crisis - but that wasn't really the point of your post, so I didn't think the quibble was worth it - and honestly, I simply don't have the time that I know it would take to quibble with you about anything <VBG>.

P.S. Where did you get your screen name? If I remember correctly "Pituophis" is a genus of snakes.

DING! Give the man a cupie doll. I was quite involved with the study of that genus six years ago when I chose that moniker. Literally, the name is from the latin Pitu (pine) + ophis (snake). If I do say so myself, I am one of the foremost experts on the genus, particularly on the black pine snake - Pituophis melanoleucus lodingi which I will be proposing to elevate to full species status (P. lodingi).

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Author: JustCallMeTodd Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8957 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 1:25 PM
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I can't believe that this post got so many Rec's. When worthless rhetoric gets that many Rec's, it would suggest that a lot of people from the Political Asylum board must have stopped by.

An interesting aside personal observation that I've made, among those of us who are L/libertarians there is quite often disagreement as well as agreement. Between the vast majority of left/liberal posters you rarely see disagreement. Just an observation for what it's worth.

Todd

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Author: deanwoodward Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8958 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 1:28 PM
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JG,

Great post -- factually and logically correct, which is why all the socialists will be so anxious to vent their spleens all over you. They simply cannot accept the argument that the free market is a better provider of goods and services than the Government.

Obviously, you've developed quite a following. (Just don't let the socialists know that you're sporting a crown now. They'll REALLY be pissed off then.)

Dean

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Author: coyote97 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8959 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 2:00 PM
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Why should the health care market be any different?

Because healthcare is important. People want everyone to have great care right....so it has to be possible, right?

Great post Galt. But, sadly, I think it is merely preaching the choir. Stage one thinking and "visions of the annointed" rule in healthcare.

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Author: MadCapitalist Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8961 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 3:39 PM
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I can't believe that this post got so many Rec's. When worthless rhetoric gets that many Rec's, it would suggest that a lot of people from the Political Asylum board must have stopped by.

An interesting aside personal observation that I've made, among those of us who are L/libertarians there is quite often disagreement as well as agreement. Between the vast majority of left/liberal posters you rarely see disagreement. Just an observation for what it's worth.

Todd


I think it's pretty obvious that libertarians are less likely to buy into conventional wisdom than the general population is.

Also, most liberal posters seem to be woefully ignorant of research and analysis relating to economics and government interference. You basically *have* to ignore the evidence if you are a liberal, because the evidence showing the negative effects of government intervention on the economy is pretty overwhelming.

My own belief system has evolved over time. Like most people, I used to think that government could solve far more of society's problems than is actually the case if only the government would spend more money, change the system, and get the right people in place to do the job. Of course, this is dead wrong. I've learned that there is a problem with government systems. Government systems don't adapt nearly as well as market systems. Pricing mechanisms are pretty effective at getting businesses to adapt. If something isn't working in the private sector, there usually is very little time before it changes or dies (although the government loves to interfere with this mechanism whenever possible).

This mechanism is largely missing from the government sector. That which isn't working in government gets bigger rather than smaller. Politicians make the argument that more spending is needed to solve the problem. If the problem isn't solved, then obviously *more* spending is needed. It is rare for programs to be eliminated altogether.

As Gordon Gekko said in the movie Wall Street:
"...in my book you either do it right or you get eliminated."

Most of government doesn't get it right, and it should be eliminated.

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8962 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 3:42 PM
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Oh fiddle faddle. Another of the "market is usually right, therefore it is always right" posts, loaded with misstatements of fact and perversions of history. While I recognize that the thread has moved on to focus mostly on healthcare, I simply can't let the misstatements of fact in the original post stand without refutation.

Unlike manufacturing where there was central coordination of what would be manufactured, the allocation of the labor pool was left up to the free market exclusive of controls on wages. This created a huge loophole; while wages counld not go up, fringe benefits could be increased. A major fringe benefit that was added was health insurance.

Well, no. "Health insurance" was part of the deal for workers on the Hoover Dam, constructed a decade before World War II. Kaiser was one of the companies which provided it to workers back then, and Kaiser Permanente grew out of it. However most smaller employers did not add "health insurance" simply because most workers were not in a position to bargain for it. And it didn't happen during World War II, either.

During World War II unions had signed a No Strike Pledge, and the War Labor Board determined wages. Bargaining then focused on nonwage benefits, and some headway was made in establishing these so-called fringe benefits. After the war the industrial unions mounted major campaigns to establish health care, pensions, insurance, and other benefits.

Employers fought this effort claiming that basic federal law did not require them to bargain over any nonwage items other than working conditions. Despite this, in 1947 the United Mine Workers gained broad medical and insurance benefits. In 1949 the Supreme Court ruled that such nonwage matters were legitimate subjects of bargaining.

http://www.afscmelocal328.com/healthhistory.html

"Health care" as a fringe benefit came after the war for the most part, not during. And it came as a result of collusive bargaining, not "the free market."

While regulation in general is usually counter-productive (I can't think of an example where it is not, though I'm sure there is one or two examples out there)

Yeah, well there's that "environment" thing, where the costs of pollution are not priced into products, because to do so puts the good guy at a competitive disadvantage. And then there's "safety". For an object lesson, you might look at the history of the coal mining industry. Or steel. Or railroads.

In fact, let's take "railroads", just for a second. In the heyday of railroads, the cars were held together with a link-and-pin arrangement. It required a man to stand between the cars, and to hold the link just so, and to drop the pin just so, and get his hands out of the way before the cars crunched together. It was said that a foreman could tell how long a man had been doing this job: no fingers missing, he was a greenhorn. One finger gone, he'd been at it a year or two. Two fingers missing, he'd been at it a while. All his fingers gone, he'd been at it 10 years, but couldn't do it anymore.

There was a better way, the "knuckle coupler", which was patented in 1868, but the railroads wouldn't install them. Too expensive, they said. Also too expensive were air brakes and other safety measures, because it was cheaper to fire the workers who got maimed or killed; labor was in plentiful supply, you see. So while these safety features had been available for years, it wasn't until Congress passed the Railroad Safety Act of 1893 (over 25 years after these improvements were available) that these - and other safety measures - became standard.

(In a curious twist, they made the railroads more efficient as they could run longer trains and at higher speeds, but the "free market" was too shortsighted to see that. That 1893 Act of Congress was one of the first pieces of legislation which regulated business, incidentally, coming on the heels of the laissez-faire period of the late 1800's. It gave rise to George Westinghouse's first fortune, among other things.)

Without food you will die in a few weeks at best. Without health care, you may live for many years. Yet food is provided in such abundance through the free market that one of our major chronic health problems is obesity, too much food.

Well, as luck would have it for my side of the argument, there has been substantial involvement in government with "food."

For instance, some of the first grants given by government were to Land Grant Colleges for the purpose of agricultural research.

Agricultural research in the US has been greatly influenced by the establishment of the system of Land Grant Colleges, which was created in the late 1800's to advance the teaching of agriculture and related fields. At the time 50% of the US population lived on farms, and 60% of the labor force was employed in agriculture. The system has survived successfully to this day, promoting a three-pronged mission: teaching, research and extension services. The extension services provided the important link between agricultural colleges' academic and research programs and societal needs.

Traditionally, discoveries in the public research institutions and agricultural universities were seen as "public goods" and flowed directly down the chain of public institutions to farmers and businesses. This system formed the basis for many improvements to crop germplasm.

http://www.pipra.org/background.php

The USDA came into being in 1862, and was instrumental in many things agricultural, not the least of which was becoming a central repository for questions and answers about problems in one area which could be transmitted to farmers in another. They helped develop the transmission of weather forecasts via telegraph, granted research monies into hog diseases, various plant blights, and offered incentives to those Land Grant Colleges to come up with more productive ways to farm to feed a growing population from the same farms.
http://www.ars.usda.gov/is/timeline/chron.htm

And you may remember the "Dust Bowl" of the 1930's. It was the addition of mechanized farming via "the market" which created the conditions which allowed a short drought to drive 60% of farmers from their land and into bankruptcy. Who did what to ameliorate it? Individual farmers? No. Corporations? No. It was government which taught farmers that their "topsoil break" ploughing methods were exacerbating the drought conditions and leading to the dissolution of growing conditions throughout the midwest.
http://college.hmco.com/history/readerscomp/rcah/html/ah_026700_dustbowl.htm

Your happy example of McDonald's "clean kitchens" is touching, but should I bother brining up the name of Upton Sinclair and his muckraking scandals about the unregulated food supply industry, or do you know that part of history? If not, why not? If so, why do you ignore it?

Public safety is something "the market" often doesn't price in. Nor is public security. What is the market mechanism which encourages a nightclub owner not to stuff 400 people in a club where only 200 can safely evacuate in case of emergency? Should we go ask the patrons of the Coconut Grove for their views? Which market mechanism provided safety to the Triangle Shirtwaist Factory workers? Perhaps we should take a vote of them, except they're all dead.

It is surely a loss of freedom of choice for government to tell building owners that their doors must open outward, in case of panic, rather than have everyone stack up against doors which can't be opened at all, but that's just a loss of freedom we'll have to put up with, I think.

Does anybody here wish there had been a regulation mandating the airlines to install heavier cockpit doors? They certainly didn't do it of their own volition, did they? How's that "market" thing work with that?

"National security" is another thing the market doesn't see. Saudi Arabia could singlehandedly destroy our economy, today, should they so choose. At the start of World War II, we suddenly found ourselves without access to rubber, more than a small inconvenience. Indeed, both Japan and Germany's early moves were into areas which gave them access to strategic raw materials which they could not secure in "the market." We seem to think that doesn't apply to us, for some reason.

Government interference in the economy has never worked.

As I said, fiddle faddle.

"The market is usually right, therefore it is always right."

Honest, you need a new theory. We have prospered because of a mix of market and regulation.

Government controls of the market have never worked.

Yeah. Except in America, where there is much regulation, and somehow we manage to creep ahead in spite of your dire and extremist predictions.
 


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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8963 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 4:09 PM
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...my quibbles were more with things you didn't talk about in regard to the so-called health care crisis...

Another post for another day. ;^)

...which I will be proposing to elevate to full species status...

Good luck!

John

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Author: erikinthered100 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8964 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 4:24 PM
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Good post.

Personally, I am a strong believer in free markets. On the other hand, I also believe that government plays an important role in policing these markets. Policing markets means ensuring honesty and fairness in transactions as well as promoting safety and national security. There is a profound difference between government policing of markets and government control of markets. In the former, government intervention acts to preserve free markets. In the latter, government intervention abolishes free markets.

In healthcare, the government has greatly exceeded its proper role as policeman and is usurping the individual's power over their own healthcare. Proposals to expand the government's direct control over our healthcare dollar threaten to erode this power even further.

Government as healthcare regulator is "healthy" and necessary while government as healthcare dictator and dispenser is neither.

wolvy

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8965 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 4:36 PM
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Great post Galt. But, sadly, I think it is merely preaching the choir.

It made POTD today (Yippee!!!! My First!!!!), so more than the choir will be reading it.

Stage one thinking and "visions of the annointed" rule in healthcare.

I agree with "visions of the anointed", but I'm not sure what you mean by "Stage one thinking." (Though once you tell me, I expect I will agree.)

John

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Author: coyote97 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8966 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 4:56 PM
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I agree with "visions of the anointed", but I'm not sure what you mean by "Stage one thinking." (Though once you tell me, I expect I will agree.)

John


Shining the spotlight on typical "stage one thinking" is a major part of the theme of Sowell's "Applied Economics - Thinking Beyond the First Stage". First stage thinking is proclaiming goals, noble or otherwise. It is ignoring incentives and constraints. An example......people often support economic housing for the poor as a goal. "Everyone should have affordable housing" is a statement in stage one thinking. They in turn support rent control to achieve this "noble goal"....Never bothering to analyze "what's next".....the impact of the incentives and constraints that are created by rent control. They don't think through the resulting slums, housing shortages, the very people it is supposed to help being hurt.

"Applied Economics" is an outstanding followup to "Basic Economics". Sowell outlines the problems with many first stage political solutions to economic problems. In my opinion, it was better than "Basic Economics" to give you a point of reference if you have read that.

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8967 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 4:58 PM
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During World War II unions had signed a No Strike Pledge, and the War Labor Board determined wages. Bargaining then focused on nonwage benefits, and some headway was made in establishing these so-called fringe benefits....

I believe this is what I stated. The government (i.e. the War Labor Board) determined wages; this means there were wage controls. One of the fringe benefits was health care. During the war, it was established as a primary fringe benefit. Furthermore, this is what the Unions did; it says nothing about the non-union workers (the majority of the workers).

After the war the industrial unions mounted major campaigns to establish health care, pensions, insurance, and other benefits.

What they started in the war, they continued after the war. I never said they didn't.

The USDA came into being in 1862, and was instrumental in many things agricultural,...

Was one of those things the mechanized farming which you blame on the free market?

Upton Sinclair and his muckraking scandals about the unregulated food supply industry, or do you know that part of history? If not, why not? If so, why do you ignore it?

I'm quite aware of it. Are you aware of the number of people fed by these people you want to villify?

Public safety is something "the market" often doesn't price in. Nor is public security.

Obviously you haven't been reading my posts. I'll leave it for you to search out my arguments on this one.

What is the market mechanism which encourages a nightclub owner not to stuff 400 people in a club where only 200 can safely evacuate in case of emergency?

Since the government has granted itself a monopoly on such designations, it is pretty hard for the market to do anything about it.

Should we go ask the patrons of the Coconut Grove for their views?

Sure. Let's ask them how well the government protected them and enforced their own standards.

It is surely a loss of freedom of choice for government to tell building owners that their doors must open outward,...

The same can be accomplished through industry standards and lawsuits for violating them.

Does anybody here wish there had been a regulation mandating the airlines to install heavier cockpit doors?

So you are faulting the free market for not doing something that the government could have done but didn't? How does that strengthen your case for government regulation? Especially considering that it is the government that had the intelligence, not the airlines.

"National security" is another thing the market doesn't see.

Again, read my old posts before you start setting up strawmen.

As I said, fiddle faddle.

Yep. That about sums up your arguments.

John

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8968 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 5:01 PM
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"Applied Economics" is an outstanding followup to "Basic Economics".

I've already bought it and am planning to read it next.

John

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Author: erikinthered100 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8969 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 5:19 PM
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Interesting.

I think I'll take a look at your reading suggestions.

wolvy

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Author: coyote97 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8971 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 5:38 PM
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I think I'll take a look at your reading suggestions.

wolvy


I highly recommend anything penned by Sowell. He has the courage to say some very unpopular things that need to be said. If interested....he does two to three essays a week at:

http://www.jewishworldreview.com/cols/sowell.archives.asp

I have posted links to his essays frequently. In my opinion, he is a master at getting right to the real issue. He hits a wide range of socio/political topics. His "randomn thoughts" installments are my favorite.

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Author: RaplhCramden Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8973 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 5:46 PM
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I highly recommend anything penned by Sowell. He has the courage to say some very unpopular things that need to be said. If interested....he does two to three essays a week at:

http://www.jewishworldreview.com/cols/sowell.archives.asp


Funny... he doesn't LOOK Jewish. Is he?

Just curious. I have read some of his books on education, in some of which he gets quite autobiographical, but its been a few years and I don't remember him talking about Judaism. I do remember he moved to New York City when he was young, but that is not quite the same thing as converting (except perhaps for some ultraliberal sects?).

R:

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Author: coyote97 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8976 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 5:57 PM
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Funny... he doesn't LOOK Jewish. Is he?

I don't think he is Jewish. My best guess is that he is agnostic actually, though I am not sure. He does not point to any religious beliefs to support his views. If he does allude to his religion, I do not recall where that is.

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Author: MadCapitalist Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8978 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 6:11 PM
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Honest, you need a new theory. We have prospered because of a mix of market and regulation.

No, we prospered *despite* a mix of market and regulation.

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Author: eboller Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8980 of 23781
Subject: Re: Economics and Health Care Date: 6/21/2004 6:28 PM
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Just curious. I have read some of his books on education, in some of which he gets quite autobiographical, but its been a few years and I don't remember him talking about Judaism.

To my knowledge he isn't. That website though often has conservative and libertarian articles posted on it.

Eric

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Author: Hallucigenia Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8987 of 23781
Subject: Re: Economics and Health Care Date: 6/22/2004 6:59 AM
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"But won't the cost savings to business make them more competative?" Someone has to pay. And government enterprises are notorious for being inefficient. Just compare any government school system to a private schools of the same quality. The private schools operate for much less. Someone will have to pay, and whether it comes out consumers through higher prices at the checkout line as it does now, or whether it comes through higher taxes taken out of your check giving you less to spend in the checkout line is irrelevant. The cost must be paid. And if you are a student of history, government, or economics, you know that the cost will be higher if it is first filtered through the government.

Not always though. JGII refers to one reason in his post, the complete absence of the concept of value for money in the US system. At least in the UK you get NICE telling big pharma and other suppliers 'only if you can save a life for ~US$50k will we buy your product'. Governments would never pay $1000 for a cold remedy; HMOs would. And do - just look at the case of Relenza, the flu drug from GSK/Biota.

Also, see http://www.medscape.com/viewarticle/480360?src=mp :

"U.S. hospitals owned by investors with the aim of making money are less cost-efficient than nonprofits, Canadian researchers report....

"The reality is that for-profits face significant economic challenges. The first is they have to generate revenues that will satisfy shareholders," Dr. Devereaux said.

"Second, they have high executive bonuses. Thirdly, they are very top-heavy and have high administrative costs. Also, they have to pay taxes. That is a lot of extra money that they have to come up with," the investigator added.

Dr. Devereaux and colleagues earlier showed that for-profit hospitals had higher death rates.

"Instead of finding new efficiencies, folks were cutting corners in quality health care, and also people were having to pay more for care."

Dr. Steffie Woolhandler and Dr. David Himmelstein of Harvard Medical School commented that 13% of all U.S. hospitals are for-profit, and said converting them to nonprofit status could have saved $6 billion of the $37 billion spent on care at investor-owned hospitals in 2001....

"Investor-owned hospitals charge outrageous prices for inferior care," Dr. Woolhandler said in a statement. "The for-profits skimp on nurses, but spend lavishly on their executives and paper-pushers."
"

This might be one of the reasons the USA is lagging many other countries in things like nurse:patient ratios, installation of CT and MRI scanners and other things that might be useful for good health - see a previous discussion on the Biotech board, http://boards.fool.com/Message.asp?mid=20761325

That paper reckons that the US spends $300bn on healthcare bureaucracy, or 24% of its total spending on 'healthcare'. No comparative figures for other countries are given, but I'd suggest that is one reason why the US spends disproportionately so much more on healthcare.

And at the end of the day, in return for spending 13.9% of GDP on healthcare (versus a median of 8.3% in the OECD), you have to ask - is the US healthier? Surely that 50% extra cash brings tangible benefits in terms of the ultimate benchmark, life expectancy?

Sadly no - the US lags most of the industrialised world in that respect. Spending 50% more for a worse result? Doesn't sound too efficient to me.


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Author: MadCapitalist Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8992 of 23781
Subject: Re: Economics and Health Care Date: 6/22/2004 9:37 AM
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And at the end of the day, in return for spending 13.9% of GDP on healthcare (versus a median of 8.3% in the OECD), you have to ask - is the US healthier? Surely that 50% extra cash brings tangible benefits in terms of the ultimate benchmark, life expectancy?

Sadly no - the US lags most of the industrialised world in that respect. Spending 50% more for a worse result? Doesn't sound too efficient to me.


Give me a break. Even the best healthcare system can't overcome the damage we do to ourselves. We are a fast-food, quick-fix nation. Don't you think lifestyle has anything to do with life expectancy?

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Author: zsimpson Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8994 of 23781
Subject: Re: Economics and Health Care Date: 6/22/2004 12:09 PM
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Give me a break. Even the best healthcare system can't overcome the damage we do to ourselves. We are a fast-food, quick-fix nation. Don't you think lifestyle has anything to do with life expectancy?

I also wonder abouthow those figures are tallied up. We have literaly millions of people from all over the world that come to the US for healthcare. Why would they do that if we have such a poor healthcare sysem?

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 8995 of 23781
Subject: Re: Economics and Health Care Date: 6/22/2004 12:18 PM
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JGII refers to one reason in his post, the complete absence of the concept of value for money in the US system.

I did? I must have missed it, or I don't follow what you mean.

Governments would never pay $1000 for a cold remedy; HMOs would. And do - just look at the case of Relenza, the flu drug from GSK/Biota.

Say what? People die from the flu - tens of thousands every year. I have yet to hear of anyone dying from a cold. Even though they both cause people to have some superficially similar symptoms, the flu has about as much in common with a cold as a tension headache has with a ruptured berry aneurysm.

That paper reckons that the US spends $300bn on healthcare bureaucracy, or 24% of its total spending on 'healthcare'.

This is neither surprising, nor unexpected considering the detachment between the patient and the payer. Return it to a true free-market system where the patient bears a substantial portion of the cost, and you will likely see a significant drop in these costs.

Surely that 50% extra cash brings tangible benefits in terms of the ultimate benchmark, life expectancy?

As discussed previously, this is a poor means of making a comparison. Adjust for different causes of death and different reasons for seeking medical care, and the U.S. will fare much better. The cost of other country's health care would go up significantly if they had as many penetrating injuries as we do (treating a bullet wound or stabbing to the abdomen is extremely expensive). Adjusting for people dying from their own stupidity (e.g. drugs, participation in gangs, etc.) and our relative standing in longevity would improve. We have more AIDs than Europe on a per capita basis, and that, too, increases both our heathcare costs and lowers our longevity. Studies I have seen making such adjustments have demonstrated that longevity would be the longest, and costs would be only slightly higher than average. Eliminate the disconnect between patient and payor, and the costs would likely be among the lowest.

Keep in mind, I am not saying that we have a great system. The while point of the post was that our system is fundementally screwed up. Rather, I was attempting to point to how the system could be substantially improved by the addition of more appropriate market incentives.

John

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Author: TinkerShaw Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9000 of 23781
Subject: Re: Economics and Health Care Date: 6/22/2004 1:56 PM
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I have no doubt prices can be lowered in a free medical market. Millions would be excluded from the pricier, albeit life saving, medical treatments available now.

GoofyinMD,

Your above statement is absolutely and utterly senseless. If prices go down that makes universal coverage that much more affordable and obtainable. It is far more palatable, and far more economically efficient to give cash vouchers for medical care, to allow the millions who would be excluded - as you allege - to participate in the free market, without breaking the system, than it is to have a much more pricey system that relies almost entirely on rationing and some sense of socialism.

It may make you feel better to say that everyone gets the same health care, but I'll tell you what, it makes me feel a lot better to actually create a system in which everyone gets the healthcare they need and at a much more affordable price, as a free market solution offers, then some feel good disaster of socialized medicine and in the inevitable rationing embodied by 6-12 month waits for operating rooms, exclusion from specialized medicine, et al., that characterizes those systems such as found in Canada and Great Britain that are always on the edge of insolvency and higher and higher tax rates.

Tinker

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9003 of 23781
Subject: Re: Economics and Health Care Date: 6/22/2004 2:28 PM
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It may make you feel better to say that everyone gets the same health care, but I'll tell you what, it makes me feel a lot better to actually create a system in which everyone gets the healthcare they need and at a much more affordable price, as a free market solution offers, then some feel good disaster of socialized medicine... [emphasis mine]

Tinker,

I can see why you are a favorite fool of 1096 people...err, make that 1097. ;^)

John

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Author: JustCallMeTodd Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9008 of 23781
Subject: Re: Economics and Health Care Date: 6/22/2004 4:20 PM
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I think it's pretty obvious that libertarians are less likely to buy into conventional wisdom than the general population is.

It just went to enforce my point to show that if we really all cared about ideology that we'd be in lock step agreement with each other in regards to issues such as most liberals/leftists are. Especially the original one that commented on ideology.

Todd

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Author: coyote97 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9014 of 23781
Subject: Re: Economics and Health Care Date: 6/22/2004 5:04 PM
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I can see why you are a favorite fool of 1096 people...err, make that 1097. ;^)

How do you explain Sandyleelee? :-)


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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9015 of 23781
Subject: Re: Economics and Health Care Date: 6/22/2004 5:06 PM
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How do you explain Sandyleelee? :-)

I think P.T. Barnum explained that one. ;^)

John

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Author: erikinthered100 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9023 of 23781
Subject: Re: Economics and Health Care Date: 6/23/2004 12:35 PM
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Due to the loss of incentives for medical innovation and discovery, ultimately everybody would be excluded from "pricier, albeit life-saving medical treatments" in a government controlled healthcare system. This could be catastrophic as new diseases emerge in a system lacking the vibrant medical research machinery produced by free market incentives.

As it stands now, stagnant socialized healthcare systems act as parasites feeding off the advances produced by our freer healthcare market. Moreover, price controls in these socialized systems are subsidized by patients paying inflated prices in the US. Although the price is suppressed, the true cost which includes the cost of rewarding innovators never changes.

The true dyfunctional nature of a fully socialized government healthcare system such as Canada's is masked due to the presence of a nearby free market. The US acts as its free source of medical advances and as a lifeboat for those unable to find appropriate and/or timely care in their own country.

wolvy

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9025 of 23781
Subject: Re: Economics and Health Care Date: 6/23/2004 3:28 PM
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As it stands now, stagnant socialized healthcare systems act as parasites feeding off the advances produced by our freer healthcare market.

Even catching the subtleties. ;^)

erikinthered100 added to your Favorite Fools list.

John

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Author: erikinthered100 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9026 of 23781
Subject: Re: Economics and Health Care Date: 6/23/2004 3:37 PM
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Thanks, JG

Due to your suggestions, I have some interesting reading ahead of me.

You just joined my small but growing FF list as well.

wolvy

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Author: dcolpo5 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9046 of 23781
Subject: Re: Economics and Health Care Date: 6/24/2004 5:53 PM
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Great post with 1 caveat. You ignore (or maybe I missed it, in which case I plead post-lunch syndrome) the assumptions of perfect information and thin markets. While there are a raft of open-heart surgeries performed each year, most of us don't get them or know few people who do. We don't do a lot of comparison shopping for health care. This isn't like buying a loaf of bread, not liking it and choosing to buy another brand. That being said, I agree with what I expect will be your counter argument that even without perfect info the market would be more efficient. Whether or not efficiency is the one or main goal is open for debate.


Dave

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Author: JohnGaltII Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9047 of 23781
Subject: Re: Economics and Health Care Date: 6/24/2004 8:53 PM
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You ignore (or maybe I missed it, in which case I plead post-lunch syndrome) the assumptions of perfect information and thin markets.

Actually, I didn't ignore it, per se. I know many people who have had heart surgery, and every one of them asked around with one exception; in that case it was emergent and he would not survive until another surgeon could even get to the hospital. In addition, I already know who I would go to if I needed sugery, a dermatologist, an ENT, an opthomologist, etc., as do many people. The point is, I have yet to hear of a single person who chose his doctor based on a yellow pages ad. And I know a lot of people who have certain doctors on a personal blacklist.

It is not perfect, but perfect information is not available in any market, thin or otherwise; it never has been, and never will be. The key is that even imperfect information is enough to allow the markets to function in every other area; there is no reason to think health care would be different.

Whether or not efficiency is the one or main goal is open for debate.

I don't see efficiency as an end unto itself, but rather value to the patient (however each person measures it for himself) as the main goal. Efficiency plays a role, but it is not a be-all, end-all.

John

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Author: TinkerShaw Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9048 of 23781
Subject: Re: Economics and Health Care Date: 6/24/2004 10:24 PM
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While there are a raft of open-heart surgeries performed each year, most of us don't get them or know few people who do. We don't do a lot of comparison shopping for health care

That is because (1) we don't see the actual cost due to insurance, and (2) many plans limit whom you can see, and (3) if we had government health care the government would severely limit who we could see, and they would have to, as for example, Hillary's health care fiasco called for a limit on specialists and requiring government approval for a doctor to be able to be trained as a specialist. What sort of choice would this sort of monolithic big brother program provide?

There is no perfect system, this is not a perfect world (other than as a sphere that is) but there are better systems and better ways to do things which provide for much better outcomes. And as is usual, choosing free markets, except where free markets clearly don't work due to externalities or unique factors to the market, should be our first solution, and falling back to correct the problems that may still exist by fine tuning it with laws and government intervention.

However, it seems as if the first choice is a government solution, void of any relationship to the market. It is as if somebody out there wants to buy a lot of votes and gain control of a lot of power. I will tell you, those who run the government controlled healthcare system will have enough power to run the country, which is a frightening prospect. Healthcare patronage, those with connections get the care.

Tinker

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Author: TinkerShaw Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9049 of 23781
Subject: Re: Economics and Health Care Date: 6/24/2004 10:31 PM
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P.S.

Look what government run schools have lead to in regard to the chemical use of our children. Good lord, I'm presently litigating a case of a 6 year old on Ritalin, et al., diagnosed with depression, and some sort of anxiety, at age 6. It is apparently not uncommon to put active 6 year olds, with no proof of any chemical imbalance or problem with the brain, on such drugs and to diagnose children with such problems.

Imagine what will happen if the government runs our healthcare system. Everything will be mandated, control drugs will eventually seep into the system. A good portion of the population (far more than at present) will be on adult Ritalin, et al. (yes, I know, it already seems like a good quarter of the population is already, and that is because the medication is subsidized by insurance, so why not take a pill to solve every problem).

I for one do not want to sacrifice that much liberty to my government so as to put them in absolute charge of my life and death, and everyday medical decisions. That road leads to an extremely, perilously steep and slippery slope.

Government is not all bad, it has its place, it can bring benefits, but it is not itself a primary component of any solution to resolve the difficulties and problems in our healthcare system. Doctor, first rule, do know harm. Maybe we should take that advice in reforming this country's healthcare system.

Tinker

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Author: eboller Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9053 of 23781
Subject: Re: Economics and Health Care Date: 6/25/2004 9:30 AM
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Look what government run schools have lead to in regard to the chemical use of our children. Good lord, I'm presently litigating a case of a 6 year old on Ritalin, et al., diagnosed with depression, and some sort of anxiety, at age 6. It is apparently not uncommon to put active 6 year olds, with no proof of any chemical imbalance or problem with the brain, on such drugs and to diagnose children with such problems.

Imagine what will happen if the government runs our healthcare system. Everything will be mandated, control drugs will eventually seep into the system. A good portion of the population (far more than at present) will be on adult Ritalin, et al. (yes, I know, it already seems like a good quarter of the population is already, and that is because the medication is subsidized by insurance, so why not take a pill to solve every problem).


Tinker did you see this:
http://boards.fool.com/Message.asp?mid=20932895

Seems it's already being talked about.

Eric

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Author: TinkerShaw Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9057 of 23781
Subject: Re: Economics and Health Care Date: 6/25/2004 10:52 AM
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Eric,

It is a sad day when even a Republican president wants to not just pry into your bedroom but into that vast empty space that most of us have between our ears that we call a brain.

There is legitimate mental illness, but most of the problems we suffer from have nothing to do with any mental illness but rather with our choices and values. But lets of course create a system that places all blame for our actions and behavior on a mental illness.

Tinker

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Author: eboller Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9058 of 23781
Subject: Re: Economics and Health Care Date: 6/25/2004 11:11 AM
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It is a sad day when even a Republican president wants to not just pry into your bedroom but into that vast empty space that most of us have between our ears that we call a brain.

There is legitimate mental illness, but most of the problems we suffer from have nothing to do with any mental illness but rather with our choices and values. But lets of course create a system that places all blame for our actions and behavior on a mental illness.


I agree. Very sad...and scary.

Eric

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Author: cfelong Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9071 of 23781
Subject: Re: Economics and Health Care Date: 6/25/2004 8:21 PM
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"And government enterprises are notorious for being inefficient. Just compare any government school system to a private schools of the same quality. The private schools operate for much less."

Your your reasearch, assessment and analogies of the free market and medical costs is superlative and fascinating but I would not throw education into the same analogy pot.

Education is a little more difficult to assess than medicine. I was a product of Catholic schools and can sing many of their praises, but as an adult I know many Catholic children with disabilities who are denied entrance to those Catholic schools because the schools have not made it a priortity to serve all children. These are not kids with severe brain damage but those such as a girl with progressive hearing loss who needed speech therapy and lip reading skills (a delightful young woman who has babysat for us) or the fairly common dyslexic child or ADHD child whose parents don't want to drug them with Ritalin. If private schools were required to accept all disabled children, and those children unfortuante enough to be born of highly dysfunctional parents, they would find their ability to hold down costs much compromised. This is the biggest reason I have never supported private school vouchers.

As most any private school parent will attest, tuition does not reflect the true cost - ask how much additional that parent puts in or solicits for fundraising.

Teachers themselves sometimes make the trade off between lower pay/better working conditions and vice-versa

Claire

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Author: NoGoodReason Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9074 of 23781
Subject: Re: Economics and Health Care Date: 6/25/2004 10:32 PM
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this is not a perfect world (other than as a sphere that is)

I read that it's actually got a bit of a bulge around the middle.
Sort of like Michael Moore.

-NGR
~picking nits

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Author: JohnFife Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9328 of 23781
Subject: Re: Economics and Health Care Date: 7/3/2004 9:28 AM
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From an ethical, economic, practical, and historical stand --your post is wrong in both premises and facts. From a deductive perpective, you might as well attempt to prove that the military, police, fire department, etc. would best be left to private enterprise sector and predatory capitalists.

Health care is a continuum of knowledge and application that has developed to its current quality because it has, unlike any other profession, been subsidized by taxpayers from the time of Hipocrates to Salk to stem cell research and from grammar school to teaching hospitals, NIH, FDA, etc.

From a fundamental economic standoint, health care, just like police and fire service, has no bartering product equivalent.

From a progress and product & service perspective, health care is dependant on the free exchange of ideas and technique --(e.g. operations cannot be patented) and the total involvement of the government (e.g. Vaccination laws, product marketing regulations, etc.)

From a historical standpoint, free-market capitalism in health care has killed (and is killing!) far more people than it has saved or will ever save. First, through thousands of years of inaction (i.e. the "life is cheap" argument) and... Secondly, through hundreds of years of it being allocated more to the rich while being subsidized by the poor (e.g. Tax exempt institutions are and have always been the intrical part of the whole system).

Therefore, all of your elasticity and supply & demand arguments collapse into the absurd.

jf


http://boards.fool.com/Message.asp?mid=20977264

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Author: coyote97 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9329 of 23781
Subject: Re: Economics and Health Care Date: 7/3/2004 11:52 AM
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Therefore, all of your elasticity and supply & demand arguments collapse into the absurd.

Ya right. Maybe you should invest the same amount of effort (as Galt did) into supporting the contentions you make. Better yet.....why don't you and J.R. go some place and discuss the human condition with one another. Your simplistic brand of how wonderful government is just because you proclaim is boring and useless.

Now since you addressed the post to Galt personally.....I would suggest you you read this thread:

http://boards.fool.com/Message.asp?mid=20948287

I hope you just weren't aware and not swooping in to pick on a dead man like J.R.

Now if you have something compelling to say about healthcare I would be happy to take up Galt's side of the discussion (I don't pretend to assert I would do so as well he). But, if all you have to offer is hippy dippy condemnation of capitalism and praises of government......don't bother.

Here is a suggestion. Actually read this Friedman piece:

http://www.thepublicinterest.com/archives/2001winter/article1.html

And cogently dispute his contention about third party payment. I have yet to see anyone do it. Until you have done that, you can't make the assertion you do about what the free market has done to healthcare without looking like a moron.....but, that's just my opinion. There are plenty of people that look at it like you do. :-)

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Author: WrnBuffett Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12069 of 23781
Subject: Re: Economics and Health Care Date: 9/17/2004 4:08 AM
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Well put, Mr. Goofyhoofy. Much better than I could have done.

The "Loonitarians" simply don't get it.

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Author: 52758 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12086 of 23781
Subject: Re: Economics and Health Care Date: 9/17/2004 10:24 AM
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"I don't know if I'll end up agreeing with you but one cannot ever be certain about one's hypothesis if one never considers the opposing view. Our current health care system and the byzantinne method of financing it is so messed up that we can ill afford to consider all views on the matter."

I think you have the same problem President Bush has of not reading his sentences before uttering them. Certainly you mean - "the byzantine method of financing it is so messed that we can ill afford NOT to consider all views on the matter."

It's a problem everywhere currently since the proof reader has gone into retirement and the spell checker is used instead. Where the INTENT checker has gone no one seems to know.
52758

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Author: matthewlf Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12088 of 23781
Subject: Re: Economics and Health Care Date: 9/17/2004 10:50 AM
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the byzantine method of financing it is so messed that we can ill afford NOT to consider all views on the matter

If you're going to be our English teacher, I suggest not forgetting the "up" that was between "messed" and "that" in the original comment.

Next time you could perhaps just post a question to verify what you perceive to have been said. Perhaps that didn't serve your INTENT.

Matt.

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Author: RaplhCramden Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12598 of 23781
Subject: Re: Economics and Health Care Date: 10/5/2004 5:39 PM
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Hi LuceLu!

Following your post above, I looked into ISRG and bought some and I'm quite happy with it!

I was wondering if you knew any other standout medical companies?

I'm looking in particular at Stereotaxis STXS which has a magnetically guided catheterization thinger that should cut down on some bypass operations.

Thanks for the great info in the past!

R:)ph
RaplhCramden on the fool

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Author: TaoRegency Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14133 of 23781
Subject: Re: Economics and Health Care Date: 12/4/2004 2:52 AM
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Exactly where is this free market that everyone is so proud of?

Is the price of a drug the same all over the world?

Are there not incentives (tax breaks) for drug makers to do R&D?

Are there not laws that keep the consumer from seeking out drugs from a cheaper source?

Is it FAIR that the American consumer is expected to pay a higher price for a drug because the drug manufacturer has to give discounts in other countries?

There seems to be a knee jerk reaction on this board that if one argues that there is an inherent lack of economic logic in something that one is arguing for government involvement.

There is no doubt, that the government is a large reason for alot of the problems in healthcare today...as there is no doubt that there are problems within the healthcare delivery system today that are inherent in the structure of the system itself.

Lets not forget, the new medicare prescription drug program does not allow medicare to negioate prices that it will pay for drugs...this is something that Bush and the drug companies demanded.

Thus, even those players in the market that everyone is so willing to protect by arguing for free markets do not want free markets.

TAO



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Author: TaoRegency Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14134 of 23781
Subject: Re: Economics and Health Care Date: 12/4/2004 3:10 AM
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John,

How does one determine the efficiency of a healthcare system?

By the profit margin of the healthcare provider?

How does one determine the effectiveness of a healthcare system?

By the profit margin of the healthcare provider?

There is a basic assumption on the part of some that American healthcare = Best healthcare, but how do we determine that?

Once again, cannot the effectiveness of a healthcare system be measured by life expectancy?

Cannot the efficiency of a healthcare system be measured by healthcare costs as a percentage of healthcare costs to GDP?

Tao







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Author: TaoRegency Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14135 of 23781
Subject: Re: Economics and Health Care Date: 12/4/2004 3:25 AM
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I believe that the AMA represents its members very well.

But its members are not the American public.

It is like the recent study that showed that doctors who made mistakes, and admitted the mistakes and apologized for them, were less likely to be sued for malpractice.

Further, there is a basic assumption on your part that treatment is determined by some protocol based upon a diagnosis.

You and I both know from experience that a diagnosis for tennis elbow that is work related and thus paid under workers comp, will be treated with more doctor visits, physical therapy, and more meds than a diagnosis of tennis elbow covered under personal health insurance.

I have been managing a self insured health insurance plan and a self insured workers comp plan for 15 years.

I agree that government is not always the answer...I also agree that healthcare providers are just as inept at solving their own problems.

TAO

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Author: TaoRegency Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14136 of 23781
Subject: Re: Economics and Health Care Date: 12/4/2004 3:32 AM
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Thank you, there is no doubt that insurance carriers, as one of the players in a free market system, are in some cases worse than the government.

I manage a self funded insurance program and I remember arguing with the TPA and the reinsurance carrier about why would a breast reduction surgery be approved as medically necessary from a quality of life issue but at the same time they would not cover the costs of hearing aids periods.

I can imagine that having large breasts can impede ones quality of life after time....but at the same time, and following the same logic, I also believe that losing ones ability to hear could also impedes ones quality of life...

Or eyeglasses...

TAO

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Author: TaoRegency Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14139 of 23781
Subject: Re: Economics and Health Care Date: 12/4/2004 4:06 AM
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John,

As an employer with a self funded insurance plan I would beg to differ with you. We know you are a doctor and thus you believe that the problems of healthcare could be resolved easily by letting healthcare professionals do what they do best.

A good doctor is not a good businessman and or a good manager.

You may perform your services for free but that does not mean what is true for you is true for all...

I remember meeting with a group of doctors in our town and and then another town where we had a facility and laying out a new idea with them. I wanted to develop a "gatekeeper" program. An employee would pick a primary care physician and this physician would then be responsible for monitoring and directing the patients care. I then put my money where my mouth was by saying that we would pay twice the usual and customary rate for a visit that the employee had with their primary care physician and I expected the primary care physician to spend twice the amount of time with the patient. I then also wanted the patient referred to a specialist when the protocol required it...rather than four five office visits to the primary physician before a referral was issued. I also expected our employees to be able to see their primary care physician within 24 business hours of an appointment being made.
(To limit emergency room visits for non emergency care).

At the time I had employees going to a specialist, who may have treated them in the past for something in their speciality, to now be treated for something well outside their specialty...and thus I was paying a heart specialist to treat a sinus infection.

Guess what, it worked, but it took years. The employees adapted real quick...the medical community was much slower. Within three years we cut our healthcare costs dramatically, just by a little economic conditioning. We got employees to develop a relationship with a primary care physician, we got employees to go to their doctor earlier rather than later, and we got the doctors to "slow" down.

While our costs for primary care physicians dramatically increased our costs for life threatning diseases dropped dramatically.

We also sponsored health fairs and monthly seminars and screenings...all of which were paid for by the employer...

Oh, and this employer is an apparel manufacturer where most of the employees lack college educations and for the most part never had access to regular healthcare, and the last price increase this manufacturer has been able to pass on to its customers occured in 1996; and this is due to a true free market.

I do not agree that employer provided insurance is the issue, it can be, but is not always the case. Just as I do not believe that healthcare providers can solve all of their own problems, they can, but not in every case.

TAO







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Author: TaoRegency Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14140 of 23781
Subject: Re: Economics and Health Care Date: 12/4/2004 4:12 AM
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I do not believe that licensing and accreditation, which involves a doctors ability, has anything to do with HIPPA...which deals with an employee being able to take their healthcare with them....

HIPPA is one of the most logical things government has come up with in a long time...even if they went about it an illogical manner.

Under HIPPA an employee is given credit for prior insurance coverage by the insurance company of their new employer. Before HIPPA, a sick employee could not leave their current job because if they changed employers all of the treatment under their prior coverage would be considered a pre exisiting condition and thus not covered under the new insurance.

The concept is solid...the administration is a nightmare.

TAO

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Author: TaoRegency Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14141 of 23781
Subject: Re: Economics and Health Care Date: 12/4/2004 4:30 AM
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Why is it that everyone in healthcare blames all of the systems shortcomings on the lack of free markets?

I do not believe that the consumer, or patient, determines demand. A patient sees a doctor, the doctor decides what tests need to be run, what procedures are necessary, so on and so forth.

A patient does not go to the doctor and say, "I want two MRI's, a C Scan, and give me three days in the hospital, and throw in a couple of meds..."

Nor could a doctor quote a price. Price is determined by what...the actual costs of services, or is it a variable dependent upon method of payment.

Even billing is determined by method of payment, bundling vs unbundling, bill each service separate, or under treatment type.

Even in the case if the consumer was given control for paying for their healthcare, we are still talking about individuals buying insurance, and thus insurance companies acting as agents for groups of consumers. The contract between the insurance carriers and the healthcare providers would still not give the consumer any more control.

Then the fallacy that consumers, if dissatisfied could change insurance carriers, healthcare is now a commodity business, where size equals cloat, so the larger insurance companies would dominate and the smaller ones would die....leaving us in the same situation we are in today.

Free market is where hospitals can work interns and residents an ungodly amount of hours and lower their costs....but that does not mean we get better healthare...just the opposite.

TAO

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Author: TaoRegency Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14142 of 23781
Subject: Re: Economics and Health Care Date: 12/4/2004 5:01 AM
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LuceLu,

I would love to see a system where the patient came first. As a healthcare user, I would love for someone to take the time to explain to me exactly what my options are...but most of the time the medical professionals and their supporting staff are just too busy to be bothered...I cannot count the number of times that I felt as if I was an inconvience that had to be tolerated.

A few years ago, I had cancer...surgery was done tumor removed, radiation began..all of this, from diagnosis to radiation happened in the course of a few days. While beginning radiation it was noted that I had not had a chest xray. Yep, went through surgery with no chest xray. So, one was ordered.

It was noted that there was something abnormal in my chest cavity. So a biopsy was ordered. I am sent to a world famous Thoratic surgeon...and his partner was a world famous heart surgeon...well, I am impressed...but good lord, I am in for a biopsy...kind of like overkill to me.

So anyway, he decides that due to my size (6'10") that he will just go right ahead and open up my chest cavity and remove the abnormality....I disagreed. I wanted to attempt the less invasive methods first.

So, day of surgery comes...out comes the consent form and guess what...they want me to consent to thoratic surgery...I say No that is not what I agreed to....

Surgery was scheduled at 8:30 am. So back the nurse goes....comes back and says doctor is busy...so I sit.

At 3:30pm they come back with a consent form that lists out what we agreed to first this, second that, and then thoratic surgery last.

I sign it and at 4:30pm I am finally wheeled toward the operating room...as they medicate me the attending nurse informs me, while I am on the gurney that the Doctor has decided to go with Thoratic surgery.

Well, I could not roll off the cart due to the meds.

I woke up at 2am in intensive care on a respirator tied down with a huge gash running down the center of my chest...my lungs had collapsed in surgery...not quite how I expected to be after going in for an outpatient biopsy.

The surgeon never once bother to come see me...I was released by one of his assistants, without ever receiving an answer as to why and what...and when I asked for an antiboitic I was told just to use soap and water...well a few weeks later I was back, wound had to be reopened due to the fact that infection had set in deep inside the wound.

Oh yes, did I tell you that this doctor performs 260 thoratics surgeries a year and that people fly from around the world to be treated by him and his partner...

Let me add...the abnormality was a smudge on the xray.

As I sat there recovering all I wanted to know is why wasn't I important enough to all these healthcare professionals to at least warrant an explanation.

Did I see an attorney you bet...I had the consent form. Did the attorney tell me I had an open and shut case...yes he did....but he also informed me that I would be suing someone who "saved" people and that I would need lots of professional witnesses and the case would take between 3 to 5 years but that I would win. He then asked me, as I was 27 at the time...if I wanted to spend the next 3 to 5 years of my life going to court....

No, all I wanted was an explanation...all I wanted was to see the surgeon face to face and have him explain to me what happened and why he did not respect my intelligence enough to follow my wishes...

So, my attorney got the meeting scheduled...I got my explanation and an apology. Found out that he had prescribed an antiboitic and had recommended soap and water...but his assistant hadn't got the notes right...so I told him that he had to eat the cost of reopening the chest cavity due to the infection...and he did.

We shook hands....and I believe for a while he was a little less egotistical and so sure of himself...and I hope that benfited others.

Sorry, if I do not believe that free market will solve most of the problems inherent in healthcare and healthcare providers....

TAO



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Author: TaoRegency Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14143 of 23781
Subject: Re: Economics and Health Care Date: 12/4/2004 5:20 AM
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Dear Goofyhoofy...

Thank you...

Some how people believe that the free market is made up of individuals who will all do what is the right thing to do...

As one CEO of a local hospital said, inregards to an abestos lawsuit...

"I monitor travel expenses closer than I do potential abestos liablity...travel expenses cost me more..."

But abestos kills people....three of his hosptials employees at this point..."

Travel expenses never killed anyone...

Under a free market system what kind of treatment would one get if one could not pay for it....

Very simple, none. Man does not do anything unless forced and or rewarded. One can complain about government bureaucrats making healthcare decisions...under free markets the bureaucrat that would make healthcare decisions would be called the CEO/CFO.

As in an earlier post...would EMS personnel pull over and assist someone bleeding and in need of care even if the individual could not pay for it...hey, they might...but they would also probably lose their jobs....

What if the services of the police and fire department were provided through a free market system?

Lets do away with local health departments and lets see how clean our restaurants stay...lets do away with OSHA...and lets see how many employers race out to protect their employees from life threatening injuries....

And exactly why do healthcare professionals believe their industry would provide better services under a free market system?

TAO

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Author: TaoRegency Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14144 of 23781
Subject: Re: Economics and Health Care Date: 12/4/2004 5:21 AM
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Exactly how does government control how an individual spends their healthcare dollars?

TAO

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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14151 of 23781
Subject: Re: Economics and Health Care Date: 12/4/2004 7:49 PM
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Hi TAO,

Why is it that everyone in healthcare blames all of the systems shortcomings on the lack of free markets?

???*EVERONE*???

If you read these boards (and by the flurry of responses.. Welcome... it appears you just found us) you'll find we tend to blame not a lack of free markets (which is a degree of continuum) but an overabundance of interfering regulation which impedes the natural economics of markets (which have variations of freeness.)

Free market is where hospitals can work interns and residents an ungodly amount of hours and lower their costs....but that does not mean we get better healthare...just the opposite.

In your same quoted free market, interns and residents can go to other hospitals, or different careers entirely. Further, the patient (other than emergency-room service, assumedly) may select freely according to whatever discretionary parameters they choose, including percieved quality of care & results.

The medical markets are certainly significantly complicated by the ethical & emotional values laden upon them in varying proportions... i.e "should" people receive care they can't pay for... at what levels... when... to what degree, etc....

Nonetheless... regulatory burdens will tend to diminish the net benefits to society more than they will help.

Cheers,
Dave

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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14152 of 23781
Subject: Re: Economics and Health Care Date: 12/4/2004 8:17 PM
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TAO,

Under a free market system what kind of treatment would one get if one could not pay for it....
Very simple, none. Man does not do anything unless forced and or rewarded.


Oh my!!! To say you're a wee bit overcynical is to call the water wet.

With such an orientating view on life, you're not likely to find this libertarian board very validating to your world model.

As with almost all others, you're welcome to hang out... but if you're new to the Fool communities, I may suggest you'll find far more kindred spirits at the Political Asylum board, and economically at the Mishedlo board. (You're far more likely to find GoofyHoofy and brethren there as well.)

It's fairly safe to say that the libertarians that live on this board have a far higher belief in the natural affinity toward benevolence of the common man, and his natural responsiveness & responsibility to society.

We're certainly not blind to the cold realities of nature... but we don't fear that nature needs a nanny either.

Cheers,
Dave

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Author: LuceLu Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14157 of 23781
Subject: Re: Economics and Health Care Date: 12/5/2004 11:57 AM
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I would love to see a system where the patient came first. As a healthcare user, I would love for someone to take the time to explain to me exactly what my options are...but most of the time the medical professionals and their supporting staff are just too busy to be bothered...I cannot count the number of times that I felt as if I was an inconvience that had to be tolerated

I would too.
I wish I had the time to go over everything a person needs to know. Sometimes people also have complications to things that are not anticipated. Unfortunately, we are so busy with patients because now the private clinics cannot get reimbursed by medicare for much of the chemo and neulasta shots, it is rush rush rush! I give the basics, our phone numbers, when to call and side effects.

I don't work in surgery. The few surgeons I see (mostly neurosurgeons) are pretty arrogant. But they even must take time-out to make sure they are going in to do the correct procedure (one operated on the wrong side of someone's brain--that's never good). In general, all patients get chest xrays--we have a check-off sheet before sending anyone into a procedure so there is no excuse -- it is clipped to the front of the chart and everything is checked or marked if it is missing.

I'm sorry you had such a horrible course. It is good you made your case though. Too many patients don't. A couple of our doctors have such horrible time management, their patients wait forever--we are constantly reminding them that they have this or that patient waiting. It is a problem. But patients seem to take it out on the nurses instead of the doctor.

Where I work, we check the orders and ask the dr. if they wouldn't like to order such and such (like premeds might get left out, or if the patient c/o chest pain--an ekg or CIPs--usually that is with a resident). Some doctors (they are human after all), say yes and thank you. Others bark that they don't need to take suggestions from a nurse. Anesthesia should have checked to make sure you had a Chest x-ray.

I think that patients, expecially cancer patients should have an ombudsman who is familiar with the treatment and allowed in restricted areas that can advocate for the patient when there is an issue such as yours--where you had an issue with the procedure they wanted to do.

I hope things are better for you now.

LuceLu


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Author: NoGoodReason Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14158 of 23781
Subject: Re: Economics and Health Care Date: 12/5/2004 3:42 PM
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There is a basic assumption on the part of some that American healthcare = Best healthcare, but how do we determine that?

"Best", it turns out, is an incredibly imprecise term.

The American health care system is "best" if best is taken to mean the most advanced and/or the most innovative.

Once again, cannot the effectiveness of a healthcare system be measured by life expectancy?

Not really. Life expectancy aggregates many factors. A country with a higher murder or suicide rate will have lower life expectancy, but that has nothing to do with a failure of the health care system. Things like diet and the rate of obesity have major impacts upon a country's life expectancy - but that's not really the fault of the health care system, either.

Cannot the efficiency of a healthcare system be measured by healthcare costs as a percentage of healthcare costs to GDP?

It depends on what your money is buying. If more money yields better healthcare, then by your definition "efficiency" would just be the inverse of "effective". I'm sure I could easily locate a country that spends less than 1 or 2% of GDP on health care - and equally sure that's not a country where I would want to find myself in critical need of health care.

The health care issue is not simple. Trying to define the issue simplistically is not worthwhile.

-NGR-


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Author: EveryVoteCounts Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 20307 of 23781
Subject: Re: Economics and Health Care Date: 6/12/2006 6:01 PM
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Government interference in the economy has never worked. It has not worked for housing, it has not worked for for wages, it has not worked for manufacturing, it has not worked for commodities, and it has not worked for health care. There is no reason to think that it will work if only the government interference is increased.

What has worked consistantly is the free market. Allocation of all things are given to those based on how much each person values it. When the government interferes, it automatically creates problems by providing services which are not as highly valued while eliminating services which are more highly valued. But this is the precise reason for the interference. Once these problems become apparent, the government, instead of backing off completely, increases its regulation leading to even more problems. This sort of approach gave us a recurring social security "crisis", gas lines in the 70's, the S&L debacle in the 80's, and ballooning health costs becoming widely apparent in the 90's. Albert Einstein once said that the definition of insanity is doing the same thing and expecting different results. Government controls of the market have never worked. Why should the health care market be any different?

TANSTAAFL,

John


Ditto


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Author: EveryVoteCounts Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21998 of 23781
Subject: Re: Economics and Health Care Date: 3/24/2007 6:31 PM
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http://www.nytimes.com/2007/03/22/business/22scene.html?bl&ex=1174708800&en=982c29954e5bba35&ei=5087%0A

Proponents of single-payer national health insurance note that private health insurance has overhead costs of 10 to 25 percent of expenditures. Medicare, by contrast, has overhead costs of about 2 to 3 percent, and socialized European health care systems generally have low overhead costs as well. That is why single-payer supporters claim that we can save money by substituting government for private insurance. But this would shift overhead costs, not reduce them.

The monitoring, marketing and overhead costs of private insurance are what allow more expensive medical treatments through the door. It is precisely because competing insurance companies spend money evaluating the appropriateness of claims that they are willing to pay for so many heart bypasses, extra tests, private hospital rooms and CT scans.

Medical insurance, whether private or government, is always going to be faced with a fundamental problem: patients and doctors will try to get the most out of any system. When they aren't paying directly, patients will seek extra care and doctors will be happy to oblige. To deal with that problem, health care systems can offer services indiscriminately and write off the resulting losses, spend money on monitoring, or limit services and prices. An analogous problem is faced by retail stores: they must either put up with theft, hire security to limit theft, or carry lower-value items.

Just as some items are harder to shoplift than others, so some medical services are less


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