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What is so special about health that it cannot be done by capitalism?

One of the beauties of the blogs, I find, is that the link-rich medium enables you to fly off on all manner of tangents and think through issues that might otherwise not arise or come into one’s head so fast. The recent posting on Samizdata about Ayn Rand – which seemed to trigger a rather bad-tempered and long comment thread – led me to a site put together by this fellow, who wrote a rather rude comment about Rand – nothing very new there – and I decided to take a look at his own blog. This is what I found. James Hooper is a socialist who once, apparently, was a “teenage libertarian”. I guess one does not come across many libertarians who imbibed their Hayeks, Rands, or Rothbards and later decided that what the world really needed, in fact, was lots of collectivism, progressive taxes, and the rest of it. I suppose John Gray fits a similar path, although as Brian Micklethwait has noted, Gray is consistent in his pathological gloomsterism.

Anway, back to James Hooper. In his latest post, he writes this:

“Healthcare is an area where the market has proven utterly inadequate, indeed it’s hard to find any pure market approach outside of the Third World (company insurance is decided by CEO boards and unions, state insurance by governments), although I’d imagine that those who have died in America owing to lack of insurance didn’t rate the distinction that much.”

Now it seems to me that there is something very wrong about this statement. Human beings require health care, just as they require food. Now, in the West, food is – mostly – produced by the free market, although as a libertarian I’d be the first to note that there is a lot of regulatory control over food production (ask any farmer, slaughterhouse owner, food retailer, etc) and a lot of subsidies, such as under the EU’s Common Agricultural Policy. But by and large, the process by which we get our fruit, veg, meat and carbs is via capitalism. This seems to work tolerably well. It could work a heck of a lot better, of course, but in general, you don’t see people, even the very poor, starving in the streets as happened under communism in Russia (1930s) or Mao’s China (1950s, 60s), or see the sort of state-induced disasters in Zimbabwe, etc. So clearly, something as basic as food seems to work best when left to the market.

So what is so different about health care that it can only - according to various statists, including many right Tories – be provided by a mixture of private/public operations or even, only by state monopolies, such as the UK’s National Health Service? For sure, some people, such as the very poor, will not be able to afford all the healthcare they want, but then the same issue applies to very poor people who cannot get all the food or housing that they want. Their problem is poverty, not something peculiar about food or housing. I understand that healthcare purchases tend to be less frequent than purchases of food; there may be inefficiencies or supply-demand issues that perhaps don’t let a market in health care function as well as in say, baked beans. But even so, for a person to state as a bald fact that a market in health care does not work seems, well, to be a case of ideology trumping experience and elementary logic. This article by Ronald Bailey lays out a good argument for a free market in health.

Of course, if, like Marx, Mr Hooper believes that a socialist society will be based on the “From each according to his abilities, to each according to his needs”, then that of course begs all kind of momentous questions of interest to defenders of liberty and prosperity. As I have pointed out before, if you say, for example, that I have a “right” to “free” healthcare, what that really means, in practice, is that I have a right to coerce someone who is able to work as a doctor/nurse/lab technician to give me what I want. In short, the Marxian “from each according to his abilities” presumably means that the state must have the power to decide what are the “abilities” that Johnathan Pearce, or James Hooper, etc, actually have, and then have the power to harness those abilities to fullfill the needs, as the state has defined them. In short, the Marxian formulation requires conscription of abilities.

There is a word for this state of affairs. It is called totalitarianism.

90 comments to What is so special about health that it cannot be done by capitalism?

  • Healthcare is an area where the state has proven utterly inadequate and I speak as someone who has had to endure the utter shite that is the National Health Service for much of my life.

    No institution in Britain better illustrates the sheer crapness of state institutions than the NHS. How many have died on the damn waiting lists I wonder?

  • JK

    Yes, the NHS is rubbish.

    But if you’re going to get upset careless critics not having read Hayek you probably shouldn’t write things like:

    In short, the Marxian “from each according to his abilities” presumably means that the state must have the power to decide what are the “abilities” that Johnathan Pearce, or James Hooper, etc, actually have, and then have the power to harness those abilities to fullfill the needs, as the state has defined them.

    When Marx wrote about “from each according to his abilities” he was very explicitly talking about what society would look like when the state had done its famous withering away, after the revolution no longer needed coercion. Maybe he was wrong, etc. But this is not really some subtle matter of interpretation. You have pulled out the one phrase from Marx’s opus where he most famously discusses this point.

    Please, know your enemy.

  • RRS

    There is an ongoing deception in the constant conflation of Healthcare with Insurance.

    Insurance is the TRANSFER OF RISK.

    Healthcare (services and costs) requires funding.

    I nsurance is an effective funding mechanism only for risk events. That is not to say that there are not other means of providing for risks and other means of transferring risks.

    One has only to look at the civic responses (those other than via governmental mechanisms, involving decisions by bureuacratic motivations) to disasters by the U S public. Strictly speaking, that public response occurs within a “Capitalist Economy,” and is limited or non-existent in Socialist or Totalitarian formats.

    “Moral Sentiments” impell human responses to the needs of others – coercions to replace perceived inadequacies of civic responses impair or destroy that moral base in human concerns with one another.

  • Johnathan Pearce

    No JK, I think you have got this wrong:

    When Marx wrote about “from each according to his abilities” he was very explicitly talking about what society would look like when the state had done its famous withering away, after the revolution no longer needed coercion. Maybe he was wrong, etc. But this is not really some subtle matter of interpretation. You have pulled out the one phrase from Marx’s opus where he most famously discusses this point.

    Well that is the problem, surely. The Marxists were dotty in thinking that we could magically get people to use their abilities to serve needs without the inevitably messy disocvery process of a market. They wanted to remove private property and markets, and thought that this process of matching “abilities” to “needs” would occur somehow or other. The trouble is, that apart from small communes of like-minded folk sharing the same tastes, etc, such arrangements quickly fall apart, either reverting to capitalism and property rights, or state control.

    There are socialists who try to square the circle by blending markets with state controls. For reasons that are fairly apparent, these efforts fall way short of expectations.

  • If the NHS is worth scrapping in favour of a private model then it must be embarrassingly shite compared to private care, and not just embarrassingly shite but *obviously* embarrassingly shite to all parts of society, including the poor. If this is not so, then why change anything – why go through the pain of changing it.

    The fact that the proles are not already revolting and calling for the destruction of the NHS means that the alternates are not sufficiently desirable today to motivate them. Why not?

  • MarkE

    The fact that the proles are not already revolting and calling for the destruction of the NHS means that the alternates are not sufficiently desirable today to motivate them. Why not?

    It might have something to do with not knowing about the alternatives. It was only very recently that we stopped hearing that the NHS was “the envy of the world”, even though that had long sionce been exposed as a lie. Politicians still feel the need to insist “the NHS is safe in our hands” (so that’s my vote you’ve lost then). I don’t know how we get the message over that the NHS is a disaster that is costing human lives, but that is probably an important step in weaning the British public off the statist tit.

    How bad does it have to get before enough people say “I don’t want your tenth rate collectivist solution – I’ll make my own arrangements”? It must be more than mere laziness, mustn’t it?

  • To me the first thing is to break up the monolithic State provision by introducing plurality and setting free hospitals etc from the whole Stalinist apparatus. If PCTs and SHAs – stripped of their hospitals, clinics and geographic monopoly are not able to convert themselves in to Health Providers, they will fold. I suspect they will.

    Once efficiencies filter down the costs will become more competitive.

    We will still need Assurance and Insurance (a plurality of private, NFP and mutual providers). A safety net is also required. Ideally it is funded voluntarily – well, all Labour supporters believe in it, so… – but until then, the State will need to fund it in the interim in all practicality.

  • What Tim C says.

    It’s easier if we look at provision side and funding side separately.

    State provision is of course crap, that’s easy.

    But taxpayer funding of some basic level (to be decided) with voluntary top ups out of private insurance or your own pocket seems fair enough to me. (Or just increase the Citizen’s Income a bit so that everybody can afford private insurance, if you actually trust insurance companies, that is).

    Which is what they have in most European countries and it works fine.

  • I confess, I’m not about to run out and set up a hospital or NFP insurer myself, but I would use and support one. I would be less depressed about the state of the country to see something being achieved by good people as opposed to too much being done by bad people at my (our) expense.

    Is there really nothing we can do other than just talk about theory and explore what if scenarios? I’m not just talking about health-care – I mean anything to bring about a de facto change of circumstances, with or without political change.

    I am indeed willing to devote some time to this kind of thing.

  • @Mark Wadsworth: it may be “easy” in theory, but it requires you to be in power, or at least to exert political influence despite a small membership.

  • Serf

    I was surprised when I read “The Welfare State We’re In” at how comprehensive the health system was before the NHS. If everyone read that book, the NHS would be hidtory.

    I have always thought that health care is an extremely difficult business to run. It requires large numbers of skilled people, and valuable people are difficult to manage. Compared to the steel industry, or coal, it is far more difficult. The state couldn’t even run the coal mines. Why the hell should it be any good at hospitals?

    The biggest problem in peoples’ perception is that somehow, if the state pays, the state should run. Break that link in the public’s perception and everything is possible.

  • JK –

    It may be factually true that Marx intended “from each according to his abilities to each according to his needs” to characterize the End of History, but on the ground most Socialists work actively (and, in Marxist terms, counterhistorically, actually) to make it reality now using exactly the totalitarian strategy of which Mr. Pearce accuses them. Mr. Pearce’s “enemy” is only secondarily Marx himself; it is primarily the politicians (and their supporters) who make the case for things like the NHS on the dubious basis that healthcare is somehow special among the service industries. I would say he knows his enemy very well – starting with whom it’s proper to aim at.

    The irony of Marx’s “from each according to his abilities…” dictum for me has always been that this is more or less what a prosperous capitalist society achieves after the market is allowed to apportion resources. In the general case, people are allowed to work to the extent of their ability, and they are rewarded accordingly. And since society in general is wealth, people all get what they need. In times of shortage (say, Mike Munger’s example of selling ice after a hurricane has cut off all the power), prices rise to make sure that the people who really need the resource (for example, those who need to keep their insulin, rather than their beer, cold) are the only ones willing to pay for it at the current price. Marx didn’t have to wait for the End of History – the mechanism was already in place in his lifetime. All he needed to do was leave it well alone.

  • Mrs. du Toit

    The general premise seems to be that if it is government interference that has broken it, the response is that the government interference wasn’t done well enough or big enough. It’s the same argument that appears when socialism or communism has shown itself to be a complete disaster… it’s because they did it wrong. It wasn’t socialist or communist enough?

    We’ll be seeing a lot of this in the future:

    If the bailouts aren’t working = the bailouts weren’t big enough.

    If the stimulus isn’t working = the money spent wasn’t large enough.

    If the regulation of industry isn’t working = we need more regulation.

    It’s surreal. People actually say that stuff… with a straight face.

  • William H Stoddard

    The enslavement of doctors is one side of that coin, and certainly not to be dismissed. But the other side is that public health will not and, indeed, morally cannot deliver what its proponents think.

    Health care is not free; providing it consumes resources, including the work of doctors, of course. The available resources are finite. Neither a free market, nor the present bastard American insurance-based system, nor outright bureaucratic socialism can deliver unlimited amounts of health care. So a socialist society must prioritize. It will do so not through price, but through waiting time . . . but waiting time is often the most precious thing a sick person can spend.

    And how, ethically, ought an egalitarian system to prioritize health care? If it values all human beings equally, then it ought to do what saves either the most lives, or the most years of life expectancy. In terms of saving lives, one very expensive surgical intervention for a cancer or heart attack patient could be traded off for simple preventive care that would save the lives of several people whose conditions were caught in advance; to provide the expensive care at all is irresponsible. It becomes worse so when you take life expectancy into account: saving five years of life expectancy for an old person such as many people with major illnesses cannot rank higher than saving seventy years of life expectancy for a child.

    If we approach the topic internationally, providing health care to people in developed countries at all saves fewer lives than providing food and very basic public health to Africans and other desperately poor peoples, of course.

    By the capitalist ethic, if you are seventy years old and want to spend your money on living to seventy-five or eighty, despite grave illness, no one is entitled to stop you. But by the socialist ethic, you should not presume to value your life above the multiple younger lives the health care budget could save. Socialism morally ought to let the old people die. Need by itself cannot be a claim on scarce resources . . . and no postscarcity society is in sight.

  • According to the Nursing Zone, the number of people w/out health care access skyrocketed from 56 mil. to 60 mil in just 2 yrs. In addition, a Fidelity survey finds almost half of U.S. employees believe their employers won?t provide health insurance, 2019.

    Like other middle-class uninsured Americans, prescription costs have become increasingly difficult to manage. Therefore, I had to go online to search for money saving options. I found Medtipster.com which is a helpful medical drug search engine that told me where to get generics for most of my brand named prescriptions. Medtipster allows you to type in your drug name, dosage and zip code to search for and locate prescription drugs that are available on discount generic programs across the United States; many of which are available for as little as $4. Prescriptions that are not available on a discounted program often have therapeutic alternatives on a discounted generic program, which are also available on Medtipster search engine. I have told my friends and families about http://www.Medtipster.com (Link)

  • William, we’ll ignore your “strawman” argument for the “morals” (whatever they are) of socialism and look at this statement:

    if you are seventy years old and want to spend your money on living to seventy-five or eighty, despite grave illness, no one is entitled to stop you.

    Indeed. What about if you are seventy years old and have no money to spend on living to seventy-five?

    Which is the crux of the problem if you have am empathic reaction to the circumstances of the other human beings you find yourself on the planet with.

    Healthcare is different because we are a social animal which, on the whole, feels an emotional reaction to the plight of others around them.

    BTW. Jonathon – while food is indeed produced by the market. People who can’t afford to eat are generally given options to get food too.

  • Johnathan Pearce

    What about if you are seventy years old and have no money to spend on living to seventy-five?
    Which is the crux of the problem if you have am empathic reaction to the circumstances of the other human beings you find yourself on the planet with.

    Daveon, as I noted, that shows that the problem is poverty, not the structure of healthcare. Not all folk will agree with me on this point, but as another commenter noted, even in the 19th Century, before the modern Welfare State arrived, institutions such as Friendly Societies, unions and philanthropists did a lot to fill the gaps; even many GPs would treat their poor patients gratis or charge a lower fee.

    For far too long, the supporters of the of the NHS have tried to create the myth that before the system of socialised medicine, there was just a bleak world in which only the mega rich had health care. This lie needs to be nailed.

    there are lots of things that could be done to foster more self-reliance in providing for health care, such as health savings accounts, etc.

  • Mrs. du Toit

    Which is the crux of the problem if you have am empathic reaction to the circumstances of the other human beings you find yourself on the planet with.

    There is no crux. Just reach into your pocket and give them money. What is wrong is to reach into another person’s pocket to force them to share your empathic reactions. They might have empathy for something else and they alone get to dictate where (if any) of their charity money is spent.

    You’re creating a false dilemma. No one is suggesting that there aren’t poor people needing food or medical care. The solution is not limited to “die” or “government pays.” There are many other options.

    As a point of clarification, health care is not health insurance, which is what the politicians and socialists in the U.S. are always going on about (which is simply a ruse to create another tax that will go into the General Fund to do with whatever they damn well please–like everything else).

    The fact that x million people don’t have health insurance has no relationship to their inability to access health care. Folks can qualify for welfare (if they are indigent), pay cash, pay on an installment plan, or declare bankruptcy if it is beyond their means. Hospitals cannot deny emergency treatment, based on a patient’s inability to pay. They can require the person be transferred to a state hospital (after the person is stabilized) or refer them to free clinics or other charitable organizations who provide their care.

    It is complete balderdash that Americans have no access to health care. That’s like saying that Americans with Internet access have no access to information. They’re just too lazy or too stupid to Google.

  • Pa Annoyed

    Yes, it is poverty that is the problem, but Socialists see poverty as a problem to be solved at all costs. The fact that capitalism doesn’t provide an instant fix means, as far as the Socialist is concerned, that capitalism is broken.

    The question is, what if you are 25 and don’t have the money to live until you’re 27? (Like someone I know.) You don’t have savings, or a rich family, you can’t work because you’re in the process of dying, and the insurance to cover the most expensive sorts of medical conditions is beyond your means? Do you simply shrug, knowing you’re going to die?

    To a Socialist, that people who could be saved are going to be told they’re going to die because they don’t have enough money is a horror. It’s one thing to do without a nice car, or holidays abroad because you’re poor, but for you or your children to be condemned to death for not having enough money is simply unacceptable.

    The thing about insurance is that on average, it costs slightly more than it would if you didn’t have it. It simply smooths probabilities out into certainties, and the company takes a percentage. So while you could get some more expensive treatments that way so long as they’re rarely needed, ultimately poor people will be inevitably limited to cheaper treatments.

    Taxation, however, is levied mostly on the rich. So if you pay for it from taxes, the poor can (in theory) get better and more expensive treatments than they could otherwise afford, the rich worse and less than they could otherwise. Socialists figure that everyone’s needs are roughly the same (in fact the poor tend to have poorer health and so greater need) and the rich’s means are so much greater, that this is only fair. After all, if you passed by a person drowning in a pond that you could have saved (remember what was said here when those PCSOs did just that?) and left them to die, that would be morally wrong. It would be equally wrong to let a poor person die that you could have saved with your money. So since only immoral people would refuse, coercion is OK because it only hurts the wicked. Good people would have paid anyway, charitably, so it does no harm to any of them. (This is Socialist thinking, remember.)

    Only the selfish have anything to fear from redistributive taxes.

    Private medicine cannot achieve this happily redistributive state of affairs, and so truly “has proven totally inadequate” in a Socialist worldview. Of course, they have problems getting their own schemes to actually work in any practical sense, but it’s not that they have misunderstood what private healthcare would mean or could achieve. It’s simply that they don’t like it.

    They have a different moral system. That’s not the sort of thing you can argue rationally against.

  • RRS

    Those who quote the 1848 Manifesto lingo never seem to come to grasp with how the “from” and “to” movements are to occur, by what mechanism other than one that will be indistinguishible from a “market” if their is to be no coercion.

    Who decides and how are their decisions to take effect?

  • virgil xenophon

    While I made my living for a considerable part of my life as an ins broker, and in another part as the owner (with my wife, an RN) of a medi-temp Nursing agency; and am therefore a believer in the flexibility of the private sector to solve many of the problems of delivering health-care, I would feel a whole lot better if, in arguing for a role for the private sector, we who champion
    the private sector would admit that rural health-care will always have to be subsidized to a large extent–probably by government. We would gain a lot more credibility that way.

    That this is so is largely a function of the old “how ya gonna keep ‘em down on the farm after they’ve seen gay Paree.” Most medical training takes place in medical centers in major metropolitan cities and physicians–and especially physicians wives–having grown accustomed to the blandishments of the cultural life of the city, are loath to spend their lives in the relatively culturally isolated countryside. If even Stalin and his head of the secret police Beria and his henchmen couldn’t force Russian physicians into the rural vastness
    in meaningful numbers, it’s unlikely that enough unsubsidized incentives will be found in present day western societies to accomplish what Stalin and Beria failed in. Therefore any system of meaningful reforms advanced by the private sector must, imo, address this issue in order to be credible.

  • If even Stalin and his head of the secret police Beria and his henchmen couldn’t force Russian physicians into the rural vastness in meaningful numbers, it’s unlikely that enough unsubsidized incentives will be found in present day western societies to accomplish what Stalin and Beria failed in.

    Stalin and his henchmen failed at a great many other things at which Capitalism is a rousing success – not the least of which, as was pointed out earlier, is getting the comparatively larger number of farmers tilling comparatively more productive soil to grow enough food to put on the shelves in the cities in the first place. The overall lesson to be learned from the Soviet Union, in the end, is that centralized planning is a poor substitute for free market price incentives. Draw the appropriate lesson regarding subsidies.

  • Can someone please explain to me once and for all what exactly is wrong with the American system?

  • Nick E

    @Alisa: The problem goes like this. Many Americans believe that people in other countries get to have all the high-quality healthcare they want without ever having to pay for it. So they demand generous health insurance benefits (either directly from the gov’t via Medicare/Medicaid, or indirectly through gov’t mandates as to the “minimum benefits” private plans must have). Which amounts to a scheme where other people can subsidize lots of your healthcare consumption. Which necessarily makes healthcare terribly expensive. They then panic about the high prices of services and demand that the gov’t fix the problem somehow. And they don’t believe that a gov’t-controlled system would carry any reductions in access or quality of care, because they believe that Europeans and Canadians all get perfect, free healthcare from their gov’ts.

    On the other hand, those of us who live in Massachusetts are already painfully aware of the flaws in this way of thinking.

  • Mrs. du Toit

    …what is wrong with the American system?

    It’s not fair!!!!

    That’s what it seems to come to. I have no idea what it means other than the plans are to break it to make it fair.

    The question is, what if you are 25 and don’t have the money to live until you’re 27? (Like someone I know.) You don’t have savings, or a rich family, you can’t work because you’re in the process of dying, and the insurance to cover the most expensive sorts of medical conditions is beyond your means? Do you simply shrug, knowing you’re going to die?

    Well, socialized medicine isn’t going to help that situation either. Socialized care means that health care is rationed to limit the cost exposure. Add to that the delay in getting seen and your friend would be dead or denied coverage anyway.

  • Laird

    Alisa, let me take a crack at that.

    In a nutshell, the problem (of course) is government, but that manifests itself in numerous ways. Insurance has already been mentioned here, and the fact that it has ceased to be true “insurance” against unexpected calamaties. It has now turned into a maintenance contract, covering routine medical matters, so it has created a huge dislocation between the consumer of the services and the payor. With little incentive to economize, all aspects of the health-care system have become vastly overused, predictably driving up costs. The fact that most “health insurance” is employer-paid is itself yet one more unintended consequence of our tax system, and is an artifact of the wage and price controls of WWII (unlike other employment benefits, health insurance isn’t taxed as income to the recipient). So the bottom line is that most people don’t directly pay for their insurance and thus don’t try to keep its cost down.

    The use of third-party payors also indirectly drives up costs, as the insurance companies rationally seek to minimize the claims paid and the doctors are forced to hire people to manage the insurance payment process.

    Our legal system is another huge problem. Nearly everyone here views the tort system as a giant lottery, and medical malpractice claims are endemic. The fact that most are frivolous is irrelevant; politicized (translation: bought and paid for by the plaintiffs’ bar) courts won’t dismiss these suits or sanction the lawyers who bring them. [Althought here is an interesting counter-illustration.] Accordingly, litigation costs are extremely high, and too many juries are willing participants in the “lottery” game and gladly award outsized judgments. With that risk looming it is hardly surprising that many frivolous claims are simply settled, rather than contested. The result of all of this is the practice of “defensive” medicine (ordering every conceivable test, overutilization of expensive specialists, overmedication, etc.) which drives up systemic utilization and costs, as well as the price of malpractice insurance.

    The mere existence of nonprofit hospitals is also a culprit. The fact that the institution itself is “not-for-profit” doesn’t mean that it doesn’t actually make one, or that the persons involved aren’t every bit as interested in personal wealth and power as the managers of any other enterprise. They all pay themselves very well, of course, but more to the point since the institutions aren’t permitted to retain much in the way of profit there is a constant expansion of facilities as a means of using up the “excess revenues”. Where I live, the mega-hospital in my county (which has successfully bought up all its competitors, a fine use of the “exess revenues”) now sees itself as being in competition with the mega-hospital in the adjoining county, and both have built elaborate new facilities right on the county line almost within sight of each other. This isn’t a rational use of resources, but is a predictable result of the non-profit system (shareholders in a for-profit hospital wouldn’t stand for such squandering of resources). This is yet another reason why I oppose the entire non-profit section of the tax code.

    Is that a good enough start for you, Alisa?

    Back to the original issue in this post, notwithstanding the idiocy posted on his blog by Mr. Hooper, eliminating the private markets from health care (which, to one degree or another, is pretty much the case everywhere in the world, as far as I can tell) cannot fail to result in inferior heath care. Competitive markets use pricing to send two very important signals, neither of which exists when the market is controlled by governments: outsized profits send a signal to the market to reallocate resources into that area, and high prices serve as a brake on consumption. Any resource, by definition, is finite, and its use must be allocated in some fashion. Without the price mechanism something else will take its place, be it long waiting lines, rationing, simple unavailability (fewer people becoming doctors), or (most probably) political influence and corruption. The price mechanism is the least distortive, most effecient, and least offensive method of allocating any resource, including health care services.

  • Paul Marks

    Alisa I am told (I do not know) that there is a Russian saying “first they smash your face in – and then they say you were always ugly”.

    Whether there is such or saying or not – it is apt.

    Both subsidies and regulations have made the cost of health care very expensive – and then the collectivists who supported all the interventions blame the high cost on the “free market” or on “big business CEOs” and demand yet more interventions.

    As for the history……….

    First State after State introduced doctor licensing – for the “good of the sick” of course, to protect them from quacks.

    However, then the American Medical Association stopped being an group of people who could say to the public “go to one of our member – they will offer you better treatment” and became an organization that (via its influence on government bodies) could, by the threat of force, stop people competing with its members.

    An odd things started to happen.

    Medical schools (even high quality medical schools) that did not play ball with the AMA found that their qualifications were not recognised.

    And doctors found themselves discouraged from siging on with American fraterinities.

    For like British Friendly Societies some American mutal aid societies (Fraternities) had hired doctors on fixed pay contracts.

    And in the 1930’s when there was vast influx of doctors from Europe (fleeing the Nazis) by some strange coincidence the number of Americans passing medical school examinations fell – so that there was not such a great pressure on doctor fees by having “too many doctors”. Or perhaps it was because the students became more stupid – or went for them many other opportunities open to them in the Great Depression.

    Milton Friedman expossed the fraudalent nature of occuaptional licensing more than half a century ago using the medics as an example for study. But did not lead to a roll back of these regulations.

    On the contrary there were a vast number of new regulations – each increasing costs.

    Insurance (which only became really popular in the 1950’s anyway – when just paying for each treatment became an expensive option) is no longer insurance at all.

    The insurance companies are told they must include X Y Z in their pland – even of the people have no real interest in these things. So costs go up.

    And insurance companies are told they must not take account of A B C factors in their prices – so everyone has to bear the cost by the cost of insurance going up and up.

    And, of course, E.R.s are not allowed to turn people away (whether they have insurance or not – so much for the “people dying for lack of insurance”) so the costs get passed on.

    And it is not a zero sum game – it is worse than that as there is no real relation between the individual and medical costs anymore noone is really in charge of them.

    And of course one can not buy insuance over State lines (which even John McCain was in favour of) so there is no real competition between States – each may regulate to the point of insanity, and the Federal government regulates on top of all this (adding to costs even more).

    Then there is the crazy legal system that allows people to lay suit and win without their being negligence – “something bad happened so I must be paid think-of-a-number-and-times-it-by-ten”.

    In many rural parts of the United States doctors involved in such things as child birth are hard to find – as they can afford the malpractice insurance.

    And there are endless other regulations.

    And it is not just regulations.

    The subidy programs.

    First Medicare and Medicaid – and now SCHIP.

    These are not just a vast expense in themselves (Medicare and Medicaid have gone from five billion Dollars for both in 1965 to many hundreds of billions of Dollars for each now) – they also push up private health costs.

    Just as subsidies for higher education have pushed up college tuition fees – such is the nature of subsidies.

    Is the above enough to be going with, or shall I add more?

  • dre

    For an example of free market health care, look at pet health care.

  • nick gray

    If you have a government-run health-care service, then it becomes a sacred cow, and Hellywood won’t make movies about it’s inefficiency and venality, and would lose another plot-line. without HMOs, they’ll go back to Brit-bashing! You have been warned!

  • chip

    “I’d imagine that those who have died in America owing to lack of insurance didn’t rate the distinction that much.”

    As someone who just lost a friend to cancer, mostly because the NHS misdiagnosed him twice and then refused to provide his records to his new doctor abroad, I know a little something about people dying in certain healthcare systems.

    The fact is that about 2/3 of Americans with cancer are still alive after 5 years, while in the UK it is only half.

    So the question is ‘how many people have died in socialist system that could otherwise have lived in a free system?’

  • RayD

    Sorry, your argument comparing health care to food is very poor, and below standard for this site.

    You have to split health care into two parts, rather like running a car. You pay for servicing out of income but insure against accident.

    And there’s the problem, right there. Insurers wiggle out of paying. It’s a business, it’s what they do. If someone pays their premiums, and then gets a serious disease which the insurer declines to cover for some reason, e.g. you said you didn’t smoke but we found nicotine in your blood, now what? What’s the market solution? You can’t go elsewhere because it’s now a pre-existing condition.

    That, I believe, is the argument for state health care.

  • Thanks guys. The main reason I asked is that I understand the problems broadly, and need no convincing myself, as I have lived in the US and paid the healthcare prices. I am looking for a more systematic explanation though, that would also include some useful examples, so that when I compare problems and their solutions between the US system as it exists now and, say, the Israeli system, I can compare apples to apples, especially when arguing with the various socialist types here. (No, scratch that, with the ignorant brain-washed types who are nevertheless still receptive to reason and plain facts. The truly socialist types are a waste of time and energy:-|) I fully realize that I am asking for free lunch here, but I think that if anyone can come up with such very short version of “US Healthcare for Dummies”, they will do a great service to their nation and the advancement of freedom the world over. If not, I’ll just sit down and try to work it out from your comments above:-)

  • Alsadius

    The defence goes something like this:

    – We consider it a right as a citizen of a first-world nation(i.e., one that can afford to dick around with such things) to have access to certain fundamental things, most notably food, shelter, healthcare (necessary for life), and primary education(even out the birth lottery).

    – Some of these things have predictable costs. We can give income support to pay for food and shelter, and provide vouchers(I wish) to pay for education.

    – However, healthcare has unpredictable and wildly variable costs. We can’t ensure a basic standard of living and let people pay for it themselves, because they often won’t be able to. Thus, giving money is insufficient, and we must give insurance of some kind.

    – If the government is guaranteeing/mandating insurance, then it must clearly have some control over that insurance to ensure that tax dollars are spent well.

    Thus, public healthcare. I don’t buy the whole argument, and it’s certainly not airtight, but it’s the sort of reasoning involved, I expect. Personally, I buy maybe half of it – public guarantees of health coverage are fine by me, but systems like the NHS are trash. There are better ways, even with the same objectives.

  • Alsadius

    Oh, and Alisa, the problem is that it’s the worst of both worlds. You have all the bureaucracy and torpor of a publicly regulated system(because it is), and all the litigiousness and poor people falling through the cracks of a private system(because it also is). It’s got all the inequity of a private system, and all the inefficiency of a public system, and the activists on either side point at the other half and blame it for everything. The American healthcare system is not the worst system in the world, but it is certainly the biggest mess of a system in the world, and as such it has pretty much every failing imaginable, no matter where on the scale. It has pretty much every success imaginable too, but those don’t make nearly as good of rhetorical points.

  • Oh Alsadius, I certainly do understand the socialist logic:-)

    I obviously need to narrow down my question: where I really have no information is the regulation part (in the US). What, where and how is regulated? Paul mentioned the inability to buy insurance across state lines. What other regulations are there? Also, someone (Laird?) mentioned subsidies. Are Medicare/aid what is meant by subsidies? Any other subsidies?

    I guess I’ll have to plow* through Laird’s reply – I doubt I’ll find anyone more systematic than him:-)

    *No offence Laird, it’s not your fault, it’s the system’s.

  • Johnathan Pearce

    RayD, perhaps you think the article falls short of this site’s standards because you just don’t agree with it. Let’s review your point:

    You have to split health care into two parts, rather like running a car. You pay for servicing out of income but insure against accident.

    Yes, I know that.

    And there’s the problem, right there. Insurers wiggle out of paying. It’s a business, it’s what they do. If someone pays their premiums, and then gets a serious disease which the insurer declines to cover for some reason, e.g. you said you didn’t smoke but we found nicotine in your blood, now what? What’s the market solution? You can’t go elsewhere because it’s now a pre-existing condition.

    Well insurance firms clearly do pay for healthcare, despite some obvious difficulties, so I am not sure your argument about the drawbacks for insurance really applies. And with insurance, remember, premia will obviously vary depending on whether a person adopts a high-risk or low-risk lifestyle. That is one way, by the way, that the market encourages people to take greater responsibility for their health. With state-funded systems, there is inevitably pressure for the state to boss us around in order to cut health spending costs.

    Some health spending costs, just like running a car or a house, are known and predictable. As we get older, our healthcare spending tends to rise, and as we reach the time of going into residential care, etc, this rises further. That is why people can and should take out things like health care savings schemes, which are controlled by the individual rather than the state, to encourage choice and keep costs down.

    Sorry RayD, but your arguments are not very convincing.

  • Vercingetorix

    What is so special about health that it cannot be done by capitalism?

    Nothing.

    We get by quite well without community messhalls, community barracks, community bathrooms, and so on. We don’t need every hospital to be communal, just a few and those could be much better run through charities rather than the government. As with 99.999% of life, alas.

  • Rich Rostrom

    Differences between food and medical care:

    People enjoy food and pay for it willingly.

    Nobody enjoys medical care and nobody pays for it willingly; at best it is a tolerated necessity. (Cosmetic surgery is the exception to this rule.)

    Food is cheap; an adequate basic diet can be had for a few dollars a day.

    Medical care is expensive; much more costly than food. The NHS in England spends about L1,800 per year per capita – about $7.50 per person/day.

    Food costs fall in a fairly narrow range.

    Medical costs vary wildly, with some people having literally hundreds of times the costs of others.

    High cost food is purely a luxury that no one has to have.

    High cost medical care is often a matter of life and death.

    Food is easily judged; people know what tastes good and what doesn’t. No one buys fake food.

    Medical care is complex and obscure. It is difficult even for experts to determine what is good practice and what is bad. People pay charlatans huge sums for dubious or non-existent medical care.

    Food is safe. Few people are made sick by what they eat, and even fewer die of eating bad food.

    Medical care is dangerous. Thousands of people every year are killed or crippled by medical errors.

    And so on.

  • Rich, no one here, including Jonathan, claimed that food and healthcare are the same in every way – of course there are many differences. I think what you would be expected to provide is proof that the very real differences you listed somehow logically preclude healthcare being provided by free private market.

  • Johnathan Pearce

    Rich, I second Alisa’s point, but let me add some more, since you went to the trouble of listing some of the differences.

    First of all, just because people buy healthcare less requently than food, or because individually, healthcare is more complex and more expensive, does not, in of itself, make it any more sensible to run healthcare via the state than through the market. Lots of things, like cars, for example, are relatively infrequent purchases and are complex bits of machinery. For very good reasons, we are better off with cars being built by the private, not state, sector.

    There is also the implied paternalist argument that you use, namely, that because consumers are not experts about complex health, they therefore are not able, as informed consumers, to make a choice. But that does not rule out the case for competition in a market for health, far from it. So long as doctors are licensed by an accepted institution and they do not fraudulently pose as doctors, then a consumer can “shop around” for a doctor; they can check their reputations, get second opinions, get references, etc. This is no different from financial advisors, accountants, architects, engineers, geologists, whatever. (The internet is also making such checks increasingly easy to do.)

    In fact, I would argue that precisely because health is a relatively rare spending item unlike food, that the case for competition and the market is even stronger. So your points, detailed though they are, don’t lead to the statist conclusion that you no may hold.

  • Bendle

    Johnathan, surely the comparison with food is specious? Most western food production is heavily subsidised and protected in order to insulate it from natural risks and market fluctuations. In a nutshell, the trouble with farming is that a short run run of low prices, bad harvests or disease will reduce returns to the extent that the business becomes non-viable. People move into other businesses, food production falls, prices rise etc etc. That’s what happened in the UK in the 1930s. If for some reason importing more becomes difficult, you can have national security issues.

    I’d be the first to agree that the wastage and over regulation that one finds in the subsidised parts of western agriculture are typical problems associate with state control. And I am not one of those farmers who exaggerates the number of abandoned farms in the 1930s in order to justify more and more subsidy. But most of our food supply just isn’t left to the market – the capitalism involved has much of the risk removed.

  • Johnathan Pearce

    Johnathan, surely the comparison with food is specious? Most western food production is heavily subsidised and protected in order to insulate it from natural risks and market fluctuations.

    Part of the wholesale market for food is distorted by tariffs and subsidies, yes, as I said in the article. But the retail side of it – leaving aside some issues to do with supermarkets – is pretty free market, in fact ruthlessly so. Just imagine if we ran our shops the same way that we run the NHS. It would be a disaster.

    the trouble with farming is that a short run run of low prices, bad harvests or disease will reduce returns to the extent that the business becomes non-viable. People move into other businesses, food production falls, prices rise etc etc.

    Well, if demand for some kinds of health treatment rise or fall because of changes in ageing, technology, disease, environmental factors, then this can also make some kinds of health treatments obsolete, so that some kinds of health treatment no longer are viable. Patents on drugs run out, for example, making some firms’ operations less profitable, and so on. There are economic trends in healthcare just as dramatic as in food.

    But your point about swings in the price of crops, for example, hardly undermines the case for a market. The large futures markets of Chicago and elsewhere were developed so that growers could hedge prices in conditions of uncertainty and ensure that farmers got an upfront price for their crops.

    I never said the parallels were exact, but I sense here that some people on this board are trying to pick on such differences to make the case that somehow, health care is “different” and therefore – non-sequitur – must be delivered by the government in some form or other.

    To put it politely, I beg to differ.

  • bendle

    Well, to be open, I DO think healthcare is “different”, but I wasn’t trying to nitpick and I thank you for your reply. I’ve said this to you before, but I’m just an curious non-libertarian, and your replies are always helpful.

    I don’t disagree with the case for markets, I just think sometimes there are strong cases for limited state intervention. Even Hayek allowed for a bit of that didn’t he? Anyway.

    You would find interesting material for the health debate in early 20th century midwifery. When licensing of midwives began, many women particularly in rural areas, preferred to stick with the unofficial local ones because, chiefly, they were more sympathetic and gentle. This was generally seen as evidence of backwards-ness, but in fact in the 1930s, rates of infection were actually higher with official doctors. The local unofficial midwives tended to charge what the mother could afford.

  • Johnathan Pearce

    Bendle, thanks. Your nugget about midwifes is exactly the sort of useful data that these comments are good for. Cheers!

  • RayD

    Johnathan, it was the specific comparison to food that I thought poor, not the whole article. I’m sorry if I was unclear.

    Vendor sells me a bad apple, next time I go elsewhere. Doctor is baffled by a nasty rash, I take it somewhere else. No problem, agreed.

    For life threatening conditions the situation is different. Your very existence is in the hands of a commercial organisation whose profit would be increased if they could find a reason not to treat you, or to give you a cheaper, less effective treatment. Or you could be uninsured and end up alive but in so much debt any kind of normal life is impossible.

    The idea that a friend or family member might die because their credit is insufficient or their policy had lapsed strikes many people as just plain wrong and somehow “uncivilised”.

    If the government had no involvement in health care at all, I suspect that there would be pressure to regulate, and regulate quite heavily in the case of insurers going bust or policies mis-sold. The government would end up in a similar position with respect to health care providers as it does with banks, providing a guarantee for depositors. I think this would be health care delivered by the government by the backdoor, would you agree?

  • RayD

    Jonathan,

    Off topic, but I would be interested to hear your response.

    To play the Devil’s advocate, I will argue that social workers are practicing a form of health care when they intervene to prevent what they consider to be ill treatment of a child. Note I’m carefully avoiding stating that criminal offenses are being committed so you can’t argue that it is covered by law enforcement.

    Is that state provided health care for the child?

  • Laird and Paul, thank you very much, things are becoming much more clear. A question:

    The use of third-party payors also indirectly drives up costs, as the insurance companies rationally seek to minimize the claims paid and the doctors are forced to hire people to manage the insurance payment process.

    Does this have anything to do with government regulation? Also, the same question regarding tort law.

    And yes, if there is more (???) feel free to pile on:-)

  • Laird

    As to insurance indirect costs, I don’t think it has much to do with government regulation per se, although insurance companies are in fact highly regulated (mostly at the state level, including specifying what types of procedures have to be covered). It’s mostly the usual sorts of claims-processing paperwork. Insurance companies want to be sure that claims are proper, so there are extremely detailed forms and processes to follow (every medical procedure has a unique code, and if you enter the wrong one it might not be paid). Doctors don’t fill out those forms themselves; they hire clerks to do it. It’s very labor- and paper-intensive on both ends, as well as time-consuming, all of which drives up costs.

    Tort law isn’t generally driven by regulation, but by statute, common law, and the court-made rules of civil procedure. As such litigation is necessarily a species of government action (or at least, government-controlled action), which is why I lump it in with my general statement that government is most of the problem. A more rational (fairer and cheaper) malpractice claim procedure could be devised, but the trial bar is too powerful for that to happen.

  • J

    Alisa:

    At a fundamental level US healthcare appears to be inefficient – it produces too little health for the amount of money consumed. Of course this is not necessarily a bad thing. And it also the case that keeping a sick person alive for 6 years often costs 10 times more than keeping them alive for 5, so ‘first rate’ healthcare may be inherently highly inefficient.

    There are other ways it appears to be bad (but might not actually be). One is the enormous influence insurers and the financial systems have. I don’t just mean the usual shock horror cases of evil insurers (although those are plentiful and real). I mean the fact that the process and systems of US healthcare are geared first towards billing and secondarily towards clinical care. My involvement is merely in writing software, but it’s clear that US health IT systems are essentially massively complex billing systems with a small amount of clinical stuff added on. This is kind of representative of the whole approach.

    The system is fragmented. Again, it’s not clear how much of a problem this is – US consumers don’t seem to mind it. Doctors find it very frustrating that it’s almost impossible to reliably transfer records between competing institutions.

    I actually find it hard to decide which of the two systems I prefer – or even which is ultimately better in a purely clinical sense.

  • Paul Marks

    Rayd – you have got the message that the level of subsides and regulations has reached such a level that there really is not a market in healthcare anymore.

    As for health insurance companies seeking ways to “get out” of paying for XYZ.

    Insurance only became popular in the first place because government interventions hit both direct payment (increasing the cost) and mutial aid societies (back in days when “fraternity” did not just mean student drinking den).

    And, of course, the things the insurance companies try and “get out of” are normally the things they were forced to cover – by regulation.

    To work out an insurance premium (for life insurance, flood insurance, or health insurance) one has to know various things about the situation of the person who is asking to buy it.

    If the government says (for example – as in California) “yes I know this person lives in area that is very likely to be flooded, but you have to insure him anyway – and this is the price you must insure him at”.

    Well then the whole thing is a farce and all bets are off.

    It is no different in health insurance.

    As for social workers:

    You do not want to know what I think about them – so I will not anger you by giving you my opinion of these people. Other than to say things were better when the social workers belonged to such things as Locke’s Charity Organization Society.

    Of course “free health care” need not be from the government either – indeed you could help fund it yourself – on a voluntary basis. Unless (like Harry Reid) you think taxes are voluntary.

    Bendle:

    Using the absurd government interventions in farming and food as some sort of justification for internvention in health care is an error.

    Rich Rostrom:

    I agree that health care is very complicated – that is a good reason that government should not get involved.

    The more complex something is the less suitable it is for government. The sword of state may be sharp – but it is (in another sense) a very “blunt instrument”.

    Alsia.

    I forgot to mention the antics of the F.D.A. in driving up costs and killing thousands of people by making them either never get meds or only get them when it too late – on health and safety grounds of course. This has been especially bad since the 1962 amendments.

    See “Who Protects the Consumer” in Milton Friedman’s “Free to Choose” (1980).

    Almost needless to say the “health” regulations on food in Britain are really about bankrupting small independent enterprises and pusing everything into the hands of a few very large corporations (not about making food safer).

    See the extensive writings of Christopher Booker and Richard North on this subject, over the last several decades.

    It is irritating for me to see the same old lies come up again and again.

    With for example government “health” regulations being treated as if they were for the “good of the consumer…..”

  • nick gray

    Alisa, what sort of health care do you enjoy in Israel? Is it just “Be grateful you woke up alive!”, or is there more to it?

  • Johnathan Pearce

    RayD, thanks for your response; but you are still making some fairly basic errors in logic, in my view:

    For life threatening conditions the situation is different. Your very existence is in the hands of a commercial organisation whose profit would be increased if they could find a reason not to treat you, or to give you a cheaper, less effective treatment.

    Wrong, because such an organisation will have a reputation for delivering good service that it wants to protect. On that basis, one wonders why we are not routinely poisoned by food companies looking to make money out of adulterated, sub-standard products. The reason they don’t is not mainly because of government regulation, but because firms that kill their customers tend not to stay in business very long. And consumer activists and journalists kick up a stink.

    The same process will apply even to the sort of life-threatening illnesses that you talk about; it is also not very credible, in my view, to imagine that a desire to control costs will not also apply to the state sector. In that case, however, there is no meaningful competition and no way that a patient can check up on the relative track records of different service providers. In the NHS, there just is not this sort of data available.

    The idea that a friend or family member might die because their credit is insufficient or their policy had lapsed strikes many people as just plain wrong and somehow “uncivilised”.

    Well that is the case for charitable assistance, for doctors to help folk in poverty, etc. (I will leave aside whether I am, or should be, expected to cover all of the potential health costs of my fellow Man, which are infinite). As I have said several times before on this thread, these are issues of poverty and the side effects of absurdly high costs caused by the problems that Paul Marks wrote about on this thread. Fixing such issues by the sort of socialised medical situation we have in the UK is a sledgehammer to crack a nut.

    Still not convinced, I am afraid.

  • bendle

    Bendle:

    Using the absurd government interventions in farming and food as some sort of justification for internvention in health care is an error.

    Paul:

    I agree that it would be. But I didn’t make it because that’s not what I said. I just pointed out that citing food as example of a need met by free-market capitalism is bogus.

  • Wrong, because such an organisation will have a reputation for delivering good service that it wants to protect.

    I think the reputation argument is a tricky one. The very best hospitals might have very poor success rates, because the most (medically) hopeless cases will gravitate to them. That’s going to put pressure on hospitals on the one hand to take cases that are good for their reputation, and on the other hand it’s going to require consumers to have access to and an understanding of independent information on ‘value-added’ for hospitals. None of that is insurmountable, of course, but it’s a barrier.

    On the food comparison; companies routinely adulter food, and are incredibly skilled at cutting every corner they can to save money while not causing immediately noticeable harm to the consumer. I’m not particularly happy about that for food, but for medical care (where identifying harm is much harder) it’s even more scary.

  • benson2000@googlemail.com

    “I will leave aside whether I am, or should be, expected to cover all of the potential health costs of my fellow Man, which are infinite”

    In the days of conscription armies there was a self-interest argument in this respect – the 20th century concern re public health provision was – arguably – kick started by concern over the poor fitness of working class recruits to the Boer War and WW1 armies. Of course by this logic, the fact that we are unlikely to ever have to conscript an army means we no longer need socialised health care.

    “Well that is the case for charitable assistance, for doctors to help folk in poverty, etc”

    To accept a 100% free-market capitalist solution, does one not have to:

    1 Believe that charity will cater for those who cannot afford private health insurance

    2 Be comfortable with the fact, if charity cannot cater for all of those people, some of them will die because they don’t have it?

    I’m not trying to be emotive with point 2.

    I understand the philosophical argument for not paying for other people, and I have read Paul’s posts about poverty and inflated costs, but ultimately these two practical questions remain, no?

  • bendle

    “On the food comparison; companies routinely adulter food…”

    Even more so in the less regulated 19th market when, notoriously half of all bread for sale in London contained alum, wine, cider and cheese had lead added, and milk had water and chalk added. One might argue that these substances were not classified as poison, but they could be, and were fatal.

  • bendle

    “On the food comparison; companies routinely adulter food…”

    Even more so in the less regulated 19th market when, notoriously half of all bread for sale in London contained alum, wine, cider and cheese had lead added, and milk had water and chalk added. One might argue that these substances were not classified as poison, but they could be, and were, fatal.

  • Johnathan Pearce

    Even more so in the less regulated 19th market when, notoriously half of all bread for sale in London contained alum, wine, cider and cheese had lead added, and milk had water and chalk added. One might argue that these substances were not classified as poison, but they could be, and were, fatal.

    Which requires, at most, for there to be strict rules against fraud and adulteration, not a National Food Service or massive regulation, which is what the health-cannot-be-done-in-a-market seem to be arguing.

    Sigh.

  • Laird

    Benson, to accept a socialized medicine solution (even a less than 100% one), you have to accept the proposition that someone else’s need (real or perceived) gives him some moral right to take my property. The two points you listed are red herrings. Whether or not the human charitable impulse will provide for most people in need (and history demonstrates that it usually will) is irrelevant to the moral question of need justifying theft. I maintain that it does not.

  • Johnathan Pearce

    In the days of conscription armies there was a self-interest argument in this respect – the 20th century concern re public health provision was – arguably – kick started by concern over the poor fitness of working class recruits to the Boer War and WW1 armies. Of course by this logic, the fact that we are unlikely to ever have to conscript an army means we no longer need socialised health care.

    Well, that is very different from the sort of altruist argument that one normally associates with arguments on why we should be forced to pay taxes to pay for the health care of the poor. Even that military-fitness argument shows how the Welfare State has often been driven by war, rather than by more benign considerations.

    It gives a whole new meaning to the expression, “War is the health of the state”.

  • bendle

    The two points you listed are red herrings.

    Laird, I see that they are in moral terms, but in terms of what might actually happen, surely to accept the purely free-market solution, you have to be willing to say something like “Because I believe that someone’s need does not give them a moral right to my property, I accept that people without the ability to pay for what they need will die as a result of it.”

    I am not judging whether that is a good or bad thing to believe, I’m just interested in the question.

  • Johnathan Pearce

    Bendle, fair dos. The problem is that apart from ideologues like us, very few people object to tax-funding of health care for the poor on the grounds that need does not justify theft. Most accept, either explicitly or not, the premise of what Ayn Rand called the altruist argument: namely, that my need justifies taking from someone else, even if that means theft of some kind.

  • bendle

    OK I see.

    Personally I quite admire the libertarian integrity in at least confronting the question.

    And actually my proposition might not be quite as outre as it might sound. Take someone with lung cancer who has an expensive operation but refuses to stop smoking. At that point a lot of people would say he didn’t deserve another NHS op. Which is in effect saying they shouldn’t have to pay for it. The implication is that if he dies because they wouldn’t pay on the basis of a principle – well, tough. Obviously this is slightly less easy with, say, a child with leukemia, but still.

  • Laird

    [Y]ou have to be willing to say something like “Because I believe that someone’s need does not give them a moral right to my property, I accept that people without the ability to pay for what they need will die as a result of it.”

    I am willing to say that, with the slight modification that such people “might” (not “will”) die of it. Your “need” creates no “right” to my property, but you nonetheless have the right to request assistance and I have the right (but not the obligation) to grant it. Few people would refuse assistance to a sick child. But whether spending huge sums of money on a lung transplant for an 80-year-old chronic smoker makes sense is a decision best left to the people being asked to bear the cost (which does not mean a government bureaucrat spending tax dollars). If he’s paying for it himself, from his own wealth, no problem. If he’s asking me for a contribution, my decision will turn on numerous factors which are personal to me. In no case, however, has he any moral right to demand my contribution, and if he dies as a result, so be it. He’s going to die eventually anyway; it’s just a timing issue.

    Benevolence is a common human trait, and one of the serious flaws inherent in the socialist model is that it has a tendency to suppress charity. Another is that it creates a mindset of entitlement. Both are very bad things.

  • Laird – I’d say that the vast majority of people would refuse assistance to a sick child, unless you can somehow get the actual sick child into their house to ask them directly while looking pointedly at their LCD TV and 50 gallon fish tank. A child starves to death every 5 seconds somewhere, and there are surely enough requests to help them on TV, in newspapers and elsewhere, yet staggeringly little of our individual wealth goes to help them.

    Now I’m sure some of those people believe that giving money wouldn’t actually help (and they may be right). And some will believe, despite all the evidence, that the government is taking care of it. But for most people if the problem isn’t literally right in your face (and I use the word literally in the literal sense) then there isn’t really a problem.

    That’s not an argument for socialized health care, or against charity. But it is a fact.

  • Paul, no one is expected to help children thousands, or even hundreds of miles away. We are supposed to help those we know and have an interest in (which of course doesn’t mean that some of us will not extend their charity to far away places, and contrary to what you wrote, many actually do). Those far-away children are surrounded by people just like you and me, and those people are supposed to be interested in those children. The reason those people are not helping those children is because their society is screwed along the lines of our own, only to a much greater degree.

  • Alisa – “supposed”?

  • “supposed”= “morally expected in a functioning civil society”.

  • Alisa – that’s a 7 word sentence containing 5 words with hazy meanings (in this context). For example, in a “functioning civil society” I would “morally expect” people to provide help based on need rather than geographical proximity, and those quoted word are sufficiently nebulous that my assertion is as valid as yours. My understanding, limited as it is, is that in a libertarian system you’re free to expect whatever you will, but people will assign their charity without regard to what you or others might suppose.

  • in a libertarian system you’re free to expect whatever you will, but people will assign their charity without regard to what you or others might suppose.

    Of course, but that is only part of the picture. The other part is that most of us are, as has been pointed out here and elsewhere numerous times, are social animals, who are willing to help others under the right circumstances. Lack of coercion is a necessary circumstance for most people. It’s like this: either we assume that most people are charitable by nature or not. If they are, there is no need to force them. If they aren’t, then what you are saying that the few that are charitable are there to force the uncharitable majority into being charitable. Does this sound to you like something that might work? And do you really think that most people wouldn’t chip in to help a sick child next door? As to expectations and suppositions: there are some among the uncharitable that can be peer-pressured into charity. Peer pressure is a legitimate social mechanism, as long as there is no threat of physical violence.

  • Forgot to address this part:

    I would “morally expect” people to provide help based on need rather than geographical proximity

    It’s not just geographical proximity, it’s complex day to day human relationships. But, there is nothing wrong with providing help based on need rather than geography, and if you and like-minded people wish to do so, more power to you. However, most people are naturally inclined towards the opposite approach, as it is more practical for several reasons.

  • That’s not an argument for socialized health care, or against charity.

    Then why are you mentioning it, here on this thread about health care and charity?

  • Alisa – I don’t deny that people are social animals, that most of them have a charitable instinct, or that many (perhaps even most) would help a sick child next door (though ‘next door but one’ is a different prospect) . But everyday experience shows that people aren’t particularly charitable – the average amount is £15 per month, which I find surprisingly generous, but it’s still only around 0.75% of median income. Double their available income, then redouble giving as people see more needs being dropped by the government, and you’re still looking at drops in the ocean. Very welcome drops, for sure, but still drops. That’s why I find a connection between libertarianism and communism (really!); I object to communism not because I don’t like that system (though I don’t), but because people don’t behave like that – that’s why it keeps failing. I’m concerned that libertarianism has a similar flaw; it expects behaviour from people (a relinquishing of political power, for example) that sounds great, but isn’t what people do.

    All that’s rather an aside though. I was objecting to your characterization of ‘supposed to'; we can hope that people will behave as you describe, and libertarian theory might even have good reason to depend on it, but to say ‘supposed to’ denies that which is the heart of the libertarian argument, I think. That’s why I’d also disagree with your claim that peer pressure is a legitimate social mechanism; for a society legitimacy is granted by the society, not by the presence or absence of violence.

    Joshua – I mentioned it because Laird said “Few people would refuse assistance to a sick child.” I believe that is demonstrably wrong, and we need to keep that in mind when discussing health care and charity, even though it is not of itself an argument for or against either one.

  • Paul –

    OK. The reason I asked is because I think you might be taking things out of context a bit. As I read the arguments here, they’re all about “helping thy neighbor,” where “neighbor” loses currency outside of one’s own community. It isn’t so much “geographic distance,” it’s more just a function of being a member of a completely different (and, in the case of the deaths that make your “a child dies every 5 seconds” statistic possible, NONfunctioning) civil society. Charity serves to plug up holes in an otherwise functional society. People slip through the cracks for whatever reason (sometimes their own fault, but more often they’re victims of circumstances, or just genetically poorly endowed), and the human impulse is to want to help. Charity functions in this kind of environment. Charity doesn’t function at all in the kind of environment where a breakdown in property rights or police protection has created a semi-permanent hellhole, like in Zimbabwe or Uganda, and I don’t think anyone here is arguing that the kind hearts and deep pockets of the West can make those situations right. In those cases, the solution will have to be deeper, more systemic. My point is that seeing that everyone gets reasonable access to healthcare in a functional, capitalist society and preventing people from starving to death in a non-functional, politically primitive one are two completely different problems with completely different solutions. It’s only productive to talk about charity in connection with the former, and so I wonder whether your refernce to world starvation isn’t needlessly distracting from the issue under discussion?

  • Laird

    Paul, Alisa is carrying the argument quite nicely, but I’d like to note that your observation that “people aren’t particularly charitable” actually supports my earlier assertion that socialism suppresses charity. If I see 40% of my income taxed away by a government which supposedly is going to “take care” of all the needs of the poor, why should I contribute even more? “I gave at the office”, as it were. Get the government out of the charity business and I think you’d find a huge increase in contributions. Also, private charities have a better chance of influencing destructive behavior on the part of recipients, ultimately reducing the need for charity, but we’re drifting seriously off-topic here so I’ll stop.

    You did make an interesting point, though, which I’ll have to ponder: “I’m concerned that libertarianism has a similar flaw; it expects behaviour from people (a relinquishing of political power, for example) that sounds great, but isn’t what people do.” You may be right about that, but I’m not convinced. Certainly some people have an insatiable lust for power, but surely that isn’t everyone, or even most people. And isn’t that why we have constitutions, as a check on that impulse?

  • Jim A

    Well the difference is that with food the difference between the best and worst is largely one of taste and preference. You can certainly get by (probably more heallthily than most of us) on a diet of beans, rice and a bit of greens for an astonishingly low cost. Healthcare OTOH is much more of an even line, the difference between advanced (and expensive) medical care and asparin and rest is often one of life or death. Yes, many treatments are expensive and are marginal improvements on cheaper ones, but the private market works well for food precisely because the minimal ammount needed is very cheap by Western standards. The same can NOT be said for medical care.

  • Yes, many treatments are expensive and are marginal improvements on cheaper ones, but the private market works well for food precisely because the minimal ammount needed is very cheap by Western standards. The same can NOT be said for medical care.

    The private market is the reason that food is so cheap. There was a time in human history when you worked 14hours a day in the field with scant guarantee that you would have enough to eat through the winter. These days, half an hour of trivial data entry buys you a greater variety of more nutritious food than even your great grandparents could well have imagined. It’s hard to imagine that healthcare will always be as expensive as it is now, especially if the market is allowed to function. Notice that the expense of healthcare goods is not something that a government distribution system can solve. The cost simply comes out in shortages. Scarce goods remain scarce until someone finds a way to produce them more efficiently.

  • Laird

    Also, the socialization of healthcare results in everyone demanding, as a matter right, a “diet of caviar and lobster” (in other words, the most advanced and expensive treatments and medicines). It is not, and never will be, feasible to provide that for everyone. Absent a free market, the inevitable shortages will be allocated via the only remaining method: political pressure. Corruption is only possible result.

  • Tedd McHenry

    I apologize if someone already pointed this out and I missed it.

    The difference between health care and groceries is that it is extremely unlikely that a random event will lead to an unexpected orders-of-magnitude increase in your grocery needs. In other words (as some have pointed out), health insurance is what concerns most people. But, as Serf pointed out, the common assumption is that if the state insures then the state must also provide the care.

    To be clear, I’m not arguing in favour of state-run health insurance, only describing how it differs from groceries (or even dental care, for that matter).

  • John McVey

    The answer is: there is nothing special about its provision. There is no reason to believe that the laws of supply and demand wont work just as well in medical goods and services as they do for any other goods and services, if people were left free to act and hence those laws were left to function. All controversy relates to the moral status of inequality of access. The argument “But it’s DIFFERENT!” is at heart an egalitarian complaint, not an economic complaint.

    The moral issue is masquerading as an economic issue because ideas regarding the former being put into practice then having a strong influence over the latter. The interference then stuffs up the mechanism, the consequences of which is then used as excuses to engage in more interference so as to further the morally-preferred outcomes. Notice that this pattern is in principle exactly the same we find happening where-ever else there is interference similarly driven by moral beliefs, such as education or finance.

    In all cases, free-marketers arguments about why the mechanisms are not functioning properly get ignored because of the simple idea that if something is evil in morality then it is not likely to be good in practice: “inequality is evil, free-marketers are (at best) indifferent to inequality, and hence their ideas if practiced would lead to practical outcomes we (the egalitarians) find intolerable.” Tack on sordid tales of misery and woe, gross inequalities, and all that stuff from cliche leftist dystopia stories etc. Once again, there is no difference in principle from this happening in the realm of medicine versus this happening in other realms.

    We’re NEVER going to get any real progress to free markets without first challenging the moral beliefs of the anti-freedom crowd and giving a solid moral foundation to free markets. Continuing to focus on economics at the expense of promoting the requisite moral theory is a waste of time and effort.

    JJM

  • Paul Marks

    Bendle

    I apologize for mistaking your point about farming.

    Bendle and Paul.

    Companies live or die by reputation – exposing them (a commercial interest of their rivals as well as for investigate journalists) is rather better than relying on government regulations.

    Indeed, I repeat, the idea that government regulations are there to “protect the consumer” is utterly absurd.

    As lots of work (by the writers I cited and by many others) have shown this is not the effect of the government regulations (I doubt it is the intention either).

    Benson2000.

    “Some poor people will die”.

    Thousands of poor people die from poor health care or no health care every year.

    They die because people think “it is the govenrment’s job, so I do not have to think about the matter”.

    Health comparisons.

    Much better left to consumer groups than to government.

    Even commercial groups (that, supposedly, should favour their corporate customers) have a better record of real health and safety work.

    See the work of Underwriters Labs.

    How people can still have faith in government in this day and age is beyond me.

    Government is both structually useless (the very nature of the Sword of State makes it unsutable for such things as running or paying for health care for the general population) and, particularly in the case of the United States government, utterly corrupt.

    “John McCain is not corrupt and he almost became President”.

    Perhaps not – perhaps John McCain is not personally corrupt (no earmarks or other Obama stuff for him), but he would still be the head of a vast government full of corruption.

    To trust such a government to regulate “health and safety” in health care (or anything) is a clear error.

    I do not believe in statism – but even if I did, I would not trust the American government in these matters.

    They are far more likely to persecute the innocent and support the guilty, than they are to do the reverse.

  • Relugus

    Actually, the army would be most suitable to privatisation.

    We could hire mercenaries to defend the country under private contractors, which would work out cheaper for the taxpayer as mercenaries often work out being cheaper than soldiers.

    Wars are fought for to enrich defence contractors anyhow so why not be honest about it?

    It would also put an end to the massive pork and corporate welfare sponging that arms manufacturers indulge in.

    Certainly the army is no more important than health unless you are paranoid or a warmonger.

  • Laird

    “Certainly the army is no more important than health unless you are paranoid or a warmonger.”

    Well, I’ll plead guilty to the “paranoid” part of that. But while I don’t have any problem with privatizing the army (after all, the Founders abhorred standing armies, which is why the Constitution limits appropriations for the purpose of “raising Armies” to two years), I take issue with the bizarre assertion that “the army is no more important than health”. WTF? A thoroughly idiotic statement. Defense of the country is the primary function of the federal government, whereas the health of individual citizens falls nowhere within its Constitutional mandate. So when one is looking at the federal goverenment, of course “the army” is more important than “health”. The comparison is so illogical it’s not even “apples and oranges”, it’s more like “apples and screwdrivers”.

  • kentuckyliz

    Farmers buy crop insurance. That way if there’s bad storms or drought or floods or fires or blight or biblical plagues, their income is protected and they don’t lose the farm.

    Does the crop insurance ensure that the crop grows? No.

    Insurance is a protection against FINANCIAL catastrophes.

    Ditto health insurance. The American uninsured are primarily voluntary–healthy stupid young adults (probably like the dying 25 year old) who think they’re immortal and will never get sick, or a chronic condition, or in an accident–despite the fact that youth engage in adventure sports and motorcycle riding and ATVing etc. However, this is also the time of life when you don’t really have any assets accumulated, so there is NOTHING TO LOSE. Big bills? No problem, BK your way out of it.

    The aforementioned farmer’s wife works off the farm as a teacher or nurse or government employee or for a big company, to provide health insurance for the family. (Unless they choose the Medicaid route. And they can! Despite huge income and assets, my sister’s family tried to get SCHIP for the kids temporarily, and they were not allowed to–they were forced onto Medicaid! They are MULTIMILLIONAIRES!)

    Another huge segment of the American uninsured are illegal immigrants. The hospital social workers try to sign them up for Medicaid but they won’t because they don’t want to be any more detectable to ICE. They give fake names and get their free ER care and that’s it. Why not? That’s in their best interests.

    Another part of the American insured, are adults who are temporarily insured between jobs. Most uninsured are “frictional” uninsured, like frictional unemployment. That is not a permanent problem.

    People don’t know how to negotiate with hospitals and access charity care if they’re in a jam. Hospitals have huge charity care budgets and will look at a person’s financial situation and go sliding-scale. The retail bill costs are just a starting point. Go in with a paystub and propose paying 1% of the bill on a payment plan, and it will likely be approved. You have to know enough to ask.

    I think the Archer HSA’s should be more widespread and will become the predominant model for private and employer health insurance. In fact, I think if the government had any sense, they would allow Section 125 HCRA accounts to accumulate over a lifetime like HSA’s do. It’s in the government’s best interest to allow people to accumulate health-wealth for their later-life/end-of-life big ticket health care costs. We should accumulate these kind of asset balances just like we do for retirement. I’d max that out, so I can decline and die like my Dada did…in a really beautiful (non-government) care home with a staff who doted on him and waited on him hand and foot. Being a cash customer brings certain perks like that.

    The Archer HSA’s also make people savvier, cost-conscious consumers of routine health care, while protecting against catastrophic (financial) losses.

    There’s lots of uninsured who could afford a catastrophic plan who don’t buy it. It’s a free country. I’d like to keep it that way.

  • kentuckyliz

    I was the youngest, and hence the rebel child in my family of origin. My parents were WWII era Brits. So, being a rebellious teen, I took German as my foreign language in high school.

    My family spoke French around the dinner table! My brother and sister had some French in their young lives in Canadian schools, but we moved to the US when I was 2 so I didn’t get that.

    That one decision as a 13 year old made a huge difference in my life, that I couldn’t anticipate.

    After college, I was in London UK living in Hyde Park with an aunt and uncle, casting about for job opps. The Canadian embassy was hiring me when they discovered I couldn’t speak fluent French (as the Quebecois insist upon)…so I wasn’t hired. Aaaack!

    So my reality branched off elsewhere and I ended up in the USA. (And happy about it.)

    The breast cancer I was diagnosed with in 2007 was HER-2 positive. HER-2 is a protective protein that protects cancer cells against treatment! There is a biological treatment for it, Herceptin. If you need Herceptin, you need it, and other treatment is practically pointless without it. HER-2 positive BrCa is more aggressive and deadly than negative. My mom died of BrCa in 1992 and she was probably HER-2 positive. The science came out in the mid90s, so I’m lucky I guess.

    My visiting English rellies last summer (one a retired doctor) said I was really “lucky” to be getting Herceptin treatment, because the regional NHS boards have fixed budgets and won’t pay for it. I said, well, it would crack and scramble my nest egg, but I could pay for my own Herceptin treatment if I had to. They said that if you did that, the NHS doesn’t cover ANY of your treatment. WTF?!?!?! I couldn’t pay for everything. So only wealthy people willing to write some checks get effective BrCa treatment in the UK–if they’re HER-2 positive. That’s whack.

    I am SO HAPPY that I didn’t end up living in the UK. It probably saved my life.

    And it all boils down to being a rebel child choosing German to give the bird to my parents. LOL

  • Lucky us too, that we can now read your comments:-)

  • Joshua – I’d disagree that charity isn’t a solution to both types of problem you mention, though the type of charity would have to look very different. In any case, the urge to help will exist; I doubt there are many people who would rationalize their giving with “I want to help the people of X, but until they restore the independence of the judiciary I think I’ll just let them starve to death”, even if in the long run that would be the optimal thing to do. That’s one of the strengths of individual charity, of course; large numbers of individuals get to make lots of mistakes, rather than governments focusing on a few!

    Laird – I agree that charitable giving would go up markedly, I’m just worried it wouldn’t be all that marked. From what I’ve seen if people’s incomes rise a little bit they quickly adjust to ‘needing’ that extra money, and their charitable giving doesn’t rise in proportion. Of course if the extra bit they don’t spend is the bit the government would have wasted that’s OK.

    I’m sure there aren’t that many people who desire power so much, but the great man theory of history shows that we don’t need many to make a difference, whatever constitution may be in place. And it’s not just the abuse of power that I’m concerned about. For example, one of the reasons that we have large government is that people want certain things to be done, and think that joining together through government to achieve them is effective. I’m no student of history, but that seems like a near-universal pattern. Even if a generation decided (wisely) that this isn’t the right thing to do, the next generation will tend back to that pattern.

    For these and other reasons, if we could get 10 generations to live under a libertarian system it might well prove to be lasting and stable. But I wouldn’t be too surprised if the same thing was true of communism; in both cases it’s an interesting hypothesis that we can’t get to.

  • Paul Marks

    The Sword of State is rather good at destruction (although utterly useless at cost control doing the destruction) that is why it called the Sword of State.

    Someone (like Relgulus?) that government is good at destroying cities so it is good at running health care, has rather missed the point.

    As for heath and safety – again I accpet that health care is very complex.

    Which is another reason why government should NOT be inolved.

    For government to pass a law saying “a loaf of bread shall be…..” is one thing (although I do not agree with it) – for the government to try and work out what “good health care” is, is rather more complex.

    Independent consumer groups and an alert press (I am thinking more of a John Stossel type thinking journalist of course) are rather better safeguards.

    Although all things are imperfect – perfection is not to be had in this world (Ouch, that showed my Tory heart under my libertarian mind).

    As for charity.

    The lives of Octavia Hill and C.S. Locke are worth looking into – for effective charitable work.

    However, mutial aid is the real thing.

    Even in 1911 more than 3 out of every 4 industrial workers in Britain were members of Friendly Societies (Fraternites).

    So if they did injure their back (or whatever) they did NOT fall into a terrible state.

    And that was on 1911 levels of wages – how much more could be achieved now.

    And (of course) the number of people who were members of mutail aid groups was growing all the time.

    And yet I just heard Peter Hitchins agree with the B.B.C. leftists on the “Start the Week” show that the government had to step in to fight poverty in Edwardian Britain.

    Based on what evidence?

    Oh yes – the writings of Fabians.

    People who never told the truth about any subject – public or private.

  • Jim A

    There was a time in human history when you worked 14hours a day in the field with scant guarantee that you would have enough to eat through the winter.

    Well yes, technology improvements (greatly assisted by free markets) have enabled farmers to produce great surpluses of food beyond their means. So in the West, we eat more (if not better) and have a vastly reduced percentage of our population devoted to food production. But it is nearly impossible to satiate people’s desire for healthcare. People are perfectly willing to put “boobjobs and housecalls,” in the same category as “lobster and caviar,” and say that only the rich can have them. But they are unwilling to put uncle John’s cancer chemotherapy in the same basket.

    We tend to be unwilling to honestly agree upon where the line between human right and price rationing should be. And make no mistake, even supporters of government mandated equality in healthcare stop at the border. Few seriously advocate the idea that nobody in the U.S. and the E.U. should get expensive cancer therapies, knee replacements, or emergency room visits before we provide the basics of clean water and immunizations to the third world.

  • People are perfectly willing to put “boobjobs and housecalls,” in the same category as “lobster and caviar,” and say that only the rich can have them. But they are unwilling to put uncle John’s cancer chemotherapy in the same basket.

    You’re right that this is the major PR problem that free-market healthcare faces. It may well be an insurmountable one.

    If libertarians want to make the case for free-market healthcare, then, the best strategy is probably to emphasize that the resource allocation problem doesn’t magically go away once government gets involved. To the extent that things are scarce, it follows that not everyone can have them, and some basis for deciding who gets what has to be agreed upon. The trouble with “need” as that basis is that it gives investors a piss-poor motivation to keep throwing money(=resources) at the problem. The high price of chemotherapy is what signals to the economy at large that chemotherapy is something that people want/need. It attracts the research money necessary to make chemotherapy more effective and easier to provide – eventually bringing it within a price range that everyone can easily afford. When you start allocating on the basis of need, that signal is completely destroyed by moralist noise, and not only does investment dry up, but the (illusory) low price stimulates demand for a resource that in fact cannot be provided in anything like the amount the price would suggest.

    My point about food was that there was a time when your alternative there was death too. There was a time when it was perfectly substitutable for your example of “uncle John’s chemotherapy” – in the sense that if you didn’t get another week’s worth of meals, you died. Many people did, after all – die of starvation. It’s difficult in the extreme to believe that we would ever have struggled our way out of those times by simply handing out food to whoever claimed to be hungry. Compensating the farmers for their crops was a sine qua non of attracting the kind of attention to agriculture that resulted in our present abundance of foodstuffs.

    What you’re saying is that the public is never going to allow that process to be repeated for healthcare. Which is ironic in the sense that that same public is the first victim of its own shortsightedness here. The most constructive thing to do seems to be to make the case to them that resource allocation problems are better solved by technical innovation than they are by slicing the existing pie differently. We don’t do anyone any favors by simply noting that free-market healthcare has a PR problem and shrugging our shoulders. The pressing question is how we get the general public to come to understand that it is in their interest to let healthcare goods be priced freely.