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The Left’s Story on Health Care

Arnold Kling makes an interesting observation about the Left’s story on health care,

  1. The U.S. system is flawed.
  2. Other countries’ systems work much better.
  3. The U.S. system relies on the free market.
  4. There are two systems of health care in the developed world–ours, and the one every other country uses.

Like Arnold, I agree that number 1 is true. I think that number 2 is highly doubtful. For one thing health care financing schemes are unraveling everywhere. France? Yep, they are in trouble, they recently had protests over health care. England? They are instituting mandatory wait wait times for many patients that can go as long as 16 weeks. Canada? The health care system there is a financial black hole. Number three is an outright lie, and as a result so is number 4 especially when you consider that countries such as France, Canada and England all have different approaches to health care.

Now, one could argue that this is a strawman argument by Kling, but I’m not sure it is. But, in my view, the idea that the American health care system is flawed and can’t continue much longer isn’t so much an argument against markets, but is really more an argument that the government has done a pretty bad job.

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About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research.

Comments

  1. Grewgills says:

    Now, one could argue that this is a strawman argument by Kling, but I’m not sure it is.

    1. We all agree.
    2. The argument is that the systems of other developed nations work as well or better for 2/3 or less of the financial costs. No one really thinks that health outcomes are substantially worse in these other countries, with the possible exception of the UK, and many see the evidence pointing to the outcomes being better. No one can legitimately argue that financial costs are not substantially lower (generally falling between 2/3s and 1/2) in these other countries. Please don’t respond with the tired waiting list argument as it does not hold for the overwhelming majority of these other systems.
    3. No, the argument is that the market cannot be relied upon to provide universal care. Do you seriously dispute this?*
    4. No again. The argument is not that there are two systems of health care, theirs and ours. The argument is that every other Western industrialized nation (and some others) have managed to implement universal health care via some system and we have not.

    2, 3, and 4 are (intentionally?) poorly framed and if not 3, then 4 is certainly a straw man.

    For one thing health care financing schemes are unraveling everywhere…

    Yet everywhere prices are considerably lower and are rising at a slower rate**.

    Number three is an outright lie, and as a result so is number 4 especially when you consider that countries such as France, Canada and England all have different approaches to health care.

    Yes, but the lie is perpetrated by Kling for the reasons I have stated above.

    * Many on both sides do underestimate the role of government in our current system.
    ** cite previously provided.

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  2. Steve Verdon says:

    Grewgills,

    I’ve gone over this ground with you before and you either totally disregard it or don’t understand it. Most of the non-U.S. systems ration health care via mechanisms other than prices (heck even the U.S. system does this to varying degrees depending on what we are talking about). As such, whenever somebody has to wait for a procedure that is a Social cost at the very least. The more a country uses wait times, England being the most obvious case, the more these social costs go up. These costs are very much like environmental costs due to pollution. Typically people on your side of the political spectrum view the latter as important to measure. So why don’t you think the former are important to measure?

    Keep in mind by increasing the social costs the costs on the books can be non-increasing or even decreasing. Hence your measures of financial success are, to varying degrees, biased. Why do you feel it necessary to use a biased measure?

    And yes th waiting list argument varies from country to country, but again you aren’t looking at statistics like probability of dying while waiting for treatment, are you? Why not? I know in Canada the numbers aren’t all the good in some instances. Here is an interesting article. Private health care clinics opening up in Canada. Note such clinics are illegal, but the government is not shutting them down? Why? People want them. They want to be able to pay out of pocket to get treatment they’d otherwise have to wait for. Do these expenditures show up in Canadian health care expenditure data?

    “Why are we so afraid to look at mixed health care delivery models when other states in Europe and around the world have used them to produce better results for patients at a lower cost to taxpayers?” the premier of British Columbia, Gordon Campbell, asked in a speech two weeks ago.

    Gee, a mixed model. Guess what? The U.S. has a mixed model. Let me repeat this: The U.S. has a mixed model. We have a mix of private and governmental provision of health care and like just about every other country it is going of the rails. I’ll suggest something: It is going off the rails not because of the private aspect of the model. I’d say it is crappy incentives (the biggest due to government) and government. That other countries may have slightly better incentives/government would be an improvement, but only that instead of going bust in 20 years we’d go bust in 30 or 40 years.

    On top of that our political system doesn’t induce politicians to look for a long term solution. The longest serving poliical position is in the Senate for only 6 years. Since they look forward at best only 1 maybe 2 election cycles they don’t have a very long view of things, and something that is going to go wrong in 30 years is somebody else’s problem.

    Another cost issue you are overlooking is to what extent does the U.S. research subsidize the rest of the world? If most of the drug research is taking place in the U.S. and other countries are getting discounts then there is indeed a cross-subsidy going on that you should correct for.

    As for universal coverage, I’m not convinced that it is a must. Sure it sounds good, but it also could be that some people would rather have other options. A young healthy 20 year old may not need everything covered. How often do 20 year olds go to the doctor? Maybe less aggressive coverage such as catastrophic for the young would be a better bet, and smaller medical issues are covered out of pocket.

    Yes, but the lie is perpetrated by Kling for the reasons I have stated above.

    Kling has never made such a claim and has in fact written quite a bit against it. And I’ll note that whenever I discuss health care inevitably somebody always comes along and argues I’m arguing for a free market system.

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  3. Rick DeMent says:

    And Mr. Verdon completely side steps the social cost of employer provided health care, and non-universal risk pools on individual eco0nmic decision making. Fewer people with families will take financial risks because the fear the prospect of not being able to provide health services on the open market. Fewer people are inclined to change jobs, to become involved in businesses, to strike out on there own and innovate. The cost to our economy in this regard is staggering, not that anyone ever sat down to try and calculate it.

    Soem kind of universal heath coverage in this country would unleash a tsunami of entrepreneurial activity that is simply not possible under the current system where health care considerations play far too large a role in individual economic decision making.

    The social cost lost in this regard dwarfs the social cost of giving up the rationing by price model.

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  4. Tano says:

    Excellent point Rick. It has always amazed me that those who worship free-market principles seem unable to grasp this point.

    Their instinct seems to be to treat healthcare as simply another commodity, like plamsa TVs. At some point their humanity kicks in and they are willing to fudge a bit to prevent people from dying in the street, but it remains primarily a healthcare-as-commodity apporoach.

    The real difference in the “left’s” approach is to see healthcare as a foundational necessity, akin to national defense. With assured healthcare for all, just like with assured national defense for all (we are committed to defending poor neighborhoods from al-Q, not just our financial centers), one creates an environment in which free people can participate fully in the economic life of the nation, to the benefit of all.

    The details of how you do this are open to negotiation aimed at pragmatic solutions. What is crucial is the vision and the commitment to place the health of all citizens in the highest category of national priorities.

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  5. anjin-san says:

    For one thing health care financing schemes are unraveling everywhere. France? Yep, they are in trouble, they recently had protests over health care. England? They are instituting mandatory wait wait times for many patients that can go as long as 16 weeks. Canada? The health care system there is a financial black hole.

    I have been hearing the line about the French/UK/Canadian health care systems being on the brink of collapse from the right for 25+ years now. That’s a long time to be on the brink.

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  6. Grewgills says:

    I’ve gone over this ground with you before and you either (1)totally disregard it or (2)don’t understand it.

    Actually it’s option 3, I simply find your argument unconvincing.
    Wait times are not an issue in most universal care systems. Care is universal and available in a timely many in almost all OECD nations. Do you believe that it is a case of American exceptionalism, or perhaps English as a primary language exceptionalism, that means we cannot do likewise?

    Keep in mind by increasing the social costs the costs on the books can be non-increasing or even decreasing. Hence your measures of financial success are, to varying degrees, biased. Why do you feel it necessary to use a biased measure?

    How do you propose we remove the bias from this measure? Keep in mind that wait times in most OECD nations are not at all long so you will need to place quite a high value per day to get our costs at all competitive.
    An interesting tid bit on wait times is here.
    The relevant quote is near the end of the article.
    “Despite the fact that the U.S. spends more than double what other countries spend for medical care for its largely private system, American patients report almost as many problems as Canada in getting same-day appointments and using emergency rooms instead.”

    And yes the waiting list argument varies from country to country, but again you aren’t looking at statistics like probability of dying while waiting for treatment, are you?

    Are you looking at them or just speculating that they may exist? There is a non-trivial difference.
    Wait times in most universal care nations are trivial leading to trivial potential for loss of life due to wait time. The severity of the condition and the danger posed by waiting is considered when determining when a given procedure is to be performed in those nations* further ameliorating this potential. Do you have any actual evidence of statistically significant increase in mortality due to imposed wait times outside of the UK?

    I know in Canada the numbers aren’t all the good in some instances. Here is an interesting article. Private health care clinics opening up in Canada.

    and this is relevant why? Is anyone proposing that private insurance or private care be outlawed in the US?

    Do these expenditures show up in Canadian health care expenditure data?

    Are you suggesting that these costs would nearly double per capita health care spending in Canada?
    (per capita health care spending US $5711, Canada $2998)

    I’ll suggest something: It is going off the rails not because of the private aspect of the model.

    That certainly has been your consistent opinion. How do you propose we achieve universal coverage without government involvement? or do you simply think that there should be a segment of the population that does not have access to health care? Remember when you answer or accuse me of offering a false choice that it is government regulation the requires ER care and that this is a substantial expense.

    Another cost issue you are overlooking is to what extent does the U.S. research subsidize the rest of the world?

    I have answered you on this point previously as well. If we are indeed going to subsidize drug research we would be much better off subsidizing it directly rather than by paying inflated drug costs. At least if the subsidy was directed we would be getting more vaccines and antibiotics rather than more viagra clones and dosage changes to lengthen patent protections. The same argument holds for other medical research as well.

    As for universal coverage, I’m not convinced that it is a must. Sure it sounds good, but it also could be that some people would rather have other options.

    How large a portion of the uninsured do you really think this is?

    A young healthy 20 year old may not need everything covered. How often do 20 year olds go to the doctor?

    Well that makes covering them rather cheap doesn’t it?

    Kling has never made such a claim and has in fact written quite a bit against it.

    Kling’s lie was falsely characterizing the arguments of “the Left” in his points 3 and 4. I thought that was clear. Apologies if it was not.

    And Mr. Verdon completely side steps the social cost of employer provided health care, and non-universal risk pools on individual eco0nmic decision making.

    To be fair to Steve he regularly argues that health care should be decoupled from employment, but he does poo poo benefits of a universal risk pool.

    * in the US as well

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  7. M1EK says:

    Most of the non-U.S. systems ration health care via mechanisms other than prices

    As does most of the US system. The rationing mechanism in this case is most often the insurance company, operating in its role as gatekeeper, deciding what they will and won’t pay for. In other cases, our wait times are quite often as bad or worse than the nations you decry even when the insurance company _is_ paying.

    We’re quicker for vanity surgery, and for any procedure the very rich want to buy. But this fiction that a middle-class person can go to the doctor whenever they want has got to go – it’s a lie. You wait many months for a first appointment with a specialist who happens to be in network for your insurance more often than not.

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  8. Search for Cheap Insurance…

    Sorry, it just sounds like a crazy idea for me :)…

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