Arnold Kling  

Libertarian Health Care Reform

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Public Choice Theory, Example ... Cognitive Economics?...

Will Wilkinson writes,


I believe that the state’s grant of monopoly privelege to certain official certifying agencies has a lot do do with the high cost of health care. Besides creating artificial scarcity (and therefore huge rents for M.D.s), the certification cartel violates our natural liberty to cooperate. The more I think about this, the more it ticks me off. You don’t need a Ph.D. in mechanical engineering to change a muffler any more than you need a M.D. to set a broken arm. You just need to know how to change a muffler or how to set a broken arm.

He also has a free-market alternative to my idea for a commission to evaluate costs and benefits of medical protocols. Instead, Wilkinson says we should use idea futures markets as

A source of free, highly reliable information about the most effective treatements. If you want to know if a treatment A, which costs half as much, works as well as treatment B, check the ideas markets.

I'm not sure about this one. In normal futures markets, you know the expiration date of a contract, and everyone knows what happens at the expiration date--you have to deliver corn, or you settle the S&P futures market based on stock prices at the market close, or what have you. How would you settle an idea futures market in the cost-effectiveness of health care protocols? Would you not need something like my commission?

Lots of other ideas to chew on at Will's post. Read the whole thing.


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The author at Minor Thoughts in a related article titled Health Care Blogging writes:
    Will Wilkinson presents his Health Care Fantasia that includes the following prescriptions for cheaper health care: decartelization of doctors, abolishing the FDA, offering real insurance markets, creating a health care ideas futures market, creating e... [Tracked on March 21, 2006 3:10 PM]
COMMENTS (24 to date)
Will Wilkinson writes:

Bryan, What I had in mind is: a new treatment becomes available. So a proposition is proposed, i.e., treatment x will be more effective than treatment y (or 80% as effective or whatever. Prices will inform consumers of expert consensus until dispositive studies are performed and the contracts are settled. The point being, quality information about new treatments is available BEFORE studies are completed. If a drug meant for one thing turns out to be effective for other problems, the market will reflect this too before solid studies on the drugs effectiveness for secondary uses are done. However, you are right: there would need to be somebody or other performing studies on the effectiveness of various treatments in order for the market to be possible.

JohnDewey writes:

I think people are smoking dope if they believe the U.S. public will anytime soon support eliminaton of certifications for M.D.s It's not going to happen - especially with so many boomers entering the senior years when medical competence is critical.

About some specific arguments made by Mr. Wilkinson:

Physician's assistants are already setting and casting broken bones in the U.S. Under suoervision of MD's, they do preliminary diagnosis of patient illness. But they do not and should not perform arthroscopic knee surgery, or decide that a kidney is cancerous and should be removed.

Increasing the supply of PA's might reduce health care costs, but doing so won't be easy. It is difficult to find quality candidates willing to invest 2 to 3 additional years in a difficult curriculum, and then receive one third the pay of an MD.

Will also argues that nurses could prescribe drugs. I've been married for 27 years to an extremely conscientious and knowledgeable RN. She knows a great deal about many drugs used in the OR. But she just doesn't have enough training in all the possible drug interactions and side effects to be able to safely precribe medicine. No RN does.

The practice of medicine is hard and the risks are much larger than Will Wilkinson acknowledges.

Collin Imhof writes:

I agree: the practice of medicine is hard. However, isn't it being made a little harder by these artificial licensing restraints?

I also agree that it's not going to happen anytime soon -- and that's the scariest part about it.

Will Wilkinson writes:

JohnDewey,

If you think that most doctors have any idea about most drug interactions, then you're kidding yourself. A large portion of the drugs that matter come out after a doctor has left med school, and they have to pick new info up as they go along. Except for a few who really keep up to date, most doctors prescribe formulaically. You simply don't need years of school to prescribe this for high blood pressure, and that for a sinus infection. Indeed, computers, who do not require a salary, can do this much better than doctors. And it is trivial for them to keep track of drug interactions.

I agree, ending the harmful subsidies to M.D.s isn't going to happen any time soon. But it is more likely if people get over the myth that M.D.s are superscientific healers. What they do is no more complicated than the guys on TV who build custom motorcycles. If you had to have a license to build custom choppers, we'd probably never know how cool custom choppers could look.

JohnDewey writes:

Sorry, Will Wilkinson. I'm a free market advocate, but I can't buy your position on doctor certification. Neither will the public. What I've observed, through my wife's 27 years work in giant hospitals and in small ones, is that medicine is a much tougher science than you acknowledge.

I hope libertarians don't use this certification argument too much. It's the one that will certainly backfire in our efforts to forestall socialized medicine. Liberals will use that position to convince the public they should fear free market advocates. There are so many other arguments we can make, some of which you have expressed well.

The public respects and trusts their doctors and nurses. I've seen surveys from the U.S., Great Britain, Israel, and Australia that confirm this. IMO, it's because the public recognizes not just the medical profession's herculean efforts, but also their competence. I do not believe the public will opt to risk losing that, certainly not based on arguments from economists they don't understand.

Joe Martin writes:

JohnDewey,

My wife works as a pharmacist. Therefore, I agree with Will. If you think doctors have a clue about what they're prescribing, you're delusional. My wife spends a lot of time calling doctors and "correcting" the prescriptions that they give out.

From her perspective, nurses and pharmacists working together could take care of a lot of the work that doctors could do. Nurses could diagnose many simple ailments and pharmacists could prescribe the most appropriate drug for the ailment.

Also, after moving from New York to Wisconsin, I can tell you that most of the licensing process is straight up nonsense. We spent nearly $2000 and three months just getting permission for her to be able to work again. We also had to correct the errors of the state licensing board. It's pretty clear to me that that sort of foolishness drives down employment and drives up prices.

Silas Barta writes:

Will also argues that nurses could prescribe drugs. I've been married for 27 years to an extremely conscientious and knowledgeable RN. She knows a great deal about many drugs used in the OR. But she just doesn't have enough training in all the possible drug interactions and side effects to be able to safely precribe medicine. No RN does.

LOL!!!!! You're joking, right? There's something called a "cross-referenced database" that handles precisely these kinds of things. You enter their medication, and their medical history, and it will stpit out potential problems. Problems like these are handled *all the time* in the IT world. I never thought someone would try this excuse.

JohnDewey writes:

"If you think doctors have a clue about what they're prescribing, you're delusional."

'Delusional' is a bit stronger adjective than necessary, isn't it? I think I just have a different opinion.

The MD who treats my illness does have a clue about what he's prescribing, Mr. Martin. But I take comfort in knowing that conscientious pharmacists such as your wife are backing him up and catching errors. Please thank her for me.

JohnDewey writes:

Mr. Barta,

I've programmed computers for about 30 years now. That's long enough to realize that the best expert system for critical functions is one that doesn't rely 100% on databases and retrieval software. Rather, it would be better balanced if operated by someone who has medical knowledge necessary to catch data and program errors. IMO, an expert system such as you described should be either an aid for a physician or an aid for that physician's assistants or a second opinion facility for patients.

I think I can say with confidence that nurses will not be prescribing potentially dangerous drugs in my lifetime.

Joe Martin writes:

JohnDewey,

I apologize for the strong language. It is, indeed, a difference of opinion. Most doctors stick with a few basic drugs and prescribe those. Most pharmacists, however, can recommend drugs better suited to your condition. I'd like to see the entire industry substantially deregulated because I think the lines between pharmacist, doctor, and nurse are far fuzzier than most people think. For many basic situations, pharmacists and nurses could do a fine job of diagnosing and prescribing. Of course, anything out of their league could be referred to a physician.

I support expert medical systems for the same reason. Many maladies could be diagnosed (and treatments prescribed) via computer. Anything that weirds out the machine could result in a referral to a human specialist. The threshold that determines when the machine is "weirded out" could be set fairly low and still result in lowering the overall demand for doctors.

As far as seeing nurses "prescribing potentially dangerous drugs", I still question the necessity of prescriptions. Why not deregulate the market and let patients make that decision for themselves. Most, if not all, would still choose to do so in consultation with a doctor or pharmacist. But I don't think access to drugs should be limited to a special class of individuals. That lowers the supply of health care and drives up the price.

Health care will only become cheaper when both the supply and demand issues are addressed.

Bob writes:

I agree with Mr. Dewey that we are not likely to see any changes in licensure of physicians any time soon. However, I don't agree that the high confidence the public has in the judments of their doctors is warranted.

A recent New York Times story described just how often doctors, MDs, get important things wrong. The story suggests that the 20% error rate has not changed in 70 years. I have a close friend who published a peer-reviewed paper over 50 years ago showing that expert judgment in the medical field was poor. This state of affairs should concern all of us.

Why has there been so little reduction in physician errors in nearly a century? What is it about medical education, training, and certification that resists improvement in this vital area?

William Woodruff writes:

The United States ranks 37th in the World for quality of Health Care:

http://mwhodges.home.att.net/healthcare.htm#rank

-William

Joe Martin writes:
Why has there been so little reduction in physician errors in nearly a century? What is it about medical education, training, and certification that resists improvement in this vital area?

Monopoly power? Wasn't the AMA and licensure all getting started sometime around the 1920's? It's tough to improve when there is little competition in the actual delivery of health care. There have been few major changes in health care itself over the past 70 years.

Silas Barta writes:

That's long enough to realize that the best expert system for critical functions is one that doesn't rely 100% on databases and retrieval software.

Yeah, but what would be really stupid would be to rely on a human with a 20% error rate in a profession insulated from competition from better providers...

Wait, which side were you arguing again?

maej writes:

In recent years we've seen a proliferation of primary care health providers. That person who takes your blood pressure is likely an LVN, LPN or ME. I've seen FNP's for years to get annual exams and treat sinus infections. The rules regulating NP's vary from state to state, but in all they have prescription writing powers. In some states they can even open clinics. The problem is that the public rarely gets to choose to have access to these cheaper providers. They all are required to operate under the auspices of an MD (which also elevates their costs).

Add to this a shortage of nursing professors (why teach when you can make twice as much in a hospital) and a glut of nursing program applicants. Take a look at the wait lists for good nursing undergradate programs sometime.

Dan Robin writes:

I do not think you have to eliminate the concept of a licensed physician to expand the right of lesser professionals to provide care.

Each individual can then choose the level of care. Each can weigh the cost and risk of obtaining care or drugs from, say, a nurse who claims to be backed up by a world class computer program. That level of care may be an increase. Maybe they previously could only afford to have a friendly conversation with a neighbor who knew of a similar problem.

There are lots of people who understand risk and are willing to try lesser forms of service.

JohnDewey writes:

Near absolute commitment to ideology is something I simultaneously respect and fear about libertarians. Certainly some of the hard stances expressed must impede aceptance of libertarian solutions. The U.S. public is not about to accept less certification of physisicans or removal of regulations on narcotics.

It is possible to support more freedom in markets without abandoning regulations. The public does realize its limited ability to make its own decisions on complex issues. It will continue to rely on government and industry organizations for assistance. IMO, libertariians will not be successful by proclaiming that AMA is evil or that FDA should be abolished.

I believe the biggest healthcare threat we face is socialized medicine. Libertarians should realize that physicians are their allies in that fight. And they should not ignore the fact that physicians are more trusted and respected by the public than just about any other profession.

JohnDewey writes:

Mr. Barta,

I agree we should not rely on humans who have a 20% error rate. I'm not sure I accept the 20% error rate in the first place. My wife tells me that many corrections to prescriptions are the result of patients neglecting to disclose all the medications they are taking. As I understand it, pharmacies often have better information about all the medications of a single patient.

I think we could do more to automate physician functions and to provide them with more realtime information as they see patients.

In many cases, physicians must make judgment calls about the medicine they prescribe. I believe that only physicians or highly trained nurses can evaluate whether the side effects of certain drugs outweigh the benefits. But I do believe that databases and pharmacists should perform their function to limit the errors of physicians. All humans make errors, even the highly trained and most intelligent ones.

JohnDewey writes:

Joe Martin and Bob,

I don't think it is valid to compare error rates from 80 years ago with today's error rates. In the first place, the error-catching capability continues to improve. Many errors in past years certainly went undetected.

The practice of medicine is much more complex than 80 years ago, or even than just three decades ago when my wife, an RN, and her brother, an MD, began their careers. There's just so much more to know: so many more drugs; so much more equipment; so many more diseases that have been identified.

Health care professionals do update their knowledge and skills, much more than the public realizes. The free markets in equipment and drugs do take care of that. MD's and RN's in the OR see presentations by vendors regularly.

One equipment maker, Stryker, just built a demonstration laboratory a mile from my home, near the north end of DFW airport. They are flying in surgeons from all over North America every day. No doubt the free market has forced all manufacturers to do likewise.

A more complex profession has certainly increased the number of decisions a physician must make. Specialization has reduced these somewhat. Still, each MD has many more opportunities for error than ever before.

JohnDewey writes:

Here's a study on physician error rates as they prescribe drugs:

http://tinyurl.com/jyuku

For the sample studied, the mean error rate was only 3%. The authors recommend the use of Computerized Physician Order Entry (CPOE). Making intelligent systems available to physicians would likely eliminate most of these errors.

JohnDewey writes:

William Woodruff wrote:
"The United States ranks 37th in the World for quality of Health Care"

That statement has been bothering me since I first read it. I finally had time to read the WHO's description for those rankings.

WHO derived a measure of health care efficiency for each nation that depends on life expectancies and health care expenditures. Certainly that cannot be valid, as life expectancy is a function of personal choices and genetic makeup of the population. The functioning of a health care system in affluent countries is no doubt a minor factor.

The expenditures included in deriving these rankings are also questionable. Health care expenditures that have no impact on life expectancy - such as breast augmentation, orthodontic braces, and hair implants - were included in deriving the efficiency measure. As the richest nation on earth, the U.S. certainly spends much more than average on cosmetic health care.

The WHO 2000 report was controversial, and many consider its results to be invalid. But if one does accept its conclusions, then please note one of the reported results: the U.S. health care system was ranked first out of all 119 nations in responsiveness.

William Woodruff writes:

John writes:

"I believe the biggest healthcare threat we face is socialized medicine."

John, we can agree to disagree, because I respect your opinion. I have lived in a country with socialized medicine and received care under their system of health delivery.

Again, I ask you: How many citizens in Belgium, Norway, Sweden, Germany, Austria, Luxembourg, Lichenstein, Spain, France, the UK, Canada, Korea, Japan would trade their health delivery system for the American system ??

Does, your statement apply to citizens of the OECD, or are Americans somehow anatomically different than other humans ?

"I believe the biggest healthcare threat we face is socialized medicine."

-William

JohnDewey writes:

William Woodruff

"Again, I ask you: How many citizens in Belgium, Norway, Sweden, Germany, Austria, Luxembourg, Lichenstein, Spain, France, the UK, Canada, Korea, Japan would trade their health delivery system for the American system ??"

I cannot possibly answer your question. And you cannot answer it, either. So what's the point of asking the question?

My opinion is that at least thousands if not millions of Canadians would trade their system for ours, which is why so many cross the border for surgeries. I have read several posts from former UK residents who were glad to leave behind the health care queues they faced back home. I suspect that most Europeans would not want our system simply because they hate Americans - though they've always been pleased to get our money.

Sheyla nurse writes:

The problems with european health care are huge. Europe is believed to be more socially oriented.

[edited for grammar and nonfunctioning links--EconLog Ed.]

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