Arnold Kling  

The Case for Health Care Reform

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Matt Welch writes,


In France, by contrast, you walk to the corner pharmacist, get either a prescription or over-the-counter medication right away, shell out a dozen or so euros, and you're done. If you need a doctor, it's not hard to get an appointment within a day or three, you make payments for everything (including X-rays) on the spot, and the amounts are routinely less than the co-payments for U.S. doctor visits. I've had back X-rays, detailed ear examinations, even minor oral surgery, and never have I paid more than maybe €300 for any one procedure.

I believe that America's health care system should be reformed. Medicare is unsustainable. Employer-provided health insurance should never have been instituted in the first place, and it is becoming more dysfunctional every year. I would like to deal with the structural issues that bias our system in favor of specialists, fragmented care, and credentialism. Americans need to learn how to make reasonable judgments about medical procedures that have high costs and low benefits.

None of these problems is addressed by the bills in Congress. This year's health care debate is proof that top-down reform is not going to work. The more the system is politicized, the less likely it is that it will change. The only direction for reform is market-oriented policy that by today's standards seems radical and unacceptable. In contrast, the politicians are struggling mightily to do what amounts to minor tinkering and tampering.


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COMMENTS (21 to date)
Marcus writes:

"Employer-provided health insurance should never have been instituted in the first place..."

And what is Congress going to do? They're going to expand it!

Ridiculous.

I fail to see why anyone would want to mandate that your employer decide for you what either your health care or investment (401k) options are.

Floccina writes:

I fail to see why anyone would want to mandate that your employer decide for you what either your health care or investment (401k) options are.

Well said why do 401k limit one's investments more than IRAs do. Why can one put more in a 401k than an IRA. Did the finance industry pay off congress? Why these oddities?

Dave writes:

I'm preaching to (most of) the chior here, but writing this makes me feel better:
What if no one was involved except for the individual and the Ins Co - which could operate across state lines - was not mandated to provide certain types of coverage etc. I would have been buying ins since I was 18 - a plan with a high deductable at first then as I got older and started a family a plan with more coverage. I would have paid for what I wanted. In many years I would have paid everything out of pcoket - assuming a 1000 dollar deductable. When I had a much needed surgery a few years ago it would have been covered - I of course would have paid my deductable out of my savings.
Why is this idea so hard to fathom?
Oh I forgot, politicians are involved...

Can I start a colony on the moon? Oh Id adopt almost the entire US Const - but Id really enforce it.

david writes:

What makes you think any attempt to institute market-oriented policy would not be struggled mightily over in Congress?

There's that phrase about first-best policy in a second-best world...

Kling apparently desires a world where, by a miracle, a horde of populist libertarians pours forth and votes into place politicians who legislate decentralization while said libertarians construct alternative non-government institutions to replace them.

Which strikes me as about as realistic as wishing that people stop chasing perverse incentives or that technology in medicine and wherever stop costing so damn much.

Alex J. writes:

David,

Change for the better is not possible so we should endorse change for the worse?

swh writes:

ABSOLUTELY! How do we make a change happen? The fundamental structural changes you are talking about are not WANTED by the industry, government, nor the PUBLIC because they still think they should have gold plated health care for free. So again.....how do we make it happen?

SyB writes:

"In contrast, the politicians are struggling mightily to do what amounts to minor tinkering and tampering."

True. But the article you reference points to the superior nature of socialist healthcare over what we have right now. We tinker and tamper because our political system is divided between the socialist and libertarian view--so we get the middle muddle.

Why don't you, Mr Kling, come make a supportive statement such that if we can't achieve your #1 goal of market based healthcare we ought to strive for the second best #2 of socialist health care--so we get rid of the muddle?

You've not really addressed the article in reason, in other words.

Nick writes:

I had a discussion with a professor of pathology on the topic of health reform. I sided with the market oriented reformer types but he brought up an interesting point regarding the consumers access to information:

"At my medical center I knew which departments were strong and which departments were very weak, sometimes from the post mortem autopsy conferences.

In fact I would never go to where I worked for coronary surgery nor would I go to our academic medical center competitor nearby but rather the public non-profit hospital that had a CEO who looked at the market and recruited and built a wonderful cardiac surgery facility that had a lot of practice and that's where I would go. How does the average consumer know this?"

Crawdad writes:

SydB: "We tinker and tamper because our political system is divided between the socialist and libertarian view--so we get the middle muddle."

More like full on socilist and socialist lite, nothing to do with libertarian views.

Thomas Sewell writes:

Nick,

The medical providers don't currently need to care what the patient wants in health care. The patient doesn't typically pay the bills and isn't the consumer of health care services. Insurance companies, the government, and employers are their typical average consumer. They care much more about billing practices that conform to their bureacracy than they do about patient outcomes.

Why would a mechanism for differentiating care providers in terms of patient outcomes matter to the people who pay the bills? Or rather, why would it matter enough that they might be willing to pay extra for it? There may be a slight incentive there because insurers don't want their insured to get sick again soon, but it's clearly not the top of their priority list.

Below is a summary of what I think you'd have to do short-term in order to change the incentives so that the patient and the patient's priorities actually mattered. For best results, you'd have to go even further towards patients paying their own bills.

From this discussion of reform ideas:

Increase supply of medical care by removing legal obstacles. That means removing licensing restrictions (especially for Health care professionals trained in other countries) and removing AMA (Doctor's union) restrictions on the number of new health care workers trained every year. It also means severely limiting the FDA's ability to stop drugs from being produced. At most, they should evaluate and report on, rather then control the legality of drugs. That way Doctors and their patients could choose what risks to take based on their best information available.

Add more competition to the system by overriding state insurance regulators with a federal mandate that allows interstate commerce in insurance policies. Either end tax breaks for employer-provided plans or make sure that they are matched exactly by breaks for non-employer-provided plans. Prevent any regulators anywhere from regulating what is offered at what price in health insurance plans. Innovation in insurance service doesn't start in state health insurance regulation committees!

Allow prices to reflect demand as much as possible by providing methods for price transparency in service as well as allowing insurance as insurance instead of pay-for-service plans. Most of that would be taken care of by removing regulatory obstacles as above.

Ryan Vann writes:

"Why don't you, Mr Kling, come make a supportive statement such that if we can't achieve your #1 goal of market based healthcare we ought to strive for the second best #2 of socialist health care--so we get rid of the muddle?"

This doesn't make a whole lot of sense; why can't the other side concede that #1 is better than both the muddle and #2? The answers should be obvious, which is why we have the muddle to begin with.

SyB writes:

"This doesn't make a whole lot of sense; why can't the other side concede that #1 is better than both the muddle and #2?"

Several reasons: (1) In any system, at some point, people have to step in line and follow. If the libertarians don't have the votes--and they don't--then they need to look for the next best option. Get in line. Or just continue to contribute to the muddle. (2) Socialist health care works. It's been implemented.

Bob Montgomery writes:

That was a mostly thoughtful article, but anytime I read someone complaining that they can't get health insurance to cover their pregnancies my eyes glaze over.

Look, I've got five kids under age 8. I know how expensive it is to have a baby in a hospital; I just wrote multiple checks for $1500+ a few weeks ago to pay for my youngest's birth. And I'm glad I have insurance that mostly covers this, or the cost would have been 5x to 10x as much.

But still.

Complaining because insurance won't cover a childbirth is like complaining that insurance won't cover your elective plastic surgery. You don't want insurance, you just want somebody else to pay your bills.

David C writes:

I wonder, maybe I missed it. Has Arnold Kling ever given an in-depth explanation of why he thinks the current Senate and House bills won't work? I've seen him write this down in a blog post about 5 or 6 times, so I figure this explanation must be somewhere.

As for the article, the only problems it specifically mentions are insurance companies making weird decisions about who to cover, less than straight forward billing practices, and the inability to obtain insurance in between jobs. Aren't all of these specific issues addressed in the current health care reform bills?

The three goals of reform are expanded coverage, reducing overall costs, and reducing the deficit. While the health care reform bills may not do the latter two very well, I've never seen a good explanation of why they won't achieve them at all or make the problem worse.

The_Orlonater writes:

I would like to add that's France's own "Medicare" is in itself unsustainable and heavily indebted, but in France it's less so because they have heavier co-payments than we do in the U.S., probably no "defensive" medicine, and the the private health insurance market isn't as heavily regulated.

Colin K writes:

@SydB:

We can pass the same laws they have in France, but the result is likely to look a lot more like a French restaurant in Dubuque than L'Atelier de Joel Robuchon, even if they use the same cookbooks.

To be fair, it would probably also look a lot like a Texas BBQ stand in Paris. The best bakeries here get their flour shipped from France, but the water and ovens are still somewhat different, and so on.

Needless to say, while French haute cuisine may be objectively superior to BBQ brisket, I would bet on getting better chicken and ribs in Iowa than Foie Gras-stuffed quail.

And I think healthcare is at least as complex as gastronomy.

Ryan Vann writes:

SyB,

So, to summarize your argument, there aren't the votes for #1, so we should vote for #2, which there apparently aren't enough votes for either, because there would be enough votes for #2 if everyone for #1 voted for it? Again, there wouldn't be a muddle to begin with if people simply acquiesced to contrarian viewpoints when their own are not likely to be made policy. That isn't a realistic view; people are stubborn.

Ryan Vann writes:

Colin K,

Well put. I'd venture to say that politics of healthcare are even more complex.

cristine writes:

my belief is that America's health care system should be reformed. Medicare is unsustainable.

edel writes:

The biggest problem I see with the current reforms is that will backfire the proponents of health care change. Extending insurance to millions is indeed honourable but by beefing the system will make it much more expensive, not less.

PROGRAM MISSED THE ORIGINAL GOALS
The original idea was to have a basic coverage to everyone by the government parallel system. That implies a huge economy of scale to purchase services and products and it will bring prices to a bare minimum as other countries had achieved. Then, the private sector would readapt to erode those main services from its weakest points (usually dental, queues, psychological…) and give add-ons services while keeping the government in constant check with their main services.

IT HAS TO BE PUBLIC
Heath systems have developed to be as more complex as possible to avoid competition. I am highly educated and with some spare time, but I am incapable of comparing two insurances plans… I just pick for what “I believe is best” not what I know is best for me. Imagine people less educated or with less time… Also if I break an arm, I’ll go to the nearest hospital, not necessarily the approved one.

IT CANNOT BE ON TOP OF PRIVATE, BUT RATHER PARALLEL
Having Medicaid and these programs piggybacking the insurance system is what is costly to taxpayers while it does not provide no benefits of Competition, Economy of Scale or any other mayor economic aspect. Is like Walmart was forced to purchase its goods from other much smaller chains, would be there any real competition there? Let Walmart do whatever they do best and the smaller chains focus on what Walmart is incapable to deliver.


For change in health care there is not middle way. Or you go one way or another. Middle ways here is condoned to be messy, expensive and what is worse, everlasting since proponents of one side and another will then blame each other’s part for the failure.

Frank writes:

Your post does not seem very responsive to the issue you have broached. Assuming that the French system, which many people admire, is very different from whatever you would propose, what do think is wrong with it?

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