Arnold Kling  

The Road to Health Care Serfdom

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Canada Wins... sentences to ponder...

If Massachusetts is any indication, we are on it if we adopt reforms similar to theirs.


Last month, Democratic Governor Deval Patrick landed a neutron bomb, proposing hard price controls across almost all Massachusetts health care...

average Massachusetts insurance premiums are now the highest in the nation. Since 2006, they've climbed at an annual rate of 30% in the individual market. Small business costs have increased by 5.8%. Per capita health spending in Massachusetts is now 27% higher than the national average, and 15% higher even after adjusting for local wages and academic research grants. The growth rate is faster too.

Of course, Wesley Mouch does not care.

I don't suppose the fact that I told you so will get me anywhere.


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COMMENTS (14 to date)
Doc Merlin writes:

It doesn't matter how often it fails or how destructive it is. People will always propose that they can use force to make prices lower and that goods will remain widely available.

What they don't realize is that controlling prices by force is no different than trying to get rid of a fever by adjusting the thermometer.

Lord writes:

That process started many years ago. This, if anything, is the beginning of end of it and should be welcomed as such.

nick caruso writes:

In re: beginning of the end: I hope the end of the end isn't too many lifetimes off.

Perhaps, we can hope for a chance to start over somewhere offworld. Say, the moon. On second thought, lets make that the asteroid belt.

dave writes:

nick
I thought I was the only one who fantasized about starting over on the moon.

Les Cargill writes:

So it'll bubble, the bubble will burst, then it will correct. If you lie to Schumpeter, he will get you.

Doc Merlin writes:

@Lord

Nah, look over history. As long as humans have been around they have been doing this nonsense. The society falls apart then they learn their lesson for a while. A few generations later someone does it again.

Babinich writes:

"Last month, Democratic Governor Deval Patrick landed a neutron bomb, proposing hard price controls across almost all Massachusetts health care..."

Hmm, aren't we the species that is supposed to learn from our mistakes?

SydB writes:

Not arguing for price controls here, but WalMart does it all the time. Which drives prices lower. And it works. The squeeze the profits out of the middle-men.

tjames writes:

SydB - yes, Wal-Mart is good at squeezing suppliers, but notice they are squeezing what is still a profit. If Wal-Mart forced its suppliers to sell at a continuing loss, they would soon run out of goods to sell, which is what, I presume, Babinich is alluding to.

Floccina writes:

It doesn't matter how often it fails or how destructive it is. People will always propose that they can use force to make prices lower and that goods will remain widely available.

But I am open to the, no doubt hard to believe, idea that it might work in medical care because we have high barriers to entry into medical professions. In other words if we lower compensation to medical personnel we might still get plenty of people, albeit less qualified people, willing to work. The licensing system keeps many would be practitioners out. Now this could affect quality but we seem to get little from medical care beyond the basics so the quality loss may only have a small effect, not to mention that ability in schools and on tests is far from a perfect analog to practicing.

Floccina writes:

It doesn't matter how often it fails or how destructive it is. People will always propose that they can use force to make prices lower and that goods will remain widely available.

But I am open to the, no doubt hard to believe, idea that it might work in medical care because we have high barriers to entry into medical professions. In other words if we lower compensation to medical personnel we might still get plenty of people, albeit less qualified people, willing to work. The licensing system keeps many would be practitioners out. Now this could affect quality but we seem to get little from medical care beyond the basics so the quality loss may only have a small effect, not to mention that ability in schools and on tests is far from a perfect analog to practicing.

Currently Government through licensing is IMO creating a shortage of suppliers. So maybe it balances out a bit. Isn't what they to to some extent in Canada?

mulp writes:

Based on my experience in NH, a mere 30% increase in premiums for the individual market would be welcome relief.

And a better (lower) high deductible policy in Mass without subsidy would be about two-thirds what I currently pay in NH for a $5000 deductible policy in NH.

And I'm a lot healthier than Dick Cheney was 7 years ago, who I think would have been denied coverage in NH, forcing him into the high risk pool.

Of course, as I read the views of conservatives on health care economics, Dick Cheney chose to have a heart attack because he has free government run health care without limits, or his doctors decided to diagnose him with a heart attack in order to bill the government thousands of dollars more and Dick Cheney agreed to the over use by over diagnosis because it was free to be treated and tested for a heart attack. He must have had the heart bypass surgery because that was free as well, not because he had severe heart disease.

So, it is the people like Dick Cheney who are driving up the cost of health care in the US. If he lived in Mass, he would have been encouraged to have more heart attacks because he wouldn't have been charged much higher insurance premiums, but if he lived in NH, the higher insurance cost would have made him healthy.

On the other hand, if Dick Cheney were French or Israeli he would have chosen to be healthy, or refused to be treated for heart disease he didn't have.

At least according to the conservative's health economics theory.

In any case, I debate with myself selling my house in NH and moving south to Mass - the savings on health insurance are just one of the attractions. I pay a high price to live in the woods of NH, and high cost of "small government" is one of them.

Floccina writes:

@Mulp

He must have had the heart bypass surgery because that was free as well, not because he had severe heart disease.

On the other hand, if Dick Cheney were French or Israeli he would have chosen to be healthy, or refused to be treated for heart disease he didn't have.

Interestingly, Dr Nortin Hadler in the book "The Last Well Person" (I heard about the book here on econlog and got it) says that heart bypass is mostly no more effective than non surgical treatment. He says that it is seldom done outside the USA.

Nortin M Hadler MD MACP FACR FACOEM writes:

I have been following your discussion of health expenditures in the context of interventional cardiology. Missing from most formulations is consideration of the inefficacy of what we do, let alone overtreatment. For those of you who prefer blogs, perhaps these postings would be helpful:

http://www.thehealthcareblog.com/the_health_care_blog/2010/02/the-health-assurance-disease-insurance-plan.html#more

http://www.thehealthcareblog.com/the_health_care_blog/2010/01/comparative-effectiveness-research-and-kindred-delusions.html#more

You reference my monograph, The Last Well Person, in your discussion. Two books have been published since that provide additional details of this argument:

http://www.uncpress.unc.edu/books/T-8491.html

http://www.uncpress.unc.edu/browse/book_detail?title_id=1676

Nortin M Hadler MD MACP FACR FACOEM
Professor of Medicine and Microbiology/Immunology
University of North Carolina School of Medicine
Attending Rheumatologist, UNC Hospitals

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