Curing America's Health Care Ills

[Adam's Apple]

How to Cure Health Care
By Milton Friedman, Hoover Digest
November 21, 2005

This is a good article on health care in America, beginning with a history of how we came to depend on employers for health insurance coverage and going into the author’s ideas on how to cure America’s health care ills without “universal” health care.

http://www.hoover.org/publications/digest/3459466.html

 

[Bern80]

Not through all of it yet, but that it is a perspective from one of the brightest economists of the last century speaks volumes.

To carry out some of his analogies (i.e. third parties don't pay for food), shouldn't the left be pushing that all basic 'necessities' be provided by the government (food, shelter, etc.)?

 

[Mr.Conley]

Not through all of it yet, but that it is a perspective from one of the brightest economists of the last century speaks volumes.

To carry out some of his analogies (i.e. third parties don't pay for food), shouldn't the left be pushing that all basic 'necessities' be provided by the government (food, shelter, etc.)?

Actually, we do provide food and shelter. Take a look a HUD and all the public housing projects. And we subsidize our farmers to the tune of about $20 billion a year.

 

[Bern80]

Actually, we do provide food and shelter. Take a look a HUD and all the public housing projects. And we subsidize our farmers to the tune of about $20 billion a year.

To a degree. I'm talking about the difference between optional and requirment. i.e. requirement that government be the sole provider of health care.

We're considering the hypothetical that regardless of what you make the government will provide those necessities from our current system where if you're destitute enough government will provide those basic necessities.

Certain people have the expectation that their healthcare is governments responsibility regardless of whether they can pay for it or not on the ground that it is a basic necessity (which is open for debate as well). So why do they not make the same argument with regard to other basic necessities?

I'm not arguing that this country should'nt have safety nets. I'm arguing that it isn't unreasonable to expect people to provide for themselves if capable.

 

[ScreamingEagle]

The high cost and inequitable character of our medical care system are the direct result of our steady movement toward reliance on third-party payment. A cure requires reversing course, reprivatizing medical care by eliminating most third-party payment, and restoring the role of insurance to providing protection against major medical catastrophes.

The ideal way to do that would be to reverse past actions: repeal the tax exemption of employer-provided medical care; terminate Medicare and Medicaid; deregulate most insurance; and restrict the role of the government, preferably state and local rather than federal, to financing care for the hard cases. However, the vested interests that have grown up around the existing system, and the tyranny of the status quo, clearly make that solution not feasible politically. Yet it is worth stating the ideal as a guide to judging whether proposed incremental changes are in the right direction.

If we had good leadership, the "tyranny of the status quo" could possibly be broken. Americans are ready for change. But it seems that even our congressmen are subject to that same "tyranny".

 

[jillian]

I'm wondering why anyone would pay much attention to an organization named to honor the economic acumen of the person who brought us Hoovervilles.

 

[Bern80]

I'm wondering why anyone would pay much attention to an organization named to honor the economic acumen of the person who brought us Hoovervilles.

Unless we're talking about different Hoovervilles, you lost me. Hoovervilles or shanty towns were unofficial towns brought about by dissatisfaction of Hoover durring the depression. Freidman, by the end of the depression, would have been 26-28. Who/what are you talking about?

 

[jillian]

Friedman wrote the article, and by the way, made one of the stupidest comments I have ever read in it about how people would make better medical care choices if it came out of their own pocket.

The link, however, is to the Hoover Institution, which was started by Herbert Hoover. It's mission statement is:

MISSION STATEMENT

Now more than four decades old, Herbert Hoover's 1959 statement to the Board of Trustees of Stanford University on the purpose and scope of the Hoover Institution continues to guide and define its mission in the twenty-first century:

"This Institution supports the Constitution of the United States, its Bill of Rights and its method of representative government. Both our social and economic systems are based on private enterprise from which springs initiative and ingenuity.... Ours is a system where the Federal Government should undertake no governmental, social or economic action, except where local government, or the people, cannot undertake it for themselves.... The overall mission of this Institution is, from its records, to recall the voice of experience against the making of war, and by the study of these records and their publication, to recall man's endeavors to make and preserve peace, and to sustain for America the safeguards of the American way of life. This Institution is not, and must not be, a mere library. But with these purposes as its goal, the Institution itself must constantly and dynamically point the road to peace, to personal freedom, and to the safeguards of the American system."

The principles of individual, economic, and political freedom; private enterprise; and representative government were fundamental to the vision of the Institution's founder. By collecting knowledge, generating ideas, and disseminating both, the Institution seeks to secure and safeguard peace, improve the human condition, and limit government intrusion into the lives of individuals.

http://www.hoover.org/about/mission

Based on what I read in the article and saw on that site, I figure it's economic assertions would result in about the same as Hoover's.

 

[Bern80]

Friedman wrote the article, and by the way, made one of the stupidest comments I have ever read in it about how people would make better medical care choices if it came out of their own pocket.

The link, however, is to the Hoover Institution, which was started by Herbert Hoover. It's mission statement is:



http://www.hoover.org/about/mission

Based on what I read in the article and saw on that site, I figure it's economic assertions would result in about the same as Hoover's.

What evidence is there that Hoover caused the depression?

And Friedman's statement is stupid? You really believe people are tighter and make better choices spending other people's money then their own?

 

[jillian]

What evidence is there that Hoover caused the depression?

And Friedman's statement is stupid? You really believe people are tighter and make better choices spending other people's money then their own?

I think most people go to the doctor when they have no choice because it is so expensive. I believe people who aren't monied only take their kids for well visits when those visits are insured.

I think older people on pensions have enough trouble paying for medications and food and the whole concept that a purely profit-driven pharmaceutical/medical industry would somehow benefit from people being on their own is silly.

No one says, "oh, I think I'll waste my insurance company's money today and go to a doctor".

As for Hoover, he absolutely made bad choices.

 

[Bern80]

I think most people go to the doctor when they have no choice because it is so expensive. I believe people who aren't monied only take their kids for well visits when those visits are insured.

I think older people on pensions have enough trouble paying for medications and food and the whole concept that a purely profit-driven pharmaceutical/medical industry would somehow benefit from people being on their own is silly.

No one says, "oh, I think I'll waste my insurance company's money today and go to a doctor".

As for Hoover, he absolutely made bad choices.

You kinda dodged the question. In order to answer it you have to assume you are the one required to pay your healthcare costs. If you're argument is it's a basic necessity then carry that over to other basic necessities. Do you just buy any old house on a whim? Do go through the supermarket randomly grabbing things off the shelves?

For that matter just answer the question (though worded slightly different). Why would people NOT spend their healthcare dollars more wisely than a third party payer?

Pretend you are the third party payer. Are you saying you would make better healthcare decisions for someone else then you would for yourself?

 

[jillian]

You kinda dodged the question. In order to answer it you have to assume you are the one required to pay your healthcare costs. If you're argument is it's a basic necessity then carry that over to other basic necessities. Do you just buy any old house on a whim? Do go through the supermarket randomly grabbing things off the shelves?

For that matter just answer the question (though worded slightly different). Why would people NOT spend their healthcare dollars more wisely than a third party payer?

Pretend you are the third party payer. Are you saying you would make better healthcare decisions for someone else then you would for yourself?

I don't think I did dodge the question. Health care is different from other necessities. Poor people, in particular, end up using hospital emergency rooms as their primary care facilities because they can't afford routine preventive care. So, there are different issues. If I live in a lesser house today, it doesn't mean that I will suffer from some housing emergency later on. If one neglects one's health because one doesn't have the money to seek out proper care, then there are greater health problems later on, at a greater societal cost.

Unexpected health care costs are also the leading cause of bankruptcy filings. Again, this results in a societal cost that can't be ignored.

I'm not certain what you mean by your last question. I'd like to think I'd make good health care decisions no matter whom I was making them for.

Also, you're asking the wrong person, perhaps, about housing.

 

[ScreamingEagle]

Health care is different from other necessities. Poor people, in particular, end up using hospital emergency rooms as their primary care facilities because they can't afford routine preventive care. So, there are different issues.

Poor people also end up using food banks as their primary source for food because they can't afford routine grocery shopping. Different issues, same principle.

Therefore, don't you think we should also have a socialized food program for the nation too? Both food and health care are "basic rights" as you liberals like to say.

And just think...you liberals could dictate...and enforce... exactly what kinds of foods everybody could eat...your food police would have a heyday

 

[midcan5]

I tired to read this with an open mind but that was hard. He starts out telling us medical care as it exists is a disaster. Right away I do not agree. From lots of personal experience, and for many people I know in large corporations or with HMOs, or simply well to do, that simply is wrong. Medical care is excellent for the top wage earners and government workers. It is only bad if you have to pay for it on your own or have some aliment that is costly.

There are genuine benefits to economies of scale as he should know and HMOs force a bit of reasonableness through setting the price the doctor gets paid. I recently had a mark removed because of too much sun as a kid and the surgeon charged 800 plus dollars. Aetna paid him approximately 300 for a procedure that took less than 15 minutes. Ask Milton how he would control that in a saving plan system? If (some) doctors do not get paid enough they add test after test to compensate or they gouge the ones with good insurance policies.

In the end old Milton offers nothing of substance except 'ye old voucher system.' Does he know any real people I wonder. In the past companies provided excellent health care insurance, they even had internal medical facilities. That changed when the focus changed to the next quarter's earnings. It also changed because medical service is not telephone service, it requires people, technology, medicines, and while I can give up my phone, a health issue has deeper requirements.

 

[jillian]

Poor people also end up using food banks as their primary source for food because they can't afford routine grocery shopping. Different issues, same principle.

Therefore, don't you think we should also have a socialized food program for the nation too? Both food and health care are "basic rights" as you liberals like to say.

And just think...you liberals could dictate...and enforce... exactly what kinds of foods everybody could eat...your food police would have a heyday

Idiocy. I do wish you'd actually raise a point now and then. Go on... I'm rooting for you.

 

[Bern80]

I don't think I did dodge the question. Health care is different from other necessities. Poor people, in particular, end up using hospital emergency rooms as their primary care facilities because they can't afford routine preventive care. So, there are different issues. If I live in a lesser house today, it doesn't mean that I will suffer from some housing emergency later on. If one neglects one's health because one doesn't have the money to seek out proper care, then there are greater health problems later on, at a greater societal cost.

Not really, no. You can lose your house unexpectedly in a fire or hurricane or tornado or flood. Something that would be equally catastrophic financially. Food, as far as supply goes is relatively dependable (assuming you can afford it). If you don't maintain your house you will cause yourself bigger financial burdens down the road as well. Health and shelter are amazingly analogous. Yet no one is proposing that government take over housing.

Unexpected health care costs are also the leading cause of bankruptcy filings. Again, this results in a societal cost that can't be ignored.

Agreed, but you're extrapolating out that government should be the solution.

I'm not certain what you mean by your last question. I'd like to think I'd make good health care decisions no matter whom I was making them for.

I mean pretend you are an insureance company for one. Someone is giveing you their money to determine how their healthcare dollars should be spent. I don't doubt for second that you would try to do what is in their best interests. But do you think the same can be said for an insureance company? Or the government for that matter? Even assuming they try their best to make good decisions for you do you still believe they would spend their money more wisely than you would yourself?

 

[Bern80]

I tired to read this with an open mind but that was hard. He starts out telling us medical care as it exists is a disaster. Right away I do not agree. From lots of personal experience, and for many people I know in large corporations or with HMOs, or simply well to do, that simply is wrong. Medical care is excellent for the top wage earners and government workers. It is only bad if you have to pay for it on your own or have some aliment that is costly.

There are genuine benefits to economies of scale as he should know and HMOs force a bit of reasonableness through setting the price the doctor gets paid. I recently had a mark removed because of too much sun as a kid and the surgeon charged 800 plus dollars. Aetna paid him approximately 300 for a procedure that took less than 15 minutes. Ask Milton how he would control that in a saving plan system? If (some) doctors do not get paid enough they add test after test to compensate or they gouge the ones with good insurance policies.

In the end old Milton offers nothing of substance except 'ye old voucher system.' Does he know any real people I wonder. In the past companies provided excellent health care insurance, they even had internal medical facilities. That changed when the focus changed to the next quarter's earnings. It also changed because medical service is not telephone service, it requires people, technology, medicines, and while I can give up my phone, a health issue has deeper requirements.

And do you know why physicians charge so much? I'll give you hint. It isn't because that is the market value of that procedeure.

 

[midcan5]

And do you know why physicians charge so much? I'll give you hint. It isn't because that is the market value of that procedeure.

All personal service costs rise faster than other costs. "Economists refer to the "cost disease" of the personal services as Baumol's disease, after the economist who discovered it, William Baumol. The problem stems from the fact that in many personal services, productivity improvements are either impossible or highly undesirable. In the "impossible" category, think of how many musician hours it took to play one of Mozart's string quartets in 1790 versus in 1990, or how many bus drivers it takes to get children to school today versus a generation ago. In the "undesirable" category, think of school teachers. Their productivity can be increased rather easily: by raising class size, which squeezes more student output from the same teacher input. But most people view such "productivity improvements" as deteriorations in educational quality, a view that is well supported by research findings. With little room for genuine productivity improvements, and with the general level of real wages rising all the time, personal services are condemned to grow ever more expensive (relative to other items) over time. That is the essence of Baumol's disease."

"The prediction of Baumol's disease -- that the prices of personal services (such as education and entertainment) will rise relative to the prices of manufactured goods and impersonal services (such as cars and telephone calls) -- is borne out by history. For example, the theory goes a long way toward explaining why the prices of health care and college tuition have risen faster than the consumer price index for decades."*

*Alan S. Blinder

http://www.foreignaffairs.org/20060...ffshoring-the-next-industrial-revolution.html

 

[jillian]

Let me make a bet here that his next comment is about how doctors get sued by big bad trial lawyers.

 

[Bern80]

Let me make a bet here that his next comment is about how doctors get sued by big bad trial lawyers.

Close. A large part of it is the outrageous cost of medical malpractice insureance. Which is driven up by lawyers sueing (sometime frivilously) sueing doctors.