The Relentless Process of Socializing Health Care
The movement towards socialized medicine is strong but widely misunderstood. Many ordinary people see health care as a right and complain that it is too expensive. Some economists also see problems with the existing health care system and propose public-sector alternatives. One serious problem with those who want socialized medicine is that they fail to see the problems that already exist with governmental involvement in health care.
Economists Steven DeLoach and Jennifer Platania claim that employer-provided health care affects the economy adversely. The logic of the DeLoach/Platania argument is relatively straightforward. Since health insurance is a fixed cost per employee, employers have an incentive to increase output by increasing hours worked per worker, rather than by hiring additional workers. Since labor productivity declines as workers work longer, it would be more efficient to hire more workers, rather than to have the same workers work longer...
The primary problem with DeLoach and Platania is that they do not sufficiently account for the effects of existing governmental intervention. FULL ARTICLE
Comments (55)
Sterling
I find the point about government regulation of insurance deductibles very interesting. Can anyone provide more details about this (and a source, perhaps)?
Published: May 1, 2008 9:08 AM
Erik
Here you go... A PBS document detailing the maze of regulation... I've only skimmed it, so I don't know if it covers everything, but it has a decent summery of a number of state regulations. Most regulation is done at the state level currently.
http://www-tc.pbs.org/now/politics/Healthinsurancereportfinalkofmanpollitz.pdf
Published: May 1, 2008 11:01 AM
yumi
Socialised health care should be avoided at all costs. The National Health Service in the UK is the biggest employer in Europe but perhaps unsurprisingly, there are too many problems with it. Often patients are unable to see doctors when they need to, due to a long waiting list. And as there is no opt-out, even those with private insurance must pay taxes towards the NHS. It's one thing to advocate the system, but another to actually live under the system.
Published: May 1, 2008 11:10 AM
fundamentalist
The largest chunk of health care spending goes to hospitals, about 40%, and the daily rates are ridiculous. In Oklahoma, a semi-private room is $500/day, so the whole room charge is $1,000/day. I would like to see some insight into why hospitals charge so much. They obviously haven’t spent the money on the rooms or the equipment in the rooms, nor on the nurses attending patients. I suspect that the extra costs come from excess capacity in expensive equipment, such as MRI machines, and rooms.
Published: May 1, 2008 12:06 PM
Nat
Medicare, Medicaid, and the VA already make up over 50% of healthcare spending in the US; so we already have socialized medicine. Any pathologies of the healthcare system can hardly be blamed on capitalism.
During the Presidential debates, then Governor Bill Clinton admitted that the elderly paid a higher percentage of their income to healthcare than when before Medicare was passed. This was in 1992, so I'm sure the percentage is even worse.
To anyone advocating a single payer system, I have just two words: Walter Reed. That hospital is supposed to be the creme-de-la-creme of government owned hospitals, yet it is rife with scandal.
Published: May 1, 2008 12:53 PM
John
"I suspect that the extra costs come from excess capacity in expensive equipment, such as MRI machines, and rooms."
With all do respect fundementalist, I must take issue with this suspicion. One of the single largest costs any not-for-profit hosptial (county and city facilities) deals with, is the extraordinary cost of caring for illegals (so called undocumented workers) and the uninsured.
Providing healthcare for 12 million undocumented residents and millions more uninsured is a burden on our health care system that is unmatched. Moreover, the enormous costs of malpractice insurance also drives up the total costs which are then passed on to the patient.
For private facilities, excessive waste may be an issue with some weight. And it may be ever so slightly a factor in NFPs. But, it is so far from being a primary or even a secodary factor of inflated costs, that it fails to make even the 10th draft pick among the pool of potential troublemakers.
We will never be ablel to solve our health care crisis, because people are the primary driver. They decide if capacity will hold through such variables as violence and unhealthy lifestyles. They decide if the payments will be made on time or if they will purchase an Xbox. They decide to go to the emergency room, rather than to the out patient clinic. And they decide to sue, rather than to fully appreciate that health care is largely a process of continued learning through science and mistakes.
No one system, no one school of thought will ever be able to completely solve and or create a perfect health care system. I am 100% confident that our best effort and a nearly perfect health care system, will only arise out of a proper hybrid application, which in may ways, is what we have now, but which has been beaten to near death from every possible angle.
Published: May 1, 2008 2:31 PM
Jon Tyree
Something you didn't mention is how demand skyrockets under a third-party payer system because all the costs are essentially hidden from the consumer. Aside from the copay, when you have insurance the perception is that it's free. There's an incentive to use as much as you can get since you're paying a fixed price, the bit deducted from your paycheck. This has also led to the publics perception that health care is a right and it SHOULD be free.
When you go to the doctor, no one ever mentions price. I feel doctors are part of the problem, here. The system is set up so that the doctor can recommend whatever he wants. The patient says OK. The doctor bills the insurance company some huge amount. You don't see it unless you read the summary you get from the insurance company in the mail, or the insurance company decides they're not going to pay it and you get a bill.
My view is that health care should be more like car maintenance. Bear with me, I call it my 'oil change analogy'.
First, have insurance for major medical problems that is truly insurance, where you are selling your risk, instead of a health maintenance system. You wouldn't go to some highly specialized custom racing shop for an oil change.
There should be a market for low-end routine medical services and tests. One where providers don't take insurance, they advertise, and actually compete on price in addition to other factors, like JiffyLube or Valvoline Instant Oil Change.
I can only speculate on what's preventing such a market since I'm no expert on medical laws but I'd guess first the AMA. I assume there are laws requiring certain things to be performed by board certified doctors, which would raise costs. Second, the fact that many people have insurance that covers the small stuff so why not go to the doctor every week? Third, uninsured people often go to ERs for care when it isn't necessary.
Published: May 1, 2008 3:22 PM
jpleezy19
http://www.nytimes.com/2008/04/04/opinion/04krugman.html?_r=1&oref=slogin
This article is nearly a month old but details many of the American left's qualms with the current US health care system and the Republican proposals.
It seems like Krugman's analysis flies in the face of some economic truths. Wouldn't a free marketplace be able to provide cheaper health care than one marked with government intervention? It seems to me that without a true consumer-based marketplace costs are driven up rather than down. The previous post regarding the "oil change" analogy seems like it would reduce costs significantly.
Also, hasn't the Laffer curve and recent tax cuts validated that cutting taxes increases revenue in a growing economy?
The biggest issue I have with any health care system without universal coverage is one that Krugman makes his point on. The few major chronic diseases (cancer, diabetes, etc.) dominate a majority of the nation's health care budget. How will those without the financial means with one of these disease be able to pay for coverage when an insurance company would undoubtedly deny them care in a free market?
Published: May 1, 2008 5:21 PM
Owen
I support free-market healthcare so long as the major problems with it are sorted out:
1. The tendency for medical insurance companies to deny claims 'off the bat' before even investigating them hoping the claimant will 'give up'.
2. The huge expanse of money wasted on lawyers and claims assessors that are all trying to deny or limit claims.
2. People with pre-existing conditions paying higher rates. This is because people should all have been covered prior to their condition (at least right people would have been) so this creates a serious inequality.
3. Definitions of what medical treatment is provided. Many insurance companies deny claims based on the available cure being "experimental". Well defining this term creates a wealth of problems.
The solution to all of these problems can only be some form of government regulation or a government run insurance company which adheres with these principles and operates in the free market.
Published: May 1, 2008 7:05 PM
Inquisitor
Here's a better idea... instead of advocating recourse to government at every turn of the corner, why don't you convince others to fund such an agency, without coercing unwilling participants into it?
Published: May 1, 2008 7:13 PM
Owen
Inquisitor:
A government operated health insurance scheme would be profit-making and completely voluntary. It is simply an effort to correct a market failure because these a services that are desired but current insurance companies do not provide them.
Of course if such services were provided then there would be no need, but we could wait and see.
Published: May 1, 2008 7:29 PM
Curt Howland
Owen, "A government operated health insurance scheme would be profit-making and completely voluntary."
That is a bald faced lie. Government _is_ coercion. To assert that anything "government" is going to be voluntary is to make an insane comment.
Published: May 1, 2008 7:57 PM
Martijn Meijering
Where I live, in the Netherlands, we have had a hybrid system for a very long time. For the past couple of years we have been moving towards a more market based system. In the US, we see a trend away from pure market forces. We may end up converging to a common system.
Some features of the Dutch system:
- Insurance is mandatory
- People with lower incomes get a healthcare allowance
- Individuals can choose their insurance company
- Individuals have to pay their insurance bill every month, making the costs visible
- Insurance companies have to accept all applicants
- Insurance companies have to offer everybody coverage for the same price and cannot differentiate between the healthy and the sick, the young and the old.
- Medical institutions and insurance companies have to compete
- There is a government fund and equalisation scheme for chronically ill patients, which means insurance companies can still make a profit on them
- Insurance companies have to offer basic, minimal coverage specified by law
It is far from perfect, but it combines universal, affordable coverage with competition on the supply side. I think it is a tremendous improvement over the largely socialised cartel we had previously.
Published: May 1, 2008 8:25 PM
Owen
Curt Howland:
I don't think you understand what a "government operatied profit-making voluntary organisation" is.
It doesn't involve coercion at any stage. It is merely correcting market failure. If such services were provided in the market it would be unnecessary but they aren't so it is market failure because many people want it.
Martijn Meijering:
Very nice. Those are exactly some ofthe regulatory features that I feel would be necessary to allow a free-market system to operate whilst protecting poor peoples health.
Published: May 1, 2008 9:01 PM
fundamentalist
Martijn: "In the US, we see a trend away from pure market forces."
It's a myth that the US has a free market in healthcare. Healthcare is the most heavily controlled and regulated part of our economy. The American Medical Association controls all medical schools and limits the supply of doctors while making sure they can never repay the debt taken to pay for medical school. Hospitals are so heavily regulated and inefficient that rooms cost more than luxury hotels in New York City. At the same time, the government is flooding the system with elderly patients. Fraud is massive. It's so screwed up that I think pure socialism would be an improvement!
Published: May 1, 2008 9:56 PM
Francisco Torres
To "sort" the problems indicated below, first it is important to analyze the situation to make sure these are real problems...
1. The tendency for medical insurance companies to deny claims 'off the bat' before even investigating them hoping the claimant will 'give up'.
How many times does this happen? Also, there is a serious misunderstanding of what an insurance does when insuring against something: Medical insurance, as it works right now, is more of a payment system than insurance. On a free market system, minor expenses would be paid by the patient and insurance would give coverage in case of catastrophic events, like an accident or an unexpected illness. There would not be a doctor's guild that limited the number of doctors that can graduate, nor would there be a state bureaucracy that imposed terribly stringent rules to test and market new medicine.
2. The huge expanse of money wasted on lawyers and claims assessors that are all trying to deny or limit claims.
Again, that is not a consequence of a free market, but of the over regulated mess that exists now.
2. People with pre-existing conditions paying higher rates. This is because people should all have been covered prior to their condition (at least right people would have been) so this creates a serious inequality.
No, this is YOUR misunderstanding of how insurance works. A preexisting condition increases the risk of an event, for which an insurance company has the right to charge a premium - the same it does when insuring inexperienced drivers, or homes in land of earthquake activity or prone to flooding.
3. Definitions of what medical treatment is provided. Many insurance companies deny claims based on the available cure being "experimental". Well defining this term creates a wealth of problems.
Not if the contract stipulates that no experimental treatment will be covered. If the buyer does not agree to the terms, he or she can seek another provider. Why would this be a problem is not clear.
The solution to all of these problems can only be some form of government regulation or a government run insurance company which adheres with these principles and operates in the free market.
You beg the question - you basically use false problems to argue in favor of regulation to solve them.
Published: May 1, 2008 11:18 PM
Owen
fundamentalist :
Relax, I don't think anyone seriously said that the market for healthcare was 100% free.
Healthcare is heavily regulated in order to protect the health of the public. The argument over whether you should regulate or litigate an industry is conclusively won by the regulatory side. Regulation is simply a "heads-up" by legislators on how a particular piece of public health protectng legislation should be read. Firms are not allowed to endanger peoples health.
That's a powerful little American Medical Association considering it represents less than 19% of practicing doctors, eh.
I am not sure how you linked the AMA to preventing doctors from paying back their student loans though...where is that relationship?
I think you're exaggerating their ability to restrict doctor numbers. If a profitable new medical school was declined accreditation they could sue and overturn that decision.
Fraud is massive by who? Private hospitals? Individual patients?
Published: May 1, 2008 11:20 PM
Francisco Torres
Owen,
It doesn't involve coercion at any stage. It is merely correcting market failure.
There is no such thing as market failure, Owen. What exists is a heavily regulated system where intervention in the pricing system creates a supply problem.
If such services were provided in the market it would be unnecessary but they aren't so it is market failure because many people want it.
"Such services" like which?
Published: May 1, 2008 11:31 PM
Owen
Francisco Torres:
None of your responses actually refuted my points.
1. Denying claims "off the bat" is quite common and has been shown to be policy at many major medical insurers, and indeed insurers of all types. The longer they hold out from paying the more interest they earn on your money - good business really.
2. A child from a well-off family would be insured since before birth so would never have a pre-existing condition. It is a problem exclusively relating to the lower-class. So sadly, it's YOUR misunderstanding of how insurance works.
3. You have obviously never had a dispute with your insurance company over the exact meaning of a term in your contract and whether it covers a specific instance of illness. I can assure you this occurs thousands, if not hundreds of thousands of times a day and the insurance company will hold for months until litigation after litigation forces them to read the pol;icy in an unbiased way - enter your money-hungry lawyers!!
4. The huge expanse of money is spent to litigate and deny free-market contracts. There is not government involvement.
Seems like you could not refute ANY of the real problems I identified so my assertion that regulation is needed still stands.
Published: May 1, 2008 11:37 PM
Owen
Francisco Torres:
Agreed. The Free-market is the best option. BUT if people want a system which fixes the problems and it is NOT provided in a free-market, then this is market failture and regulation or government provision would be warranted.
Published: May 1, 2008 11:39 PM
Tom
I've noticed that in all of the health care articles I have read I have never seen mentioned the type of private health insurance that seems to be prevalent in Singapore. Instead of the insurance company paying for your medical bills after you get sick, the insurance will pay you a specific amount for your illness. If you get one type of cancer then you might get $50k while another type would be $200k all based on the cost of treatment. This is of course all laid out in a contract so that it is very easy to compare between insurances. The fact that you get a fixed payout encourages you to economize your usage of medical services since you can keep the leftover money. With this system the only argument with the insurance company is the diagnosis instead of the course of treatment. Also, by having the patient decide, the cost of a treatment is now an extremely important factor so prices should come down.
The government's medical savings plan also works in a similar way except that the money stays in your private Medisave account for future use instead of going directly to your pocket if you do not spend the allowed amount. Although medical care is subsidized, everyone still cares about prices since most of the cost is either coming from your Medisave account or you are paying out of pocket. One last important note is that all basic costs (checkups, vaccinations, etc..) are always paid out of pocket.
Published: May 2, 2008 12:57 AM
Owen
Tom:
That sounds like a great idea - paying out cash instead of treatment. It could really move things closer to a free-market.
Published: May 2, 2008 2:36 AM
Inquisitor
"then this is market failture and regulation or government provision would be warranted."
Why? Why do you assume governments do not fail, and frequently? Public choice economics is devoted to its persistent failures. It is a non sequitur that if the market "fails" the government will be able to do anything about it but compound the failures. Why not suggest something original that doesn't involve coercion for once?
Published: May 2, 2008 8:07 AM
Inquisitor
"The argument over whether you should regulate or litigate an industry is conclusively won by the regulatory side."
Nope, people simbly bore of arguing with you. If you want to see the regulatory side engaged in an actual battle, get Beyond Politics for a complete smackdown of the notion of "regulation".
Published: May 2, 2008 8:11 AM
Martijn Meijering
Inquisitor:
You ask 'Why not suggest something original that doesn't involve coercion for once?'
People are not reasonable and given the oppurtunity will not respect property rights. Governments, being made up of people and elected by people, are also not reasonable and since they do have the opportunity they will definitely not respect property rights. How do you stop people infringing other people's property rights? It must involve some form of coercion, sadly. How do you make sure that coercion is just? You can't, I'm afraid. It's a problem.
Published: May 2, 2008 8:48 AM
Martijn Meijering
Inquisitor:
You ask 'Why not suggest something original that doesn't involve coercion for once?'.
People are not reasonable, and given the opportunity will not respect property rights. If you want to stop this, you need some kind of coercion. Theoretically, a government could force people to respect property rights. In practice, since governments are made up of people and elected by people, they too are unreasonable. And since they have power, they have the opportunity to infringe property rights and will definitely do so. We're screwed.
Published: May 2, 2008 8:53 AM
Inquisitor
I see - so what hinders one from determining whether defence against aggressive coercion is "just" or not? How does one jump from that alleged fact to a positive embracement of coercive measures? "Murder's a fact of life, so feel free to murder to get what you want!"
Published: May 2, 2008 8:55 AM
Curt Howland
Owen, "I don't think you understand what a "government operatied profit-making voluntary organisation" is."
Yes, I do. It's an oxymoron. Any such completely voluntary organization would not, by definition, be government. If government is involved, it is by definition coercive. Otherwise, government would not be involved. QED.
"It is merely correcting market failure. If such services were provided in the market it would be unnecessary but they aren't so it is market failure because many people want it."
This is a non-sense statement. If many people want something, their demand will create an opportunity for that demand to be filled. By involving government, they are using coercion against others to fulfill their "demands".
That's the definition of "terrorist".
There are no market failures. That, too, is an oxymoron. A non-sense statement. You may very well have a "demand" that no one wants to fill. So do I. By then using government to fill that "demand" you are initiating force no differently than the terrorist, the thief, the murderer.
Published: May 2, 2008 9:11 AM
Martijn Meijering
'I see - so what hinders one from determining whether defence against aggressive coercion is "just" or not? How does one jump from that alleged fact to a positive embracement of coercive measures? "Murder's a fact of life, so feel free to murder to get what you want!"'
I'm not embracing coercion. I'm just observing that we're screwed either way.
Published: May 2, 2008 9:15 AM
Inquisitor
Well then my earlier comment was not directed toward you - just Owen.
Published: May 2, 2008 9:27 AM
Inquisitor
correction of earlier post: simply*
Published: May 2, 2008 9:29 AM
George Gaskell
BUT if people want a system which fixes the problems and it is NOT provided in a free-market, then this is market failture and regulation or government provision would be warranted.
More nonsense from Owen.
There is no "market failure." Failure means that something is not operating according to its purpose. But the market, as a whole, has no purpose other than to give willing buyers and willing sellers an opportunity to find each other and compare alternatives.
When would-be buyers of medical services find that there are no producers willing to supply goods at the offered price, that means that either (a) some artificial mechanism is preventing sellers from showing up, or (b) the offered price is too low.
If (a) is the cause, the only systematic mechanism for preventing producers from providing goods (which they would love to sell to willing buyers) is GOVERNMENT. Usually this takes the form of some artificial barrier to entry, like a state-sponsored monopoly, or some other form of protectionism.
If the cause of the problem is that the offered price is too low to attract producers, then that's not really a market failure, now is it? That's just people wanting to pay less than the market price.
Published: May 2, 2008 9:48 AM
Martijn Meijering
'If (a) is the cause, the only systematic mechanism for preventing producers from providing goods (which they would love to sell to willing buyers) is GOVERNMENT.'
Generally, yes, but not always. Where I live, you sometimes read stories about physical violence and threats of physical violence by competitors. Recent stories were about taxi drivers, window cleaner, and foreclosure auctions.
A relative of mine works at a bank and was told during a training course that sometimes if outsiders place a high bid on a property, they are told that they probably don't want to do that. If they persist someone casually remarks that he knows the person's license number and mentions the first names of the person's children.
Published: May 2, 2008 10:24 AM
fundamentalist
Owen: “I don't think anyone seriously said that the market for healthcare was 100% free.”
At what point does it become socialist? The only difference between our system and a socialist one is that the socialist model is more rational. In fascist economics, the state controlled every aspect of decision making in companies, but because the state allowed the owners to retain a piece of paper declaring that they owned the business, fascists called their system a capitalist one. Our healthcare system is fascism on steroids with schizophrenia. Pure socialism would be a relief and a breath of fresh honesty.
Owen: “Healthcare is heavily regulated in order to protect the health of the public.”
You don’t know that because you can’t know the motives behind every law. Like all good socialists, you assume the motivations of legislators are always good. The evidence suggests that they are quite corrupt. In the late 80’s, the AMA bribed Congress to restrict the supply of foreign-trained doctors for the sole purpose of raising the incomes of doctors. As a result, the avg doctor’s annual income went from $80,000 to $120,000 in a few short years.
Nevertheless, I couldn’t care less about motivations. Good intentions have killed millions. Economists should care about outcomes.
Owen: “I am not sure how you linked the AMA to preventing doctors from paying back their student loans though...where is that relationship?”
The AMA makes the cost of medical school ridiculously high. That’s why so many med school students want to go into the high paying specialties. I have a friend going through med school today and he feels cheated in many ways. He wants to be a doctor because he wants to help people. But the debt he will take on in school will keep he and his wife poor for a very long time after he graduates.
Owen: “I think you're exaggerating their ability to restrict doctor numbers. If a profitable new medical school was declined accreditation they could sue and overturn that decision.”
You don’t think they have tried? I have read of numerous cases where new med schools tried to implement methods to reduce costs and the AMA wouldn’t accredit them. They challenged the AMA in court and lost. The AMA has a lock on med school accreditation and micro manages those schools. In addition, the AMA spends millions bribing legislators to enact laws implementing its policies. The AMA keeps doctor’s salaries aritificially high by restricting the number of med schools, the number of students in med schools, and the increasing the cost of educating students. It has also gotten legislation passed restricting the entry of foreign-trained doctors.
What would help a great deal is an accreditation organization that competes with the AMA. Then we might get rid of the requirement to have a bachelor degree to attend med school. There is no reason that students couldn’t major in medicine as undergraduates and practice medicine with just a bachelor degree. The AMA instituted the separate med school after the bachelor degree early in the 20th century for no reason other than to limit the supply of doctors and increase their salaries. In addition, by having the same educational requirements as a PhD, doctors would earn more respect, and could be called “Doctor”. It has nothing whatsoever to do with improving the quality of healthcare or protecting patients.
Published: May 2, 2008 11:00 AM
newson
Martijn Meijering says:
"Where I live, you sometimes read stories about physical violence and threats of physical violence by competitors. Recent stories were about taxi drivers, window cleaner, and foreclosure auctions."
in most english law jurisdictions, merely making credible threats constitutes "assault" and allows for criminal prosecution. i think it's a bit of stretch to imagine doctors kneecapping competitors who may not stick to guild's price schedule.
unfortunately, i think medical guilds in all developed nations are the least likely of all to lose monopoly status, with perhaps lawyers as a close second. as long as people mouth "every life is priceless", blithely ignoring the costs of life preservation, health will continue to outpace every other budget item.
Published: May 2, 2008 11:18 AM
fundamentalist
Owen, You’re obviously a big fan of state regulation of industry, so you should learn some painful truths about how it really works. Most of what I know about how state regulation works comes from a class I took on the subject in grad school, at a state university that promotes socialism. In other words, my info comes from supporters of state regulation, not opponents.
When politicians decide they want to regulate an industry for the “public good” (it’s always for the public good), they establish an agency. Next they have to staff that agency. Who do they hire? Obviously, people who are experts on that industry. Where do they find such experts? In the industry to be regulated. Now the major players in the industry have a huge stake in who gets appointed to run the agency that will regulate them, so they begin lobbying and bribing (through campaign contributions) politicians to get their people employed in the agency. Within a short time, the largest companies in the industry have staffed the regulatory agency with their people. As a result, many regulations have nothing to do with public safety and everything to do with protecting the industry leaders against competition. Even the socialist writer Rod Dreher, deplores the industry take over of the FDA in his book about “crunchy conservatives.”
Regulation does not protect the public; it lulls the public to sleep by fooling it into thinking the regulatory agency is looking out for its interests. Then the public is shocked and awed to find that the regulatory agency has failed them time and time again. The public interest would be better protected by removing the regulatory agencies and forcing people to pay attention.
A recent study on traffic accidents in a Scandinavian country confirms this idea. The study found that traffic signs warning drivers of a dangerous intersection lulled drivers into a false sense of security which caused many deaths. When the state removed the signs, drivers became much more careful on the dangerous road and deaths declined.
Published: May 2, 2008 11:41 AM
newson
fundamentalist says:
"A recent study on traffic accidents in a Scandinavian country confirms this idea. The study found that traffic signs warning drivers of a dangerous intersection lulled drivers into a false sense of security which caused many deaths. When the state removed the signs, drivers became much more careful on the dangerous road and deaths declined.
this reminds me of travelling around guatemala many years ago. no roads signs, and nor were any needed - dangerous curves would be marked by humble crosses and flowers, laid by relatives and loved ones. the more the shrines, the more dangerous the stretch (and no technical information can impact more than a death count).
where i live, authorities loathe these sort of home-grown initiatives and prefer to spend billions on useless "drive-safe" campaigns and signage, whilst banishing grief to cemeteries. this is just the australian way.
Published: May 2, 2008 12:15 PM
Al
"A recent study on traffic accidents in a Scandinavian country confirms this idea. The study found that traffic signs warning drivers of a dangerous intersection lulled drivers into a false sense of security which caused many deaths. When the state removed the signs, drivers became much more careful on the dangerous road and deaths declined."
This is interesting. Anyone have a reference to this study?
Published: May 2, 2008 1:14 PM
fundamentalist
Al, Sorry, I heard it on NPR about a year ago, on the program in the afternoon. But that's about all I remember. But the story was so good it stuck in my memory. I may be wrong, but I think the country was Denmark.
Published: May 2, 2008 4:07 PM
fundamentalist
This passage from "Human Action" p. 273 describes the corruption existing in federal regulatory agencies:
In an unhampered market economy the capitalists and cntrepreneurs cannot expect an advantage from bribing officeholdcrs and politicians. On
the other hand, the officeholders and politicians are not in a position to blackmail businessmen and to eFtort graft from them. In an interventionist country powerful pressure groups are intent upon securing for their mernbers privileges at the expense of weaker groups and individuals. Then the businessmen may deem it expedient to protect themselves against discriminatory acts on the part of the executive officers and the legislature by
bribery; once used to such methods, they may even try to employ them in order to secure privileges for themselves. At any rate the fact that businessmen
corrupt politicians and officeholders and are blackmailed by such people does not indicate that they are supreme and rule the countries.
Published: May 2, 2008 4:11 PM
George Gaskell
Here are two articles on removal of traffic lights and traffic anarchy:
http://www.spiegel.de/international/spiegel/0,1518,448747,00.html
http://www.wired.com/wired/archive/12.12/traffic.html
Published: May 2, 2008 4:35 PM
Francisco Torres
Replying to Owen.
None of your responses actually refuted my points.
I beg to differ. See below.
1. Denying claims "off the bat" is quite common and has been shown to be policy at many major medical insurers, and indeed insurers of all types. The longer they hold out from paying the more interest they earn on your money - good business really.
What do you mean by "quite common"? How much common? The practices you mention are the stuff of John Grisham's novels, but in reality is not as common as you think.
2. A child from a well-off family would be insured since before birth so would never have a pre-existing condition. It is a problem exclusively relating to the lower-class. So sadly, it's YOUR misunderstanding of how insurance works.
I fail to see what one thing has to do with the other. First, you totally misunderstand the concept of Preexisting Condition: it is NOT related to status, but to GENETICS. Second, insurance serves as a hedge against risk, where the likeliness of an event will increase or decrease the premium one has to pay to hedge that risk. So if you have a preexisting medical condition, the risk of you getting sick is much higher than for a healthier person. This explains the premium you would have to pay, or the unwillingness of an insurer to insure you. The same could be said about a person with a history of smoking, or of drinking, or involved in dangerous sports.
3. You have obviously never had a dispute with your insurance company over the exact meaning of a term in your contract and whether it covers a specific instance of illness.
My specific anecdote with my insurer is of no relevance to the issue of whether there needs to be government intervention on the market or not. Just because you or I had some tiff with a particular company does not mean that there needs to be a sweeping regulatory imposition upon an entire market.
I can assure you this occurs thousands, if not hundreds of thousands of times a day and the insurance company will hold for months until litigation after litigation forces them to read the pol;icy in an unbiased way - enter your money-hungry lawyers!!
You can assure me anything, but the fact is you cannot know this for a fact, unless you are privy to very specific statistics. Also, it does not make any sense: The insurance companies have to pay the lawyers to defend their position, a costly strategy if they indeed deny a claim "thousands and thousands of times" a day.
Another point: you seem to be focusing on insurance companies as if they were the sole proprietors of the health care system. However, most of the expenses borne by a patient comes from regular care, and not catastrophic medical events. Insurance companies offer payment systems for minor medical care because governments required employers to provide coverage for their employees for mayor and minor medical care, which had the unfortunate consequence of driving the price of all health care to the roof. It was government intervention that created the problem, and not the free market.
4. The huge expanse (sic) of money is spent to litigate and deny free-market contracts. There is not government involvement.
If this were true, insurance companies would end up bankrupt due to litigation costs. The fact that coverage is denied in certain cases does not indicate a systemic problem. Also, insurance is supposed to be a hedge against risk, and not a payment system - regulation and bad laws has distorted the reason for being of insurance when it comes to medical care.
Agreed. The Free-market is the best option. BUT if people want a system which fixes the problems and it is NOT provided in a free-market, then this is market failure and regulation or government provision would be warranted.
First of all, if people want SOMETHING, it creates an opportunity for entrepreneurs to cater to those needs. There would be no market failure. What you are talking about is a problem that exists BECAUSE of interventionism, and not a lack of. You cannot conclude "market failure" when the market is not allowed to function. If you left the market alone and allowed doctors to graduate in as many numbers as the market will bear, with insurance companies insuring under whatever plan they wish, and every patient taking care of its own expenses, heath care would be much cheaper and more readily available. Most of the procedures done every day are quite minor and can be performed by less specialized health care givers (nurses or technicians). Instead, by LAW even a minor procedure like closing a small wound has to be performed by a doctor licensed by a government-certified school. This creates a supply problem.
Published: May 2, 2008 7:38 PM
Owen
Francisco Torres:
I agree that if none of these problems actually existed then the free market insurance is the way to go. But if they do exist in any degree then regulation and/or government intervention is the way to solve them.
1. Denying claims is quite common and is regularly on television shows in New Zealand about this practice. You underestimate it. Anyway, even once is too much.
2. Right people would insure their babies before they were born eliminating the possibility that they have a pre-existing condition. Poorer people who are getting insurance later in life will have "pre-existing conditions for which they will potential NEVER be able to get cover. That is a status problem.
3. It is in the interest of an insurance company to draw out the process of claim approval despite being in full knowledge that they will eventually have to pay. If it is a large amount they make interest on the money not paid, if it is a small amoutn often the person gives up. Either way this is a problem which requires government intervention to fix.
4. It's not the insurance company that would spend the money to deny the claim it is the customer who spends to money on laywers to fight it. The insurance company just sits back and enjoys the ride for as long as it can.
Published: May 3, 2008 12:10 AM
Owen
Great info about traffic signs. Unfortunately it doesn't translate into business regulation because a business does not "think" the same as a person.
Business have their own unique pathology which makes them relentlessly pursue profit whilst a person seeks 'utility' or 'desires' which are only sometimes related to money.
Published: May 3, 2008 1:10 AM
newson
owen says:
"It is in the interest of an insurance company to draw out the process of claim approval despite being in full knowledge that they will eventually have to pay. If it is a large amount they make interest on the money not paid, if it is a small amount often the person gives up. Either way this is a problem which requires government intervention to fix."
here's a story to counter your point. fai insurance operated in australia, and in 2001 went into liquidation with its parent, hih insurance. long before the market dealt the hih/fai group the coup de grace, fai (originally "fire and accident insurance") was colloquially known as "forgetaboutit" for their stalling on claim payouts and vexatious litigation. their premiums were cheap, but their payout reputation was mud.
the market finished them off, and following a royal commission, criminal charges were laid. those who thought they were getting a bargain premium found out that there are no free lunches. other insurers paid promptly and refused to compete on premium price alone. they still operate successfully.
insurers are subject to much popular scrutiny, and tardy payers or obstructionist tactics are easily exposed by disgruntled consumers. policies are renewed regularly, so there is ample chance to swap insurer, if unsatisfied.
Published: May 3, 2008 5:20 AM
newson
owens says:
"Denying claims is quite common and is regularly on television shows in New Zealand about this practice. You underestimate it. Anyway, even once is too much."
the inference being that regulation is perfect. this is simply utopian.
your language is loaded - "pathology" indicates disease/sickness. i put it to you that the state "relentlessly pursues" power. is this also pathological?
Published: May 3, 2008 5:34 AM
Owen
newson:
The inference is that firms have a pathological impulse to screw people over if it will be profitable for them. In other areas of life it is accepted as being dealt with by market forces but when peoples lives are at stake it should and IS CURRENTLY treated differently.
That is why there is alot of health and safety regulation and why healthcare often gets overly socialised.
I am all for market forces in healthcare PROVIDED the very significant problerms identified can be solved. The system in the netherlands seems to go some way to doing this.
Pathological is not my wording. It is a common description of the "mind" of the firm. If a person acted in a way that a firm is supposed to, that person would be deemed pathological. A firm considers everything in dollars and sense, has absolutely no remorse or feelings.
That is why the actions of a firm cannot be compared to those of an individual when considering whether to regulate or not.
Published: May 3, 2008 6:19 AM
newson
to owen:
there is no such thing as the mind of the firm, anymore than the mind of the government.
the government's incentives are to accumulate power, irrespective of what individual public servants' agendas may be. power is only checked by periodic review by the public (elections).
companies' mercenary incentives are constantly counterbalanced by the consequences of their actions. screw one customer, and fifty others will get an earful at the pub. competition ensures that in the commercial sphere, what comes around goes around. on the flip side, word-of-mouth recommendations are gold, and save a fortune on advertising.
Published: May 3, 2008 6:43 AM
Inquisitor
Again, why this confidence in government regulation? Even if everything you said were true, you've not even shown that government would not botch things up, and make them even worse.
Published: May 3, 2008 6:45 AM
Owen
newson:
I agree with you. The market is the best way to solve that issue.
Inquisitor:
Point taken that government could botch things up but so can the free market so that is a mute argument.
Published: May 3, 2008 7:03 AM
Inquisitor
Well it's not if you're suggesting the government as a corrective measure...
Published: May 3, 2008 7:12 AM
Owen
Inquisitor:
...both the free-market and grovernment have their deficiencies in the area of health-care provision.
That is why determing which one is better without exact knowledge of the extent of these deficiencies is impossible.
Published: May 3, 2008 7:22 AM
newson
unsatisfied? dissatisfied! why didn't spellcheck bail me out?
Published: May 3, 2008 7:23 AM
Inquisitor
Which is why I suggested Beyond Politics (as well as Unwarranted Intrusions), because both books examine just that - regulation from a theoretical (Public choice school) and empirical vantage. Public choice and Austrian economics come very close to one another.
Published: May 3, 2008 7:41 AM
newson
to owen from lenin ("the state and revolution"):
"To decide once every few years which members of the ruling class is to repress and crush the people through parliament--this is the real essence of bourgeois parliamentarism, not only in parliamentary- constitutional monarchies, but also in the most democratic republics."
Published: May 3, 2008 7:49 AM