How would truly free-market hospitals handle patients who are now free riders? There is every reason to expect that these uninsured, mostly low-income people would be treated more humanely and with greater dignity than they are in the current quasi-socialist system. FULL ARTICLE
Source link: http://archive.mises.org/10705/is-emergency-care-a-failed-market/
Is Emergency Care a Failed Market?
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Robby,
1. You are right, but the particular kind of mismanagement we have in health care is unique. By and large, we have an artificially inflated supply of care. Usually people throw out government regulation because it makes things worse, but in the case of health care, from the perspective of the individual, the government is making things easier. They require the ER staff to heal you, they subsidize hospitals so there are more in rural areas, they subsidize employer provided health insurance, they pay for the fire department, etc.
I agree with you that it amounts to a mismanaged mess that productive citizens have to pay too much for, but what I’m saying is that under a free market system there would likely be less services provided in areas with low demand and low ability to pay, at least initially. Perhaps once the market had time to invent creative solutions things would improve, but how long is that going to take? That’s the problem politically, people don’t want to head down the J curve. People only want the perception of constant improvement.
2. I had two caveats on my statements here, first that a fee-for-service price list would be incomprehensible, and second that the market would likely invent an entirely different price structure because of this. Health care is nothing like ball point pens or computers. First of all it is a service not a good. It is more like hiring a law firm, cleaning service, or paying for a private university.
Also, the comprehensibility of prices and the knowledge consumers have of quality is not all or nothing, it is on a sliding scale. My original point was that health care is on the low end of this scale, which means it would be on the low end of market functionality. Out of all the services I can think of health care and education are probably the two most difficult to assess the quality of. Assessing the quality of a pen or computer is trivial by comparison.
3. Your example shows that food and shelter can be demanded by large groups of people all at once, but it hardly shows that an individual person can consumer $100,000 of food in one day. You also cannot “stock up” on health care services. People have no way of knowing how much they will need in the future and thus no way of preparing for it. If I wanted to spend a million dollars on a nice house I could deliberately go into a high paying career and save for it. But I have no way of knowing if tomorrow I will be diagnosed with a chronic disease, be unable to work, and eventually have to consume a million dollars of health care, so I can’t prepare for it. Ordinarily in a market system this would mean I don’t get the million dollar service. The basic problem with health care is that society feels obligated to provide the service anyway! This isn’t difficult to understand. The problem is that our societal values are no compatible with a free market for health care. It doesn’t matter how much more efficient the system would be.
You also seem to be ignoring the nature of health care and trying to treat it like a commodity. It simply isn’t a commodity. Perhaps in the future it will come closer to something easily definable and measurable, but today there is just very little information consumers can go on. For example, if I know I need more RAM for my computer I can find out what kind I need and compare prices on modules of the exact same type. If I need a root canal I can compare prices. But if I have “something vaguely wrong with my foot and need something to fix it” how am I supposed to shop around for that? Call them and ask what the going rate for “foot problem” is? Even if I got a diagnosis and it turns out I have a nice simple problem like a bone spur, I can’t compare prices on treatments for that either. If Hospital A wants to do surgery and a month of PT for $5000 and Hospital B wants to try a drug for a year for $1000 how am I supposed to compare those? Either one could be a complete failure or complete success, and I won’t know until much later.
One last point. Remember that the FDA did not always exist. Insurance regulations did not always exist. Laws about physician licensure and such did not always exist. All of these things were created in response to crises and problems with the current system. These crises would not have happened if the free market system was perfect. There are fewer laws and regulations in areas like high tech devices because markets for these products work well in delivering quality, making consumers happy, and not killing anybody. Health care is regulated because bad, cheap health care practice can and does kill people. The argument that bad practitioners will be discovered and driven out of the market is cold comfort for people whose lives have already been ruined. The fact is people would rather have an inefficient regulated market that feels safe than a wild west market where anything goes
James,
“All of these things were created in response to crises and problems with the current system.”
Please elaborate if you will. What sort of crises prompted the establishment of these various state interferences?
“there’s just no arguing with the religious”
This is especially difficult when you put forth no arguments……
James,
And to reply to your post from this morning:
“When I lived in New Orleans there were large neighborhoods where local businesses would not go. No pizza delivery, no appliance repair, and no car towing. Too dangerous. Even in the nice town where I live now pizza places have stopped delivering to certain neighborhoods. The authorities themselves are reluctant to go into these neighborhoods, but they do because they feel obligated to. However, the best service providers will invariably gravitate toward greener pastures.”
I hardly see how recognizing that the government has done an abysmal job maintaining law and order in poorer areas is justification for why it must provide healthcare too. As for businesses not going into these areas, that’s very simple. A pizza delivery shop that charged a 2 dollar premium per delivery to bad parts of town, to pay for the additional insurance perhaps and to compensate the employee for the additional risk, would be berated as racist, and probably face legal trouble based on discrimination as well. I’d also point out that many of the VERY WORST neighborhoods are projects built by the government, and frequently forbid any sort of commercial activity within the project (I’m sure pizza delivery is allowed, but you cant’ open a pizza shop on the grounds).
“Its similar to the problem in education. The worst schools attract the worst teachers, because the best teachers move on to better schools at the first opportunity.”
Why do terrible schools exist at all? Because people are forced to pay for them regardless of how they feel about the service perhaps? Regardless of whether they even make use of the service? Because people are given no choice, or very limited choice, about the schools they may attend?
I don’t think your assessment is accurate that government is involved in these activities, protection, education, healthcare, because these problems make it difficult for the market to provide. Rather I think these problems are difficult for the market to provide PRECISELY because the government is so involved. And has spent decades and even centuries crafting an elaborate system of lies and rationalizations about how only the government can do these things.
Fortunately I don’t have to go strictly on gut feeling about this. There is plenty of evidence that suggests education for example was FAR more effective, FAR cheaper, and even MORE universal PRIOR to the government’s involvement. Do you know anything about the literacy in Colonial America? It was astounding, Thomas Paine’s “Common Sense” was purchased and read by very nearly EVERY American household of the period, today such would be covered in a college level class (if our colleges had the guts and intellectual vitality to even study it at all, they do not). The best sellers of that day are the literary classics of today, things like Cooper’s Last of the Mohicans were the “light reading” of the colonial period, read by Farmers, Tradesmen, laboroers, etc who’d never spent a day in a government school, today your average college graduate would not stand a chance against those people. Nor was this phenomenon relegated to “those who can afford it”… the literacy rate in New England at this time was something like 98 or 99% FAR superior to what we have today even if one ignores just how much the definition of “literate” has been watered down in the time since.
“I don’t see how the market can counter the basic problem here: the people who need the most help are the ones least able to find it, pay for it, and keep it. Libertarian solutions seem ultimately doomed by the simple fact: dumb people exist.”
My first retort is “yes dumb people exist, all the more reason to do away with the states power over our lives. I’m tired of being ruled by dumb people!” But again I’d point out, the government schooled these people, the government decides what they should and should not be taught, the government insulates them from the consequences of their dumbness (ensuring they’ve no opportunity or motive to smarten up)… and yet you conclude that we must have government involvement in every facet of life because we have dumb people.
Who’s to say all healthcare is expensive? Who went broke buying antiseptic cream or a bottle of aspirin? Indeed comparing 1800s medicine to nowadays is ridiculous. In fact, when did proper medicine even begin? Prior to the 1800s there doesn’t seem to be much that we would even recognise as medicinal treatment.
Comparing healthcare to food is also bunk. Basic foodstuffs are cheap just as many items in a chemist store are cheap. Fancy foods are not found in charities, likewise dire expensive treatments aren’t likely to be supplied by charity as charities don’t have bottomless pits of money.
Similarly, comparing doctors to veternarians? Golly, isn’t one big difference is euthanasia is available to the vet and the pet owner?
But when did the U.S. have a free (enough) market in health care? Prior to the 1950′s? The 1930′s? 1900? When did all the new, fangled equipment for diagnosing and treating cancer, stroke and heart disease, etc.? Gee, after 1950! What a coinkidink!
The problem with your analysis is that healthcare should not be a profit-driven “commodity” or service in the first place. Hospitals used to be considered either charities or public utilities. All who need medical care could get it there, regardless of ability to pay. That’s the way it is now in nearly all the rest of the world.
People who want to run a business and “make money” should be in another line of work. The fact is, everything now is corporate-controlled, and corporations control the government. The outrageous billing and collection policies of even religious or public hospitals and other providers are well-known.
And “health insurance” is the ultimate protection racket. You’re not insuring “health” at all, but only your savings, home, or other assets from being confiscated by the cost-shifting, bill-padding hospitals and clinics who are spending millions lobbying against any sort of consumer protection or patient’s rights.
This is a bad example for a libertarian argument, overall.
Paul Stephens, Green Party organizer
Thorny issue, with a high emotive kneejerk coefficient.
Some thinking points:
1. Modern healthcare can do far more than the healthcare available in the past. Generally, the more cutting-edge the treatment, the more it costs. Somebody’s got to pay, and as soon as an expensive treatment is discovered, it is impossible to make it universally available to everyone who could concievably benefir from it, without bankrupting everyone else.
2. The biggest problem with free healthcare, as with just about any other sphere of government intervention, is that its very availability lowers the cost of high-risk or imprudent lifestyle decisions in the minds of people making their day-to-day decisions. If everyone is to make reasonable risk-seeking or risk-averse choices according to their own optimal balance, it is essential that the potential cost of healthcare is brought to account. If its not, the effect is to drive a wedge between choice and consequence.
3. As regards those whose need for medical care emerges despite a prudent approach to their life choices, the charitable impulse is quite sufficient to cover those cases at the margin, if it was not crowded out to the extent the State has this last century or so. what follows probably applies to any sort of charity, but I offer it here in the healthcare context:
there is a huge wellspring of people who devote their time, money and effort towards dealing with those ‘social problems’ that they feel strongly about, and medical trageties are no exception. Witness the innumerable voluntary foundations and support groups for innumerable diseases, invariably staffed, funded and advocated for by people who are passionate about them. Given a free market in charity, any dollar raised and deployed by passionate volunteers will buy far more bang than the equivalent dollar spent through any government-run agency.
Bear in mind too that a free market in medic al charity entails donors giving to those causes that they feel most strongly about. It follows that the most dire need on any concievable compassion or pity index will generate the widest response, so the scale of the problem will be matched by the size of public response – which provides a natural fit between the scale of the problem and the charitable effort devoted to its solution.
Interesting points. I don’t think every possibility situation would work without adjustments and support to morality but the basic precept that individuals pay there own way and a system that supports that through service with bartered trade if necessary is going back to how it worked before.
If the government hadn’t competed with the private sector and used coerced finances to inflate worth to substantiate health care costs over the past systems that were in place included the churches, private hospitals, family Doctors and many more avenues that provided care and kept the cost within societies ability to pay, perhaps costs would be more inline with what people could afford.
Something has gone dreadfully wrong in our entire system where we trust a government solution that is supposed to make things more affordable or improved and the mere cost of the bureaucratic waste becomes its Achilles heal, and its proven track record shows it can’t manage costs or quality.
Even with the advent of insurance, cost have steadily risen, become more inflated, support more retirements and specialized careers for people just to handle those who have refused to pay for treatment or get treatment because it can be had for free.
Many people develop into despotism because the system allows them the opportunity to be that way by confiscating moneys from people not involved in the actual immediate care of said individual. Health care gets complicate when a certain amount of people trust decency with no evidence or encouraged commitment to it or financial responsibility, especially when they have created a system that supports or encourages neither.
The first step in any government or community based system is to insure a responsibility toward value……….Governments don’t seem to do that well and impose wasteful, politically motivated solutions that adhere to no morality in there business model but a huge morality assumption in their sales pitch.
Even though a large amount of people sincerely believe affordable health care can be reached by spreading more burden to more people, the simple lack of morality of economics will create an atmosphere that promotes financial failure and burden to ever increase until care becomes the sacrificial lamb and life becomes cheapened to support the thesis.
The simple question is; is it moral to invite people to carry the burden of others, leveraged by bureaucrats, another cost layer without a real financial responsibility to anyone, and condemn them to bureaucratic induce decisions based on no morality but political expedience?
As soon as you, as an individual give up your responsibilities for your future moral commitments, you have accepted the changing morays of bureaucratic desires. Instead of supporting responsibility it will migrate to the government model that we see in medicare, medicaid, the VA and welfare; huge cost over runs, paperwork up the cuzzoo and wasteful spending with fraud at a ration 2-3 times normal activity. the bonus will be great retirements and careers for doing very little good at the cost of all, with the most unscrupulous gaining the upper hand.
What America is confused in, is the moral dilemma of how to enforce responsibility with finances and peoples worth and how do you take care of those with little worth.
Some trust the government to remove the moral commitment from society and let the cost be dictated by a surrogate, a bureaucrat….. while others know that if you remove human achieved value for the sake of no human commitment to worth, then you automatically detach individual respect and control to invite a state of decay where all become less morally bound to their worth. The resulting devaluation of not supporting others worth lends society to develops an attitude of presumptive value that no system can financially maintain……and gives the power and value to the government bureaucrat over peoples choices.
Free exchange of service with a leveraging of value that has the individual as its keeper is the only leverage point that has its source based on human morality.
Why we are choosing to condemn every one in this country to a systematic raping of individual rights, power and economic value by continuing inviting in a system of bureaucrats to leverage value and service for political needs, disguised as a morality blanket for civilizations lack of commitment to human value, will do exactly the opposite of its intentions as usual, is anybodies guess.
Mushindo,
Spot on with your second point. The biggest improvement my driving ever made happened the day I lost free (to me) major medical coverage from my parents. Paying for my own much less comprehensive coverage reminds me that there are real costs associated with reckless behavior and encourages me to avoid that behavior in order to reduce the odds of the consequences occurring. Government-mandated and -controlled “insurance” will only insulate people from that signal.
From the libertarian point of view, the whole “welfare state” and political/bureaucratic control over its agencies is a bad thing in itself. I agree with that. Any humane social order is based on “values” (morality) rather than profit-maximization or coercion.
But viable, humane, free, and democratic welfare institutions are certainly possible and desirable. Food Stamps or education vouchers are good examples of how the State (or local city-states, rural counties, etc.) can maximize social welfare at the least cost to taxpayers (those who have acquired surplus wealth from whatever source).
I was trained in both Austrian and Chicago School economics, and they differ somewhat on some of these philosophical issues. But I think they agree that there is nothing wrong with assuring that all members of the community should have some sort of guaranteed income and access to all the necessities of life. Only Social Darwinists (and maybe anarcho-capitalists) really maintain that the community has no responsibilities to those whose survival and well-being depends on outside help.
Self-help communities of such people, subsidized wisely, are probably the best answer to this problem, but they must be open, transparent, self-governing, and democratic.
We’re all opposed to Authoritarianism, aren’t we?
Jake,
There are so many differences between modern america and colonial america that I think any attempt to draw educational lessons from that time period is pretty much a wash. Even defining what “literacy” means is difficult. Do you realize that historians define literacy rates during that period as the percentage of people who could sign their name on a document? And even then they come up with a wide range of figures, from 70-100%, for white males only. I can assure you that in the period for which we actually DO have data, the literacy rate has been increasing ever since WWII until leveling off recently.
Regardless, none of this addresses the point I was making. I agree that education should be free-market, but my point was that in a market the best teachers will go to the highest bidder. They aren’t going to hang around the ghetto. The same would go for health care. That is the basic point I’ve been making in this whole thread, and I haven’t heard any response to it other than the faith that charity will supplement demand for health care for the poor. I also don’t believe we can educate our way out of the situation. No matter how wonderful the education system is, there will always be a good 10-20% of the population that are just genetically low-IQ and/or irresponsible. What’s more, as technology progresses and more low-end jobs are automated, there will be an increasing proportion of the population with nothing productive to do.
Paul,
That is an interesting idea, that hospitals should all be run as charities. I’m not sure it would work given the high cost of medicines and equipment today, but it certainly sounds like a viable solution. Those on the left would probably argue there should be a market system for those who can pay, and a tax on them to subsidize the charity hospitals for the poor. This seems like a realistic outcome of a push toward a more free market health care system.
Mushindo,
You make a good case for the ability of charity to pay for health care for the poor, but how would the system actually work? Would the poor have any incentive to worry about costs and quality if they knew their costs would all be reimbursed by charity? Wouldn’t the charity hospital be more concerned about donors than patients? It seems like the system could develop some of the same problems we have under the current system and people might still call for government intervention.
Clearly hospitals should withhold life saving care until it can be confirmed that the patient is able to pay. Regardless of whether or not the patient is conscious.
I am a part-time paramedic in Georgia and Alabama. I currently work for a private EMS service and have worked for government EMS services. I can tell you that from my perspective, patient care is better with the private services because they care to serve the needs of the patient. Not so with government services, they are government employees so they can treat patients badly and can (and often do) try to not transport many of their calls to hospitals.
Private EMS is possible and would make our world a better place. Governments need to quit involving themselves in crowding-out private industry in this much-needed field.
Here’s my perspective as an ER doc, and MPH student studying health systems: Interesting, idealistic, Utopian (for libertarians, of course) view written by someone who seems to have no real grounding in the history of emergency care in our country, the challenges that would face a market in emergency care, the systemic nature of emergency care, and no realistic plan for implementing his plan.
Bottom line: private charities have failed rather miserably both here in the US and globally at providing universal emergency health care for the most destitute. And the crucial question is: Is that OK? Would it be OK with you, with voters, with politicians, with the media for occasional deaths and long-term disability because of all of the inconsistencies that would accompany a plan suggested by the writer? That’s where we were about 20 years ago, and it wasn’t OK (for society, at least). Would it be OK now? It may be the case that, with time, charities would step up to fill in the gaps, but would the bad outcomes be acceptable during the transition period?
The question at hand, of course, is: Given the current political, legal, and cultural climate, what is the best long-term plan? Few are truly willing to answer that question from any political ideology, it seems to me. And that is a thought that is much more concerning than even the government take-over of health care (which is terrifying). Because the alternative to all current proposals is the status quo, which is government-run health care that is incredibly inefficient, and is unacceptable.
Where are the libertarians that are willing to take a long, hard look at this issue and propose a realistic plan? The little I’ve seen comes across the same way: idealistic and superficial, appealing to emotions and “the good old days when I used to practice” without a realistic, thoughtful plan.
I would LOVE to read a thoughtful, realistic, libertarian (or even just conservative) plan that reasonably addresses the emergency care quandary, and the implications for the rest of health care. This isn’t it.
to chads,
what about getting rid of the ama for starters? getting rid of licensing, and opening the market up to competition, or is that part of the utopia you don’t care to think about?
Newson,
If abandoning licensing for emergency physicians and other providers and opening emergency care to the market is a strategy that you think will be best given the current cultural, legal, and medical environment, then pursue it. Fight for it. Advocate for it.
I think that it would be a disaster. And I hope others that trust the market and fear the government can come up with a better proposal. If not, we’re in for a tough road ahead.
chads,
What’s wrong with private licensing similar to Underwriter Labs or the BBB?
to chads:
i suggest you’ve got a conflict of interest as big as a house. as an opening gambit, what’s wrong with freeing up competition in the professions?
as orion points out, professional reviewers will provide paid ranking services. costs come down, and service improves.
newson: Are you really making assumptions about my political motivations when you know nothing about me?
orion: Interesting. I don’t know much about the private licensing practices of those organizations. Could you elaborate?
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