The real problem with the American healthcare system is that prices are continually rising, making healthcare unaffordable to an ever-increasing fraction of the population. And recent healthcare legislation has addressed none of the causes of high prices. FULL ARTICLE by Vijay Boyapati
Source link: http://archive.mises.org/12803/whats-really-wrong-with-the-health-care-industry/
What’s Really Wrong with the Healthcare Industry
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You forgot the FDA whose regulation has driven the cost of developing, testing, producing and marketing a drug to over a billion dollars. This is not just the fault of IP but the fault of the FDA regulations have made the pharmaceutical suppliers charge huge amounts of money for the drugs initially to cover the costs of regulatory compliance. And now the FDA with the help of Freedom Loving John McCain is trying to force the FDA down the throats of herbal medications.
And you also forgot medical marijuana and other “Controlled Substances”. Ending the “War on Citizens” would free up lots of good medications to treat a myriad of problems.
In my view, the FDA could not impose such costly requirements on companies if these same companies could not recoup these exorbitant costs through monopoly pricing. So IP and an onerous are partners in crime.
Should say “IP and onerous FDA requirements” are partners in crime.
Um, who is going to develop drugs if they can’t recoup the expense of research and development, which of course is the overwhelming bulk of the cost of producing a prescription drug? Are you suggesting government agencies be tasked with deciding and executing all needed R&D? Perhaps Hillary Clinton can be put in charge when she’s done with being America’s face to the world.
If you’re not suggesting that madness, are you suggesting living in a world with no new prescription drugs? You can certainly point to plenty of dumb drugs on the market, but are you ready to spend the rest of your life only having the drugs that are currently available?
What alternative to IP are you proposing? The kids born with flippers thanks to Thalidomide don’t give me much confidence in letting companies just sell whatever they think might be profitable.
Bogart makes a good point. The FDA, in conjunction with IP, only add to the misery.
I’ve always said that the only reason that our local GP’s charge $75 for an office visit is because that’s what insurance will pay. Our copay is $15, so that’s more in line with the actual cost of the visit.
Just my thoughts,
SOD
Fantastic article by Boyapati. I just sent it to my doctor.
This article makes some very good points, but the author has fallen for some of the very myths that have increased medical expenditures beyond what is necessary to maintain health.
Medical services arose to treat the sick and comfort the dying. Over time we have developed many ways to extend life. Unfortunately, extending life costs a great deal, and the dying run out of resources before the medical establishment runs out of ways to keep them alive. In addition, patients eventually die anyway, which is a very unsatisfactory outcome. Conversely, healthy people generally have the resources to pay for medical services and, due to their health status, don’t die and thus provide a higher level of satisfaction for medical providers.
Due to the practical and financial realities of treating dying patients, there is a slow but steady pressure to shed sick patients in favor of healthy ones. Hence the rise in “preventive” medicine. It offers several attractive features to providers: It gets people who otherwise wouldn’t use medical services into the offices on a regular basis; it provides a predictable stream of income; beyond printouts describing chemical and mechanical measurements, results or changes in actual health status are not required, that is, providers are no longer presented with patients who expect their health to improve as a result of services, since they are already healthy anyway. Pharmaceutical companies are continually expanding the definition of healthy “patients” who can “benefit” from their products, even when studies have shown little or no benefit and a host of complications caused by their products (see statins).
Here is a never-reported fact: Underweight/low weight is the most dangerous weight condition of all, far more so than “morbid” obesity. And yet it is held up as the ideal for healthy living.
The obesity-as-disease myth is a major driver of medical expenditures. But it is a manufactured “disease” that supports a $45 billion-per-year weight loss industry. The “fact” that more than half of Americans are overweight is due to a change in the national weight standards that lowered the bar for the definition of overweight. Overnight, a whole lot of people became “overweight”. This was due to profit interests, not health interests. It provides another group of previously healthy individuals who “must” now purchase services form medical providers to solve their “problem”. In reality, overweight/obese people fare better on many health metrics than their misnamed “healthy weight” peers.
High fructose corn syrup is no less “natural” than sugar made from cane or beets and the the assumption that it causes obesity is unproven. It’s well trumpeted by MSM and repeated ad nauseum, but the truth is these “facts” are based on flawed studies whose results are misrepresented to look like they found information they really didn’t. However, if the HFCS myth can lead to a reduction or elimination of corn subsidies, the whole big lie might do some good.
Except corn syrup only exists because of government subsidies.
That’s right, and while you cannot blame obesity entirely on HFCS, it is a factor, I believe, along with our sloth-like lifestyles. I would also argue that the creation of boring government jobs (and some in the private sector, like checking boxes to make sure government policies are followed) that never go away, unless you basically don’t work at all, creates a boring life, and people overeat out of boredom.
http://24.media.tumblr.com/tumblr_kyec7vBldm1qapqsxo1_400.jpg
I agree that there are big differences between merely being “overweight” and “obese” when just looked at through the lens of the BMI. That said, a lot of people are obese and underweight. Both are signs of malnourishment and could lead to health problems as people age, driving up health costs for everyone. Why should a healthy person who has taken responsibility for their own health by eating nutritious food be asked to subsidize a lifetime of poor dieting, and malinvestment by government, with either higher taxes or insurance premiums?
One, obesity, has a lot to do with the over-consumption not just of food in general but sugary food and drinks, which have been effectively subsidized by government (corn, for example).
The other, being underweight, could be a reaction to the “overweight/obese” trend that leads people to adopt diet fads, i.e. vegetarians, low fat, etc., where people are not only short on calories but do not get adequate sources of protein. It could also have something to do with poverty, although there are fat poor people.
Diet fad, diet pills, vegans, obesity, pharma, etc., that are now specializing in “treating” malnourishment are reacting predictably to the malinvestment and moulding of private choices that government intervention creates.
About the only thing I could agree with in your post is that with weight issue is a manufactured problem but not for the reasons you state. It’s because the nutrition in our food delivery system has been compromised. Time and again I have seen people lose weight, eliminate sugar and carb cravings, disappear aches and pains all by changing their diet.
The focus is all wrong. Little is said about health and prevention of illness. It’s a band-aid approach to reactive medicine. Doctors today treat after the fact and cure nothing. If it doesn’t have a double blind placebo study that fits your definition of scientific it doesn’t count. Mean time people get fatter and suffer. Wake UP!
Many great points in your article, but I’d note one thing – the graph at http://images.mises.org/4434/Figure1.jpg relies upon government CPI figures, does it not? Beginning in the 70s, the official CPI statistics were cooked to mask the effects of inflation and to reduce the cost of “inflation-adjusted” social security, government pensions, and so forth.
Using the calculator at shadowstats.com, it appears that the true CPI, calculated by the old method, has increased 18-fold since 1970; by this measure, health care costs have not risen faster than inflation. However, as Vijay Boyapati rightly observes, the costs of computers and cell phones have fallen since 1970. These goods are sold directly to cost-conscious customers, not indirectly via employer- and government-funded insurance.
http://www.shadowstats.com/inflation_calculator?amount1=100&y1=1970&m1=4&y2=2010&m2=4&calc=Find+Out
Congrats Vijay on your first article!
I agree with DayOwl- the effects of obesity are probably vastly overstated. Studies often group the morbidly obese with the merely overweight through the use of metrics like BMI. Since the morbidly obese do have really bad outcomes, this makes merely being overweight seem much more unhealthy than it is.
I’m also very, very skeptical about the effect of corn syrup. It’s basically impossible to run a long-term controlled experiment on human diet, let alone a double-blind experiment. So all this data comes from small, short-term studies and larger epidemological studies where hidden variables can easily swamp the relatively small effects being measured.
false, hfcs and sugar are definitely linked to obesity and weight gain and studies have shown obese kids lose significant weight and fast, specifically from reducing sugar, hfcs, carbs consumption especially juices and drinks, and not from fat. Corn syrup is just sugar, and sugar makes you gain weight if you aren’t naturally always thin.
this video goes over the studies
http://www.fathead-movie.com/index.php/2009/08/22/weekend-bonus-sugar-is-poison/
Josh, have you been to a mall lately? A grocery store check out line. Obesity over-stated? Look around.
vijay, a few questions/comments:
- totally agree with you on the AMA point. i think the AMA plays an important role in supporting doctors, especially as it relates to malpractice lawsuits, but the AMA, in conjunction with medical schools, does a number on the american people by trying to dictate who can perform even the simplest of procedures. furthermore, while the AMA is pushing for schools to graduate more doctors, they are not takling about ways to deal with problems beyond just having more doctors. same problem in canada
- if someone is poor, and can’t afford, say, $700 for a generic drug cocktail, but it is the only thing that will keep them alive, should they simply be allowed to die? or must they hope there is some generous person out there who would help them? or do you believe the government should be involved when it comes to the most destitute?
- while it is far from perfect, medicare negotiates rates of procedures with doctors. in fact, that’s why some doctors don’t participate in medicare, because they feel the rates are too low. in canada, government run healthcare negotiates both drug prices and procedure costs. i agree with you that obama’s bill did little for cost — a lot of people were hoping that the government would untie the hands of medicare and let them negotiate drug costs. indeed, you point out that your company would feel weird prying into your procedure details and asking you (or on your behalf) negotiating better costs — but medicare, and insurance companies, do that all the time. and if i have cancer and am really stressed about my treatment, the last thing i want to do is price comparisons. i’d rather visit a few doctors and find the one that i feel is right for me, based on recommendations, bedside manner, etc..
i guess what i’m saying is you can look outside the USA to see how other countries have controlled costs. you’ve presented the free market system here, which may indeed be better than what the USA has right now. but that is a far cry from justifying that as the best choice, as opposed to, say, single payer universal health coverage.
You mean the same systems that are notoriously behind the US one? Costs may be out of control, but freezing medical technology is the worst sort of solution.
“- if someone is poor, and can’t afford, say, $700 for a generic drug cocktail, but it is the only thing that will keep them alive, should they simply be allowed to die? or must they hope there is some generous person out there who would help them? or do you believe the government should be involved when it comes to the most destitute?”
You’re saying that someone’s need is someone *else’s* obligation. Perhaps you are right
in a moral sense, but that’s clearly not what you mean here; you mean someone should
be *forced* to help the person in need. All government can do here is enforce whatever
moral obligations exist through law/threat of force, and this is the objectionable part
to libertarians. Why, exactly, should moral obligations (assuming your example here
qualifies, eg why should the medical needs however grave of a complete stranger take
greater priority over the needs of my family, however trivial?) be enforceable by law?
That’s the question you should try answering.
i think my main concern is what constitutes aggression. for me, i’d like to be in a society that does its best to deal with all forms of aggression, not just man-made aggression. ie, if i come down with a horrible disease, and let’s even imagine that this disease has no social component, not pollution or chemicals or etc, but simply arrives in me due to some intrinsic abnormality, i’d like to be amongst a people who value protecting me against that threat as much as if i’d been attacked by an awful miscreant. could libertarians be for that? i suspect they might suggest the formation of voluntary associations to help with such problems, but i think it’s of such importance to the social good that it does warrant the use of force by the government to protect members of society against those non-agent threats.
so, i started snooping around, and i really loved this discussion on peasoup:
libertarians and universal healthcare
and here’s one of the comments (by valerie tiberius) that really resonates with me. but i was thinking rawls too when i approached this topic, so ..
I actually find it amusing that you conflate your own bad luck with an aggression. Even more so when you mention voluntary associations since they were the solution to these sort of problems before government “fixed” it.
Thank you, Thank you, Thank you! For pointing out obesity’s impact.
I have tried to point out to friends that our higher obesity rate and high costs go hand-in-hand and that you can’t compare our health-costs and longevity with Japan because they are much skinnier people and have a relatively homogeneous genetic stock.
I have also stated that farm policy subsidizing corn costs is part of the problem only to receive back a asinine reply of “you know, some of us can support government health-care and oppose the perverse incentives that the corn lobby has on the government.” They don’t get the fact that the problem is the perverse incentives of the government at all levels.
At least big-corn (and the production of HFCS) is becoming some sort of cause celeb though.
Nope. Whenever societies go from traditional eating to Western eating their bodies go down the same path as Westerners have. Any Asian who eats like any Westerner becomes fat too. The secret to an extremely long life is to eat 80% of fullness and only use healthful ingredients which is what most people don’t want to do if they have the chance.
Well done! I’m glad to see that someone is trying to teach economic reality to students. Did you get any feedback from the students?
For the 47 Million Uninsured, you actually left out some very important (esp. for your point of view) facts:
1. 12.5% of the uninsured are illegal immigrants. I am not saying that to de-humanize them but only to make sure that one doesn’t go past anyone – and of course deterring their immigration status prevents them from paying taxes, which go towards the programs which would help them.
2. 25% are ELIGIBLE for public health insurance (Medicaid) but have not signed up – either they are unaware of their eligibility or have not navigated the system. Forgive me but I find it hard to believe they can be THAT bad off in this case.
3. (Which you did point out) 20% or so can probably afford it but do not choose to purchase it.
(Data from the book Flatlined, which pulled most of this from the US Census Bearaeau 2001)
Now, that isn’t 20 + 25 + 12.5% = 57.5% as I’m sure there is some overlap but we know that at least 25% qualify for public programs and – possibly – 20% simply choose not to pay for it. That cuts the # of uninsured nearly in half though I don’t hear politicians from either side pointing that out. Surprise surprise.
Lastly – and I do not know if this figure has already been lumped into the 25% that qualify for public programs – at the county hospitals here in Houston there is this “Gold Card” program, which cover’s some people who are not elligible for medicaid. Most of the poor patients we see at our hospitals are covered by this system and receive pretty good care.
Put all this together and you have to wonder just how many of our population are truly uncovered, and how many are being lumped in for political objectives.
Excellent Piece.
I think Vijay might have forgotten one of the most important factors behind the increased costs in medicine: Litigation costs. In the US, the risk of lawsuits with massive and increasing penalties terrifies practitioners and motivates outsized risk premia that are charged to patients. The out-of-control judiciary, pushed by class-action lawyer lobbyists, has been often pointed out as something that needs to be changed through tort reform.
An additional factor might be credit creation in a fractional reserve system, pushed by the Fed. I would remark that high education (or quality education), health and housing are three activities with high recourse to credit financing that have seen price increases way above average CPI increases in the last decades.
This article is pure bunkum because it does not address the fundamental problem with western medicine: monopoly. One hundred years ago the Rockefeller and Carnegie Foundations hired Abraham Flexner to write a report on medical education in the US and Canada. The result was to flood money into only those schools that supported the used of drugs, surgery and radiation. Other modalities (homeopathy, naturopathy etc. ) were discouraged and called quackery, even when and especially if they worked. Today you have a system that is not controlled by the government, but by private industry and their tax free foundations who have the money to buy politicians and bureaucrats who rotate between government and industry and industry and government. Private industry also pays for scientific research that somehow seems to support their latest product–(pharm drugs 3rd leading killer). In 1978 the Congressional Office of Technology wrote a report that noted that 80% of what is done in medicine has no scientific underpinning and that technology is constantly being introduced to the market by industry that increases cost but has no effect on patient outcomes. This office was disbanded in 1996 by Newt Gingrich in his drive to get all the K Street lobby money to flow to the Republican party. It has been known for decades that there is an inverse relationship between the number of allopathic physicians and the declining quality of care. Improvemnets in community health in western countries were not dependent on antibiotics and vaccines, but sanitation, clean water, better housing, education and living wages. Today, the public health sector has succumbed to coca cola, McDonalds, KFC and Monsanto. Americans are not being told the truth as well as they are being lied to by the public relations of these major businesses. Businesses hold a utilitarian point of view. They want to make as much money as possible, the human, health, earth consequences as can be seen with this latest BP disaster are secondary, if considered at all.
@Banks
“This article is pure bunkum because it does not address the fundamental problem with western medicine: monopoly.”
But it does. It discusses how the medical industry is able to maintain its monopoly or cartel: via the aggressive dictates and legislation of the government. No monopoly adverse to the consumer is possible without state intervention into the market.
“One hundred years ago the Rockefeller and Carnegie Foundations hired Abraham Flexner to write a report on medical education in the US and Canada. The result was to flood money into only those schools that supported the used of drugs, surgery and radiation. Other modalities (homeopathy, naturopathy etc. ) were discouraged and called quackery, even when and especially if they worked.”
And what institutions do you think were able to lend legitimacy to such propaganda? State influenced, subsidized and state legitimized organizations, which people tend to lend credence to because they suppose they are disinterested and objective parties, operating strictly in the interests of the consumer. It is completely under the false pretext of state benevelance, or false objectivity that such misrepresentations could ever take place. Furthermore, only bodies endorsed and backed by the state, which are essentially arms of the state, were able to legally prevent competition in the medical industry.
“Today you have a system that is not controlled by the government, but by private industry and their tax free foundations who have the money to buy politicians and bureaucrats who rotate between government and industry and industry and government.”
Yet it is because private industry controls the government, that private industry fraudulently and aggressively controls or influences the market in their favor – as even your comment regarding the buying of politicians seems to acknowledge.
“Private industry also pays for scientific research that somehow seems to support their latest product–(pharm drugs 3rd leading killer).”
And the state, with its pretext of objectivity, then lends further credibility to such research that otherwise would clearly be seen as having a bias towards the researcher’s funders.
“In 1978 the Congressional Office of Technology wrote a report that noted that 80% of what is done in medicine has no scientific underpinning and that technology is constantly being introduced to the market by industry that increases cost but has no effect on patient outcomes.”
Yet it is state regulation which prevents competition in the medical industry that would put such practioners of such futility out of business, should this finding actually be deemed accurate by the buying public.
“This office was disbanded in 1996 by Newt Gingrich in his drive to get all the K Street lobby money to flow to the Republican party.”
It seems the K Street lobby understands the importance of directing cash to the right places. Do you?
“It has been known for decades that there is an inverse relationship between the number of allopathic physicians and the declining quality of care.”
Yet do you understand from where the power to eliminate alternative medicine is derived? Without a state and its massive regulatory machinery, competition in the medical market would be alive and well today.
“Improvemnets in community health in western countries were not dependent on antibiotics and vaccines, but sanitation, clean water, better housing, education and living wages. Today, the public health sector has succumbed to coca cola, McDonalds, KFC and Monsanto.”
Relying on the state to regulate the market instead of allowing the market to regulate itself via the free buying and abstention of buying by the consumer results in such things. The state is not run by angels, but by self-interested men who are attracted to political power and love to use it to their own advantage. They have little interest in sanitation, when overlooking such issues can be so much more personally rewarding.
“Americans are not being told the truth as well as they are being lied to by the public relations of these major businesses. Businesses hold a utilitarian point of view. They want to make as much money as possible, the human, health, earth consequences as can be seen with this latest BP disaster are secondary, if considered at all.”
From your perspective, it must be an amazing and bewildering state of affairs – to see how regulated our health industry is by the state, and yet to be so aware of how freely corporate interests can trample over consumer interests. I suppose you think more regulation of the industry is the solution.
Yikes.
Good points, but the article DOES address, though indirectly, in its discussion of licensing (of doctors). Absent licensing, we could have robust competition in types of medicine practiced by medical professionals, and ultimately the safer and more cost-effective forms of practice would predominate. The patent system, also addressed in this article, also biases our system toward allopathy, since artificially high profits are obtainable here and Big Pharma uses the regulatory system to exploit this fact . A free market in health care would indeed cause a restructuring which would solve these problems.
Although it appears that private industry is to blame for the current state of health care. The actual blames goes on to the exploitation of the trust that the government has with the population. If the government was not involved in the health care market, no licenses, no medical certificates. If anyone could become a doctor and start doing brain surgery in a corner shop. Although the standards would likely to be less, it would be a lot cheaper. Without the government interference by enforcing the monopoly that you mentioned, there would not be anything stopping the cheaper doctors from actually doing a good job and eventually becoming good doctors. This would have allowed cannabis and nutrient based medicines to have a wider scope in the medical market.
In the UK, with the NHS, I find that the GP market has been completely distorted due to the NHS’s interference. For a basic consultation with a private GP you will not find any below a very specific price point, it is surprising that the price fixing police have not noticed that one. Double standards. The reason however for the specific price point I do not think is due to price fixing. If anyone could tell me any other reason other than the government interference in the market that could have caused it ?
The legacy of the bloodletters was suppressing alternatives like homeopathy long before “100 years ago,” and indeed it was through their lobbying for “licensing” as well as through “peer review journals” and guilds like the AMA that medicine became the very unethical “government and its licensed agents will tell you all what you’ll be getting” monstrosity that endangers Americans’ health today.
Nothing free market about it, all socialist criminality.
The following is a New York Times article from 1910. A doctor complains that medical prices are too low, seeks government restrictions on competition from lodge practices and other mutual aid societies.
http://query.nytimes.com/mem/archive-free/pdf?_r=3&res=9507E2D71F39E333A25755C0A9679D946196D6CF
Also, in response to the comment of “Banks” – she actually is in full agreement as to the important causes of health care price rises and the overall distortion of the health and food industries. She says this:
“The result was to flood money into only those schools that supported the used of drugs, surgery and radiation. Other modalities (homeopathy, naturopathy etc. ) were discouraged and called quackery, even when and especially if they worked. Today you have a system that is not controlled by the government, but by private industry and their tax free foundations who have the money to buy politicians and bureaucrats who rotate between government and industry and industry and government.”
The article says this:
“From its inception, the practice of licensure has been motivated primarily by the control of supply by organized medicine — in particular, the American Medical Association (AMA) — to allow the increase of wages for members of the licensed group… Licensure limits the extent to which market forces — that is, forces that lead to the cheapest and most effective results for consumers — may determine the most efficient use of doctors, nurses, and technicians.”
Hence, the two are on the same page – government should not give away to outside organizations the power to coercively interfere with humans engaged in voluntary transactions in the health care arena.
However, Banks then turns away from her spot-on libertarian rent-seeking analysis, and turn to collectivist nonsense (that is contradictory to here earlier pronounced aims): Businesses hold a utilitarian point of view. They want to make as much money as possible, the human, health, earth consequences as can be seen with this latest BP disaster are secondary, if considered at all.”
Actually, it is the government and AMA who are working to increase profits to doctors at the expense of patients. Capitalism – free markets – on the other hand, allow free entry and allow supply to increase and profits are sent spiraling down as prices decrease. Only a free market system of profit and loss ensures that production decisions undertaken by individuals are in line with the demand of others.
Banks is a libertarian – and possibly an Austrian. She may just not know it yet.
I fully agree that the four mentioned factors drive costs upwards. However,
there is one special property of the health care market that separates it
from other markets. In emergency cases, your ability to freely choose what you
want is reduced. When you are an unidentified victim of a robbery, laying in the
street, bleeding, without consciousness, then you are unable to negotiate a price or choose
a hospital. If someone choses to help you, how much will he be allowed
to charge? What if you cannot or do not want to pay? How is the right price established?
The obvious and often implemented solution is to let the government pay for emergency
services in some way. Do you see a more efficient free-market alternative?
“In emergency cases, your ability to freely choose what you
want is reduced.”
That’s why there is insurance. You get insurance beforehand, and they negotiate with health care providers on your behalf. So that way no one takes advantage of your lack of leverage in negotiations. Insurance is part of the free market.
Thanks for bringing up the point about insurance being part of the free market, Jack. I think the author confuses the distortion of incentives due to insurance (ie, lack of cost discrimination by consumers) with a government intervention. While I recognize his point that employer provided insurance is certainly dominant because of tax incentives, I’m unclear as to how this contributes to growing costs over a free market for insurance where everyone is responsible for purchasing their own. Even if employers weren’t providing health insurance, wouldn’t any insurance (government or not) still distort incentives and lead to higher use and higher costs – simply the economics of moral hazard? It seems to me that his argument is instead to remove health insurance to reduce costs.
I’m also unclear how the lack of taxation is somehow government intervention? I find it interesting that when a tax is absent it is called “subsidization.” What would be the free market solution? To remove the tax break given to employees who receive employer provided health insurance? But wouldn’t that essentially create a tax? Employers care not for what the payment package includes for their employees only the monetary value- so if they don’t provide health insurance it would mean they would instead pay a higher salary or compensate their employees some other way. Unfortunately, as we all know, income is taxed so really removing the tax break for health insurance would just mean more money going to the government through the income tax.
The main reason for the distortions is the fact that most insurance packages cover things that should not be insurable. Insurance is designed to pool the risk of a catastrophic event among many people, not to pay for routine and/or minor procedures.Most health insurance packages could be better described as health financing than health insurance… for a full treatment of the difference between legitimate medical insurance and the medical insurance that exists today, read Healthcare and Insurance on a Desert Island.
tT9rsw Good point. I hadn’t thought about it quite that way.
Please, will someone explain to me how a pharmaceutical company or medical device company would expect to recoup the actual costs associated with research and development if it is possible for another manufacturer to steal their intellectual property with no similar investment? Why would anyone take any risks in R&D?
I realize this is a perennial argument within the Libertarian community. Obviously I stand on the side of intellectual property rights. Even technology companies, cited as an example in the article, enjoy trademark rights. Intellectual property that I work for and earn is property.
Perhaps I misunderstood this point of the otherwise excellent article which, except for omissions pointed out here, is spot on.
I do believe that if you eliminated the insurance middle man, there would be no way for pharmaceutical companies to charge thousands of dollars per year for their treatments, and the prices would have to come down. On the other hand, those folks with rare illnesses might never see treatments or cures, since nobody would be able to pay a pharmaceutical company enough money in a free market to develop such a therapy.
Another high cost driver: substance abuse, both prescription and non-prescription. The former is absolutely driven by drug companies (ie. Oxycontin, brand amphetamines for adults, sleep medications, etc.), often through the use of what I like to refer to as “diagnosis expansion.” The FDA limits advertising of a drug to a particular diagnosis, so the pharmaceutical companies work very hard to expand the definition of the diagnosis, or change the entire treatment theory, as in, “Many adults have difficulty concentrating, therefore they should be treated for ADD.” Or, “There is no limit to the dose of opiods that back pain patients should receive.” You just have to get people started on a small dose of these medications, and then you have a customer for life. And, substance abuse very often turns into “disability” which is then an excuse to exit employment and receive specially designated welfare. It is disgusting. The addicts are notoriously high utilizers of healthcare, being very emotionally and physically needy. Eliminating welfare and essentially “free” addictive drugs would put a BIG damper on this problem. But as it is now, people are able to get free healthcare and free welfare as they swallow the pills to which they are addicted all day long.
Thanks!
Removing IP does not prevent you from selling or making a profit with a viable product. It only allows other people to attempt to duplicate your product and compete with you freely. The drug company would produce the tablets then sales people would sell them to distributors who will sell them to the pharmacies who sell them to the pharma junkies. Just because someone else can produce the tablets does not mean you will not be able to compete. The selling point then will not come down to back hand deals with socialists government officials who are using tax payers budgets. But it would be about the quality of the product and maximising cost reduction during the production process and other such factors.
The pharma drug market and the war against illegal drugs are both enabled by the state, both in their own negative ways.
1. First mover advantage is a very big deal. It takes for others to copy your product, and even then people will be skeptical of the copy – you have the brand name. Even with competitors, you can still make lots of money.
2. The biggest thing that people forget is that development costs go down significantly with no IP because their is already a pool of intellectual capital just sitting there. And then the pool grows even bigger as companies take advantage of the pool of intellectual capital to make new drugs, and that information is, in turn, fed back into the pool of intellectual capital, making it easier to developin the future. In this way, there is an exponential innovative process.
But if you really want to know, read “against intellectual monopoly”
You also need to consider that the costs of producing a new drug would not necessarily be prohibitive on the free market. It is quite likely that the free market would find much more efficient means for assessing the safety and effectiveness of a new drug. So when considering the world without IP, you also need to think outside the current State-constructed box.
That said, if developing a new drug on the free market would still be prohibitive absent IP, in certain instances, then you must consider the possibility that this is the market’s way of telling you that this is not the correct way to address the problem. It could be that there are appropriate solutions to be developed using nutritional, herbal, or some other physical approach, where the costs of developing and promoting the solution are in line with the benefits to be provided.
I (and probably many other people) would be willing to pay extra for a drug if I knew that the money would be going to a company which invented it and invested a lot of time and money developing it. VOLUNTARILY!
I read a fascinating article in a recent Atlantic Monthly about the effect of insurance on health care and mortality rates. You know all those thousands of deaths caused by lack of insurance? Turns out there aren’t. Death rates among the uninsured are higher when it involves catastrophic illnesses that are expensive to treat. But these deaths are offset by the INCREASE in death rate caused by overuse of treatments and medications among the insured. Statistically, about as many people die from insurance as from a lack of it.
“Libertarians who value justice and recognize that the use of aggression cannot be logically justified must reject all state action in principle…”
Where I stopped reading. Well, almost. Why? Simple:
“The perfect liberty they seek is the liberty of making slaves of other people.” — Abraham Lincoln
And, yes, “aggression” can be logically justified, when it has in fact made slaves of other humans. But glad to see that 150+ years after the fact, you’re still wrong side re that matter of the use of force to end slavery.
Almost forgot, but a computer is a good while a doctor provides a service. That you attempted to equate the two for purposes of comparison is simply astounding. Are you hoping to genetically engineer our humanity so that doctor’s can do 10x the work for half the cost? In other words, there’s a reason or two why computers are now cheaper and can do more for the dollar, but those reasons don’t apply to doctors and nurses. And maybe if you advocated that we mass market the machine that does the magnetic resonance imaging, so your own personal MRI machine, then maybe those machines might have a price over time comparable to that of our computers. Truly lastly, for more of the simply absurd, you can go to the electronics store and try out the computers, the tvs, and the dvd players. And if you wish, you can also check their tech specs. Doesn’t work that way for doctors, as you might die before you get to the next part of the test. In other words, for more of the simply absurd conflating that you do, please don’t conflate us being consumers with respect to computers, tvs, and dvd players with us being consumers with respect to our health care. And you might want familiarize yourself with notion of risk of loss, as there isn’t any when I go into Sam’s Club to check out the computers, the tvs, and the dvd players, while there is when I go see the physician. Affects me on my end, and affects also computer manufacturer and physician, though so you don’t conflate again, with respect to the latter two, in profoundly differing ways.
*SIGH* Yeah, PHD5204, libertarians have NEVER heard that one before.
Lincoln isn’t a good person to quote about liberty. You know, 600,000 state-sponsored murders and all that, made “nice & legal” by a person who hated blacks and earlier had promised southerners a constitutional amendment to make slavery “nice & legal” if they’d just agree to drop the term “These United States” for the more despot-comforting “The United States.”
“High fructose corn syrup is no less “natural” than sugar made from cane or beets and the the assumption that it causes obesity is unproven. It’s well trumpeted by MSM and repeated ad nauseum, but the truth is these “facts” are based on flawed studies whose results are misrepresented to look like they found information they really didn’t. However, if the HFCS myth can lead to a reduction or elimination of corn subsidies, the whole big lie might do some good.” This assertion is highly questionnable.
1/ One should evaluate the problem of free fructose in the perspective of the western diet which is too much cal for too less physical activity
2/ Fructose increases less glycemia than glucose which led to “state and expert recos” that fructose is better than glucose. Unhappily fructose increases fat storage and TG levels in the blood which could lead in the perspective of a positive energetic balance to metabolic syndrome and it does occur in our populations.
3/ Industry uses fructose both because it sweetens more than glucose and recos are in favor of it, it appears that it is not a safe way especially for children
4/ Without doubt agriculture subsidies play a role in the corn invasion of our diet which has two major consequences
-more fructose through HFCS treated by enzyme
-more linoleic acid an omega 6 fatty acid which is in far excess in the western diet.
So DayOwl you are wrong on fructose according to the recent literature and also on obesity, because each of us is free to go obese but the facts are easy to verify even in your vicinity…
On the other hand you are right on subsidies, they interfere with agricultural choices and unexpected consequences are inevitable.
You’re just repeating the marketing misinformation, a.k.a. “recent literature”, that I was referring to in my post. Don’t allow your attention to be diverted by trivial concerns. The issue isn’t health, it’s the intrusion of government into more and more aspects of our lives, i.e., “People don’t eat right, therefore we must control their eating”. Obesity is just an excuse, not a scientifically validated reason. It’s another way to create more customers for the health-industrial complex.
For the first time in the history of mankind, our nation and many others have a consistent supply of enough food to eat for everyone. What kind of sick society turns a triumph over starvation into a disease?
“What kind of sick society turns a triumph over starvation into a disease?”
None. Nature has done so.
Obesity, and in some cases, being even just a little bit overweight increases your risk of premature morbidity and mortality from cardiovascular disease, joint degeneration, cancer. Man’s command of science has allowed the triumph over some of the natural consequences of self-induced obesity. On the other hand, in some cases, man’s command of science has caused obesity (overuse of certain antipsychotic medications, for example, or the production of cheap, highly caloric foods.)
You don’t have to be starving to be unhealthy. There are opposite boundaries of excess.
I agree with you that government should not attempt to control our excess behaviors. Obesity of some is an excuse to control all our behaviors, and this leads to the loss of freedom via abusive tyranny.
Just one proof of increasing morbid obesity in US:
http://money.cnn.com/magazines/fortune/storysupplement/flyp_ibm_07/
please take note that the measurement is not a “change in the national weight standards” but the old and nonmodified BMI! You will see the story from 1995 to 2008!
So obesity is increasing and your are right it’s a big business but primarily for industrial agriculture which is the beneficiary of giant subsidies… Healthcare comes after to repair damages.
75% of the healthcare expenditure is devoted to smoking, junk food and lack of exercise. So you can live better without that and be a libertarian too!
But the main question remains:
How to deal with an illnesscare system ( I use this neologism to stress the difference with health which is a capital of well being) which is completely mutualised (in Europe and now in US)and these facts about people behaviours? Collective mandatory funding of healthcare is a strong incentive for a huge moral hasard as people believes that taking risks will be compensated by collective insurance that they pay only according their income!
Day Owl,
You miss the point. a consistent supply of nutritionally bankrupt food is not a victory. It is a scam.
Just to cite one of your many points, the $70 you spent to remove your cyst will only benefit the “Country Doctor” who probably drives a 30-year old truck, living in 40-year old house, which has not been remodeled for the past 20 years. How far will that $70 go around in the overall scheme of the American economy?
On the other hand, the $700 you have to spend with a doctor’s assistant provides a source of income for that doctor, his/her assistant, and other staff, not to mention his/her ability to remodel his/her house, buy a new car, set up a savings and checking account in a bank, have credit cards, go to Europe or Asia for a vacation, etc.
Are you also advocating the regulation of high-fructose corn syrup? Do you know its economic consequences in the Midwest as opposed to choices American consumers make?
If you really understood the dynamism of economics you’d understand that the more you want to stop doing things, the more stagnant the economy becomes. Although it is NOT AN ABSOLUTE LAW, higher costs mean more prosperity. No law of man or God has been broken in passage of the Universal Healthcare System. How can you stop something that does not commit sin or a crime?
Have we turned our backs on the prosperity Americans bring to the people of this nation?
Higher costs mean more prosperity? My personal experience is a little different. I find that the more I can buy with my earnings, the more prosperous I am.
” No law of man or God has been broken in the passage of the Universal Healthcare System. How can you stop something that does not commit sin or a crime?”
I’m not a very religious man but I do believe “thou shall not steal.” Is in the Ten Commandments somewhere.
Supporting a less efficient system makes everyone poorer in terms of real wealth. Sure, the assistant and the other people in your example will have less money but the money could have been spent on things that are actually valuable. This is an example of the broken window fallacy. google it.
Not only that, every American should go around breaking windows to guarantee that costs remain high & prosperity refreshes anew.
I agree with everything except that the problem lies with ever increasing prices. Increased healthcare costs are more a result of increased useage, rather than increased prices. Despite what the general public may think, we healthcare providers are told by health insurers what we will get paid for the services we provide. We do set fee schedules, but these are merely window dressing, as required by law. Furthermore, not one soul has adequately defined what the supposed healthcare problem is. Many are fond of displaying this example or that, but no one has identifed the profound flaw. That is until now. I say that most are completely off base in this discussion. It is critical to differentiate the conversations that should be occurring. Health Insurance is Not the same as Health Care, and Health Care is Not the same as Health. The ultimate goal should be healthy people, which is primarily the responsibility of the individual, not something to be legislated. Health Insurance is merely a business model to help pay for Health Care which theoretically (but neither historcally or statistically) leads to a healthy populus. When the government is allowed to mandate certain behaviors (buying health insurance) under penalty of some punishment (taxes or jail), you can bet that some will gain and some will suffer and it won’t be as advertised. The moral of this story is: JUST BE HEALTHY!
Perhaps we should use illness insurance instead of health care or health insurance!
Thank you Captain Kirk!
Now, let’s start teaching people how to be healthy… naturally!
Also forgot to mention the high cost of forced unionization of healthcare workers. The unions act as if they own exclusive rights to provide all care. This is expensive and inefficient.
The unions have government protection to own exclusive rights to healthcare services.
I didn’t read all of the other 55 comments, so I may be duplicating someone. I think it needs to be recognized that a contributing factor to the cost of health care is the consumers who do not pay. As a society, Americans are not willing to allow people to suffer and die because they can not afford to pay for treatment. I am not saying that we should deny treatment to these people, and I don’t have an answer to this problem, but I think it needs to be acknowledged and addressed.
The increasing rate of obesity especially child obesity is alarming. Please parents let us check our children’s diet to avoid calamity in the future.
At first i used to this only children of the poor suffer from obesity because they can’t afford for expensive and more nutritive foods, but today, it’s another story. Those of the rich eat just whatever they can achieve, putting aside the health consequences. Where are we heading to?
The increasing rate of obesity especially child obesity is alarming. Please parents let us check our children’s diet to avoid calamity in the future.
It is true that health care is constantly rising in the US. A lot of it has to do with taxes and lawsuits for malpractice. This issue is a frustrating topic for a lot of Americans and it is always getting better.
I remembered one movie, with a guy named John Q, who held emergency staff and surgeon hostage at the hospital because his health insurance is limited and does not cover his seriously sick child and the hospital does not want to put his son’s name on the list of heart donor’s recipient because they cannot afford to pay for the heart transplant procedure. This reflects how bad is the health care system. If you don’t have money and you get seriously sick you are bound to die unless you have that much courage to do such an act like what John Q did.
Regarding the obesity issue, I think many factors are contributing to the rise of obese population. But for me, I would rather make my own moves to lose weight than to turn into a full grown obese and suffer complications in the end. Plus the fact that I am not guaranteed that my health insurance would cover all the expenses.
Yeah, for a student at a university, maternal insurance costs $3000 per semester. How the heck is a student suppose to be able to afford that?!
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I’ve heard a bit about Decarb and how it stops carbs being absorbed. This would be great for me as I can’t lay off my cakes and biscuits. Do you know much about this product?
It takes nearly the whole term of the President to address the health care system and when there’s an oil spill, everyone’s jumping on it in a heartbeat
What is exactly the purpose of American health care system?
Are they like, punishing people for having health problems so that people make an effort on their own part of staying healthy and eating right? I wonder.
The health care system has alot of issues. I am currently using alternative medicine to loose waight as per the post above.
The problem with the health care industry is that America has turned it into a business. when it’s more about money… the actual health care falls by the way side. When its a business and they get to charge the insurance companies basically whatever they want… this adds to the problem.
Mr. Boyapati,
I feel that our political establishment is bouncing down two sides of a very narrow alleyway. No one is asking where the alleyway is headed or why the shadows are getting longer, the piles of sewer deeper, and why all those rats are following us with sneers on their faces. So I am by no means supporting any of the predictably narrow positions on health care that populate congress. I can even say that I like the idea of Libertarianism and that the Austrian school of economics has sparked some hope in me that there is a better way. That said, I post the following in an attempt to further understand your argument in the hopes that I can agree with you.
You wrote: “According to the National Health Interview Survey, 40 percent of those uninsured are less than 35 years old, while approximately 20 percent earn over $75,000 a year.[4] In other words, a large fraction of those who are uninsured can afford insurance but choose not to buy it or are healthy enough that they don’t really need it.”
I do not understand your use of this statistic. To me it says that the vast majority of uninsured people are older and poor. Exactly the opposite of the conclusion you seem to make. You state that a “large fraction” are young or can afford insurance. “Large,” perhaps in absolute terms, but relative to the other 60% / 80% who are old / poor, I’m not seeing support for your point.
You wrote: “When I had the procedure to remove the cyst done at Country Doctor, it was performed by an actual doctor, and it cost less than $50.”
Country Doctor received no less than 39% of its funding from government sources in 2009. Indeed, their 2009 annual report stresses the difficulties they are having continuing to operate as government funding has declined during the financial crisis. They cite “bailout funds” as a key resource that has buoyed operational funds and allowed the mission to continue. I find it ironic that your example of market forces is so obviously propped up by direct government intervention.
You Wrote: “Licensure limits the extent to which market forces — that is, forces that lead to the cheapest and most effective results for consumers — may determine the most efficient use of doctors, nurses, and technicians.”
As I think about my experience with the medical world (there are three doctors in my family and my wife recently successfully fought a bout with cancer) I find that my priorities when receiving medical care are in conflict with your economically sound statement. The problem is that “market forces” are not sentient, rational, or benevolent. This trait is what makes market forces such an excellent allocator of resources in most cases. In the case of my medical treatment, however, I am uncomfortable with allowing a non-human to decide, based on cold economic calculus, who is authorized to provide my care. Two problems are apparent with your line of reasoning: 1) The average patient is not equipped to judge the proficiency or qualification of a care provider to provide care. 2) Markets almost never get it “just right” and are indeed characterized by overshoots on either side of “just right.” Under your preferred system, what would keep a market overshoot from enabling an enterprising nurse, for example, to start a practice and sell services that he hasn’t the qualification or proficiency to perform? Your point about proficiency amongst doctors and continuing education is noted and perhaps changes need to be made to the current system. But at least I know that a doctor is a doctor. I can then make my own judgement on whether I like said doctor. But I know that a common baseline of medical equivalency is (imperfectly) assured by licensure. **To sum up this point – I worry that the “market forces” road towards the “cheapest and most effective results for consumers” would be littered with dangerous errors as the market classically overshoots to either side of the medically sound employment of qualified personnel.**
“The Obesity Epidemic” -Totally agree here. It is amazing to me that the corn lobby is able to run ads on television that blatantly purport the lie that “whether its corn sugar or cane sugar, your body can’t tell the difference.” The government restricts the import of cane sugar and subsidizes the production of corn and we wonder why Coke tastes better in Mexico.
“Intellectual Property” -I would like to learn more about this argument.
In summary, I feel that I am a bit of a clean slate when it comes to this topic. I am reading and learning as much as I can in search of an informed position. I write this in the hopes that you will respond and further my education.
Regards,
D
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With healthcare costs rising should we not be looking at preventative measures to reduce this issue?
Back pain is becoming something of normality in today’s society as our lifestyle dictates, and in some cases with dire consequences leaving an individual completely helpless. Work pressure and the onset of increasing age have a part to play in this problem area.
Sciatica plays a major role in this problem and often ignored through lack of understanding and willingness accept there is an underlying problem.
Repetitive strain and back problems have become an issue in today’s computer world such as carpel tunnel, disc herniation and tendinitis. Most of us, I think are all guilty of bad typing practice and mouse manipulation by using the wrist instead of using the elbow as pivot.
Our posture when sitting at our workstation has become a real issue. Back pain is becoming something of normality in today’s society as our lifestyle dictates, and in some cases with dire consequences leaving an individual completely helpless. http://www.sciatica-pains.com
These are but a few
Isn’t the problem attitude to food rather than regulation and what is approved by the fda. Food in the west is plentiful there is no consideration of seasonality. Food is seen as a recreation rather than a fuel and suppliers particularly fast food and convenience food manufacturers are more interested in getting you coming back than contributing to a healthy diet.
The only real solution is to educate peopel about diet, get youngsters to understand the nutritional benefits of different foods and encourage the food industry by rewarding companies that really promote health.
There also need to be action on cheaper foods which seems to be packed with hidden fats sugars and bulking agents
I am curious to know, as I live in Europe, what happens to an immigrant in the US, if he arrives at a hospital without insurance?
Actually, it doesn’t matter whether the person is an immigrant or not. I can’t speak with authority for every hospital, but I think that this rule is enforced just about everywhere in the US (it certainly is in New York, where I live). Hospitals are not permitted to refuse emergency care to anyone regardless of his or her not having insurance. They, of course, can try to collect the charges, but the vast majority don’t work too hard and don’t get paid. (In 1991, I went to an emergency for a life threatening condition; because I had no insurance, it took me about 2 years to pay off the charges, which were modest by hospital standards.) This, by the way, is why people without insurance, whether immigrants or not, have tended to use emergency rooms as a substitute for seeing a doctor (who can ask for insurance or payment up front for non-emergency visits). Or they avoid seeing a doctor until a condition becomes at least arguably an emergency.
I happen to know that there is a major US city — I won’t name it for fear of giving people ideas — that has free city hospitals. They do not question people’s immigration status or even residency in the city. I happen to know, because I know someone who works there, that many foreign nationals arrive at the nearby large international airport and ask where the free hospital is. A very large number of patients are treated at that hospital by means of translators because the folks have literally just arrived in the US for the purpose of taking advantage of this city’s free hospitals. I don’t have a hard time seeing the social justification for a city’s taxpayers to provide free care to its own residents, but it doesn’t make a lot of sense to me to have the city’s tax payers provide free medical care to people in foreign countries.
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What is the benefit of health care industry to the common person?
MRI Machines, insulin injections, cancer treatments, dialysis machines, and a few other things.
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