Authored by Chris Rossini via The Mises Institute,
Ever since the US government began to sink its claws into the medical industry a good 50 or so years ago, attempts at reducing costs have failed again and again. This is par for the course whenever government invades an industry.
Trying to reform this Frankenstein with either Obamacare, or Trumpcare, will solve nothing.
The problem is structural. Tinkering with this or that will just waste more time.
In order for real change to happen, a fundamental change has to occur in the thinking about what health care actually is. It’s not what Americans have been conditioned to believe.
Peter Klein has put it into plain language in the following short video.
I’ve also transcribed key sections below:
From a fundamental economics point of view, what is healthcare exactly? One of the things that’s particularly frustrating for me as an economist is this notion that “healthcare” is some kind of a unique good or service, that everybody needs, everybody wants, but cannot be provided by the market the way the market provides shoes, or tomatoes, or automobiles, or any other good.
But what is healthcare?
Nobody consumes “healthcare”. No one has a right to “healthcare,” because healthcare is not a homogeneous thing.
There’s no such thing as one unit of healthcare.
Rather what we mean by healthcare is a discreet set of specific commodities, goods and services, that you can buy in combinations, or different quality levels.
So open heart surgery is a service you can purchase on the market that contributes to your health. But so is taking an aspirin.
In other words, there’s no such thing as “healthcare.” There’s a heterogenous bundle of goods and services that different individuals will want to consume at different levels.
Now when we think about it this way, it becomes far from obvious that these particular kinds of goods and services cannot be supplied on the market just like other goods and services.
If we would just allow the free market to work, if we could eliminate the third party payer system, the government subsidies on the expenditure side that drive prices up, there’s no reason why a truly free market in healthcare goods and services couldn’t be just as effective in the U.S. as the market for computers, software, automobiles, or the market for anything else.
It should be noted that it’s not just the government that opposes the free market. Yes, politicians love wielding power and like forcing people to do things against their will.
But the cornucopia of crony businesses in the medical industry would oppose the free market as well. They have a sweet deal using government power to their advantage. The last thing they would want is to compete in a free market without government giving anyone an advantage.
Gov doesn’t invade industry. Gov is a prybar – burglar tool – used by industry that wants to step off the competition merry-go-round by becoming a cartel. cartels are color of law, sword•pen, creatures. Frankenstein monsters.
I posted this elsewhere yesterday…
Thought exercise for today: What if there was no government involvement in medical care and no medical insurance?
OK, here’s a controversial thought concerning the medical system I first thought about over 10 years ago. Think it through as an exercise and let me know what you think would be the long term ramifications.
What if all government involvement in health care and all medical insurance were completely eliminated? What if anti-trust regs were enforced and it was a true free market? What do you think would happen to health care in the U.S. then?
We already see with Lasik, Oklahoma Surgery Center and top hospitals in other countries doing medical tourism what true competition does for prices and quality. (Lower complication rates in some top Indian hospitals for medical tourist at a tenth or less the cost in the U.S., among other things.)
We mostly had this situation in the 1930s and earlier. If you had, for example, an appendectomy and had at least a working class income you could actually pay the bill and it would not ruin your life:
“At the time, rates for a hospital stay (not including surgery or treatments) was $4 a day in a five-bed ward, while semi-private rooms were $5.50 and private rooms were $7 to $8. A front corner room went for $10 per day. All the rooms had lavatories and toilets. And, yes, that fee included general nursing care and complete dietary services.” http://www.latimes.com/tn-gnp-1117-verdugo-views-there-was-a-time-when-a-hospital-stay-cost-4-a-day-story.html
Even count inflation at more than the government rates, that would be about $150 a day for the private rooms with the nursing and meals. The doctor fees were similarly cheap.
So back to today: We would have major turmoil and disruption for up to a few years as the system adjusted, hospitals went bankrupt (but were the bought for pennies on the dollar and would be profitable again at a much lower fee structure), etc. The bottom line, in my opinion, is that the system would end up being affordable for average incomes as that is what it would take for people in those professions to make a living… affordable pricing.
Thoughts?
My wife had own first child in 1973, when I was a medical student. At that time her health insurance didn’t cover obstetric care. The hospital bill for an induction of labor, delivery and a three day post-partum stay was about $610, for which we paid cash. The obstetrician did not charge us anything for the prenatal care, staying up all night for the induction or the delivery because I was a medical student. Oh how times have changed.
Also have to get the lawyers out of the equation. Back when hospital beds were $4/day there weren’t battalions of ambulance chasers waiting to pounce on every hangnail as an instance of gross malpractice.
ONLY the free market can undo the damage 100+ years of government protectionism and intervention (at the local, state, and federal levels) has caused. I’m not sure I would agree with the anti-trust provisions as a truly free market will undo any monopoly before it ever gets out of hand, but all the rest is right on. Of course one key component is the money system. So long as the Federal Reserve controls 1/2 of EVERY financial transaction in this country, there cannot truly be a free market in anything. And along with your freedom suggestion would be the need to eliminate the FDA, DEA, and all the current restrictions on medical information and freedom to medicate as one sees fit (or a doctor recommends). Also gone would have to be any and all restrictions on any type of “insurance” you might wish to purchase, pre-paid medical arrangements, or whatever. Also gone would have to be all professional licensure restrictions (which are nothing more than protectionism for the existing members of the cartel). FREEDOM in medicine has a lot of implications, but when you truly appreciate just how insidious the controls of local governments (who can build and where they can build hospitals, what types of care they can deliver, etc.), state governments (who can practice medicine, what procedures they can perform, who can sell insurance, what they MUST cover on EVERY POLICY, etc.) and the federal government (everything else) exert, it is easy to see just why medicine is so messed up and why everything costs so damn much.
@ Didius accounting for inflation–5 beds at $150 each makes for $650 a day.
Minimum 3 nurses, laundry, doctor, cooks/dishwashers/food delivery/dietician. Other possible needs—Specialist depending malady, x-rays, C-scan tech, physical therapist, occupational or speech therapist, social services, adaptive equipment, prosthetics, orthotics, post-operative care etc etc etc..
At the minimum there are 10 people involved in that persons care and maybe as many as 20- if they are treated in a hospital. $65 a day wages for the 12, 440,000+ healthcare and affiliated jobs would collapse the US and global economy.
There are no easy solutions–I wish there were–a free market all along without bloated costs and government involvement would have been ideal. Switching back to home visits and personal Drpatient relationship would be wonderful…but at this point it is much more than just scrapping the industry because so much of our economy has grown up around it ( think medical suppliers, cooks, drivers, custodians- and yes even clerks, billing and administration). The 12 million middle class people with living wages would be decimated and the ripple effect would make the great depression seem mild.
PS: Both of my daughters were born at home ( less than 30 years ago) as my wife knew a midwife who assisted with births for the local Amish–a few hundred bucks, no fuss no muss.
5 x 150= 750. Just sayin.
Good catch—first cup of coffee was only half finished…
Apparently, a third payer system is a step toward what the commies in government call a “single payer system”.
We will have single payer US government health care shortly. Charles Krauthamer knows the politicians can’t take back the free shit of Obamacare. The politicians have no balls and the voters have no principles.
Everybody will have shitty government insurance. Those who can afford it will buy better treatment.
Yup. “Medicare For All”. People like stuff that’s “free”. It’s exactly like public K-12 schools. Even though they cost more to run than private schools, they’re “free”.
How about $50/month and it includes housecalls? Dr. Umbehr interviewed:
Just another broken promise by the corporate lobbyist government. There is a name for this type of government. The one which if you play ball they let you keep some money. If you don’t then you eventually end up broke or In jail. Anybody remember what kind of government that would be? I know it is not a representative republic, that is a sure bet.
HM, I think I remember. It’s called a banana republic. All it needs now is an ignorant national police force armed with Argentine surplus Ballester Molina .45s.
There already is a market for the thinking man. It consists of catastrophic policies, places like the OK surgery center, medical tourism and concierge doctors. We are simply going to end up with two separate healthcare systems. The free market system (of which the thinking people will use) and the flavor of the month, sheeple system which the insurance / cronies will tell the masses they should use.
It will be similar to UPS, FEDEX and the US postal service. Distinct systems, running in parallel to each other, but one being known among more intelligent circles as the ONLY one that you would WANT to use. The danger is that as more people move towards the private system, that the cronies will use the gun of government to ‘regulate’ the private players. That scares me a lot more than whatever nonsense they are doing now with sheeple care.
Surviving a medical issue that was with me from birth and did not create real serious trouble till my late 50’s, man was I glad I had good health insurence through my wife’s employer because after my apprenticeship and a total of 11 years with a major steel industry , retirement and benefits went into the shitter “no bail out for us” .
I was able to find employment because I was a trained experienced industrial mechanic with good work habits . The pay was lower and benefits were basicly unaffordable bull shit for everybody but the owner and his family , and so it goes !
$286,000 plus in hospital bills and $6 to $8 grand a year for prescriptions (that’s the copay) thanks to the Affordable Healthcare Act . Before that was voted in to help all Americans with pre existing conditions my copay was about $3 thousand a year .
Funny my surgeon (world class) warned me that after that bull shit AHA goes into effect I would be left to connect to a machine 8 hours a day till something else failed and then I would be dead at a real bargin for everyone but me ! I am with Jimmy Kimmel on this one . We as a nation are paying out enough as individuals directly and as taxpayers to supply our population with top notch world class medical care from womb to tomb we just are not getting it . That’s the problem , some pay little some pay a lot for the same stuff and there is little or no accountability . We as a nation do not need Health care insurence , we need a health care system designed to deliver health service and care not profits to investors . All who disagree may change their tune when you face a catastrophic illness that you can recover survive and with some drug treatments thrive but it bankrupts you and you lose your home at a point in your life where your earning potential is severely reduced and it’s to late to restart . I worked and paid taxes for all in government to have better health care for them and their families at a bargain price private employees will never see !
I know life is not fair , I totally agree with one huge BUT ! When it comes to actions benefits and protections as an American citizen I do have a right to demand and recieve fair and equal treatment under the law . It would appear that our government doesn’t think that is the case concerning healthcare . In a society where all citizens are declared equal an injury of unequal and unjust or unfair treatment to one is an injury to us all .
That is why all tax laws all medical care insurence must be shit canned and we have one set of laws we all abide by . No mor your shit is shit but my shit is stuff
Thanks for all the comments.
The $150 per day estimate was inflation adjusted for a private room, not a ward room to get an approximate equivalent for the 1930s pricing. But it is true that the hospital would net more on the 5 bed ward rooms as they cost more than 1/5 the private room rate.