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Kimball Corson
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I am both an economist (three year M.A., Univ. of Chicago, 1968, in economics PhD program) and a lawyer (J.D., Univ. of Chicago, 1971). I had a Woodrow Wilson National Fellowship in economics and the good fortune to study at Chicago under seven Nobel Laureates in economics (received before or... More
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Wandering the Oceans
  • The Economics of Health Care in America 20 comments
    Mar 20, 2010 4:32 AM
    While many have strong feelings for or against the proposed Health Care bill, few understand the economic issues involved or even what the bill contains. As of now, we are the only developed nation without a national health care program. Yet, we spend almost 19% of GDP on health care. Even so, according to recent polls, only 5% of Americans believe that the health care system we have is workable or working. The situation is a colossal mess and it reflects badly on us and our understanding in the eyes of the civilized world.
    To start with, free markets do not work in the health care area. Nobel Laureate Kenneth Arrow showed us that and how, many years ago. Absent free markets that function properly, it is clear that government has to be involved to assist in achieving results similar to what we might get from free markets if they could work in this area, that is, cost effective and efficiently provided medical care.
    The reason markets do not work properly is two-fold (1) the varieties of uncertainty involved are too great for free markets to handle, and (2) doctors feel morally obligated to treat whoever comes to them, regardless of whether they can pay. Consider first, the varieties of uncertainty involved in purchasing medical care. One, you don’t know when you are going to need it. Two, you don’t know what type of medical care you will need. Three, you don’t know who (what specialist) will provide it. Four, you don’t know whether the proposed treatment will be effective or whether further treatment will be required. Five, you don’t know what the medical care will cost. Six, you do not know where you will be when you need it.
    Such price and product uncertainty are enough to cause any market to malfunction, but add in the remaining elements of uncertainty and  free markets have little chance, especially given the possible magnitude of the expenditure by a person, which can rival buying a house. Then, in addition, we have doctors who refuse not to treat those within their purview who need care. Just making it to an emergency room usually assures treatment regardless of capacity to pay. All of these factors together destroy the free market mechanism for efficiently allocating resources in this area at minimal cost. That doctors practice or try to practice medicine to a uniform, single standard of care further compounds this problem.
    As a result of doctors’ refusal to not treat, we have the ensuing situation of paying patients being subsidized by those who can pay or are insured. This cross subsidization in large measure accounts for hospital bills to patients and insurers being so high. Call it socialism of a sort, if you will. Excessive compensation to doctors, who run many hospitals economically as though they were doctors’ cooperatives, accounts in further part for high treatment costs. The AMA has worked dutifully for years to restrict the number and expansion of medical schools and the supply of doctors. State licensing requirements have additionally involved the same ends.
    Then, into this mix, we throw health insurance companies seeking to make a good profit and the problems become compounded. Insurers would like to insure only the young and healthy, screening aggressively for pre-existing illnesses and denying coverage to the elderly, even if they are healthy. Now, the recession has added a new twist. Many of the young and healthy cannot now afford health insurance and so they are dropping it, leaving a higher percentage of those sick or ill among the insured. Insurance companies now feel compelled to raise their rates and are doing so by as much in some instances as 35% to 50%, but then even more young and healthy drop their coverage and the situation is spiraling out of control. Some insurers now think national health insurance is necessary. Nearly everyone seems to agree that the present system is not workable and cannot survive.
    While people face excessive uncertainty as individuals, and so do free markets, in trying to address health care needs under the free enterprise model, the situation is different at a macro level. If everyone is included in coverage, then the law of large numbers kicks in very aggressively and, with some time and experience, we can develop very good estimates of the number of different treatment types and profiles the public will require. We can also estimate aggregate costs and by experience and regulation based on that experience, come to control medical costs quite well. Doctors themselves control quality or the standard of care, for the most part.
    To some extent, of course, large insurance companies have the advantage of the law of large numbers as well, at least when the market for health insurance is stable, which it has not been for a while now, for reasons I have explained and for other reasons as well. Insurers’ profits are under fire. So are doctors’ salaries. But adjustments in both these compensations are in substantial measure required if we are going to provide cost effective and efficient health care. Medicare payments are in the process of being reduced by 20% and there is the expectation that insurance companies might well follow suit, as a means of controlling their cost.
    Expect much shouting from doctors, however. But they have taken advantage of their oligopolistic pricing, afforded by the AMA, for too long and it is time to get serious. If the problem is medical school costs are too high, more such schools, a bit of competition between them and substantial tuition aid with a service requirement taken back, is a good means of handing the adjustment required in doctors’ salaries. While most don’t, many doctors do earn between $500,000 and $3 million a year and think of their practices as businesses to earn a profit. This viewpoint and these compensation levels are inconsistent with cost effective treatment provided in an efficient manner.
    How to proceed now with national health care is the question. Watching law being made, as the old saw has it, is too much like watching sausage being manufactured  -- not a pleasant sight, nor  a principled one. What the proposed health care bill attempts to do, in every way possible, is to get everyone under the tent of health care coverage initially or as quickly as possible, and then sort out many of the smaller details based on present knowledge and future experience as we go. Getting everyone covered is no small feat, but that prospect now appears at hand, as we are about to have a national health care system for the first time, befitting our position as a developed nation and world leader.
    Republicans are uniformly opposed to the health care bill and predict that with its adoption, the end of the world will be on us quickly. Most Democrats are already on board. A few of the more conservative ones had to be rounded up, like runaway calves.  Points to keep in mind here are that (1) virtually no one thinks that the health care system we have is working or workable, (2) 83% of Americans believe, based on a recent poll, that lawmakers in Congress have not been doing their job, and (3) we need to do better than spend 19% of our GDP on a system that is broken and does not work and does not help everyone.
    The Congressional Budget Office (CBO) -- about the most neutral and accurate group of estimators around -- has just released its report saying that the $940 billion, ten year health care bill – that is, $94 billion a year, compared to our $663 annual defense budget, not counting almost an additional 100 billion of discretionary war spending -- would actually cut the federal deficit by $138 billion over that ten year period. That is based on a 3.8% Medicare tax on unearned income and a drop in Medicare compensation levels by almost 20% which is already being implemented.  Some 32 million Americans, now without health care coverage, will be covered. The legislation assures that 95 percent of all Americans have health insurance coverage. The bill will also assure the solvency of the Medicare program for the elderly for about the same length of time and assist Medicare patients to obtain the medicines they need.
    The 3.8% Medicare tax on unearned income would only apply to people with incomes greater than $200,000 for individuals or $250,000 for couples and the pending bill scales back an excise tax on high-end insurance plans in the Senate version. That tax on what are called Cadillac insurance plans would raise $32 billion over 10 years, much less than the $149 billion earlier planned.
    Needless to say, Texas Republicans, like most Republicans in Congress, are having a snit fit. Imagine, someone not wealthy receiving help! Heaven to be, we cannot touch the purse of the well-to-do to make sure kids get needed medical attention. As Paul Krugman explains, these people are simply from a different planet than the rest of us.
    Of course, abortion was a major issue under the proposed bill – isn’t it always? In any event, abortions are not covered under the proposed health care plan.  Even so, not one single Republican is expected to vote for the bill, whereas almost all Democrats are.
    America is about to arrive on the shores of the 20th century here.


    Disclosure: no positions
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Comments (20)
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  • TeresaE
    , contributor
    Comments (3041) | Send Message
     
    This colossal nightmare coming out of Washington has NOTHING to do with health and everything to do with vote payola and control.

     

    As we all will soon find out.

     

    Fining me $2200 a year because I choose to only carry major medical (incredibly expensive too) and take care of my own health versus having full boat insurance, going to doctor once a month and taking 5-10 lifestyle meds, is not "reform" it is CONTROL and theft.

     

    Are you kidding?

     

    Yes health care needs fixed, in large part because the government screwed it up to begin with. And we somehow think the same idiots that screwed it up are going to fix it with a massive 2000 plus page bill of new departments, oversight, taxes and regulations?

     

    Puh-leaze.
    20 Mar 2010, 12:43 PM Reply Like
  • Loverboy
    , contributor
    Comments (645) | Send Message
     
    TeresaE, you obviously didn't read the article right! sorry, i was being a smart ass... seriously, why wouldn't you want health care for kids, dont you love puppies and bunnies and apple pie?

     

    the democratic party is the saddest thing i think i have ever seen - they have had well over a year to do anything they wanted, and they could pass this now - the saddest thing for them is really that they could have had everything they wanted six monts ago, but the inbreeding (whoops, i meant infighting) has caused them to water down thier own bill!

     

    Ok, politics aside, thank GOD they have screwed themselves so bad - if they pass this bill, they go against what most Americans want, whereas if the don't pass this bill it looks as if Democrats can't govern - so the good news is either way we will have gridlock and that thier will give us the confidence we need to start to grow again.

     

    And, i completely agree - we do NOT need a massive expansion of govt, in fact we need the exact opposite.

     

    oh ya, as for reaching the shores of the 20th century - i wish all these socialists would head either west or east, i don't care, pick a shore!
    20 Mar 2010, 05:14 PM Reply Like
  • f851963
    , contributor
    Comments (160) | Send Message
     
    Your last line says a lot. "America is about to arrive on the shores of the 20th century here." America arrived on many shores in the 20th century, in the Solomons, North Africa, Italy, the Marianna's to name a few, befitting our position as a developed nation and world leader, but this arrival may be the worst ever.

     

    20 Mar 2010, 04:13 PM Reply Like
  • Dialectical Materialist
    , contributor
    Comments (4458) | Send Message
     
    I don't buy the argument that the free market can not solve the health care crisis. With the impact of the AMA and the major insurance companies, not to mention the trial lawyers of the country, we have had what amounts to collusion and racketeering that has resulted in driving the price of medical services artificially higher. If we actually saw a FREE market in health care it would drive costs down. We'd have to be willing to accept that some folks would get poor treatment, but the market would take care of bad docs by putting them out of business. That's how a free market works. Hard to say it doesn't work with medicine when we've never actually seen it in action.

     

    It also doesn't follow that if it is true that the free market can not deliver affordable health care (which I think is not true) that therefore the steps that are now being taken are the right ones. If a bus won't get me where I want to go, I don't assume I must travel by pogo stick! My friends would say, "Look at you. You are wasting energy and you look ridiculous. There has to be a better way to get where you want to be." And I'd counter, "Yeah, but I'm congress, so I'm used to waste and silliness. Don't try to reason with me."
    20 Mar 2010, 08:01 PM Reply Like
  • Kimball Corson
    , contributor
    Comments (870) | Send Message
     
    Author’s reply » If you don't buy the argument that free markets don't operate correctly in the health care area, then among economists, whose business it is to study markets, you are a minority of one. Everyone who has read his work and thought about it, agrees with Arrow.

     

    A thread running through the comments in opposition here reflect either not having read the article or not believing or understanding the arguments. Only DM here, puts his cards squarely on the table, but he has an indefensible position in light of the facts.
    21 Mar 2010, 12:37 AM Reply Like
  • f851963
    , contributor
    Comments (160) | Send Message
     
    I take except to our comment, I did read your article and it was every well written, to the point and I somewhat agree with Mr. or possible Dr. Arrow's opinion and findings. But I'd like to direct you to another article, "Why All the Angst Now on What Caused the Great Recession?", in it the author points out that Economists can not agree on what caused the housing bubble, also that a few did point out that there was a housing bubble but others disagreed. The author ends by stating various causes of the bubble and included CDS's. A lawyer in charge of the CFTC, Brooksley Born, wanted to regulate CDS stating that they could be dangerous for the economy in 1997. Her view was opposed by many in the administration including two prominent economists. Congress didn't regulate the CDS's. We now know that the lawyer was right and the economists were wrong.
    So we know that all economists do not agree and they sometimes can be wrong. We also know that congress can listen to the wrong people.
    If we take Arrow's conclusions to their end doesn't that mean the government will own and operate all hospitals, out patient facilities, nursing homes, physical therapy centers, etc.. And all doctors, nurses and hospital personnel will be government employed. Which would be a massive expansion of the government. And of course everyone wants a bigger government. : )
    Or if they are to remain private will they have a regulator al la the SEC? If they become insolvent will they be bailout because they are systemically important?
    Basically who or whom makes the decisions?
    This bill has to many questions and to many pages to read to find out if their are answers within the bill. The public has seen that the process that put it together was not without bribes and extortion. They have seen a total failure of what they thought was good regulation. They are finding out that the failures of the regulation extends back more then a just the past administration. They are seeing failure at the state and local government level and they are assured of tax increases from the federal, state and local governments. What did you expect?
    But I did read your article.
    Hey keep up the good work, I read all your stuff.

     

    21 Mar 2010, 12:33 PM Reply Like
  • Dialectical Materialist
    , contributor
    Comments (4458) | Send Message
     
    Think of car repair. My costs are unpredictable. I need to rely on the advice of a technician who knows more than me about the topic (and let's not allow years of AMA hype delude us, medical doctors are not great thinkers, they are merely educated technicians). My costs in car repair may escalate. Recommended fixes may not work. Even if they do work, something else may go wrong. There are a great many analogies between car repair and body maintenance. Yet car repair is somehow managed by the free markets. Why can this be so with cars and not bodies?

     

    Well one reason is that we are all so scared of death and illness that we try everything we can to ensure we'll never have anything go wrong. For example we want our doctors board certified, our drugs highly regulated and factory produced, and if anything does go poorly we want to sue the bejeezus out of someone. It is largely this unrealistic goal of having doctors protect us from anything bad that has put a bunch of artificial and costly nonsense into the equation.

     

    The AMA seized control of what it thinks medicine ought to be a long time ago. Non traditional practices like chiropracty, acupuncture and herbal treatments were equated with voodoo and dismissed as worthless and even regulated against at every opportunity in the mid 20th century. Except when actual science was applied to these practices to test if they were effective, it was shown they can be in the right circumstances -- and at a cost much less than "modern" medicine. And this makes sense to anyone brighter than the AMA, for, after all, many medicines get their core ingredients from plants or are made from laboratory chemical concentrates of compound discovered in plants. The idea that only your doctor or pharmaceutical company can cure disease (promoted simultaneously with a downplaying of the notion that our bodies themselves are wonderful healing machines) came from the new culture of "modern medicine" promoted by the AMA and the drug companies, both who stood to make billions by belittling obvious health care while regulating and certifying increasingly expensive treatments and procedures. (Seriously, pills so we can keep eating double cheeseburgers?)
    So my point, which is hard to make in a few paragraphs, is mostly that there is a monopoly of health care in the country now. This is a direct result of our over regulating and the AMA's agenda of professionalizing the practice of medicine. ( As a side note, this trend has been reversing somewhat. If a PA can now prescribe and administer basic meds much more cheaply than a doctor without killing the patient, why couldn't he or she have done this in the 1960's? The answer is the AMA was busy mystifying medicine and making everyone believe only a doctor could save you from your illness.) This monopoly has emerged for several reasons that I have touched upon here, but which could be explored at greater length to make me not sound like a crazy person. But the bottom line is that a monopoly is not a free market. A monopoly carefully constructed by laws which regulated the monopoly into existence is the opposite of a free market. The government (and the AMA) is responsible for this model that we assume is the only way to possibly do health care because we'll all die if we do it any other way. To then turn around and say "welp, it's clear the free market won't work, so we need more government" is ridiculous. What we need is a re-examination of our "don't let me die, doc, I'll pay you anything" culture. There are more simple things we can do to improve our health, and the basic medical doctor does not need a gazillion dollars of training to become basically a glorified mechanic. Now, when my illness requires surgery, I want it performed by a skilled and highly paid person. Don't misconstrue that I want some witch doctor to throw herbs at me and light a candle. But the notion that the man who checks my throat and gives me penicillin needs to go to Princeton or I'll die is the thinking that has got us where we are.

     

    I welcome any responses.
    21 Mar 2010, 12:49 PM Reply Like
  • Kimball Corson
    , contributor
    Comments (870) | Send Message
     
    Author’s reply » DM "Yet car repair is somehow managed by the free markets. Why can this be so with cars and not bodies?" What you have distinguished is who is a professional and who isn't. Lawyers, doctors and car repair guys are professionals. They have a rather unique body of knowledge they apply which you cannot readily second guess. This is what it means to be seriously professional. The car example has cost limited by the price of the car new. Medical and somewhat legal costs can be almost unbounded and that creates uncertainty, sometimes about whether the product is even wanted (default and possible bankruptcy for law, no treatment and possible death for medicine and walk or take the bus for auto).
    21 Mar 2010, 03:05 PM Reply Like
  • Dialectical Materialist
    , contributor
    Comments (4458) | Send Message
     
    With respect, the error here is in assuming that because medical expenses are POTENTIALLY boundless that it is not possible to deliver basic medical care at a reasonable cost. The AMA has shielded the medical profession from competition by erecting and protecting barriers to competition. I repeat again that anti-competitive practices are not "free market" and therefore can not be characterized as the system that is now failing. An actual free market without the artificial barriers to competition would result in reduced costs and would lead to more people acquiring affordable health care. Doctors would lose their status and some of their pay in the process. which is something the AMA would lobby heavily against.

     

    We agree that the system we have now is not working. I have a long history of comments on this site in which I am sympathetic to the idea of health care reform. I have not had health insurance for 20 years. I am lucky enough that I have so far been able to pay all my medical expenses out of pocket. I am definitely someone who would benefit from actual reform of the problems in the health care system now. But the biggest problem is cost, not insurance coverage. This is simple economics. If the medical costs are really unbounded as you claim, then even insurance is untenable and whether that is government or private insurance is irrelevant. The real problem is that medical care is unjustifiably expensive and outpacing inflation (so only becoming more ridiculously over costed each year). The only two things I know of to keep prices down are free markets or price controls mandated by the government. The AMA and drug companies will tolerate neither of these ideas, so we're stuck until they do. The "banksters" have been blamed for lining their pockets while they help bankrupt our nation. I think the medical establishment shares the same set of charges. What they have done to our healthcare system amounts to racketeering.

     

    I appreciate your replies and am closer to your point of view than you probably know. I want good, efficient, sensible health care reform. But what I've seen so far is not it. I would prefer a national single payer system (which has its own problems) to what is being proposed now. But lo and behold, a single payer system like England has would result in (effectively) price controls. That is one of the two approaches the supposedly free market insurance companies and hospitals will not stand for. Anything that breaks the grip of monopoly that exists now is a step in the right direction. Forcing everyone to buy insurance (while at the same time raising taxes) is merely a gift to the insurance companies and does nothing to limit costs while at the same time doing plenty to further burden businesses and individuals. I can not think of a worse plan than what is being designed. Doing nothing is better, and that is saying something because what we have now is awful.
    21 Mar 2010, 03:47 PM Reply Like
  • Loverboy
    , contributor
    Comments (645) | Send Message
     
    Kimball - you are right on both accounts! i did not read your article, and even after i did, i did not believe nor understand your arguments!

     

    FYI - I currently pay $320,000 per year in medical benefits for my employees, and in anticipation of the tax affects soon to come my way, I am definetly not looking at growth as a good option for my business. I can assure you I am not the only one who feels this way.

     

    Please, put in in terms that me as a dumb construction guy can understand - WHY the hell is this a good idea? How does it get Health Insurance out of between our doctors and us? What does it do to create more of a free market? And most importantly - When will our elected officials, ALL of them, do what we elect them to do and work together?
    21 Mar 2010, 01:18 AM Reply Like
  • Leftfield
    , contributor
    Comments (3758) | Send Message
     
    I believe the points that healthcare does not fit into free market models because it is unique, are well-made. Yet, cost-consciousness by consumers could easily be effected by co-pays with a catastrophic policy taking over at a fairly high level. Simplicity and the greatest cost savings possibly could co-exist with the maximum obtainable fairness, in my view. Cost shifting and opacity, primary culprits of our woes, are rife with the present system and in Obamacare. Although I confess, like my "representatives," to not having read it.

     

    Good points about the artificial restrictions the AMA creates. But, what ever happened to TORT REFORM? And, how's the Massachusetts universal health plan working out? (Hint: WAY over projections due to massive "unforeseen" consequences).
    21 Mar 2010, 08:11 AM Reply Like
  • FAVORJ
    , contributor
    Comments (225) | Send Message
     
    Interesting the comments on Free Markets not working in Healtcare. Yet the Inflation rate on Healtcare was substantially lower prior to the creation of Medicare and Medicaid. Yet since their creation the Inflation rate is dramatically higher. The Free Market hasn't been close to attempted since 1965 in this Country. Yet we have by far and away the highest Survival rates in this country and more accessiblity than any other industrialzed nation compared to those with Socialized systems. Mr. Corson makes the mistake of confusing Health Care Coverage with Healthcare treatments. With constant increases to Gov't Intrusion in the Healthcare system less and less students are going into medical school and we no longer attract the brightest minds. Continuing down this path and we'll soon see as they have in Great britain and Health care Rationing Gov't agency. Some how elective suregery not covered by insurance and very limited gov't involvement has become more accessible, less expensive and more advanced. P.S. The AMA represents less then 10% of Doctors in the country.
    27 Mar 2010, 02:56 PM Reply Like
  • Dialectical Materialist
    , contributor
    Comments (4458) | Send Message
     
    "P.S. The AMA represents less then 10% of Doctors in the country. "

     

    Not the way they tell it. They are an active lobby and speak for the medical community in general and physicians in particular at every opportunity.
    27 Mar 2010, 10:09 PM Reply Like
  • FAVORJ
    , contributor
    Comments (225) | Send Message
     
    They claim to, but Less than 10% of Doctors in the US belong to the AMA. It is a Professional Association. Not a regulatory body. Membership is optional. And very few Doctors Belong. The number has fallen dramatically and more and more Doctors are now members of alternative associations such as Association of American Physicians and Surgeons (AAPS) instead. They represent the position of private practitioners more accurately. Yet sadly the AMA is still able to set Accredation standards with such a small representation in the field.
    27 Mar 2010, 10:46 PM Reply Like
  • Dialectical Materialist
    , contributor
    Comments (4458) | Send Message
     
    I knew many doctors did not support all the views of the AMA, but I was not aware of the numbers you describe. Thanks for educating me. I do know that the AMA set the bar for professional associations and many industries now have associations in an attempt to professionalize (read "drive up compensation and status of") members in their fields. When you control accreditation, as the AMA has for so many years, you really get to set the dialogue about your profession. You identify what your profession does that no others should legally be allowed to, for example. So even though there are many ways we could treat folks with minor medical needs in this country, we still are stuck in the model of needing a doctor (even if the doctor never actually sees you) and I think this is one of our problems. If less educated but still fully competent and licensed and certified people were able to open limited medical practices, the costs would be driven down and the access would be driven up (and the free market would flex its muscle). But as long as the AMA is calling the shots, only a licensed doctor (overkill by a factor of 20) can set up shop to listen to my chest and give me some antibiotics. This opinion is mostly what I have been driving at with my previous comments. We need to redefine what basic medical practice is, despite what the professional associations want to tell us it is. This is what I mean by a free market solution versus the monopoly of control that now exists.
    28 Mar 2010, 06:41 PM Reply Like
  • FAVORJ
    , contributor
    Comments (225) | Send Message
     
    Point well taken. But My understanding is membership is dopping even faster than in the past. Both of my Brother in-laws are surgeons and neither belong to the AMA. They had about 17% participation up to about two years ago. And that is still extremely small. The AMA routinely speaks for Dr's in support of this recent bill for example. But that is by no means the position of the typical Dr in Private Practice. The constant message you here from them is simple. They are not in love with Private Insurers by any means. But they understand dealing with Medicare is far worse. And medicaid is not even accepted period. Only at Hospitals where it is legally required. Those that are relatively educated in Economics now understand that Private Insurers are paying out about 80% of benefits nationwide with Medicare reimbursement at about 8-10 cents on the dollar. Yet the private Insurers have access to only about 50% of the Premiums collected. As it stands now Medicare now denys twice as many requests for medical procedures that need to be preapproved as Private Insurers. Hence Both of my Brother-in laws no longer accept Medicare. One is Primarily a dentist so he is largely not effected. However he also is an Oral Surgeon and makes little money when doing anything covered by Medicare. In reality they now loose money on medicare patients. This bill in general is a nightmare. I have many relative's in the field of medicine and many clients as well. One upsurd example is this new tax on medical device inventions. Essentially when a Company like Boston Scientific invents something new like a Defibrillator that saves a life everytime it kicks in, they will be taxed on the new invention. That cost will oviously just get passed back down to the patient and the insurer. Their is a Monopoly already. That is true. But it's a Gov't run Monopoly. Not a private sector monoply. With regard to your point around being treated by professionals other than Dr's, I partially agree. We should have that freedom. However I am not so sure I would rush to do that. Case in Point. Last year my father was diagnosed with a rare form of leukemia. Only about 60 cases annually. Their is one Dr on the planet that truly specializes in T-Cell LGL. This should have been caught sooner. But he was seeing a PE in the Dr's office who apparently didn't have the proper eye for reviewing his bloodwork. Once problems developed and he saw the general practioner, they picked up on it right away. He was referred to the Hershey cancer institute immediately to see the world foremost expert. For those of you reading this. The expert in T-Cell LGL leukemia is in Hershey PA. Not Europe.
    28 Mar 2010, 08:23 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    Kimball –

     

    The impact on US labour mobility of various models of healthcare funding deserves greater attention.

     

    My understanding is that during WW II tax incentives were enacted in the US that strongly encouraged employers to provide health care, sick leave and retirement plans and the like as benefits to employees and that from this the current employment based health insurance model arose. Large corporations such as those dominating the steel, automotive and defense industries in particular attracted and retained employees in completion with small and middle sized employers by offering such plans. Such industry leaders were mass employers and collective bargaining extended these benefit packages to all their unionized employees. Management extended similar benefit packages to many of their white collar employees as well. Insurance companies developed innovative schemes to facilitate such corporate programs and allow at least some of the middle and smaller corporations to also offer comprehensive benefit packages to at least some of their longer term employees. As a result, the pattern in the US was that employer based programs played a large if not dominant role in relation to the provision of health insurance with private insurance schemes for individuals outside the employment context filling some of the remaining void. Government health insurance plans played a subsidiary role filling some but by no means all of the remaining gaps in health insurance coverage. Note that in this paragraph ‘void’ refers to both lack and inadequacy of coverage.

     

    In contrast to the largely employment based health insurance model in the US, in most other advanced countries the government took a lead role in providing comprehensive health and security benefits to all citizens and residents with employers and private insurers playing a smaller augmenting role.

     

    The effect on labour mobility of the US employee based model is complex but, arguably, it is not too much of a simplification to state that:
    (a) many employees in smaller and middle sized companies have inferior or no health insurance coverage,
    (b) many of the insurance company plans (whether offered to persons based on employment with a particular employer or by some group plan that was not employment based) are applicable only to persons resident within a particular geographic area, and
    (c) the scope of and eligibility for coverage in many industries decreased significantly as the traditional large employers downsized or faced increased competition from rivals that did not provide similar coverage
    with the cumulative effect over the 70 years after WW II that a large number of persons who have no health insurance coverage as employees, inferior coverage or coverage that is personally very costly are very willing to move to other employers who offer equal or better (in terms of cost or quality) coverage while another large number of employees are unwilling to leave their current employer of area of residence for fear of losing coverage. The choice of young persons entering the labour market is similarly skewed by concerns about health insurance eligibility and the cost of adequate coverage depending on their place of residence or employment. Thus mobility is enhanced for some segments of the work force (but for reasons that are arguably not enviable) while for other segments mobility is impaired. The point is that the effect of health insurance availability on labour mobility is not rational in terms of the needs of employers and employees generally.

     

    The challenge from the labour mobility perspective is therefore whether, and if so how, the US wishes to maximize the opportunity of all individuals to acquire adequate health insurance coverage at reasonable cost (i.e. on essentially the same terms) without regard to who employs these individuals or where those individuals reside. Most other advanced countries do this by basing health insurance on national citizenship or residence but other options may be available as well.
    29 Mar 2010, 10:36 PM Reply Like
  • think23606
    , contributor
    Comments (563) | Send Message
     
    Bob, I agree some of what you said. I think it is important to realize that employers began giving healthcare not because of tax incentives but because FDR, during wwII made it illegal for employers to entice employees from other companies w higher wages. These other benefits were allowed and the rest is just another example of the unintended consequences of government interference.

     

    I agree w your assessment of many of the problems that occurred after that.
    31 Aug 2011, 09:36 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    think23606,

     

    I'm more than read to concede the point. I know that in Canada (I'm a Canadian) we were in WW II for two years longer than the US (having declared war on Germany early in the fall of 1939) and were therefore subject to the necessary vagaries and distortions of wage and price controls and of rationing for a correspondingly longer period than the US. For example, various firms in the forestry industry in British Columbia where I live competed to attract loggers by providing the best possible quality and variety of food in their campsite cook houses. Thereafter into the late 1960s amply selection of a wide selection of food rivaling that in the best restaurants was a bargaining chip in collective bargaining in the BC forest industry.

     

    That said; whatever the reasons that led to the current US over-reliance for social benefits on an employee based model should be reconsidered.
    31 Aug 2011, 10:07 PM Reply Like
  • think23606
    , contributor
    Comments (563) | Send Message
     
    What bothers me so(not directed at you) is that there are many in the US who love to use these things as examples of how markets do not work. when you dig a little, they are examples of how manipulations in markets do not work. thanks for the reply, have a good one.
    31 Aug 2011, 10:19 PM Reply Like
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