Rationing

Megan McArdle has some thoughts:

Robert Wright notes that “we already ration health care; we just let the market do the rationing.” This is a true point made by the proponents of health care reform. But I’m not sure why it’s supposed to be so interesting. You could make this statement about any good:

“We already ration food; we just let the market do the rationing.”
“We already ration gasoline; we just let the market do the rationing.”
“We already ration cigarettes; we just let the market do the rationing.”

And indeed, this was an argument that was made in favor of socialism. (No, okay, I’m not calling you socialists!) And yet, most of us realize that there are huge differences between price rationing and government rationing, and that the latter is usually much worse for everyone. This is one of the things that most puzzles me about the health care debate: statements that would strike almost anyone as stupid in the context of any other good suddenly become dazzling insights when they’re applied to hip replacements and otitis media.

It doesn’t help that there is so much economic ignorance out there (not to mention in my comments section).

[Update a few minutes later]

Glenn Reynolds has some further thoughts:

Also, the market doesn’t deny you a hip replacement or a pacemaker because someone in government thinks your political views are “un-American.” Given the cronyism and thuggery we’ve seen with the bailouts, etc., I’m not confident this would hold true under a government health program. And I’m absolutely certain there would be a special track for insiders and favorites.

So am I.

[Late morning update]

Five leftist myths about health-care reform.

[Update a few minutes later]

Caught in the act: a blatant lie by Barack Obama about his support for single payer. Just how stupid does he think we are? And how clueless is he if he thinks that we can’t find this kind of thing on the Internet?

[Update before noon]

The people are seeing through the snake oil:

Thirty-two percent (32%) of voters nationwide favor a single-payer health care system where the federal government provides coverage for everyone. A Rasmussen Reports national telephone survey finds that 57% are opposed to a single-payer plan.

Fifty-two percent (52%) believe such a system would lead to a lower quality of care while 13% believe care would improve. Twenty-seven percent (27%) think that the quality of care would remain about the same.

Forty-five percent (45%) also say a single-payer system would lead to higher health care costs while 24% think lower costs would result. Nineteen percent (19%) think prices would remain about the same.

…Data released earlier today shows that 51% of voters fear the federal government more than private insurance companies when it comes to health care decisions. Forty-one percent (41%) have the opposite fear.

We’re not as stupid as they want us to be.

83 thoughts on “Rationing”

  1. “Josh Reiter – let’s not replace health care with the Church, unless you can scientifically prove people have souls. (I think they do, but can’t prove it.)”

    Hell science is still out to lunch as to whether or not eggs or coffee are good for you. The point is that people have differing beliefs as to the type of health care that is appropriate to them. A homogeneous system, while able to do a few things really well, won’t be able to cope with outlying circumstances all that effectively. Not saying that it will not be able to cope, but in the long run there is the danger of needing to expend more energy and money to deal with periodic instabilities of ones health.

    Euro’s will proclaim that their system is cheaper but then keep saying, oh you can still spend ever MORE money to get the kind of health care you feel you need. Well does it remain any cheaper at that point? If socializing medicine only means that we still may need to pay more for the kind of service we deserve on top of what is already being taxed then why not just stick with what we got right now?

    Also, nobody mentions that they are using the health care bill as a means to slip in a national ID card. There will be a number and card that someone can scan that will tell them all about you and your health at a moments notice. Why not just tattoo that bar code on my arm somewhere, that will make health care cheaper I bet. No cards needed, just burn that sucker on with a laser and smell the sweet sweet fumes of socialism sinking baby — yea!

    Or, how about the fact that there are provisions that provide additional benefits to union members and members of community organizations. Just like Obama said, he’s gonna make you get involved with this process, he’s gonna make you work, and you will not have a choice. If you don’t become a part of something then you will not get the benefits, Capeesh!

  2. Also, nobody mentions that they are using the health care bill as a means to slip in a national ID card Nobody mentions it because it isn’t in the bill.

    Or, how about the fact that there are provisions that provide additional benefits to union members and members of community organizations. I haven’t seen that – got a page number?


  3. Drowning out opposing views is simply un-American.

    Rand disagrees. Fortunately, “American” can mean different things to different Americans – our freedom affords that. I’m not sure if I’m eloquent or articulate enough to fully explain why I think it is un-American to drown out opposing views, but when it comes to town halls or any political discussion, I think allowing opposing views to be heard is essential to a healthy democracy. Look at the way the founding fathers set up the Congress and look at the way our court system is set up – both branches of government put a premium on respectfully listening and considering opposing points of view. When I think about what it means to be American, I think of the Lincoln-Douglas debates, and (this was suggested by Paul Krugman), I think of scenes like Norman Rockwell’s “Freedom of Speech” painting (click on my name to see it).

    The above isn’t a proof, and perhaps it isn’t particularly coherent, but I think it could be shaped into something that was more coherent — the idea here is that you really can’t have rule by the people if a loud minority can drown out everyone else, and no one (majorities or minorities) can have freedom of speech if their voices are being drowned out.

  4. To take one example, Wyoming only has two abortion providers (as of 2005), so 96% of Wyoming women live in counties without one, and many Wyoming women who visit those two clinics travel over 100 miles to do so. Supply isn’t low because demand is low; supply is low (and falling) because of politics.

    I traveled over 100 miles and crossed through 4 counties on Sunday to take my kids to a water park. The water park that used to be in my town closed because of lack of demand. Or was that because of politics?

    Where do you live that 100 miles seems an onerous drive?

  5. Where do you live that 100 miles seems an onerous drive?

    He probably doesn’t have a car, and doesn’t think we should, either. And there should be an abortion clinic on every street corner.

  6. If we can believe this page, a grand total of seventy women got abortions in Wyoming in 2005. That’s an average of less than one woman per week per clinic. How many more clinics do you think that Wyoming needs, again?

    And if you believe that page, there were five times as many abortions in Wyoming in 1991. Either you believe that Wyoming has seen a precipitous drop in the demand for abortion over that period (a period when the rest of the country saw a much more modest decline), or you’d conclude that the fall in the number of clinics and the resulting inaccessibility of abortion services had something to do with it.

    I find it fascinating that you would choose this particular medical procedure, of all the possible ones, to display your monumental economic ignorance

    Precisely because it is a procedure that, while legal, is subject to political forces that have nothing to do with economics. The kind of forces that you and Glenn Reynolds think the “market” is immune to (despite a near century of Jim Crow arguing to the contrary).

    It doesn’t engender much sympathy for your cause.

    I’m not looking for sympathy, I’m making a point.

    But then, you think it’s no problem to call your political opponents un-American.

    And apparently you don’t think it’s a problem to project your made up ideas onto me. For the record, I don’t call my political opponents un-American, and neither did Pelosi and Hoyer. Doing so seems to be a GOP tic.

  7. Can anyone make sense of what Bob-1 wrote about opposing views? I’m at a lost to understand his meandering argument. He seems to suggest Rand disagrees with the notion of allowing debate among people with opposing views. And he’s writing this on… Rand’s blog.

    I’m just saying, perhaps Bob ought to consider for a second what he writes.

    And let’s not forget who said this:

    I don’t want the folks who created the mess to do a lot of talking. I want them just to get out of the way so we can clean up the mess.

    A few day after his administration put up a website asking people to report in dissenting opinion to one of his offices.

  8. If one wants an example of how a government can turn, take Chris Gerrib’s (true) statement that “Legally, Congress can regulate interstate commerce under Article 1, section 8 of the Constitution.” I doubt if two people on this thread realize that the original meaning was that the Federal government could override pernicious trade policies of one state against another. It had nothing whatsoever to do with intervention in business; it was strictly a matter of preventing state governments from imposing interstate trade barriers. One of FDR’s “achievements” was to pack the Supreme Court with enough judges who would take the erroneous view that is universally held today, and institute regulation of businesses themselves. And you don’t even know it happened, do you?

  9. 2) Overcharge currently healthy people

    Is that surprising? Companies that are in bed with the government always overcharge people.

    Insurance companies are about as “free market” as you are, Chris. That does not prove that more socialism will lead to less overcharging.

    3) Underpay for treatment

    So, in your paradise, the government will charge people less, but pay more???

    Exactly how does that work, financially? Are you going to print phoney money to cover the difference, or rely on the superior efficiency of socialism?

    Unless you own an insurance company, these are not favorable to you. Adding a public option forces the private sector to make their services more attractive to you.

    They’re already more favorable to me, Chris — and a truly free market option would be even more favorable.

    But what’s favorable to me doesn’t seem to matter. Only Chris Gerrib gets to decide what people should have?

  10. It takes a real statist mind set to think the framers intended the commerce clause to be used by the government to compete with private interstate commerce.

    Here’s someting to see what the effect on jobs will be with our super duper national health care insurance reform.

    http://www.poorandstupid.com/chronicle.asp

    3rd entry

  11. Leland, on another recent thread, I said Rand’s commenting policy was top-notch in its lack of censorship, and I’m happy to repeat that sentiment. I agree with Pelosi that drowning out opposing views is un-American behavior. Rand disagrees. The rest of the issues you raise, regarding dissent, were hashed out here:
    “www.transterrestrial.com/?p=20948#comments”

  12. Bill Maron – well, the exact same folks who wrote the commerce clause used it to found a bank, the Bank of the United States, which operated in competition with private banks. (Google it yourself – not interesting in landing in Rand’s moderation queue).

    Regarding the “poor and stupid” link – the linked article makes a counter-intuitive assumption that health care costs won’t go down. It also doesn’t account for low-end employees simply losing employer-provided coverage. Lastly, it ignores the huge inflationary spike in every category during the 1970s.

    Edward Wright – I’m calling them as I see them. As I see them, a private, for profit insurance company is motivated to reduce costs. And if you thing the current health care system is “socialist,” I have a bridge for sale in Brooklyn. Your health care claims are a cost. You may interpret that differently – that’s your right.

    Titus – so Ezra Klein’s such a numbskull that he can’t write down accurately what somebody told him in an interview? Even so, Isakson introduced a similar measure in 2007 (7th paragraph down).

  13. Regarding the “poor and stupid” link – the linked article makes a counter-intuitive assumption that health care costs won’t go down.

    A “counter-intuitive” assumption? Only to someone unfamiliar with government programs.

    As I see them, a private, for profit insurance company is motivated to reduce costs.

    On this planet, an insurance company, or any company, is motivated to maximize profit. That doesn’t necessarily translate into “reducing costs.” Revenues (and having satisfied customers) are important, too.

  14. Regarding “governments gone wild,” yes, governments can go bad. Are you thinking ours will suddenly go bad too? Because I don’t see that happening in the foreseeable future.

    It is no that we fear the government going bad overnight, it is the slow march toward totalitarianism that we fear. No taking away these rights wont make us serfs overnight, but eventually we will be. Government, by its very nature, seeks evermore power. Have you not read Carl Marx? Socialism eventually leads to Communism. Do you want your children, grandchildren, great grandchildren, or great great grandchildren living in a Communist USA? Protect your freedoms now. Otherwise America will end exactly as George Orwell’s Animal farm ended.

  15. I still have yet to hear from Jim or anyone else what economic laws health care doesn’t follow. It follows supply and demand, for example. Any public good whether it be associated with health care or not still has to deal with the “Tragedy of the Commons” problem.

    Unlike some others in this thread, I do not consider economic “law” as equivalent to physical laws. These are models that human systems usually, but not always follow. Having said that, before we entertain a claim that a certain market doesn’t behave in an economic way, we should hear a rational argument as to why.

  16. Jim: “I was just pointing out that in fact “the market” discriminates all the time, and the unavailability of legal abortion services in the counties that contain 1/3 of American women is one example. The fact that most women don’t get abortions is a total non-sequitur.”

    Since Jim keeps referring to “clinics”, he’s obviously speaking about services to low income women. Abortions are legal in all states and are performed in hospitals and doctors’ offices as well as in low-cost clinics.

    In this regard, “the market” doesn’t discriminate at all: states do. Except in cases of rape, incest, and threat to life, they dictate under what circumstances Medicaid will pay for abortions within their confines. They also dictate whether and under what circumstances private insurance plans are allowed to pay for the procedure. Insurance companies have no choice but to follow the laws of the states in which they operate.

    On the other hand, our government refuses to fund abortions for certain groups of people and their dependents, including federal employees, native Americans, military personnel, and disabled women covered by Medicare.

  17. “I was just pointing out that in fact “the market” discriminates all the time, and the unavailability of legal abortion services in the counties that contain 1/3 of American women is one example. The fact that most women don’t get abortions is a total non-sequitur.”

    There are only so many doctors in America that provide abortion services. They tend to locate their practices where they want as opposed to by government dictate. A medical practice is a business and businesses locate based on customers. I’d be willing to wager that most of those counties that lack abortion facilities also lack many other kinds of businesses you’d find in larger cities such as upscale dining and retail establishments.

    Even in a generally prosperous state like Colorado, there are areas of low population density and poverty where people must drive long distances to do basic tasks like grocery shopping, much less get an abortion. How many medical doctors of any kind (much less abortion providers) do you expect to find in counties like Cheyenne (pop: 1,995), Hinsdale (pop: 870), Jackson (pop: 1,476), or Mineral (pop: 993)?

    Once again, Jim shows he’s a moron.

  18. I still have yet to hear from Jim or anyone else what economic laws health care doesn’t follow. It follows supply and demand, for example.

    No, it doesn’t. Look up Roemer’s Law.

  19. Government, by its very nature, seeks evermore power. Have you not read Carl Marx? Socialism eventually leads to Communism.

    Or doesn’t — see all the socialist countries in Europe that show no signs of going communist. Sometimes communist countries introduce elements of capitalism (see China). Sometimes their governments fall and they move in the direction of democracy and free markets (see Eastern Europe after 1991).

    Politics is not as simple as you seem to think.

  20. Socialism eventually leads to Communism.

    What Jim said.

    In fact, most of the European nations have become notably more non-communist/socialist over the last 30 years, especially the UK where the Labour Party of 2009 is significantly more right leaning and pro-market than the one of 1979, or, for that matter 1989.

    Of course, they’re still significantly to the left of ANY political party in the US including the Democrats. Obama himself is significantly to the right of that old commie Tony Blair.

  21. It follows supply and demand, for example

    Interesting. So on a classic supply/demand curve could you outline how that effects, for example, demand for vaccines?

    Obviously they’re useful for an individual, but the dynamics of a pandemic are much more complex about the levels of vaccination required in a population to avoid large scale outbreaks and the consequences.

    In other words, being able to afford YOUR H1N1 vaccine doesn’t do you much good if everybody else gets it. You might not get sick but the overall economic cost will still get you.

    Measles is, perhaps, a better one, in that the cost of wide-spread outbreaks is a significant increase in child deaths and brain-damage in the non-vaccinated population.

  22. Ok, looked up Milton Roemer:

    Roemer viewed the Soviet Union as embodying a vision of the future, with a health system more oriented to preventive than curative medicine built on principles of equity. At Roemer’s memorial service in 2001, his son John stunned the audience by saying that his father had believed in the Soviet Union to the end.

  23. Interesting. So on a classic supply/demand curve could you outline how that effects, for example, demand for vaccines?

    Sure. And you can too. That’s one of the powers of models. And in my view, the supply and demand for vaccines follows economic laws as would be expected. I’m not clear what your complaints have to do with the economics of vaccine supply. For example, at first glance it appears that requiring everyone to have vaccines would be better than the free market route (which I think is the point you might be trying to make). The problem with that is how do you encourage complete vaccination? If you need a police state in order to do so, then that’s going to be far less economically viable than if you just require a little cheap advertising.

  24. Here’s a post by Kaus about an NYT interview by David Leonhardt of President Obama.

    Kaus: http://www.slate.com/blogs/blogs/kausfiles/archive/2009/08/12/will-you-won-t-you-be-on-my-death-panel.aspx

    Leonhardt/NYT: http://www.nytimes.com/2009/05/03/magazine/03Obama-t.html?_r=1&partner=rss&emc=rss&pagewanted=all

    “THE PRESIDENT: So that’s where I think you just get into some very difficult moral issues. But that’s also a huge driver of cost, right?

    I mean, the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here.”

  25. Roemer viewed the Soviet Union as embodying a vision of the future

    Fascinating, and irrelevant.

    Next you’ll tell us that Newton’s laws are bogus because Newton was an alchemist.

  26. Supplier Induced Demand can occur wherever the seller (as the expert) acts as the buyer’s agent. Medicine isn’t breaking any fundamental law of economics here, Jim. The same thing happens with auto repairs and sub-prime mortgages (you remember those, right?), for example.

    Which provision of the health care reform bill is going to eliminate SID? Who will instead act as the buyer’s agent?

    On the contrary, our experience with Medicare is that, “if you pay for it, they’ll consume it.”

  27. Roemer seemed to think it was relevant:

    The Roemers soon fled to Canada, where Milton helped build the Canadian health care system by working on the development of a hospital insurance program in Saskatchewan. Throughout his life he remained committed to emulating the Saskatchewan model. When frustrated with national efforts in the United States, he urged health care advocates to work toward health insurance at the state level, thereby laying the groundwork for a future national health insurance system. While in Canada, Roemer also began the study of hospital utilization that culminated in the finding we now know as Roemer’s law: the number of available beds creates the demand for their use.

    Seems like Roemer was building a strategy in which to push the United States to a national health insurance system. A system that the majority of Americans didn’t want when Roemer was alive, and do not want today. In fact, we are told by Democrats that they are not pushing for such a system either. Yet Jim asks that we look at Roemer for advice on how we should run our healthcare. Seems like Roemer’s inspiration is relevant.

  28. Karl: what I think you’re latching onto (because it’s hard to be clear is):

    at first glance it appears that requiring everyone to have vaccines would be better than the free market route.

    The problem is the virus or bacteria that cause a given disease don’t really care about free-market or not approaches. They work on a different set of rules which show us that once vaccination rates drop below a certain percentage of population (if memory serves it’s 80% of a given population sample) – you get a high risk of pandemics.

    You mention a little “cheap” advertising – care to explain what you mean? Are you also factoring in the cost of distribution and delivery into your equation. Is it worth the while of a private company to spend money on this? At what price point does it make sense to spend the money on advertising and delivery, versus leaving it. After all, vaccines are, generally speaking, very cheap.

    Finally, why should a private company, selling a cheap, generic vaccine for, let’s say, Measles-Mumps-Rubella, even bother to pay to deal with the negative publicity caused by some attention grabbing media hungry pundits?

    In short, like with most libertarian and free market ideas espoused here. It doesn’t survive an encounter with reality.

  29. Yet Jim asks that we look at Roemer for advice on how we should run our healthcare.

    No, I asked you to look at his law, which is based on research and has been confirmed by many studies performed by others. But instead of arguing with the law (which would be hard to do), you’d rather talk about the man behind its name. Which is, as I said before, completely irrelevant.

    To spell it out even more clearly: the credibility of Roemer’s law is not based on Roemer’s personal credibility, any more than the credibility of Newton’s laws is based on Newton’s personal credibility. It’s based on the fact that the phenomenon Roemer observed and gave his name to has been confirmed by many others.

    Your argument is essentially saying: “The supply of medical services has no effect on their utilization, because Roemer was a communist.” Surely you can do better than that.

  30. It’s based on the fact that the phenomenon Roemer observed and gave his name to has been confirmed by many others.

    Roemer’s observations were based on comparisons between the US, Western European, and USSR. The USSR was his evidence that his law was true.

    If Roemer’s law was empirically true, then how do you explain 2 abortion clinics in Wyoming conducting only 70 operations a year?

    Also, Roemer’s law is an argument for government rationing: “in an insured population, a hospital bed built is a bed filled”. If the entire population in the US is insured (Obama’s plan), then all hospitals will quickly reach full capacity. If that’s the case, healthcare costs will go up. If Roemer’s law holds, then the only way to reduce costs is to eliminate the hospital bed or “Certification of need”. Certification of need means you have to get the government to authorize your need for a hospital bed. Both are rationing of supplies by the government in order to control costs.

    Your argument is essentially saying: “The supply of medical services has no effect on their utilization, because Roemer was a communist.”

    My argument couldn’t be further from this imaginative strawmen. Supply has an effect on demand. The difference between me and Roemer, is I believe free markets correct inefficiencies faster than government controlled markets. Look up the law of supply and demand.

Comments are closed.