Tuesday, June 05, 2007

Quote of the Day: An MD Who Understands Econ

From today's WSJ, "Our Soviet Health System" by Dr. Robert Swerlick, Emory University School of Medicine:

Those who control public policy treat pricing as something trivial -- the concern of bourgeois shop keepers peddling trinkets. Yet the dilemma of administrative pricing causes problems for the allocation of resources today that would only be amplified if the U.S. moves toward even more government intervention in health care than already exists.

Where do prices come from, how do we know when they are right? If the prices set are mistaken -- result in a mismatch of supply and demand -- how are they to be corrected if pricing decisions are made in a political (bureaucratic) arena, and by the market (supply and demand)? These questions cannot be wished away.

One important lesson of the 20th century is that, while markets are far from perfect, more choices are available when people are able to use free markets to interact with each other. Markets may not get the prices exactly correct all the time, but they are capable of self-correction, a capacity that has yet to be demonstrated by administrative pricing.

It tells you something when the supply of and demand for specialist veterinary care is so easily matched when the prices of these services are established on the market -- while shortages and oversupplies are common for human medical care when the prices of these services are set by administrators in the public sector. Will health-care reformers -- and American citizens -- get the message?

17 Comments:

At 6/05/2007 9:28 AM, Anonymous Walt G. said...

Sadly, when people cannot afford to treat a pet they let it die and have it "put to sleep." Are we prepared to do the same to "granny"? If not, and you regulate the market for those who can't pay, where do you stop?

 
At 6/05/2007 10:10 AM, Blogger juandos said...

walt g. says: "Are we prepared to do the same to "granny"? If not, and you regulate the market for those who can't pay, where do you stop?"...

Well now there's a question that has been bugging me since at least college (30+ years ago) if not before then...

Playing devil's advocate here, does the fact that someone for whatever reason, good or bad deserve medical care if that same someone can't afford it?

If so why should everyone pay via extorted tax dollars?

Maybe this is yet another reason to allow medical savings accounts if we can stop Congress from interfering...

 
At 6/05/2007 11:12 AM, Anonymous Walt G. said...

Yeah, but granny had to spend all her money to get in the nursing home a few years and doesn’t have an MSA; her children are spending all their money on gasoline. What’s left from their $10-an-hour job, they pay for their own health insurance. What now? Kevorkian? He said “no” a couple days ago.

Free markets might me an answer. However, a strict free market would be cruel.

 
At 6/05/2007 2:33 PM, Anonymous Bob Wright said...

If Granny spent all her money on a nursing home, she will qualify for Medicaid.

So why do we need a hostile government takeover of medicine for the rest of us?

 
At 6/05/2007 3:13 PM, Anonymous Anonymous said...

Most of us pay out of pocket what we can afford and choose to pay for food, housing, clothing, and transportation. The government provides those things to very minimal standards for those who cannot pay, and we buy insurance to cover extraordinary costs, such as our house burning down or our car being stolen.

If we did the same thing with medical care, free market efficiencies and price signals would be preserved, and we would all be better off.

 
At 6/05/2007 4:41 PM, Anonymous Walt G. said...

bob wright,

There's a good chance we will all be granny someday if we live long enough. I don't have an answer for health-care costs.

 
At 6/05/2007 9:29 PM, Blogger Adam said...

walt g.

Part of the problem would not exist if government got out of the way. Granny might have been able to afford her medicine if a) government hadn't interfered and driven up prices, b) government hadn't frozen wages and started the expectation that health care comes from employers, and c) granny didn't have to pay money into Social Security getting an abysmal return instead being able to invest in something that would pay much higher interest. Granny would have been better off without government involvment so why should her situation now doom us all to her situation later in life? Get the government to leave me alone, let me make my own decisions, and then more often than not, I will be able to afford health care when I need it later in life.

 
At 6/06/2007 7:31 AM, Blogger juandos said...

walt g. says: "Granny would have been better off without government involvment so why should her situation now doom us all to her situation later in life? Get the government to leave me alone, let me make my own decisions, and then more often than not, I will be able to afford health care when I need it later in life"

CHA-CHING!...

Well regarding the $10/hour job walt g., maybe better job skills that are in demand by employers would be the way to go for granny's kids...

Ask yourself, "does anyone bemoan the fate of buggy whip makers?"...

I love bob wright's question: "So why do we need a hostile government takeover of medicine for the rest of us?"

adam added a few choice nuggets also...

Empowering Health Care Consumers Through Tax Reform

 
At 6/06/2007 7:34 AM, Anonymous Bob Wright said...

I've always been amazed at what politicians get away with:

First, they create a problem via government regulation and control.

Then they step forward and offer to "save the day" and help solve the problems people have navigating the government regulation. They call this constituent services.

Politicians take half our income through taxes, then offer to solve our money problem by taking over the economy where every thing will be "free" because it's provided by the government.

Unbelievable.

 
At 6/06/2007 8:02 AM, Anonymous Bob Wright said...

As of May 2007, the U.S. population is estimated to be 301,848,648, according to Wikipedia.

The number people without health insurance is estimated to be 47 million. 75% of these 47 million will have health insurance within one year [See 11/22/06 Carpe Diem post].

That leaves about 11.75 million people, about 4% of the population, without health insurance.

So to solve a problem for 4% of the population, politicians suggest a government takeover of the entire health care system.

 
At 6/06/2007 8:31 AM, Anonymous Walt G. said...

"So to solve a problem for 4% of the population, politicians suggest a government takeover of the entire health care system."

Actually the health care cost crisis extends past the 4% who do not have insurance (I don't believe in using the statistic in that manner, but I'll accept it for argument’s sake).

Affordability for those individuals and businesses that pay the premiums is the huge issue. It’s just not sustainable in the near future. I don’t like the idea of socialized medicine either. But we keep getting reminded that we have a global economy now and have to adapt to how the new world operates nowadays. Well, all the other industrialized nations’ governments are taking responsibility for their citizens’ health. How “globalized” should the U.S. be?

 
At 6/06/2007 9:31 AM, Anonymous Bob Wright said...

Home owners insurance and automobile insurance are also expensive.

Heck, a house payment is expensive.

Why not have the government provide these also if the metric is to be affordability?

 
At 6/06/2007 9:45 AM, Anonymous Bob Wright said...

Granny probably can't afford the payment to buy the car she needs to drive to the doctor's office.

What good is health care if you can't get to it?

 
At 6/06/2007 10:38 AM, Anonymous Walt G. said...

"What good is health care if you can't get to it?"


Subsidized public transportation?

House payments are subsidized by writing the interest off your federal income tax. So are children by tax credits and/or exemptions.

 
At 6/06/2007 10:41 AM, Anonymous Bob Wright said...

Medical insurance is also subsidized today through the tax deduction.

 
At 6/06/2007 10:52 AM, Anonymous Bob Wright said...

Subsidized public transportation?

We have this already - It's called Your Ride.

Since we already have government subsidized:

1. Transportation
2. Housing
3. Health Insurance
4. Health Care

Why do we need a government takeover of same?

 
At 6/06/2007 11:05 AM, Anonymous Walt G. said...

Why do we need a government takeover of same?

My point exactly. They've already taken it over, just like a cancer. The question now: Since the cancer appears inoperable, how do we deal with it. Pile up dead grannies outside of the hospital? No money to heal her; no money to bury her.

 

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