How American Health Care Killed My Father - The Atlantic (September 2009)
The author confirms the central role that incentives and institutions play in this market (as in all markets).
All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer of value.
and
We will need to reduce, rather than expand, the role of insurance; focus the government’s role exclusively on things that only government can do (protect the poor, cover us against true catastrophe, enforce safety standards, and ensure provider competition); overcome our addiction to Ponzi-scheme financing, hidden subsidies, manipulated prices, and undisclosed results; and rely more on ourselves, the consumers, as the ultimate guarantors of good service, reasonable prices, and sensible trade-offs between health-care spending and spending on all the other good things money can buy.
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Essentially I agree but when it is stated that we must "focus the government’s role exclusively on things that only government can do (protect the poor, cover us against true catastrophe, enforce safety standards, and ensure provider competition)" I object. Government can not efficiently do these things. Prior to the 1930s, private charities, self-help societies and others took care of the poor and downtrodden. See Beito's Voluntary City. I really object to the role of "enforcing safety standards and ensure provider competition". The government's role in the economy at the most should be protection of private property rights. The market will take care of the other things.
ReplyDeleteBoyes writes in response to Megan McArdle's view of the safety standards:
ReplyDelete"Government can not efficiently do these things."
I tend to read the evidence on standards in much the same way. That is standards are a cost the are imposed, rather than a response that emerges. As such, this type of tops down approach falls victim to The Fatal Conceit.
I cannot envision a standard writer would would have the knowledge in order to construct a standard to ensure safety. The regulatory burden then, is much greater than the overt cost, it includes the perverse consequences that result from the "crowding out" of decentralized agents and the process that allows solutions not designed to emerge.