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Health Care Mythology Revised
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Generally strong points. Economically speaking.
I agree now is not the time to consider increasing expenses monumentally for the nation.
That said, the philosophy that Health Care is a service that must be willingly provided for cold hard cash or not provided at all to society is unacceptable.
A nation must be judged first and foremost on how its weakest and minority and poor members are treated. It may not be economical to provide the destitute with minimal care, but the failure to do so is akin to murder when treatments exist.
That said, we live in the real world, and the real world precludes full provision of health care for all for multiple reasons, as outlined in the paper. This does not preclude the notion that at least the minimal care should be provided to the most destitute ("minimal" and "destitute" being subjective matters).
And no, the excuse that 'well the wealthy can donate to them' is moot when the system is plagued with the types of corruption outlined on this very web site. The fact is that the wealthy are often inclined to hoarde cash and destroy health care firms (www.deepcapture.com), never mind donate to charitable causes. If the wealthy aren't donating sufficiently, death ensues.
And the argument that it will decrease productivity and innovation is also moot. Any econ 101 course teaches you that equitable allocation of resources often conflicts with efficiency. Not to mention all of the potential benefits that may accrue from an insured society.
Again, take my comments with a grain of salt. I am not arguing that 'socializing' medicine in its entirety is desirable or even economically viable at this stage in our nation's growth (or lack thereof). Merely that the philosophical 'rationale' underscoring any attempt to paint socialized health care as'robin hoodinism' and 'evil' lack moral clarity.
These people used to get health care before the govt ever got involved. Drs took an oath and it was an unwritten rule that you take care of the poor for free. And they did it.
Since govt got involved, every poor person who walks into your place is a chance to rape the govt. RUN ALL TESTS.
You rant only makes sense if your definition of 'history' only goes back 40 years.
Is this the same Cliff Asness who signed the petition to keep the Fed independent?
FUCK HIM.
From his bio:
Prior to co-founding AQR Capital Management, Cliff was at Goldman, Sachs & Co. where he was a Managing Director and Director of Quantitative Research for the Asset Management Division. Cliff and his team at Goldman were responsible for building quantitative models to add value in global equity, fixed income and currency markets for Goldman clients and partners.
Clearly, we should trust the financial advice and invective (calling Canada "socialist and aying the New York Times liked Joseph Stalin betrays an alarming lack of common sense or desire for rational discourse) of Mr. Asness. Or maybe we could get him to work with AIG on some more financial innovations and creative ways to destroy the health care system, too
The cheapest way to spread risk is to spread it widely. The people who want universal health care are smarter than Cliff. They're not expecting a "right," they just want health care when they lose their jobs.
Of course health care is rationed. Of course making it "free" will encourage overuse and discourage private provision. The plan needs to address these issues.
But this is just more rich-serving tripe to keep taxes down on people who don't need government except to bail them out.
The Republican/Libertarian policy prescriptions will cause a violent revolution when the economy collapses as Ron Paul predicts. "No government" is a pipe dream. People want good government.
And who says economic growth justifies all? Growth for whom? Not for the majority of Americans.
That 'overuse' argument is simply absurd. There just aren't that many hypochondriacs or Munchausen's patients out there.
In fact, resources such as MRIs, CAT scans, surgery, etc. are prioritized much more sensibly - according to need (and to a lesser extent age) rather than serving those who are convinced every slight headache might be an aneurysm.
What there is are people who go to the doctor when something is cause for concern, before they get REALLY sick with something that would end up costing the health care system more.
And there are plenty of people in the land of 'socialized' medicine with lab-coat phobia and won't see a doctor unless dragged in by an ambulance.
The claim that there would be 'overuse' is actually the weakest argument against any alternative system.
I agree completely that overuse is a non-issue, but your "resources such as MRIs, CAT scans, surgery, etc. are prioritized much more sensibly - according to need (and to a lesser extent age) rather than serving those who are convinced every slight headache might be an aneurysm" statement makes you sound like either a first year med student or an insurance adjuster. Which one is it? It's well documented that medical providers involved in HMO's and other managed care models get compensated (bonus) for denying care. One good point made by a 'for gov't' healthcare system made was that Medicare made better use of their money by not paying out baseless, ridiculously large bonuses to executives.
bolweevil
It's our inability to frame low-probability events again. Suppose you have a remedy that treats a disease (with a probability of 0.0001 of occurring) that reduces the chance of death by 20% (so that the chance that you die goes from 0.0001 to 0.00008). The problem? The treatment is expensive, and you need to take it before you actually get the disease.
1. If you know that you'll get the disease, how much would you pay to reduce your risk of death by 20%?
2. If you know that you'll get the disease and are paying insurance, how much more are you willing to pay so that the 0.01% of people that get the disease reduce their risk of death by 20%?
Anybody who manages to rant about George Soros and ACORN in a piece that is supposed to be about the "real" state of America's health care system reveals himself as an ideologically driven crank.
Still, it is kind of fun to watch the train wreck that is the Ass Ness Monster. Go get 'em, Nessie!
Mr Denninger makes as good a point on health care as I've come across. "Look folks, you want to know why we have the health cost problems we have? I'll lay it out for you - in a way you can't refute or argue with:
1. There are no published prices. In no other line of work is it legal to do this. Nowhere. You can't sell someone a hot dog and tell them after they eat it what it just cost them. You can't hire a lawyer and have him tell you "I'll tell you what this will cost when we're done." You can't hire an electrician and have him tell you "I'll make up a bill when I'm done." In every line of work except health care, this is illegal. There are even laws for "major" consumer work (e.g. contracting, auto repair, etc) where they must give you a binding written estimate before beginning work!
2. Robinson-Patman makes it illegal to discriminate against like kind purchasers of goods in pricing decisions when the effect of doing so is to lessen competition. While it does not apply to services, it darn well should. Whether you are paying privately, you have private insurance or you're a Medicare patient if you need to have a breast reconstructed due to cancer the complexity of the procedure does not change. Yet it is a fact that the privately-billed amounts for uninsured ("rack rate") patients are often ten times or more that billed to insurers or Medicare. Try charging a cash purchaser 10x more for a TV than someone who finances that TV on your in-house credit facility and you would be shut down and thrown in jail.
#1 and #2 exist because of explicit efforts by the "health care" industry to exempt themselves from the laws that every other merchant of every other good and service in the United States must adhere to."
http://market-ticker.denninger.net/archives/1187-Health-Reform-Who-Are-T...
There is no price. Even the Medicare price is invented by bureaucrats. Thus, no market signals, so healthcare resources get devoted to various illnesses and procedures based on those prices. The prices for the uninsured are also made up and have no bearing on the underlying cost to provide the service.
I can understand why people turn their brains off and get emotional when it comes to healthcare, but rationally their arguments have been annihilated over and over, at least since Mises and Hayek carpet-bombed the socialist planning model. "But it's different." No, it's not. If you say healthcare is not the same as cars or iPods, then I say had the government decided to intervene in the food or shelter market, we would have the same complaints and people would say how we can't have a free market because people need food, shelter, etc. (See the stupidity that is rent control driving up prices!) We have a crisis in education and healtcare, where costs keep rising and there seems to be no end in sight. Both are heavily regulated and subsidized by government. Do the math.
Look at the collapse of California and the cuts in Latvia and Ireland. The UK and Europe are next, and cuts to education and health care are coming in America. Healthcare reform is the last gasp of socialism trying to crawl out of the ash bin of history.
Wow, like Lazarus this lame piece of ideological comedy is resurrected yet again. I don't have time for another go at. It was exhaustively covered both here and at ZHblogspot last week.
I'm wondering if it has to be run and rerun until it gets the "right" responses. For those interested in what citizens of "socialist medicine" countries themselves think, take a look at the blogspot comment thread: http://zerohedge.blogspot.com/2009/07/criminally-insane-cliff-asness-takes-on.html#disqus_thread
Note that the thread is closed for comments and the format is completely foreign, including the removal of layout cues allowing you to see what's a reply to whom and when. CLOSING COMMENTS AND REFORMATTING IN THIS FASHION IS NOTHING I'VE SEEN AT ZH IN 4+ MONTHS.
Frankly, I'm wondering if ZH is way too tight with Asness.
Yeah, you can flag me, but please look at and consider what I'm talking about. I'm a longtime ZH supporter.
What part of that was revised?
I love Zero Hedge, but this article is less than compelling. Mr. Assness reads more like a snotty nosed debater who writes for the National Review than an adult who has actually lived life and confronted both the miracles and traumas of the American healthcare system. I am privileged to have relatives that live in a Western European country that has nationalized health care. Are there problems with their system, of course there are, would they trade it for the American system, not in a heartbeat. In the same vein, my father recently had a heart attack and was given amazing treatment that cost him very little (thanks to a Union healthcare plan by the way), but I also have friends whose parents suffered horribly because of problems caused by the health insurance industry, not medical professionals.
A fair question is what exactly does private health insurance provide as a service? A fair percentage of our health care costs and the time of health care providers is dominated by complying with the rules of health insurance industry. This time and money would better be spent on patients. The problem with the free market argument is that with respect to health care, there is no market and no "free choice" involved. We do not shop around for insurance, it is provided by our employers (if we are lucky to be employed these days) and we are happy to have it. There is no haggling or shopping around for the best service. Basically the business model of health insurance is to deny health care to those sick patients who most need the treatment. This is not a system that is morally or economically rational.
On a side note, as to his perverted theory of rights, if the concept of rights is preserved in amber in 1600, then I guess women do not have the "right" to vote and someone needs to tell Obama that he must report to the nearest plantation. Health care may not be a right in the traditional sense of the word, what is at issue is whether it is a public benefit that should be subsidized or provided by the government, kind of like our "right" to paved roads.
Brilliant response, 100% agree.
Health care is more of a monopoly than a free market in many senses. Including the vast sums of cash ponied up for lobbying efforts annually by the behemonth drug titans (which yield compelling and disturbing results).
My response to the doctor upon first posting:
Hello Dr. Asness,
Thank you for your exploration of the myths of healthcare however I would highly encourage you to explore and offer into the public arena positive solution ideas instead of quibbles about people's perceptions of the debate. Moreover I think you gloss over some of the most important, salient topics to people affected by this debate and that is bankruptcy and denial of coverage (and their link). Granted that you shield yourself in an excuse of 'because I lack the expertise to recommend the detailed practical steps that would be productive' but frankly that is lame at this point in time when it seems most have recognized that, at the very least, the status quo simply must change in this area.
Now to our point of agreement: I do worry about the fact that we are the innovators in the arena of healthcare and have allowed for new drugs and treatments to be produced. That said I worry more about risk/reward and seeing my fellow citizens die or slip into bankruptcy thanks to health issues more. It is a delicate trade off however taken as a whole when I still do want to see new drugs and treatments to be produced.
But here is my problem: the tool of capitalism we have in our quiver is simply not appropriate when it comes to healthcare. The tool of capitalism is a blunt instrument that does some things very well (provide for innovation) but fails in other arenas when the supply and demand curve breaks down. For instance if you or I was to come down with some terrible malady tomorrow we would not have the flexibility to shop around nor wait for the price to drop for our treatment. It is inflexible. Unfortunately our country and our society takes this exceptional tool of capitalism and extends it far too extremely (hmmm... are we being somewhat extreme like the religious fighters we are at war with?) into areas, like healthcare, where it simply is not appropriate.
So I would offer you this thought: where capitalism is an incredibly useful tool, like a hammer, it probably does have a part to play in the solution to this riddle but it simply cannot be the solution. We tried it and it fails for way too many of us. Maybe we need a scalpel (public preventative care clinics, vouchers, etc.) in some key areas? Get creative and offer some good ideas.
Have a good weekend
Ok, fine... health care is not a right. I'll concede that, but why is the right to property a right then? How come we cannot live in the Hobbesian jungle and just steal from each other to survive. Homo sapiens evolved in resource constrained environments, and if killing a fellow member of your species (and denying him the "right" to their properity and life) will help you pass on your genes, you do it. If my ancestors did not do that, I would not be here typing this.
I wonder why nobody is citing the right to "life" (viz "life, liberty and the pursuit of happiness") on this one. It ain't rocket science. Where are our principled conservative and libertarian brethren on this one?
Don't give up my rights like that, dude. I suspect I'm far more likely than you to devolve into the "Hobbesian Jungle."
I mean, think about it.
Cliffy invents a few myths of his own in his screed. I'm Canadian, so let me put a few points right:
First, the Canadian government is NOT a single buyer of drugs. In fact, one of the ongoing arguments is whether there should be a national prescription plan or not; lefties love it, righties worry it's going to bankrupt the country. In fact, in most cases, individuals pay for their drugs. As a diabetic with an ever-growing list of pharmaceuticals and no drug coverage from my job, I'm painfully aware of this.
Second, although in the 1970's, the quasi-socialist Pierre Trudeau introduced "mandatory licensing" (i.e. free rein to copy other drugs), under Conservative Brian Mulroney, the Canadian government introduced 20-year patents for new drugs (regardless of where the drug is manufactured). After 20 years, Canada's "generic" drug makers can apply to make a copy, for which they must pay a small fee per pill to the originating firm. For example, I take metformin ("Glucophage") which is off-patent in Canada. 540 pills (a 3-month supply) costs $54 Cdn - about 10 cents a pill. On the other hand, Avandia, which I take once a day, is not off patent, and I pay $4/pill, all of which goes back to GlaxoSmithKline. Currently, a debate rages over "evergreening" - where the original manufacturer makes some small change to the formulation, and then applies for a patent extension. However, to suggest, as Mr. Assness (what a stunningly apropos name) does that Canadians immediately copy drugs for peanuts and the original maker gets nothing, is simply not true.
And of course, while Canada's health care costs/GDP are about 1/3 of those in the USA, Canadians' average life span exceeds that of Americans, and key indicators such as infant mortality are lower in Canada. Mr. Assness wants us to include some unknown "foregone" growth in GDP as a result of socialized medicine, but he conveniently ignores the similarly unknown "foregone" contribution one of those dead infants may have made.
In sum, if Mr. Assness applies similar methodology to his financial judgements as he does to health care, I wouldn't buy a hot dog from him.
OMG. Listening now to an uncharacteristically unconfident/uncreative Obama giving his Health Care Speech--he just said that we should take the BLUE pill if it costs half as much as the red pill.
I shit you not. In a presidential address.
Is that what it has come down to: take the blue pill if it's cheaper?
Disclosure: A The Matrix movie reference.
"he just said that we should take the BLUE pill"
He wasn't making a Matrix reference. That was a paid advertisement for Viagra.
Product placement is what it is all about.
And thus solved the quandry of finding the extra funding for this bill, above the wealthy tax already included.
The 2009 Healthcare Reform Act, Sponsored by Pfizer.
I am seriously tired of listening to Americans whine about "socialism".
Are you on the right website?
Perhaps he means (as I would) that he's tired of hearing it used as a red herring, a knee-jerk indefensibly ignorant "coup de gras" for anything that smells of sharing resources, and the outrageous propaganda it spawns pretty much whenever it's applied.
Being at ZH puts one among highly intelligent and (for the most part) sophisticated people.
The "socialism" rap is extremely disappointing when you find it even here.
But nobody's perfect, eh?
On the other hand, we should all be trying to improve ourselves in this "search for truth."
The continuing refuge in anti-"socialist" propaganda suggests that a lot of people haven't the slightest interest in some truths.
Too bad that would seem to include management.
Did anyone notice that there wasn't a single piece of quantitative analysis in the entire document? Not one. Not a single study showing why the private sector does provide better health insurance than the lowly US government. Not one single metric that allows us to rate our current system above other developed nations.
Why is this? Is this the world's only finance geek who doesn't believe in numbers? Or is the answer much simpler? Namely, that he doesn't have any.
Armed with nothing but rhetoric, the author wants us to believe that health care insurance reform is a bad idea simply because he attaches the words "socialist" and "communist" to it, as if .. "duh, it's obviously bad!"
And our freer system (as he labels it) is actually better, but as he puts it, overspends and subsidizes the rest of the world. What, out of the goodness of its two-sizes-too-small heart? You can't have it both ways. Either you think a free(r) market solution will lower costs for participants, or you don't. You can't look at examples where the free market solution results in higher costs for the consumer and then say, "well, in this case, it's because we have to subsidize all those socialist cheapskates."
C'mon. It got too ridiculous for words when he accused doctors of having little more altruism than truck drivers. That, coming from anyone in finance, is utterly laughable.
It would be ridiculous if given any thought! But why think when you can just dismiss it as "socialist"? It makes things so much simpler!
You can even ignore other perspectives on principle as "socialist." Rather than being someone who would prefer to let others die (though you can never just come out and say it) rather than share what's YOURS, you come out as an IDEALIST.
Idealism has never been a more profitable deal.
Best comment from Ron Paul on Health Care:
First of all, other people must pay for things like healthcare. Those people have bills to pay and families to support, just as you do. If there is a “right” to healthcare, you must force the providers of those goods, or others, to serve you.
Obviously, if healthcare providers were suddenly considered outright slaves to healthcare consumers, our medical schools would quickly empty. As the government continues to convince us that healthcare is a right instead of a good, it also very generously agrees to step in as middleman. Politicians can be very good at making it sound as if healthcare will be free for everybody. Nothing could be further from the truth. The administration doesn’t want you to think too much about how hospitals will be funded, or how you will somehow get something for nothing in the healthcare arena. We are asked to just trust the politicians. Somehow it will all work out.
Universal Healthcare never quite works out the way the people are led to believe before implementing it. Citizens in countries with nationalized healthcare never would have accepted this system had they known upfront about the rationing of care and the long lines.
As bureaucrats take over medicine, costs go up and quality goes down because doctors spend more and more of their time on paperwork and less time helping patients. As costs skyrocket, as they always do when inefficient bureaucrats take the reins, government will need to confiscate more and more money from an already foundering economy to somehow pay the bills. As we have seen many times, the more money and power that government has, the more power it will abuse. The frightening aspect of all this is that cutting costs, which they will inevitably do, could very well mean denying vital services. And since participation will be mandatory, no legal alternatives will be available.
The government will be paying the bills, forcing doctors and hospitals to dance more and more to the government’s tune. Having to subject our health to this bureaucratic insanity and mismanagement is possibly the biggest danger we face. The great irony is that in turning the good of healthcare into a right, your life and liberty are put in jeopardy.
Sorry, Ron Paul, but your argument reeks of the selfishness that is the undoing of organized Libertarianism. I love you guys on Freedom, but sharing is not your thing. Totally not.
To see what actual people in "socialist medicine" countries think about their health care, take a look at the thread run on the same damn article last week here or, better yet, at http://zerohedge.blogspot.com/2009/07/criminally-insane-cliff-asness-takes-on.html#disqus_thread
I get along with libertarians as well as I do principled conservatives, but gotta say that here it just doesn't measure up on the human scale, compelling as the posturing may be to some.
Revised by author (it didn't originally register as a reply to Ron Paul.)
Bob, I have to totally agree with you. I really like ZH and have been following for 4 months as well. But Mr. Ass is full of crap and just makes dillusional "statements" instead of actually using facts which Tyler tends to prefer. I hope its not because ZH is that tight with Mr. Ass.