Market Power

Is Healthcare a Right?

Health care, like any good/service, has to be produced which means scarce resources must be used in its provision.  Does anyone have a right to scarce resources?  To say that someone has a right to health care means that someone has a right to use a scarce resource despite its opportunity cost.  In short, it means taking away someone else's liberty.

Positive rights -- such as a right to health care, an education, a job, etc... -- cannot be achieved without limiting the liberty of individuals. During the Cold War, for example, totalitarian regimes justified their (egregiously bad) humans rights records by stressing how they achieved positive rights the West left to the vagaries of the market place. Yet, they did so through totalitarian regimes characterized by central planning that proscribed both freedom of contract and private property.

Modern defenders of positive rights, as the following discussion makes clear, claim that such rights can be achieved without a police state:

"Defenders of positive liberty say that there is no need for it to have such totalitarian undertones. ... For example, if the state asks the citizens what they want instead of making that decision for them, positive liberty can be guaranteed without any hint of totalitarianism."

Yet, notice that even here we see the potential for the tyranny of the majority. If the majority thinks all employees should be paid a living wage, the freedom of individual employees to take a lower wage and of individual employers to offer a lower wage is circumscribed. Again, we often see the same sort of disregard for private property and freedom of contract in nominal democracies as in totalitarian regimes.

Aside from deciding whether people have a right to health care, what is health care in the first place?  Most surely it would include treatments for cancer and cardiac surgery, but would it also include taking an aspirin for a common headache or putting on a band aid after skinning one's knees?  Would it include taking an aspirin to stave off heart disease?   

With nationalized health care, the answers to these questions are put into the hands of bureaucrats who have little or no regard for the people (and these people's property) they oversee and the people have little recourse than to abide by their deicisons.  In other words, its dictatorial at its core.

Via Instapundit

Government: Making Health Care Unprofitable Since....

From my Tweets (Timothy Burke, to be exact):

Here is what Ceci Connolly is reporting at the Washington Post:

President intends to release a budget tomorrow that creates a 10-year, $634 billion "reserve fund" to partially pay for a vast expansion of the U.S. health system, an overhaul that many experts project will cost as much as $1 trillion over the next decade.

Obama would pay for the expansion by trimming tax breaks for the wealthy and tightening payments to insurers, hospitals and physicians, according to a senior administration official.

If this report is accurate, a $634 billion fund would pay for roughly half of what a fully comprehensive overhaul of the U.S. health care system would cost. It is also notable that some of the $634 billion is reported to come from cuts to what hospitals, physicians, and insurers presently get. We have been fully expecting a $157 billion cut to what Medicare HMOs get but it would seem the docs and hospitals would be in for some pretty big cuts as well to get to $634 billion in savings.

Full post here. 

The fact that patients are shielded from the true cost of health care - largely due to the tax-free status of health insurance contributions which, in turn, spreads the cost of health care around - is one of the reasons health care costs are high.  So the answer is, obviously, to take the profits* out of health care.  Perhaps Obama wants to turn the whole health care system into a market like the market for flu vaccines.

When government policies yield unintended consequences, the answer is always more government policy.  Sigh.

*I realize that most hospitals are technically not-for-profit.  But that only restricts what they can do with any income residual.  It does not mean that the hospitals can't have profits as a motive.

St. Louis Considers New Kidney Transplant Rules

Not news:  there is a shortage of kidneys.  St. Louis news:  committee discusses new rules to allocate a scarce resource.

The committee discussed three concepts that could be used in a new system to determine who gets kidneys:

— A formula that determines how long a patient can expect to live after receiving a new kidney.

— The amount of time a patient has been receiving dialysis treatments.

— A measure of the quality of the donated organ in relation to the candidate's age and health.

Market Power:  price system not even mentioned.

With apologies to Fark for the "not news" "news" and "Market Power" list.

Report: Pope Advocates Black Markets in Human Organs and Human Suffering

OK, so he really doesn't advocate black markets or suffering.  But he did speak about markets for organs.

Despite the fact that the supply of organs is limited, the Pontiff emphasized that people can only donate, “if the health and identity of the individual are never put at serious risk, and always for morally-valid and proportional reasons. Any logic of buying and selling of organs, or the adoption of discriminatory or utilitarian criteria ... is morally unacceptable,” he stressed. "

Surely he finds unnecessary deaths to be morally unacceptable too, as well as needless suffering and pain.  But that's exactly what laws against sales of organs result in.  And surely, to be logically consistent, he must believe that payments to doctors and hospitals for transplant services rendered must also be morally unacceptable.

HT to Market Design

Two on Health Care

1.  Emergency room waiting times are up an hour on average because ER visits are up and there are fewer ER's across the country. 

2.  Related to the link above, patients are, luckily, finding non-hospital alternatives to ER's. 

Patients who need immediate care for injuries and illness, be it a nail-gun puncture or a severe stomach bug, are increasingly turning to walk-in urgent-care clinics. These facilities aim to fill the gap between the growing shortage of primary-care doctors and a shrinking number of already-crowded hospital emergency departments, with no appointment necessary and extended evening and weekend hours. Urgent-care clinics are staffed by physicians, offer wait times as little as a few minutes and charge $60 to $200 depending on the procedure -- a fraction of the typical $1,000-plus emergency department visit. Some offer discounts and payment plans for the uninsured; for those with coverage, co-payments vary by insurance plan but may be less than half the amount of an ER visit, which can range from $50 to $200.

Yes, Virginia, there are market solutions to health care problems.

Both via Art Diamond.

Why Central Direction Usually Performs Worse Than Markets

1. Bad incentives
2. Lack of information

On the last point.

First, there's a mistaken belief that Medicare is better staffed than private plans, and can therefore make better decisions about patients' clinical circumstances and the access to new therapies they should have. Yet at any time, Medicare has about 20 doctors and 40 total clinicians (including nurses) inside the coverage office, and fewer than a dozen in the office that sets the rates that doctors are reimbursed for the care they provide. Private insurers employ thousands of doctors, nurses and pharmacists, many experts in new technologies.

Aetna has more than 140 physicians and about 3,300 nurses, pharmacists and other clinicians across its health plans. Wellpoint has 4,000 clinicians across its different businesses, including 125 doctors and 3,180 nurses. That works out to one clinician for every 9,000 people covered. United Healthcare employs about 600 doctors and 12,000 clinicians across all of its health plans and various health-care businesses.

...One place where the clinician disparity is most obvious is the delivery of cancer benefits. Medicare doesn't have a single oncologist on staff, yet since the year 2000 the program issued, by my count, 165 restrictions and directives on the use of cancer drugs and diagnostic tools.

HT VoluntaryXchange

And now for something completely different... sort of:  behavioralists like to point to the imperfections of human beings: we aren't always rational in the textbook sense.  Touche'.  But as Megan McArdle wrote: bureaucrats are stupid people with bad incentives.

Government as Nanny in Healthcare

Paul Walker on government oversight of preventing non-communicable diseases:

I may be missing something, but what is strange about the fact that governments have powers to deal with the problems caused by communicable diseases but little power to respond to non-communicable diseases. After all the diseases are .... well .... non-communicable.

Aren't the powers the government has there precisely because the diseases are communicable, that is they could have large negative externalities associated with them. What are the negative externalities of non-communicable diseases? You having bubonic plague could affect me in a very direct and obvious way, without me knowing, until it's too late. So I may want the government to be able to take action to prevent you giving me the plague. But you are eating a "poor diet", how does that affect me? What, exactly, is the negative externality here?

Standardizing Life Expectancy

Greg Mankiw makes excellent points about comparative life-expectancy.  He argues that if we standardize the data to correct for factors that determine life expectancy (such lifestyle differences, like obesity, and deaths from non-health injuries, such as deaths by car accidents), we will get a more accurate measure to compare life expectancies across countries.

Update: "Ironman" (great name, BTW) at Political Calculations notes in the comments that he wrote about this very topic back in September and has some very cool interactive tables to help him make this point:  when you standardize the data, the US doesn't look all that bad compared to other countries.

The Market For Human Organs

From the current Journal of Economic Perspectives:

We evaluate the introduction of monetary incentives in the market for live and cadaveric organ donations. We show that monetary incentives would increase the supply of organs for transplant sufficiently to eliminate the very large queues in organ markets, and the suffering and deaths of many of those waiting, without increasing the total cost of transplant surgery by more than about 12 percent. We build on the value-of-life literature and other parts of economic analysis to estimate the equilibrium cost of live transplants for kidneys and livers. We also show that market price for kidneys will be determined by the cost of live donations, even though most organs will come from cadavers.

That's the abstract of the paper "Introducing Incentives in the Market for Live and Cadaveric Organ Donations"  by Gary Becker and Julio Elias.  Here is a non-gated version.

Improving Health Care

The Door links to an article about store-based health care clinics, an alternative to visiting the doctor's office for routine issues.  The whole thing is worth a read, but the following caught my eye:

In June, the American Medical Association urged state and federal agencies to look into whether pharmacy chain-owned clinics urge patients to get their prescriptions filled on site. That followed buyouts of miniclinics by two big-name pharmacy operators: Walgreen bought Conshohocken, Pa.-based Take Care Health Systems in June, and CVS acquired Minneapolis-based MinuteClinic last year.

Suppose you go to Best Buy and you talk to an associate about a new home stereo system.  What do you expect him to do - send you to Circuit City to buy the same thing he already has on site? 

Moreover, my sense is that most patients will choose to go to a clinic in a particular store because they think that is be the best place to get a check-up and any medicine they may need.  What's wrong with a patient wanting this kind of bundling and being able to get it?