A Contract With America

Dear Republican Senators (and Max Baucus):

Since you do not believe that health insurance should always be available via large-group policy to the vast majority of Americans, and since you seem to believe that the individual insurance market functions well, I believe it is only proper for you to buy insurance in the individual market.

As a taxpayer, I’m sure you’re as galled as I am that we’re continuing to insure America’s Senators through a nearly socialist system, and while you haven’t yet discovered the presence of mind to submit legislation to end this objectionable practice and free all of America’s Senators from the yoke of tyranny, you can personally act to see this deeply un-‘merican policy corrected. In short, I urge you to find the courage of your convictions and put your health where our money is.

I recognize that legislating in good faith is no longer “on the table” for you. It has to be hard being the party of “no”, never having anything constructive to offer — never being asked to think independently about anything — but this is something that you can do for your country. A contract with America, if you will. Or if not with America, a contract with an individual insurer in the greater District of Columbia and/or your home state…anyway, you get the idea. It’d be a contract for America at the very least.

On this Labor Day, I urge you to do the right thing. Join your constituents and say, with one voice, “what do you mean you won’t cover Timmy’s ear infection? He was just born! How can that be pre-existing!?!” This is “rugged individualism” at its finest. Just you against the private-sector Man. The way it should be.

True, this won’t be a 1:1 comparison since you’re in the top 3% of all earners. But don’t worry, you’ll soon find that you can’t afford the coverage you’re currently enjoying when you buy in the individual market. Your new, terrible, and terribly expensive insurance will doubtless give you the flavor of what the rest of us experience.

Ingeniously, this plan doesn’t even require that you do anything constructive toward health care reform. You can keep stiffing both your country and your constituents and you won’t have to hold any of those awkward “town hall” meetings to explain yourself. After all, this is the fiscally conservative thing to do; you’ll be saving taxpayers money, and who can argue with that?

Pretty soon, you might even be able to find the courage to do what your instincts — and terrible economics — tell you to do: advocate that our retirees buy in the individual market too! Once you discover how great the individual market is, you shouldn’t have any qualms in making the case that everyone should join it. Just think how many people you’ll be able to lift out of the oppressive regime of socialized insurance. The elderly will surely make their thanks known at the ballot box. As someone who’s most likely “getting up there” yourself, you’ll have added credibility on the issue…and seriously, when was the last time you had credibility? This is political gold.

You can even continue to play the part of hostage to broken, antiquated economics if it suits you (and your major campaign contributors, ‘natch).

It’s the very least you can do for your country, and for your (tiny) efforts you’ll be set on a personal journey of discovery. You’ve never seen the pain and burning anger caused by “pre-existing condition” denials for things that are laughably routine. You’ve never wondered in awe at how large a deductible you were suckered into, and you’ve probably never had a plan with a lifetime cap on benefits; so when you really need them, they won’t be there. In fact, I suspect that you have never considered that the majority of us don’t even have actual health insurance.

By buying in the individual market, you can set an example. This is your chance to be a real pioneer! This could even be your first step towards representing a growing constituency — something you Republicans have been searching for: those who have gone bankrupt under a mountain of medical bills because they had the temerity to get sick before they turned 65. Those folks might not have wealth, they might not even have their health, but they sure-as-hell are voters. Just think, you can get in on the ground floor of that action!

Yes, dear Senator, by simply finding your moral compass (you’ve got it back there somewhere, even if you haven’t used it in a while) and following it for just one step, you can help us right this great nation again and return it to glory. I urge you to do this thing for your country, follow your ideology, and deny yourself the kind of care that you’ve worked so hard to deny the rest of us. It’s the Right thing to do, after all.

Sincerely,

Alex Russell

29 Comments

  1. Posted September 7, 2009 at 11:42 am | Permalink

    Here! Here! And well said.

  2. sri varadarajan
    Posted September 7, 2009 at 1:47 pm | Permalink

    Outstanding!
    Its silly that people categorize public health insurance as ‘socialist’ while being perfectly ok with getting educated at public schools and being protected by public servants (police and fire departments).

  3. Rick E
    Posted September 7, 2009 at 2:50 pm | Permalink

    That’s an excellent idea.

    Somehow I doubt the question will ever be put to one of them on national TV.

  4. Laura
    Posted September 7, 2009 at 6:02 pm | Permalink

    Alex, you’re a brilliant individual, but I’m disappointed with this one-sided rant.

    Personally, I’m undecided on what good health care for America looks like. But intellectually dishonest tirades like this don’t help your cause or our country.

    1. “It has to be hard being the party of “no”, never having anything constructive to offer — never being asked to think independently about anything” –
    * You’re going to lump every single Republican senator into this?? Really? When did you become one of those crazy liberals blinded to the good ideas from both sides?

    2. This article fails to consider that the dynamics of individual health care plans WILL change if every American has to buy a plan. Whether it will be better or worse can certainly be debated, but your post takes the perspective of comparing it to the status quo. So it isn’t fair to say Republican senators believe “the individual insurance market functions well”.

    Basically, both sides agree the system is fundamentally broken, and nobody has a solution that’s palatable by the majority of the country. Your post takes the easy way out by portraying the side that’s “not yours” as advocating the current system in its current state. This is simply not the case.

    -A disappointed Dojo fan

  5. Posted September 7, 2009 at 6:29 pm | Permalink

    A couple of quick points in response (originally from iPhone, updated later with links and such):

    First, the Republican party has effectively muzzled those senators who were being constructive in the process. The moral equivalent of Bill Kristol’s now-famous strategy memo has obviously been issued. Back then, the goal was for Republicans to totally dis-engage from the process and decry the entire effort. The same thing is happening again. That Republican Senators are clearly not free to vote or even offer ammendments in line with their conscience is…well, a referendum on their party. No, I’m not a liberal, nor am I affiliated with any party, but the way the Republicans are acting — both through comission and omission — is downright reprehensible.

    Next, you’re right that the dynamics of the individual market would change with more folks in it, yet no one has sufficiently explained to me how those changes would solve the pressing problems of care being denied and cost growth. The individual mandate starts to get there, but it’s clearly not sufficient to control costs over even the medium term. The suggestion that republican senators should be subject to the whims of the market that they’re advocating seems mild by comparison to what they’d make millions of Americans endure in the interim.

    Lastly, the majority of Americans support single-payer for all under the umbrella of Medicare for everyone. It’s only our senators who haven’t gotten the news, or for whatever ideological reason, can’t accept it.

    You might be dissapointed, but so am I. Thinking republicans need to take their party back and un-muzzle their senators in this debate. It’s horrendous that the Republican party is letting itself be cast as a rump, obstructionist party of angry mobs and fear mongers. But don’t imagine that the folks who are pointing out what they’ve become are to blame for it.

    Regards

  6. Posted September 7, 2009 at 7:18 pm | Permalink

    But don’t imagine that the folks who are pointing out what they’ve become are to blame for it.

    Nor, of course, are they adding to the debate.

    I agree wholeheartedly with Laura that, while there is certainly cause for frustration, the instinctual reaction against those who don’t endorse currently proposed legislation is misguided and shortsighted.

    It is naïve to assume that inaction or obstruction on any particular so-called conservative senators’ part is due to their stubborn ideology, but that the very same motivation (albeit in a different direction) doesn’t drive the so-called liberal senators.

    As for your specific critique of that stubborn ideology, permit me to plant a small seed such that skepticism may take its roots: the current health care system is intensely and pervasively distorted by government intervention, regulation, corporatism and a long tradition of profit-squeezing from an entrenched bureaucracy that is horribly equipped to deliver any sort of reasonable profit. To call the current system “free market” is, to put it lightly, tremendously absurd.

    As for your nod to “broken, antiquated economics”, I carefully submit that this claim is entirely unsubstantiated and very likely misinformed. It should come as no surprise that the cut-and-dry storybook picture of economics presented by proponents of current legislation (wherein one side had their chance and failed, so it’s the new guys’ turn) is politicized, misleading and tragically over-simplistic. Economics is a varied and complex subject in which there are far more than two opposing sides, myriad ramifications from fiscal and monetary policies, and often there is no clear “winner” in many of its debates.

    As you should be familiar with from the software world, this does not mean that any proposed solution to a broken system is the correct one, and it also doesn’t mean that there is an easy way to distill the controversy down to a single bill, letter or sound bite. I encourage you to approach the issue with the same taste for skepticism, transparency and rational debate as one approaches features in a software project, while avoiding the easy (and all too human) traps of combative ignorance and willful chanting of the party line.

  7. Posted September 7, 2009 at 9:16 pm | Permalink

    Brilliant but probably pointless. You know the argument is getting religious when people attribute the failure of the system they advocate to it being not extreme enough. Always forgetting, of course, to look at any other system that may exist outside of the US borders.

  8. Posted September 7, 2009 at 10:19 pm | Permalink

    Brad,

    You suggested that by calling attention to the fact that the republicans aren’t being constructive, I’m not adding much. In a world where the fourth estate were doing its job, that might be true, but they’re not. So the marginal value is well above zero.

    Next, you imply that what the Republicans are doing is the exact same thing that the Democrats did while in the minority. This couldn’t be further from the truth. I’m not a fan of either party, but your assertion just doesn’t stand up to any scrutiny whatsoever. From wars of choice to massive deficit spending to warrantless wiretapping to dismantling of prudent regulation to expansion of Executive power to Supreme Court appointments, many progressives will ruefully tell you that the Democrats did little but roll over time and again, searching for a non-existant center. To suggest now, on the back of the last 8 years, that the Democrats were somehow obstructionist is baldly and willfully ignoring the record.

    You go on to note that the current system isn’t a free market, and you’re right! In fact, getting to a national market for insurance is something I’m supportive of. But here’s where we get down to the nub of the argument: you seem to suggest that if only we had a freer market that our health care problems would be solved. You don’t enumerate which problems you think that’d deal with, so it’s hard to actually test your assertion, but the implication is that if only the individual market were able to price goods more rationally, then it would do so more efficiently.

    This is the core of the libertarian fallacy when it comes to the provision of health care: modeling a service which is rife with asymmetric information issues and adverse selection in a way that assumes the exchange of a pure commodity. Sure, I might know my future needs for health care, but if I did, then I wouldn’t need insurance. More to the point, asking someone to insure me for those things would imply some sort of moral hazard. Today, it’d be called insurance fraud. Leaving that aside, though, it’s just laughable to begin the conversation from this starting point. What if I judge wrong? What if you’re my co-worker (on whom I depend for many tasks) and you judge wrong? You see, there’s a strong public good aspect to the provision of health services. We don’t have a CDC because the private market has ever done a good job of planning for, or even controlling, epidemics; not to mention creating incentives for the creation of herd immunity. It’s simple to prove to yourself that health care doesn’t — and can’t — fit the model of a market with perfect competition that always clears and in which everyone has adequate information. Even if you could, treating that as a pure market means it’s no longer insurance, and in that world, we simply don’t take care of our sick since they clearly should have known that they’d get sick and should have bought more care earlier, right?

    Your model doesn’t fit, nor is it sufficient to get us to a socially acceptable outcome. Either should be enough to doom it.

    But that’s not the worst of it. The really bad thing about your assertion that government intervention in the health market is responsible for any of the problems under discussion (although, again, you fail to state which problems) is that it simply ignores comparative data.

    We are the only industrialized country with this little intrusion into the health market by government, and yet we pay double the international average for outcomes which are at or slightly below average. Is there some particular aspect of the intrusion that makes our cost structure more “lumpy” and/or less amenable to a better equilibrium point? If so, you don’t identify such a cause. You can’t simply assert that the government is the problem without citing a mechanism, and you haven’t done that.

    I’m sorry, you’re not going to win me over now or in the future with arguments like this because they’re flat. They’re not animated by sufficient data or compelling theory which would both explain the current state sufficiently and prescribe a way out of the problem. The thread of an argument that you hinted at doesn’t meet the social goals of mainstream American society. So we’re nowhere if we ride that train…at least not until you throw some coal on the fire.

    For what it’s worth, I can see several intellectually honest libertarian-leaning arguments for how to fix the health care mess, but sadly you haven’t fielded any of them.

    Regards

  9. Mark
    Posted September 7, 2009 at 11:17 pm | Permalink

    I find the letter to be sarcastic, slightly arrogant, and condescending more than the stimulating and inspiring reads I used to find here (those were mostly about software and JavaScript too). This makes it a disappointing read, imho.

    For such a sharp & influential person in one arena, am surprised you thought that a rant drenched in condescending sarcasm was the best way to make your point.

  10. Bob Haugen
    Posted September 8, 2009 at 6:27 am | Permalink

    Alex, I love this! I found it because people are picking it up and forwarding it (I got it from a friend in Wisconsin). I think you made a valuable contribution to the debate, and the sarcasm was justified.

  11. Josh
    Posted September 8, 2009 at 9:47 am | Permalink

    Speaking as someone from outside the US with an interest on what goes on there, well said…

  12. Posted September 8, 2009 at 10:24 am | Permalink

    Alex,

    You seem to have mistaken my intentions entirely. I can clear it up fairly quickly for you, though.

    First, the bit about conservative vs. liberal ideologies influencing legislation was referring to current events in Congress, not the past eight years or any other time frame. I am claiming that the current supporters of proposed legislation are acting for special interests just as much as the current opponents are.

    Second, you assume that I am trying to deliver an argument for a better system, when I never attempted to do anything of the sort. I pointed out places where I thought your original letter made unreasonable assumptions and unsupportable claims of moral, legal or procedural superiority. No doubt there are many arguments to be advanced in favor of radically different systems, but I’m not offering any of them for your consideration.

    I appreciate that you just want to move the ball forward, so to speak, but consider that not everyone who engages you in debate is offering a full-fledged counter theory, and nor should they have to. I assume you went off onto the assumption of libertarian theories by investigating me, the person, rather than my written arguments against your letter here, on this site. It should be fairly clear that this is simply a flavor of the ad hominem fallacy.

    So, incidentally, I am only taking the place of your absent “fourth estate” and trying to ensure that your process and your conclusions will stand up to scrutiny. I too want to reach a better state of affairs with regard to health care in this country, but I also don’t want us to get there by stumbling through a misguided series of rants, raves and unsupportable proposals.

  13. Posted September 8, 2009 at 11:27 am | Permalink

    Hey Brad,

    Thanks for responding.

    I think I understand where you’re coming from, but alas, I still disagree ;-)

    I *do* absolutely agree that “special interests” are playing a large role on both sides of the aisle, but it’s not clear to me what “special interests” are on the side of the public option and regulating fairness into the system. Yes, the majority of American businesses are reeling under the weight of enormous year-on-year cost increases for health care. Both business and labor interests, then, are lobbying in favor of reforms. But what about that makes them special? The only companies not adversely affected are the ones in the business of health insurance. Definitionally, then, those interests aren’t “special”. Americans have long favored universal coverage without capricious and cruel insurance companies playing the part of middleman, but for decades reform in that direction has been delayed. Even if you can point to some “special interests” that are aligned with the majority view, they’ve been out-spent, out-maneuvered, and out-classed at every turn. The result has been that the legitimate interests of the majority of Americans have been under-represented. Consider this brief thought experiment: if “special interests” aligned with the majority view help to push through effective health reform (ignore for a moment how it’s achieved), would you be against that reform? Clearly, I’m appalled by the current process we’re using to settle this debate, but there are people with agency in the middle of it who can do the right thing for the country and stop threatening the filibuster against the majority’s view. Saying that special interests are involved in no way absolves those folks of their duty to their constituents and their country.

    Also, I didn’t investigate you. It’s sort of weird to assume I would or that I couldn’t disagree with your assertions strongly without doing so. It turns out that I just happen to know enough about the origins of the arguments you floated to know what tributary of thought they come from. There was no ad-hominem about it. Indeed, I was once a libertarian myself, so I have great sympathy for both the spirit in which the arguments are offered and the perspective that draws people to them. But I’ve found them ultimately wanting because they couldn’t explain the world I saw around me.

    Arguments that government intervention are to blame for our health care system problems simply don’t fit the evidence, even more egregiously then when points of comparison are so easy to find. You could (tersely) make a case that there’s some feature of our per-state regulatory system combined with federal distortions that makes our market unlike any others, rendering comparisons moot. But you didn’t go there; not that I’d accept the premise without seeing some data. If you had then we could have at least hashed it out.

    I’m afraid you tipped your hat, and I saw the hole in the top because I knew to look for it. You won’t be able to dismiss my perspective as ranting and raving quite so easily, then. You’ll have to bring data to convince me that I’m wrong. When you do, though, I promise that I’ll pay attention to it and weigh it in good faith and argue the points strongly but without personal attack.

    Regards

  14. Rob Koberg
    Posted September 9, 2009 at 2:34 pm | Permalink

    Alex, do you see innovation slowing, staying the same or increasing if there was a public option and inevitably single payer (maybe you don’t believe it will tend toward single payer?)? I can only see it decreasing. Save a few thousand now at the expense of untold numbers in the future…

  15. Posted September 9, 2009 at 3:17 pm | Permalink

    Rob,

    Innovation is a vector, not a unit measure. It has a magnitude and a direction, and it’s never a forgone conclusion that a large magnitude is a net positive. It’s easy to forget this. After all, most technologists have spent their careers working on one of the largest, most prolonged bouts of socially-beneficial innovation in history. It’s hard, then, to imagine that others use their creativity in ways that are explicitly, um, anti-social.

    Lets consider for a moment the most pervasive forms of innovation currently being researched, developed, and productized by the health care industry. Led by our horrendously inefficient insurance companies, we are the world leaders in health care cost growth. We’re nearly *twice* as good as everyone else in terms of extracting dollars for outcomes. That’s truly our legacy of innovation. We’re not only the best in the industrialized world at finding ways to deny care, we’re padding our lead, month by month. And it’s not like we’re carrying the world in terms of health care R&D. Other countries make critical advances at a similar clip as we do, but they can actually measure the effects of their improvements, so while we might have “more”, we don’t even have any (fine-grained) way to judge if more is actually better. And if the goal isn’t “better”, then what exactly are you arguing for?

    It’s distressing to me that you’re making a utilitarian argument about a moral issue. In fact, it’s just misdirection. Innovation isn’t some sort of reliable outcome of private industry, not that private industry would disappear in any way under single-payer. It’d just have to find other things to innovate on besides screwing patients. Most of the basic research into new drugs and medical procedures *still* comes from labs that are either all or in part funded with public money.

    Remember, though, that the market is currently starved for data. It can’t be efficient today because participants are actively working to deny it data. Seriously, just Google for “vioxx scandal”. Merck’s not alone, either. If you actually believe in efficient market theory (and by the sounds of it, you do), the you should absolutely support the comparative effectiveness research that’s part of the proposed legislation. Today, despite having a strong role in helping to determine if a drug or treatment will make you marginally better than you would be without it, the FDA has no responsibility to provide any information comparing treatments to generics or previous treatments for the same ailments.

    Put another way, we spend more than anyone else on things that (based on life-expectancy) simply aren’t working as well as what everyone else does. And we can’t even measure whether or not a new process or product will help the situation.

    You want technological progress? Then you’ll first need to legislate a measuring stick into existence and give participants incentives to work on improving outcomes. Both of those things are part-and-parcel of the proposed legislation, and the public option is key to helping to ensure that competition really has a chance to work in the face of the various (existing) market distortions.

    So let me then respond with a question: why are you against prudent and reasonable legislation that will provide transparency to markets, reduce asymmetric information problems, and help us determine whether innovation is being pursued for or against the public good; all the while dealing with a national crisis of conscience?

    Regards

  16. Rob Koberg
    Posted September 9, 2009 at 4:40 pm | Permalink

    Thanks for responding.

    However, I feel your argument on innovation lacking. First, the US is a lucrative market for medical innovation, true enough. This is also one of the main reasons there still is innovation in other countries — they can make money selling it in the states! People invest their money in innovative research basically making a bet there will be a big payday. Without this incentive, I think a good chunk of this money will dry up.

    It is distressing the relationship between the pharmaceutical and health industries. Why can’t I send in a blood sample and get the results over the internet? Do you know why we can’t do that?

    Then you are distressed that I introduce reality into what you believe is a moral action (why are we using your morality? Because Obama won by a few points in what should have been a landslide?). This is the major problem in the debate, I think. Those in favor of government healthcare feel they are acting on the only true moral footing. I argue that I believe innovation will be curtailed. I am sure you know your Hayek, so I won’t regurgitate, but there is plenty of history to back up my belief. If I am correct, then we would likely make a mistake of saving (improving? enhancing?) thousands now at the loss of who knows how many in the future.

    You talk about the nature of innovation, and I believe you to be someone who knows what they are talking about. Would you say medical/biotech innovation is in ascendancy or some other vector. (Perhaps fractal in the “I, Pencil” sense: http://www.econlib.org/library/Essays/rdPncl1.html )

    Regardless, if innovation stays the same (going along whatever vector), there will have to be rationing. Do you disagree? Should public insurance cover viagra? Data chip implants?

    Do you see only benefits or perhaps privacy concerns in centralizing your personal information so it is accessible up and down the hierarchy of bureaucracy.

    I couldn’t believe Obama could make it past his debate response to Jim Lehrer saying he would support a capital gains tax even when proven it moves less money into the coffers on the twisted rationale that it is more fair (makes no sense any way you slice it) — so what do I know…

    So, to your question: I am not.

  17. Rob Koberg
    Posted September 9, 2009 at 4:58 pm | Permalink

    Here:

    “It is distressing the relationship between the pharmaceutical and health industries.”

    I meant to add “with the government” to that sentence.

  18. Posted September 9, 2009 at 7:51 pm | Permalink

    Rob:

    Ok, we clearly need to boil this down a bit.

    The moral question is this: should we ration basic health care services based on ability to pay?

    If you think the answer is “yes”, then there’s not much to talk about. You’ll reject whatever solutions I prefer because we’ll have a fundamental disagreement about the terms of the debate.

    Just to be clear, though, if you answered “yes”, you’ve already lost the political argument by default. Rationing based on affordability was the operative system for thousands of years, and Americans have overwhelmingly supported steps away from it, first with OASDI, then with tax breaks for employer-provided insurance, and finally with Medicare and Medicaid. These programs are wildly popular for a reason: they work much better than the previous systems did and do much to reduce economic and personal insecurity. From a political perspective, Americans want to believe that they are a generous, caring people. We’re having this major public debate now because it’s becoming clear to many that our system doesn’t embody those values and we’re paying far too much for it regardless.

    If you said “yes” to the moral question, then you’ll probably want to stop reading here.

    Assuming you’re still with me, you raised some arguments that need to be deflated. The President’s speech tonight covered a lot of this ground, so before you continue, I urge you to read it.

    You asked why you have a difficult time conducting medical services over the internet. The short answer is HIPPA.

    Long answer is that HIPPA is a series of regulations which sets strict limits on how your health data can be used. The same restrictions are in place for electronically transmitting your data, requiring your personal approval for releasing any of it to anyone. You might be able to get some of your health data online (many integrated care systems like Kaiser offer this, including test results), but only after you sign the right paperwork and they can verify that you are who you say you are. Shockingly, perhaps, your privacy is a big concern for the medical industry. Not because they actually care per sae, but because they were regulated to care and the penalties for releasing personal medical data in an unauthorized way are severe.

    Also, please note that the sad fact is that we already ration care. Children born to poor mothers in this country face simply appalling rates of infant mortality, and that’s just for starters. And it’s not like we’re getting better outcomes for those who aren’t discriminated against. The research shows that more procedures don’t make for better health, but today we have a system entirely geared to doing more for those who can afford it (even if they don’t need it) in the mistaken assumption that by doing more we’ll do better. The real tragedy is that we do too much for some people and not enough for others and everyone suffers more as a result. It’s just heart-breaking when you think about the pain we’re inflicting on each other.

    The point of “innovation” isn’t to make a profit — although that’s a handy side-effect for those who live in systems that help reward that. No, the point is to advance social goals….and there are lots of different ways to get there. Markets are fantastic way of doing this when they’re appropriate as tools for allocating particular goods efficiently. But there are other ways of getting there, particularly for innovation; public prizes have proven effective in some areas, public funding of research has been shown to work time and again (see: the internet), and non-profit foundations do much of the good work that goes into research to for cures of debilitating diseases. It’s not a question of “government vs private enterprise”, it’s a question of “how do we get to a better outcome for more people”, with there being an agreed-upon floor of quality that no one’s care should be allowed to sink below. So the debate has 2 parts: where and how do we set that quality floor (universality), and how do we do better in the future for everyone (R&D, comparative research, etc.).

    Next, you didn’t address my point regarding differentiation and quality. You did, however, suggest that our outlandish spending on health care not only funds our R&D on it, but also funds the R&D for everyone else too. My first reaction is that we should tell them to get off our lawn! Under your theory, it’s only right for us to enact trade barriers against their drug companies. This, of course, is ridiculous.

    Even if I bought your premise, though, the outcome is still bunk. Imagine a market full of suckers…say in greater Outterinistan. It’s an incredibly rich country, lots of oil wealth once, but they parlayed that into a competitive, modern economy when the oil ran out. When it comes to health care, they’ll buy anything, just so long as you can patent it and prove that it’s better for them than a sugar pill, and they’ll buy LOTS of it. At exorbitant prices. They spend like they’ve still got oil! Better yet, even if there are generics on the market, you can just run ads and blanket the market with your product as “free samples” for doctors and such. It’s like they’ve never even heard of laws or regulations over there! No wonder big pharma spends more on advertising than R&D!

    You, sir, are an executive at a pharmaceutical firm, being pressured to return major profits to your shareholders. You’ll never do it in your home country because the local market for drugs has these terrible restrictions: first, you have to compete against generics for reals because the government supplies doctors and insurers with data about how effective a particular treatment is for any particular indication. Next, the government insurance plan buys in bulk, and they know it, so they keep ratcheting down your margin. But that’s alright, though, thanks to the generously funded public research institutions and universities, your drug development pipeline is full. Your investors might lose money, though…I mean, c’mon, investing isn’t supposed to be risky, is it? Anyway, you’ve got a promising new drug that came to second stage clinical trials an then tanked. It barely registered better than the placebo, not to mention the fingernail bleeding as a side effect. Not to worry though, you can just sell it in Outterinistan! Oh, sure, you’ll have to do the safety trials all over again, but that’s no biggie…the profits are all but in the bag!

    So, again, I challenge you: why, exactly, area you against giving the market the data it needs to function efficiently? An efficient market would price this product at or below the generic, allocating future capital resources not to this company (which is turning out clunker drugs) but to firms which are working on things that are actually better, or do the same job for a whole lot less, or deliver a long-term solution.

    You asked if I thought that medical innovation was improving, and the only honest answer that anyone has today is “who knows?”. As a result, we pay the wrong amount, allocating capital not to health, but to the concentration of wealth by those who are most able to dupe and screw you, the customer. That’s not how markets are supposed to work. I hate to harp on this point, but it’s the core of the argument about what we pay for the things that are being delivered.

    Next, you simply fail to distinguish between elective and basic care. What does viagra have to do with folks who can’t see a doctor for their kid’s strep throat? Who are scared to death that they might get hurt on the job? It’s non-sequitur. As I’ve said before, I have no problems with elective care being governed by market forces…none at all. It’s only when you’re having that heart attack or seizure that you’re going to be unlikely to be able to “shop around”.

    I really can’t respond to the rest of your message since I don’t have time right now, but suffice to say, you’re throwing arguments up without considering the relative merits. Are all taxes bad? What’s the difference between efficiency and access by unwanted parties? There are always risks in any system. The question is what’s better, not what’s absolutely perfect.

    Regards

  19. Rob Koberg
    Posted September 10, 2009 at 7:06 am | Permalink

    I did see the speech last night. The exchange idea sounds good, but why no talk about opening the market across state lines? Wouldn’t the competition be good at driving down costs? I also tend to think tort reform is a good idea (I doubt that gets in, though)

    Yes, we have rationing now. So it seems you agree there will be rationing. I assume you agree that the health services will continue to cost money. Wouldn’t it be in the government’s and society’s best interest to treat those who can fund the system first and foremost so they can get back out there and feed the beast?

    BTW, viagra can be defined as a medical necessity and covered by the current government program. As we get older, I am sure we will agree :)

    On the services over the internet: that wasn’t my point. My point is to simplify access. Why can’t I go into Wallmart or Safeway and get a broken bone set? Why do I have to go to my doctor to get a slip of paper to take to an approved blood letting facility and then wait a couple of weeks, then go back to the doctor so he can tell me (again) I need to keep taking Crestor and I probably will for the rest of my life. BTW, that was in NH. In CA, under Kaiser, they wouldn’t even send me in for blood tests because there wasn’t an apparent need even though I said my younger brother is taking cholesterol meds and my dad died of a heart attack in his early 40s (I am in my early 40s). My NH doctor, who is very actively pushing for government health care (even though he sees many Canadians), was shocked that Kaiser would not pony up for the drug tests. Back in Cali now, but I at least I got the scripts for about a year. I know the system is fucked. I just don’t trust the government to unfuck it.

  20. Posted September 10, 2009 at 8:53 am | Permalink

    Rob:

    I can only answer quickly. First, no idea why we’re not creating national markets. Seems dumb to me, OTOH, concentration seems the likely outcome there too unless regulation in any of these markets gets much tougher. Next, the public option *is* competition with private monopoly providers. That’s the whole point.

    As to rationing, for basic services, I’ll only agree that we *do* ration. This is one of the pressing problems we need to fix. For elective work, you can call it rationing, but those of us who believe in markets call it “pricing”. But again, that’s a question about elective care, not basic care. You seem to keep failing to differentiate for reasons I don’t understand.

    Lastly, “simplifying access” isn’t an absolute. Simplification at what cost? It sounds like your problem is competence, not simplicity. Lets not confuse those things.

    Regards

  21. Rob Koberg
    Posted September 10, 2009 at 11:48 am | Permalink

    No, my problem is not simplicity or competence. It is with the current government interference that does not allow the market to correct itself (I thought that was obvious). There are many things where you don’t need a full-on doctor. It has a lot to do with the companies large enough protecting themselves and influencing the laws to restrict the playing field, similar to what is happening in the current plan.

  22. Posted September 10, 2009 at 4:21 pm | Permalink

    Rob:

    I’ll join your trust-busting initiative in a heartbeat. Where do I sign up for Americans Against Insurance Monopolies and Oligopolies (AAIMO)?

    Regards

  23. Rob Koberg
    Posted September 10, 2009 at 5:26 pm | Permalink

    welcome back :)

    http://www.lp.org/

  24. Posted September 11, 2009 at 10:37 am | Permalink

    Sounds like you need to spend more time there. I just read through the party planks (here: http://www.lp.org/platform). Under “Monopolies and Corporations”, no mention is made of strong enforcement of ant-trust legislation, no mention is made of the (obvious, should you bother to look around) effects of non-rational choices by fully independent actors which may cause markets to function sub-optimally, and no useful policy is articulated to deal with the inevitable concentration of power (and, subsequent abuse of it) by over-sized firms in any particular area.

    And here I was hoping the Libertarian Party had come to its senses while I wasn’t looking. Sigh.

    Regards

  25. Rob Koberg
    Posted September 12, 2009 at 5:01 am | Permalink

    hmmm… Didn’t see how you made the jump to anti-trust. I assumed you were referring to the collusion of government and big business, perhaps recognizing it as a new, progressive kind of monopoly.

  26. Posted September 12, 2009 at 9:41 am | Permalink

    Rob:

    Anti-trust is an essential component of any functioning market, just like prudent regulation to ensure that information is available and that asymmetric problems (such as “is this food safe?”) are addressed sanely.

    I’m with you that the crony capitalism that we’ve seen flourish for the last, oh, decade or so is troubling to anyone who thinks that good markets are good for everyone, but you (and the libertarian party) seem to advocate for something different.

    As my wife said to me recently “don’t they understand that the rules make the game?” I think that really hits the core of it: when I was a libertarian, I thought the world would right itself if there weren’t any rules (save property rights)…that the “magic of markets” and the invisible hand would right all wrongs. As I learned more — particularly about economics — I realized that all of this was based on “the efficient market hypothesis”, which makes for great theories, but has melted down time and time again in the real world. Unregulated markets are unstable and cause enormous damage when they fall over. Something else is at work, and that something is irrationality.

    It was only after I spent more time considering the (in retrospect, obvious) distortions in nearly all markets around me, and my own lack of rationality in decision making, that I had to throw out the theory and look for something else. Libertarians advocate for a game without rules, more or less, and a game without rules is rigged by default. I want no part of rigged games, ’cause eventually everyone loses.

    Regards

  27. Mr Jellyneck
    Posted September 12, 2009 at 6:53 pm | Permalink

    for a logical guy, what a foolish idea

  28. Rob Koberg
    Posted September 14, 2009 at 11:56 am | Permalink

    Good article in the NYTimes by Tyler Cowen:

    http://www.nytimes.com/2009/09/13/business/economy/13econ.html?_r=1

  29. Matthew
    Posted November 8, 2009 at 10:33 am | Permalink

    I understand that sarcasm comes from the frustration, but when people against health coverage for all in the US say things like this:

    “People such as scientist Stephen Hawking wouldn’t have a chance in the UK, where the National Health Service would say the life of this brilliant man, because of his physical handicaps, is essentially worthless.” – Investor’s Business Daily

    They really do a wonderful job of making themselves non-credible.

    I haven’t seen any argument where anyone has so quickly and comically shot themselves in the foot and not only demonstrated their own ignorance, but done so in a way which is down right comical. Is it really possible to fail at making an argument quite so spectacularly?

    (If you don’t realise why Investor’s Business Daily has spectacularly failed have a look at this: http://www.telegraph.co.uk/news/worldnews/northamerica/usa/6017878/Stephen-Hawking-I-would-not-be-alive-without-the-NHS.html

    Or google ‘Stephen Hawking NHS’.)