Thursday, September 2, 2010

Healthcare if Different

In the comments section of this blog healthcare has been a much debated topic. Austin Frakt writes why healthcare is different, and why the solution can't simply be increased individual choice.

It's a complex problem and simply "liberating" the market won't work on its own.

15 comments:

Colin said...

Interestingly, Frakt states:

Get the government out of the way. Give vouchers to Medicare and Medicaid beneficiaries. Let people shop for the best deal on the unfettered market. And, moreover, reduce first-dollar, third-party payment by encouraging high-deductible plans.

About now you’re thinking I disagree with the notions I just expressed. Actually I don’t. They have merit, which I recognize, accept, and support.


This would seem to put Frakt squarely at odds with Obamacare and other Democrat-endorsed methods of reforming our health care system.

Frakt's only criticism is that these measures don't solve all of the problems and that more steps are needed, but at least he acknowledges they are a good first step.

However, I take issue with Frakt a bit here:

The optimal allocation of risk across these entities is not likely to be the same for the young and healthy as for the old and sick. That might be OK for buying a cell phone–overpaying for or under-utilizing cell phones won’t do you much harm–but it isn’t for buying health care. Why? Because health care is different. A mistake costs far more (your life) and you really do know far less about it than the salesman or practitioner, particularly when you’re very sick.

First off, the notion that a health care mistake will cost you your life is extremely overwrought. The overwhelming majority of health care decisions are not matters of life and death. They are far more mundane -- an ear infection, sprained ankle, athsma, etc.

Second, this isn't necessarily a case against markets. Indeed, one of their virtues is that they are great at creating information and attempting to overcome information asymmetries. Take cars for example. I know very little about cars. I can't tell you much more about how an internal combustion engine works other than gas enters a chamber, an explosion occurs, a piston moves and the wheels turn. I couldn't identify its parts. However, when shopping for a car I can easily find lots of information that help overcome the asymmetries involved. The car brand itself will tell me some information. I can consult magazines in which experts rate different cars. If the car is used I can take it to a mechanic and get his opinion on its condition.

We already see this to a somewhat similar extent in health care. People get second opinions all the time, especially in matters of life and death. A coworker of mine has a wife struggling with cancer and he says the internet has given him access to reams of information about her condition. There are even websites that allow people to rate their doctors. All this in a health care system that is far from a fully liberalized market.

Furthermore, if we don't trust the patient to make a decision, who should we trust? Should we give the doctor carte blanche to do whatever procedure he sees fit (a sure recipe for running up costs)? Should a government bureaucrat decide what health care is appropriate? Should a template be used in which different procedures are authorized for different maladies (even though people can respond differently?) While individual choice may be problematic in certain regards, what are the risk-free alternatives?

Lastly, we shouldn't view this as a theoretical debate. Free market health care works when it is tried, with notable examples here, here, and here.

I also find this article from The Atlantic to be indispensable.

Colin said...

Interestingly, Frakt states:

Get the government out of the way. Give vouchers to Medicare and Medicaid beneficiaries. Let people shop for the best deal on the unfettered market. And, moreover, reduce first-dollar, third-party payment by encouraging high-deductible plans.

About now you’re thinking I disagree with the notions I just expressed. Actually I don’t. They have merit, which I recognize, accept, and support.


This would seem to put Frakt squarely at odds with Obamacare and other Democrat-endorsed methods of reforming our health care system.

Frakt's only criticism is that these measures don't solve all of the problems and that more steps are needed, but at least he acknowledges they are a good first step.

However, I take issue with Frakt a bit here:

The optimal allocation of risk across these entities is not likely to be the same for the young and healthy as for the old and sick. That might be OK for buying a cell phone–overpaying for or under-utilizing cell phones won’t do you much harm–but it isn’t for buying health care. Why? Because health care is different. A mistake costs far more (your life) and you really do know far less about it than the salesman or practitioner, particularly when you’re very sick.

First off, the notion that a health care mistake will cost you your life is extremely overwrought. The overwhelming majority of health care decisions are not matters of life and death. They are far more mundane -- an ear infection, sprained ankle, athsma, etc.

Second, this isn't necessarily a case against markets. Indeed, one of their virtues is that they are great at creating information and attempting to overcome information asymmetries. Take cars for example. I know very little about cars. I can't tell you much more about how an internal combustion engine works other than gas enters a chamber, an explosion occurs, a piston moves and the wheels turn. I couldn't identify its parts. However, when shopping for a car I can easily find lots of information that help overcome the asymmetries involved. The car brand itself will tell me some information. I can consult magazines in which experts rate different cars. If the car is used I can take it to a mechanic and get his opinion on its condition.

We already see this to a somewhat similar extent in health care. People get second opinions all the time, especially in matters of life and death. A coworker of mine has a wife struggling with cancer and he says the internet has given him access to reams of information about her condition. There are even websites that allow people to rate their doctors. All this in a health care system that is far from a fully liberalized market.

Furthermore, if we don't trust the patient to make a decision, who should we trust? Should we give the doctor carte blanche to do whatever procedure he sees fit (a sure recipe for running up costs)? Should a government bureaucrat decide what health care is appropriate? Should a template be used in which different procedures are authorized for different maladies (even though people can respond differently)? While individual choice may be problematic in certain regards, what are the risk-free alternatives?

Lastly, we shouldn't view this as a theoretical debate. Free market health care works when it is tried, with notable examples here, here, and here.

I also find this article from The Atlantic to be indispensable.

Colin said...

Interestingly, Frakt states:

Get the government out of the way. Give vouchers to Medicare and Medicaid beneficiaries. Let people shop for the best deal on the unfettered market. And, moreover, reduce first-dollar, third-party payment by encouraging high-deductible plans.

About now you’re thinking I disagree with the notions I just expressed. Actually I don’t. They have merit, which I recognize, accept, and support.


This would seem to put Frakt squarely at odds with Obamacare and other Democrat-endorsed methods of reforming our health care system.

Frakt's only criticism is that these measures don't solve all of the problems and that more steps are needed, but at least he acknowledges they are a good first step.

However, I take issue with Frakt a bit here:

The optimal allocation of risk across these entities is not likely to be the same for the young and healthy as for the old and sick. That might be OK for buying a cell phone–overpaying for or under-utilizing cell phones won’t do you much harm–but it isn’t for buying health care. Why? Because health care is different. A mistake costs far more (your life) and you really do know far less about it than the salesman or practitioner, particularly when you’re very sick.

First off, the notion that a health care mistake will cost you your life is extremely overwrought. The overwhelming majority of health care decisions are not matters of life and death. They are far more mundane -- an ear infection, sprained ankle, athsma, etc.

Second, this isn't necessarily a case against markets. Indeed, one of their virtues is that they are great at creating information and attempting to overcome information asymmetries. Take cars for example. I know very little about cars. I can't tell you much more about how an internal combustion engine works other than gas enters a chamber, an explosion occurs, a piston moves and the wheels turn. I couldn't identify its parts. However, when shopping for a car I can easily find lots of information that help overcome the asymmetries involved. The car brand itself will tell me some information. I can consult magazines in which experts rate different cars. If the car is used I can take it to a mechanic and get his opinion on its condition.

We already see this to a somewhat similar extent in health care. People get second opinions all the time, especially in matters of life and death. A coworker of mine has a wife struggling with cancer and he says the internet has given him access to reams of information about her condition. There are even websites that allow people to rate their doctors. All this in a health care system that is far from a fully liberalized market.

Furthermore, if we don't trust the patient to make a decision, who should we trust? Should we give the doctor carte blanche to do whatever procedure he sees fit (a sure recipe for running up costs)? Should a government bureaucrat decide what health care is appropriate? Should a template be used in which different procedures are authorized for different maladies (even though people can respond differently)? While individual choice may be problematic in certain regards, what are the risk-free alternatives?

Lastly, we shouldn't view this as a theoretical debate. Free market health care works when it is tried, with notable examples here, here, and here.

I also find this article from The Atlantic to be indispensable.

Colin said...

Interestingly, Frakt states:

Get the government out of the way. Give vouchers to Medicare and Medicaid beneficiaries. Let people shop for the best deal on the unfettered market. And, moreover, reduce first-dollar, third-party payment by encouraging high-deductible plans.

About now you’re thinking I disagree with the notions I just expressed. Actually I don’t. They have merit, which I recognize, accept, and support.


This would seem to put Frakt squarely at odds with Obamacare and other Democrat-endorsed methods of reforming our health care system.

Frakt's only criticism is that these measures don't solve all of the problems and that more steps are needed, but at least he acknowledges they are a good first step.

However, I take issue with Frakt a bit here:

The optimal allocation of risk across these entities is not likely to be the same for the young and healthy as for the old and sick. That might be OK for buying a cell phone–overpaying for or under-utilizing cell phones won’t do you much harm–but it isn’t for buying health care. Why? Because health care is different. A mistake costs far more (your life) and you really do know far less about it than the salesman or practitioner, particularly when you’re very sick.

First off, the notion that a health care mistake will cost you your life is extremely overwrought. The overwhelming majority of health care decisions are not matters of life and death. They are far more mundane -- an ear infection, sprained ankle, athsma, etc.

Second, this isn't necessarily a case against markets. Indeed, one of their virtues is that they are great at creating information and attempting to overcome information asymmetries. Take cars for example. I know very little about cars. I can't tell you much more about how an internal combustion engine works other than gas enters a chamber, an explosion occurs, a piston moves and the wheels turn. I couldn't identify its parts. However, when shopping for a car I can easily find lots of information that help overcome the asymmetries involved. The car brand itself will tell me some information. I can consult magazines in which experts rate different cars. If the car is used I can take it to a mechanic and get his opinion on its condition.

We already see this to a somewhat similar extent in health care. People get second opinions all the time, especially in matters of life and death. A coworker of mine has a wife struggling with cancer and he says the internet has given him access to reams of information about her condition. There are even websites that allow people to rate their doctors. All this in a health care system that is far from a fully liberalized market.

Furthermore, if we don't trust the patient to make a decision, who should we trust? Should we give the doctor carte blanche to do whatever procedure he sees fit (a sure recipe for running up costs)? Should a government bureaucrat decide what health care is appropriate? Should a template be used in which different procedures are authorized for different maladies (even though people can respond differently)? While individual choice may be problematic in certain regards, what are the risk-free alternatives?

Lastly, we shouldn't view this as a theoretical debate. Free market health care works when it is tried, with notable examples here, here, and here.

I also find this article from The Atlantic to be indispensable.

Colin said...

Interestingly, Frakt states:

Get the government out of the way. Give vouchers to Medicare and Medicaid beneficiaries. Let people shop for the best deal on the unfettered market. And, moreover, reduce first-dollar, third-party payment by encouraging high-deductible plans.

About now you’re thinking I disagree with the notions I just expressed. Actually I don’t. They have merit, which I recognize, accept, and support.


This would seem to put Frakt squarely at odds with Obamacare and other Democrat-endorsed methods of reforming our health care system.

Frakt's only criticism is that these measures don't solve all of the problems and that more steps are needed, but at least he acknowledges they are a good first step.

However, I take issue with Frakt a bit here:

The optimal allocation of risk across these entities is not likely to be the same for the young and healthy as for the old and sick. That might be OK for buying a cell phone–overpaying for or under-utilizing cell phones won’t do you much harm–but it isn’t for buying health care. Why? Because health care is different. A mistake costs far more (your life) and you really do know far less about it than the salesman or practitioner, particularly when you’re very sick.

First off, the notion that a health care mistake will cost you your life is extremely overwrought. The overwhelming majority of health care decisions are not matters of life and death. They are far more mundane -- an ear infection, sprained ankle, athsma, etc.

Second, this isn't necessarily a case against markets. Indeed, one of their virtues is that they are great at creating information and attempting to overcome information asymmetries. Take cars for example. I know very little about cars. I can't tell you much more about how an internal combustion engine works other than gas enters a chamber, an explosion occurs, a piston moves and the wheels turn. I couldn't identify its parts. However, when shopping for a car I can easily find lots of information that help overcome the asymmetries involved. The car brand itself will tell me some information. I can consult magazines in which experts rate different cars. If the car is used I can take it to a mechanic and get his opinion on its condition.

We already see this to a somewhat similar extent in health care. People get second opinions all the time, especially in matters of life and death. A coworker of mine has a wife struggling with cancer and he says the internet has given him access to reams of information about her condition. There are even websites that allow people to rate their doctors. All this in a health care system that is far from a fully liberalized market.

Furthermore, if we don't trust the patient to make a decision, who should we trust? Should we give the doctor carte blanche to do whatever procedure he sees fit (a sure recipe for running up costs)? Should a government bureaucrat decide what health care is appropriate? Should a template be used in which different procedures are authorized for different maladies (even though people can respond differently)? While individual choice may be problematic in certain regards, what are the risk-free alternatives?

Lastly, we shouldn't view this as a theoretical debate. Free market health care works when it is tried, with notable examples here, here, and here.

I also find this article from The Atlantic to be indispensable.

Colin said...

Interestingly, Frakt states:

Get the government out of the way. Give vouchers to Medicare and Medicaid beneficiaries. Let people shop for the best deal on the unfettered market. And, moreover, reduce first-dollar, third-party payment by encouraging high-deductible plans.

About now you’re thinking I disagree with the notions I just expressed. Actually I don’t. They have merit, which I recognize, accept, and support.


This would seem to put Frakt squarely at odds with Obamacare and other Democrat-endorsed methods of reforming our health care system.

Frakt's only criticism is that these measures don't solve all of the problems and that more steps are needed, but at least he acknowledges they are a good first step.

However, I take issue with Frakt a bit here:

The optimal allocation of risk across these entities is not likely to be the same for the young and healthy as for the old and sick. That might be OK for buying a cell phone–overpaying for or under-utilizing cell phones won’t do you much harm–but it isn’t for buying health care. Why? Because health care is different. A mistake costs far more (your life) and you really do know far less about it than the salesman or practitioner, particularly when you’re very sick.

First off, the notion that a health care mistake will cost you your life is extremely overwrought. The overwhelming majority of health care decisions are not matters of life and death. They are far more mundane -- an ear infection, sprained ankle, athsma, etc.

Second, this isn't necessarily a case against markets. Indeed, one of their virtues is that they are great at creating information and attempting to overcome information asymmetries. Take cars for example. I know very little about cars. I can't tell you much more about how an internal combustion engine works other than gas enters a chamber, an explosion occurs, a piston moves and the wheels turn. I couldn't identify its parts. However, when shopping for a car I can easily find lots of information that help overcome the asymmetries involved. The car brand itself will tell me some information. I can consult magazines in which experts rate different cars. If the car is used I can take it to a mechanic and get his opinion on its condition.

We already see this to a somewhat similar extent in health care. People get second opinions all the time, especially in matters of life and death. A coworker of mine has a wife struggling with cancer and he says the internet has given him access to reams of information about her condition. There are even websites that allow people to rate their doctors. All this in a health care system that is far from a fully liberalized market.

Furthermore, if we don't trust the patient to make a decision, who should we trust? Should we give the doctor carte blanche to do whatever procedure he sees fit (a sure recipe for running up costs)? Should a government bureaucrat decide what health care is appropriate? Should a template be used in which different procedures are authorized for different maladies (even though people can respond differently?) While individual choice may be problematic in certain regards, what are the risk-free alternatives?

Lastly, we shouldn't view this as a theoretical debate. Free market health care works when it is tried, with notable examples here, here, and here.

I also find this article from The Atlantic to be indispensable.

Colin said...

Interestingly, Frakt states:

Get the government out of the way. Give vouchers to Medicare and Medicaid beneficiaries. Let people shop for the best deal on the unfettered market. And, moreover, reduce first-dollar, third-party payment by encouraging high-deductible plans.

About now you’re thinking I disagree with the notions I just expressed. Actually I don’t. They have merit, which I recognize, accept, and support.


This would seem to put Frakt squarely at odds with Obamacare and other Democrat-endorsed methods of reforming our health care system.

Frakt's only criticism is that these measures don't solve all of the problems and that more steps are needed, but at least he acknowledges they are a good first step.

However, I take issue with Frakt a bit here:

The optimal allocation of risk across these entities is not likely to be the same for the young and healthy as for the old and sick. That might be OK for buying a cell phone–overpaying for or under-utilizing cell phones won’t do you much harm–but it isn’t for buying health care. Why? Because health care is different. A mistake costs far more (your life) and you really do know far less about it than the salesman or practitioner, particularly when you’re very sick.

First off, the notion that a health care mistake will cost you your life is extremely overwrought. The overwhelming majority of health care decisions are not matters of life and death. They are far more mundane -- an ear infection, sprained ankle, athsma, etc.

Second, this isn't necessarily a case against markets. Indeed, one of their virtues is that they are great at creating information and attempting to overcome information asymmetries. Take cars for example. I know very little about cars. I can't tell you much more about how an internal combustion engine works other than gas enters a chamber, an explosion occurs, a piston moves and the wheels turn. I couldn't identify its parts. However, when shopping for a car I can easily find lots of information that help overcome the asymmetries involved. The car brand itself will tell me some information. I can consult magazines in which experts rate different cars. If the car is used I can take it to a mechanic and get his opinion on its condition.

We already see this to a somewhat similar extent in health care. People get second opinions all the time, especially in matters of life and death. A coworker of mine has a wife struggling with cancer and he says the internet has given him access to reams of information about her condition. There are even websites that allow people to rate their doctors. All this in a health care system that is far from a fully liberalized market.

Furthermore, if we don't trust the patient to make a decision, who should we trust? Should we give the doctor carte blanche to do whatever procedure he sees fit (a sure recipe for running up costs)? Should a government bureaucrat decide what health care is appropriate? Should a template be used in which different procedures are authorized for different maladies (even though people can respond differently)? While individual choice may be problematic in certain regards, what are the risk-free alternatives?

Colin said...
This comment has been removed by the author.
Colin said...

Interestingly, Frakt states:

Get the government out of the way. Give vouchers to Medicare and Medicaid beneficiaries. Let people shop for the best deal on the unfettered market. And, moreover, reduce first-dollar, third-party payment by encouraging high-deductible plans.

About now you’re thinking I disagree with the notions I just expressed. Actually I don’t. They have merit, which I recognize, accept, and support.


This would seem to put Frakt squarely at odds with Obamacare and other Democrat-endorsed methods of reforming our health care system.

Frakt's only criticism is that these measures don't solve all of the problems and that more steps are needed, but at least he acknowledges they are a good first step.

However, I take issue with Frakt a bit here:

The optimal allocation of risk across these entities is not likely to be the same for the young and healthy as for the old and sick. That might be OK for buying a cell phone–overpaying for or under-utilizing cell phones won’t do you much harm–but it isn’t for buying health care. Why? Because health care is different. A mistake costs far more (your life) and you really do know far less about it than the salesman or practitioner, particularly when you’re very sick.

First off, the notion that a health care mistake will cost you your life is extremely overwrought. The overwhelming majority of health care decisions are not matters of life and death. They are far more mundane -- an ear infection, sprained ankle, athsma, etc.

Colin said...
This comment has been removed by the author.
Colin said...
This comment has been removed by the author.
Colin said...
This comment has been removed by the author.
Colin said...
This comment has been removed by the author.
Colin said...

Second, this isn't necessarily a case against markets. Indeed, one of their virtues is that they are great at creating information and attempting to overcome information asymmetries. Take cars for example. I know very little about cars. I can't tell you much more about how an internal combustion engine works other than gas enters a chamber, an explosion occurs, a piston moves and the wheels turn. I couldn't identify its parts. However, when shopping for a car I can easily find lots of information that help overcome the asymmetries involved. The car brand itself will tell me some information. I can consult magazines in which experts rate different cars. If the car is used I can take it to a mechanic and get his opinion on its condition.

We already see this to a somewhat similar extent in health care. People get second opinions all the time, especially in matters of life and death. A coworker of mine has a wife struggling with cancer and he says the internet has given him access to reams of information about her condition. There are even websites (www.ratemds.com, drscore.com, vitals.com) that allow people to rate their doctors. All this in a health care system that is far from a fully liberalized market.

Furthermore, if we don't trust the patient to make a decision, who should we trust? Should we give the doctor carte blanche to do whatever procedure he sees fit (a sure recipe for running up costs)? Should a government bureaucrat decide what health care is appropriate? Should a template be used in which different procedures are authorized for different maladies (even though people can respond differently?) While individual choice may be problematic in certain regards, what are the risk-free alternatives?

Colin said...

Lastly, we shouldn't view this as a theoretical debate. Free market health care works when it is tried, with notable examples here:

http://www.salon.com/news/feature/2009/09/03/india/index.html

http://www.pbs.org/newshour/updates/health/july-dec09/eye_09-02.html

http://online.wsj.com/article/SB125875892887958111.html?mod=WSJ_hps_MIDDLEThirdNews"

I also find this article from The Atlantic to be indispensable:

http://www.theatlantic.com/magazine/archive/2009/09/how-american-health-care-killed-my-father/7617