Open Thread #141

Why would anyone agree to be in a show like that, playing a Western leech who gets beat up by Korean guys, who are of course paragons of morality?

My guess is the pussy. He’s 24, right?

[to baduk] What is it in your head that makes you think when the US gov’t has a debt as great as its GDP, it should spend more money? History has never shown a country successfully spending its way out of massive debt America. You’re just encouraging an enlargement of the ridiculous behavior that got us in this mess. Frugality is a virtue that helped make our country prosperous (ask the Chinese).

Jim — First thing you need to know about our friend baduk is that he is batshit crazy. I don’t know if he’s posting from an asylum or what, but clearly baduk is disconnected from the reality the rest of us live in. Second thing is, although he thinks he’s got an axe to grind against both Communists and fools (“Fools die”), in relation to American politics baduk espouses the policies of both Communists and fools. I guess it’s just Asian communists he mistrusts. The American group he seems to really dig.

It is a mystery to me why, in the face of all the evidence accumulated from decades of market-based economics and the abundance thereby produced, liberals insist that markets cannot work for health care. How can they ignore the obvious causation: As government and other third-party payers have assumed an increasing share of health-care purchases, costs have mushroomed. So the solution is for government to take over all purchases? No way, José.

Time was when if you needed to see a doctor, you paid for it with cash from your pocket. Now all the cash comes from someone else’s pocket. There is a distortion in the health-care market caused by all the government intervention.

When have price controls ever worked? Does anyone remember Richard Nixon’s quixotic Whip Inflation Now campaign?

If all the profits of all of America’s health insurers were confiscated, instantly forcing such companies into a Utopian not-for-profit condition, how much money would we get? Enough to finance America’s health care for 48 hours (i.e., the margin seems to be much less than 1%). Are we to believe the government will be more efficient? Is a margin of less than 1% evil? If so, Steve Jobs should be summarily executed.

Anyway, since there are dipshits in this world who would point to the California electricity market “deregulation” disaster as a reason not to get the government out of the health care business altogether, but instead to remake the market, check out this 2003 paper on California’s energy deregulation and ask yourself — in what way is the Obamacare plan at all dissimilar from how California “deregulated” (i.e., reordered) its energy market:

The reasons why deregulation failed so dramatically in California are complex. The most important flaw of California’s deregulated electricity market was that the market was more re-regulated than deregulated. What Paul Joskow of MIT has referred to as “…the most complicated electricity market ever created…” was a mismatched combination of a deregulated wholesale market with price controls in the retail market for up to 4 years (Joskow, 2001, p. 1). If consumers are insulated from wholesale market prices, they will not adjust their use of energy (e.g. through conservation), and this inevitably results in supply shortages. When demand is very inelastic and supply constrained, wholesale prices soar, giving generators the opportunity to exercise market power by withholding capacity. This is believed to have happened in California (Joskow and Kahn, 2001a, b; Hall, 2002).

[...]

An important economic aspect that is often neglected when formulating energy policy is subsidies to energy production and consumption. Historically, the rationale for the introduction of energy subsidies has been to stimulate economic growth and to enhance the security of energy supply (de Moore, 2001). This goal was mainly addressed through reduced electricity retail prices for industrial customers to boost industrial development, or
through various production incentives for electricity generators.

Undoubtedly, there can be some benefits for society due to energy subsidization. However, one should not overlook possible negative side effects. In order to evaluate the impact of an energy subsidy one has to balance the positive and negative implications to the welfare of the society. In many cases, the often unintended, negative side effects are higher than the benefits. Myers (1998) defines subsidies with an overall adverse effect on the society as ‘‘perverse’’. He estimated annual global energy subsidies to be $145 billion, of which $110 billion are perverse subsidies (Myers, 1998).

Let’s see… Price controls? Check. Insulation of consumers of health care services from the cost of health care services, with subsidies for “poor” families? Check. Increase in use due to greater availability? Check. Decrease in supply due to price controls chasing doctors out of the market? Check. It’s a veritable recipe for disaster — almost an exact repeat of the California electricity debacle.

The unavoidable fact is that where markets are free and open to competition without much government intervention, prices decline due to abundance. Time and time again, where the government intervenes in the market, it’s efficiency that declines leading to an increase in costs.

How deep into the market are the Feds now, and how much are we spending? When Medicare was introduced in 1965, the Congressional Budget Office projections were for $3 billion in costs in 1966, rising to $12 billion by 1990. But oops — Medicare expenditure in 1990 was $107 billion, nine times greater than promised. Now we’re spending $500 billion on Medicare (plus $300 billion for Medicaid plus another $300 billion in other Federal health-care spending, for a projected total of $1.1 trillion in 2010). Most other government programs have had the same cost explosions after they’re passed. How on Earth can we trust those people with their cost estimates for this new expanded boondoggle?

By the way, that Federal money accounts for 40% of all health-care spending in America (total $2.5 trillion medical-services market in 2010), but they only cover about 22% of the population (veterans, Federal employees, old people, and the poor), and push the cost of the uninsured poor onto the fee-paying insured. That doesn’t bode well for the future efficiencies claimed from total nationalization.

I do not completely disagree with baduk in all respects, even though he is batshit crazy.

High school graduates can do much of the work of a general practitioner physician, and in the military they do. In the Navy, they’re called Hospital Corpsmen. (Note to Pres. Obama: the p is silent.) At the entry level, an HM does the work of a medical assistant, but at the later stages of their career (E-5 and above, but usually these guys are Chiefs) an HM can be detailed as an Independent Duty Corpsman practicing medicine without a medical license at sea or in remote shore locations, or with the Marine Corps or SEALs.

None of this should be taken to mean that HMs are not trained or supervised — an Independent Duty Corpsman would have gone through a 14-week “A” school, a follow-on subspecialty course (“C” school) of many weeks, and then an accession course for the IDC assignment. And they are required, like doctors, to undertake additional professional training over the course of their career to remain eligible to work.

I believe baduk’s point is that the American Medical Association (and, by extension, each state medical licensing board) acts against the interest of patients when it promotes cartel behavior such as recommended office visit fees (price maintenance) and restricts market entry. How can anyone disagree with that? That’s free market economics 101. The AMA does so by getting state legislatures and Federal agencies to adopt its line — i.e., by lobbying them to do what the AMA wants.

The example of Crassus may be applicable as well — I don’t know, because I don’t know my Roman history so intimately. Did the Roman government prevent the organization of competing fire brigades, either for-profit or all-volunteer? If so, it would be similar to the way the American Medical Association has mobilized political power to prevent competition for its members.

A government which does not interfere in markets because it does not have the power to interfere in markets would not be corruptible by organizations such as the American Medical Association.