So, one of the things I thought about as I was siting in my car seat, either watching barriers shoot (by far to close) or stuck in traffic, was the American health care system.
In post five, I said health care is a real problem in the US and needs a solution. A gave a solution, but it was so cursory as to be nearly comic. (Like a three step process to getting the moon: 1. Build rocket, 2. Load up and launch. 3. Land on moon.) I wanted to go into detail, but I simply don’t have the time it would take to write a book about it. Here is my less summarized than before, but still highly summarized problem. (The solution in the next blog.)
I’ve come to think, after much reflection, that problem is not health care. The problem is Americans. We have the 2nd most expensive socialized health-care per capita GDP on earth, yet it covers only a 1/3 of our citizens. We have the 1st most expensive private care per capita GDP on earth, yet have the lowest age of mortality and highest infant mortality in the western world. We have highest medical costs, bar none, on earth, yet the leading cause of death cancer caused by tobacco and heart disease due to diet and inactivity. We have all of this…and yet at least half of Americans don’t think there isn’t a problem.
Most Americans are stupid. We have only two possible causes for any undesirable behavior: internal and external. I find the idea that Americans are genetically inferior to people of other nations ridiculous, so that just leaves external. What could be acting from the outside in of whole nation to make Americans so politically stupid?
Let me pause for a moment, to say that I love my country. It’s not a perfect place, but I love it worts and all. I’m not so naive to believe that the election of single black man to the highest office in the land eliminates racism. I see private, quietly expressed racism nearly everyday I am work. The fact remains however, only three generations from one of the most homicidal racial slave systems on earth, a black man as president is a good step. It doesn’t solve inner city poverty. It doesn’t change the fact that schools with mostly black kids get a fraction the funding as schools with mostly white kids, but you will not see an outcast on the Diet of Japan, or Jew as the president of Egypt in three generations. America, ultimately, does many thing better then any other nation on earth.
But in the American democracy, there is a corrosive element that eats away at the will of the people constantly. It’s called the two party system.. In turn, the two party system is what causes this uniquely American stupidity.
I could go on about how two party systems prevent any real change (which they do), or why the left and right of the Communist party in China represent more choice of ideals then the Democrat and Republican party (which they do) but thats not the important part. No matter how bad the collusion between our politically parties, or between those in power and those with money is, democracy has an amazing power to right such wrongs, and in a way the people support. While the US does have systemic problems, the existing system has the capacity for self correction…but it’s only as good as the people voting.
The two party system putrefies the minds of the people. It reduces every discussion of shade and color of meaning into single binary choice of black or white. It turns every attempt at discussion into a cosmic battle of good and evil, characterized by a double false dichotomy. “False dichotomy” in argument refers to painting a bleak picture of you opponent’s viewpoint to make yours look better by comparison. In the two party system, both the viewpoints provided are absurd. One side is the bastion of all freedom, happiness, and light, the other a hotbed of evil, conspiratorial lies, and ill will. One side is God, the other side is Satan. 100% or 0%, with no in betweens.
In that environment, there can be no discussion, no debate, only people screaming slogans. The two party system is often defended with the statement “Well, it’s a good system, because it tells both sides of the story.” That single statement shows the mental atrophy that a two party system exacerbates: the idea that all meaningful thoughts on a subject can reduced to two viewpoints. Obviously it’s better then a single party system, but thats damning with faint praise. (Two steps removed from anarchy! Go team!)
Such simplicity is seductive. You don’t need to worry about how or why. You don’t need to think. You just need to know which of a pathetic two options you choose. This brain rot affects other things besides politics. Auto accident policy is the same. Pretend you are going down a road and the person in front of you slams on the breaks to turn right. You hit their car. It is 100% your fault. Why? Yes you were following to close, but couldn’t it be even a few per cent the other drivers fault breaking irresponsibly? (Which is how most traffic law is set up in Europe.)
The first step in my little “How to fix health-care” post was “Tort reform”. The 0%/100% fault system rears it’s ugly head hear as well. If you have a pool in your back yard, it must have fence of certain opacity and height, because it is an “attractive nuisance”. You must do this, because if someone gets into your pool without it, you are 100% at fault and they are 0%. That’s stupid. At the same time, the law was put into place to right the wrong of people putting things very dangerous to children in their yards with no protection whatsoever, an environment where the pool owner had 0% fault and small child was 100% at fault.
The real answer to tort reform is a society that recognizes partial fault. I think a two party system trains peoples minds to be incapable of functioning in the gray areas that make up real life. The real cause of the American health-care failure, is Americans incapacity for rational thought, followed by an inability to turn rational thought into rational policy.
The purpose of market is to provide a place for the producer and consumer to form voluntary contracts. The market has no intrinsic morals and only one rule: the best deal. The producer makes supply, the consumer makes demand. Between them, and the competition of various producers to provide for various consumers, this constant desire for the best deal drives price ever downward. It rewards the most efficient producer and the most efficient consumer alike. It’s almost a kind of magic.
Market failure doesn’t refer to a total break down of the buying and selling but a break down of the magic, of the automatic best deal for everyone. It’s not discrete point, but direction the market can go. The opposite direction leads to the perfect market. It too is not a destination but a direction, the ideal by which markets are judged.
A perfect market consists of a few key principals, describing the market as a game it looks like this: (1.) Rationality of all players in the game. (2.) No hidden costs to any move. (3.) Enough players that no single one can steer the game by their behavior. (4.) something all the players want to play with [demand] (5.) Freedom to play or not play at any point (6.) No barriers to entering or leaving the game (7.) No barriers to any player about information on any other player.
How does the medical industry fail these criteria?
Rationality of all players in the game
(1.)Well, first of all, the medical consumers are highly irrational. Short term fun at the expense of long term health is not rational, yet 80% of heat disease alone is preventable. Throw in smoking, obesity, diabetes, etc, and the single greatest killer is short sightedness. In a perfect world, doctors would serve as check on this irrationality, but the fact is, doctors are over-treating (which gets people killed) because of their fear of litigation. The consumer is crazy and so is the producer.
No hidden costs to any move
(2.)The whole field is full of hidden costs. From regulations you never heard of to taxes you can’t imagine, the medical field is a minefield of hidden costs.
Enough players that no single one can steer the game by their behavior
(3.) Well, about half of the cost is payed for by one player (gov-care), and up to 70% of the remaining half is payed for by one company per area. Normally, this would be called oligopoly, but honestly, its worse than that. Because the first half is the government, its more like a oligopoly on the second half and monopoly on the first. Under normal circumstances, even if a player owns 50% of the total market, that player can rarely take away your organization’s legal right to exist, or place members of your organization under arrest. The government has what is known as a monopoly on force. Monopoly represents a market distortion. Force, on the other hand, represents the nonexistence of market. The foundation of market is people forming contracts of their free will, ie, without threat of force.
Something all the players want to play with [demand]
(4.) Demand, we’ve got. Sort of. The fact is, while doctors may not be the paragons of reason we hope, the producer side (as is typical in other industries) is better at being rational then the consumer side. If nothing else, it’s better organized. The consumer demand is health, not care. But doctors have no economic incentive to pursue health. They have need to produce care. So there is break down between the needs of the consumer and the ability of the producer to meet that need. Note, I am not saying there is a conspiracy by doctors to keep people sick. Doctors are like most people: there’s a few true saints, a few evil bastards, and lot of pretty ethical folk. But the fact is, we must relay on doctors’ moral incentive and not their economic incentive to provide us with health. Systems work better when the two incentives are the same.
Freedom to play or not play at any point
(5.) This one absolutely does not apply. Playing in this case means the freedom to form or not form voluntary contracts. If the consumer doesn’t enter the market he suffers or dies. At the same time, if the producers do not enter the market many suffer or die. Further, hospitals must provide emergency care to everyone, regardless of ability to pay. On the insurance side, insurers must provide insurance to at a loss to certain high risk people. They must by law.
No barriers to entering or leaving the game
(6.) Well, the barriers to entering the game are enormous. Lets say we want to start a tiny private practice, with very limited services. First, the price of becoming a MD is between $175K and $200K. Then, the first year cost for 1600 square foot commercial space, a receptionist and tech who makes no benefits is about $250K. So, minimum startup cost is right around half a million dollars. Nor can hospitals simply exit the market, they provide a community service and without them people will suffer and die. Insurance is the most heavily regulated industry in the US, so even if cash on hand was not a problem the regulations would be, but in any case, and insurance company must have the cash on hand to pay out all claims if they were all called at once. The startup costs for an insurance company are in the tens of millions.
No barriers to any player about information on any other player
(7.) This is the worst. Insurance companies use hundred page contracts written legalese on purpose, to hide the information the consumer needs to know. At the same time, insurance fraud is a huge expense, because people aren’t honest with the companies either. If people are totally honest with doctors, their premium could go up. Conversely, if doctors are honest about risks with patients, the patients will simply go to another doctor who paints a rosier picture. Again, the moral incentive is diametrically opposed to the economic one.
All in all, it’s a wonder health care is as cheap as it is. Again, I’ve hit over 1000 words, so I will post my solution(?) later. Thanks for reading all, feel free to weigh in on any of this.