Kurt Bouwhuis, Mackinac Center Intern
Here is a picture I found reading a recent Reason blog post. This pretty much explains what will happen to doctors if our government imposes price controls.
Price Controls
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Tag Archives: health care
Misleading Information
Kurt Bouwhuis, Mackinac Center Intern
“So let me explain what reform will mean for you. Let me start my dispelling the outlandish rumors…” – President Obama
I figured I would use this line from the clip to dispel the outlandish rumor that Obama makes starting at 4:37. He states we have two different approaches when it comes to health care. Our first approach is the status quo. Our second choice is reform. With either of these approaches, we are left with a healthcare system strangled by government through heavy subsidies and regulation.
I will give him the benefit of the doubt and assume he forgot to mention the third approach – Freedom. Allowing individuals to voluntarily associate in the absence of government coercion. Removing government from healthcare would get rid of political decision making, which is heavily influenced by special interests, and allow for competition to drive costs down (like in most other markets).
It appears to me that no one really understands health care reform. John Stewart has some good evidence.
Medical Coverage Like A Game Show
Kurt Bouwhuis, Mackinac Center Intern
In less than 90 seconds the new video highlights the upside-down priorities of Oregons Medicaid system. Lobbying groups have used the political process to push coverage for special-interest causes like substance abuse and weight loss treatment ahead of treatments for some kinds of cancer on the priority list.
Enjoy!
Is Profit Healthy?
Kurt Bouwhuis, Mackinac Center Intern
Here is a letter I recently sent to the Midland Daily News:
Fran Hamburg stated in a recent letter that: “The primary mission of insurance companies is not to improve overall health care but to make a profit” (Indebted?, Aug. 5). I agree! What is often overlooked, however, is in their pursuit of profit, companies do great things for society.
I, for example, am sitting in a chair typing on my laptop in an air conditioned place where I have access to food, clean drinking water, lights, etc… All these things are provided to me not because the producers personally know me and want me to feel good, but rather, because the producers are themselves seeking a wage or profit. This point was clearly articulated by Adam Smith in The Wealth of Nations in 1776 when he said: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest.”
Fran then stated: “It would seem reasonable to expect that eliminating an extra layer of administration and profit taking would save money.” It seems plausible at first, but what purpose does profit serve? Aside from encouraging entrepreneurship and risk taking, it tells producers what people want. For example, suppose I am a profitable producer of horse buggies. Additionally, suppose an entrepreneur creates a new invention coined the automobile to compete directly with horse buggies. Consumers will likely choose to buy less horse buggies and more automobiles. These consumer choices become translated into a loss for horse buggy producers and a profit for automobile producers. This economic activity is dynamic and guides the production of goods and the elimination of others.
Unfortunately, it is impossible to eliminate profits without eliminating the vital role it plays in conveying information between producers and consumers. The health care industry is a trophy example – Lobbyist and insurance companies have used government to shield themselves from competition resulting in massive amounts of regulation and 23% of all federal spending being spent on Medicare and Medicaid alone.
Everyone has their favorite horse to beat. Mine is not dead.
Kurt Bouwhuis, Mackinac Center Intern
Here is some text from Michigan Liberal today that is rather disturbing:
“There is literally no way that [health care] can be fixed within the private sector … in fact, it is the private sector and the approach to lax regulation given to it that has caused things to fail. I speak of people with no insurance; I also speak of people with health insurance who find their premiums rising so quickly because health care corporations have turned the concept into a giant, hostage cash register that they have time paying for what used to be a perk of the job and their home mortgages.” – Eric Baerren
The first statement in bold leads me to believe that the author of this post has a closed mind. How could anyone make the claim that there is no possible way for people to voluntarily associate with one another and benefit in the absence of government coercion. This must be based on the assumption that our current health care industry is a private one.
There is no evidence for either of these claims. The health care system in the United States is extremely regulated and receives massive government funding through medicare and medicaid. In fact, 23% of all federal spending goes towards medicare and medicaid. It would be just as easy for me to state that there is no way that government could possibly have the answer to the health care problem. I could also blame government for the people with no insurance, health insurance premiums rising, etc…
These claims, however, would be meaningless unless I back them up with logic or empirical evidence. Either way, I think there are far too many factors for any single individual to just claim that it is impossible for one plan to work and assume that their own plan is flawless.
Health-Care the Safeway
-Jarrett Skorup
The news the past week has been heavy on health care. President Obama delivered a speech in Green Bay, Wisconsin partially outlining his plan to force private insurance companies to compete with the government (still not sure how that works) and demonizing those on the side of free-markets. He has also issued statements that his new plan will include more taxes; Max Baucus, senator from Oregon, hints that Congress may tax health benefits, something Obama specifically chided McCain for on the campaign trail saying,
Apparently, Senator McCain doesn’t think it’s enough that your health premiums have doubled. He thinks you should have to pay taxes on them, too.
The AP reports that Obama is also open to borrowing in order to pay for the plan, though I’m not exactly sure how that fits with his “paygo” idea. But what the hey, I’m just a lowly intern, much to inexperienced to understand that politicians rarely mean what they say.
So what is the free-market response? Has anybody solved the problem?
There are several examples of companies who have found ways to better their insurance while decreasing costs, and all have done so by using the free-maket ideas of incentives and competition. The two major examples are Whole Foods (led by the libertarian-leaning CEO, John Mackey) and, more recently, Safeway.
Writing in the Wall Street Journal today, CEO Steven Burd lays out his plan for how the federal government could save 40% on its health care by adopting some easy Safeway initiatives. So how has his company been able to cut costs and yet manage to keep good service? By relying on the free-market.
As much as we would like to take credit for being a health-care innovator, Safeway has done nothing more than borrow from the well-tested automobile insurance model. For decades, driving behavior has been correlated with accident risk and has therefore translated into premium differences among drivers. Stated somewhat differently, the auto-insurance industry has long recognized the role of personal responsibility. As a result, bad behaviors (like speeding, tickets for failure to follow the rules of the road, and frequency of accidents) are considered when establishing insurance premiums. Bad driver premiums are not subsidized by the good driver premiums.
The program also provide incentives to those who get healthy on their own; doing things like quitting smoking, losing weight and decreasing blood pressure and cholesterol levels. Employees are provided with lower premiums for improving in these areas, much in the same way that car companies reward good drivers, women (who, it pains me to say, tend to be safer) and those who avoid tickets. This voluntary program (done by those in Safeway’s non-unionized work force) has a rating of “very good” or “excellent” by 78% of those participating; and Mr. Burd believes that things could be even better if laws were repealed that currently constrain the incentives his company is allowed to offer.
Using the free-market to increase competition, lower costs, and provide better care? What a novel concept.
John Stossel – Sick in America
This is the best solution I have seen thus far for the American health care problem. This video has six parts
To watch the other five parts of this broadcast, click here.
Kurt Bouwhuis — Mackinac Center for Public Policy
