Printing money does not lead to inflation, argues Argentine central bank preside

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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by MediumTex » Thu Apr 19, 2012 9:20 am

D1984 wrote: MediumTex,

Three issues with your proposed idea to have people pay off medical debts they incurred due to lack of insurance:

One, wouldn't such a system violate current interpretations of US law as regards peonage, debt bondage, and indentured servitude (United States v Reynolds, 235 U.S. 133, 1914) i.e. that indentured servitude in payment of a debt is illegal?

Two, a large percentage of the nation's healthcare spending is incurred providing medical care for people in their last twelve months of life. This sytem would be unable to collect on that because you can't make someone work to pay back a debt when they are dead (or permanently disabled by a terminal illness until they end up dying).

Three, this is a complete political non-starter even if the above two objections didn't exist; as unpopular as the individual mandate is (even among many people who otherwise like what the PPACA does), do you really think what amounts to "buy health insurance or you could be sold into indentured servitude" would be any more acceptable to most Americans? The whole plan (to me anyway) has chilling overtones of slavery and of "Arbeit Macht Frei" and this would no doubt be pointed out by the idea's opponents if anyone tried to get something like this enacted as a law.
The labor camp idea was sort of "A Modest Proposal"-style tongue in cheek suggestion.
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by MediumTex » Thu Apr 19, 2012 9:27 am

Gumby wrote:
MediumTex wrote:By an objective standard, Medicare has been a failure because it has taken a much larger health care spend than any other country in the world and failed to translate it into increased longevity.  If that's not failure I don't know what would be.
Seems like an unfair standard. That would be like saying higher auto insurance costs are a failure because the increased expenses haven't translated into longer-lasting cars.
I think that a better analogy would be to look at whether extended automobile warranties have translated into longer lasting cars.

The more basic point I would make about Medicare is simply that it is staggeringly inefficient and the people who make the most money off of the system are those who have mastered the many different ways of subtly defrauding the system through billing practices and other gaming opportunities.

I'm not saying I want to let all the old people die, I'm just saying that the current system looks like a gigantic money pit that doesn't seem to be leading to better health outcomes for those within the system. 

I understand the point about the last 12 months of life making up a lot of the overall spending during one's life, but to me this is also one of the flaws in the program.  If doctors weren't getting paid for all of that expensive but futile care, they wouldn't do a lot of it.
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by Lone Wolf » Thu Apr 19, 2012 9:48 am

To me, this issue is one where we have a conflict between two important points:
  • A free market is likely to provide the greatest level of service at the lowest possible price.  With >50% of healthcare spending coming from government, we're nowhere close to having this.
  • Once you have a free market, some people will not be able to participate in the health care system at the market price.  Regardless of how ill-advised their decisions may have been to get them to this point, it makes us uncomfortable to leave people without the opportunity to receive medical care.
First, a few obvious ways that you could resurrect a free market in healthcare:
  • Freedom to buy insurance policies across state lines.  If your state foolishly mandates "insurance" coverage for things like fertility treatments, you should be able to purchase a lower-cost option that operates under the laws of another state.  The effect here should be huge.
  • Remove protectionist import restrictions.  These policies allow other countries to get far cheaper prices for the same drugs than the United States does.  The end result is that we subsidize drug research for the entire planet.  This is unbelievably expensive.  It needs to end.
  • Instead of trying to kill HDHP and HSA a la Obamacare, actively encourage them.  HDHPs are what insurance is supposed to look like.  Enough with treating "insurance" like a pre-paid health plan.  Get price sensitivity back into the game.
  • Price transparency.  Published price lists help provide consumers with the information that they need in order to make decisions.  This dovetails with the idea of heightened price sensitivity.
Now it's down to those who will still be unable (or unwilling) to participate in the health care system at the market price.  For this, I would try to borrow ideas from Singapore's healthcare model.  These are the basic components:
  • Medisave - There are no "social insurance" programs like Medicare or Social Security but rather "mandated savings" programs where your payroll deductions go into an account.  One of these accounts (Medisave) can be used for medical expenses.
  • Medishield - There are a number of public and private options for catastrophic insurance coverage.  These are actual insurance programs designed for major, unexpected events like accidents or serious illnesses.  The "Medishield" program is the public one.
  • Medifund - Provides subsidies to the 10% or so who are too poor to afford medical coverage.  Can't be "borrowed" from and never disperses principal.  Only interest from the fund can be spent.
In other words, people wind up saving (and spending) mostly their own money.  Price lists are required to be published so you have greatly enhanced price sensitivity.  Insurance is used like insurance, not like a pre-paid health plan.  Those who still truly can't afford to pay receive a subsidy to provide for their medical needs.  Decisions about care are largely left up to patients and doctors.

In the final analysis, Singapore's government spends about 1/7th per capita what the US government does for healthcare and citizens there enjoy very good health outcomes.  I find plenty not to like about their system as well so there's still lots of nuance here.  But there are many interesting ideas in their system that reveal how we might allow truly free healthcare markets to finally emerge in the United States.

More on Singapore's system for those that are interested: http://www.american.com/archive/2008/ma ... pore-model
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by Gumby » Thu Apr 19, 2012 9:49 am

MediumTex wrote:The more basic point I would make about Medicare is simply that it is staggeringly inefficient and the people who make the most money off of the system are those who have mastered the many different ways of subtly defrauding the system through billing practices and other gaming opportunities.

I'm not saying I want to let all the old people die, I'm just saying that the current system looks like a gigantic money pit that doesn't seem to be leading to better health outcomes for those within the system.  

I understand the point about the last 12 months of life making up a lot of the overall spending during one's life, but to me this is also one of the flaws in the program.  If doctors weren't getting paid for all of that expensive but futile care, they wouldn't do a lot of it.
You're spot on. The 60-minutes segment showed how the end-of-life healthcare system is set up to reward extra care. The best course of treatment for the last two months of life is to make people more comfortable in their own homes. But, overwhelmingly, most people are admitted into expensive hospitals that are designed to suck money out of the government and insurance (via unnecessary tests, procedures and diagnostics). Unfortunately, these hospitals don't make as much if their beds aren't full of sick and dying patients.
Last edited by Gumby on Thu Apr 19, 2012 10:00 am, edited 1 time in total.
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by 6 Iron » Thu Apr 19, 2012 3:05 pm

Utilization (excessive), and insurance coverage that goes far beyond the traditional definition of insurance are important issues with regard to health care costs. Fraud is a politician's favorite target in describing ways to cut costs without decreasing service, but the only way likely to be successful at cutting costs is through rationing of care, either by self selection and market forces, or government mandate.

There was a great article in the WSJ on how doctors die that I think you may find interesting:

http://online.wsj.com/article/SB1000142 ... 33962.html
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by lazyboy » Thu Apr 19, 2012 7:23 pm

6 Iron wrote: Utilization (excessive), and insurance coverage that goes far beyond the traditional definition of insurance are important issues with regard to health care costs. Fraud is a politician's favorite target in describing ways to cut costs without decreasing service, but the only way likely to be successful at cutting costs is through rationing of care, either by self selection and market forces, or government mandate.

There was a great article in the WSJ on how doctors die that I think you may find interesting:

http://online.wsj.com/article/SB1000142 ... 33962.html

Thanks, 6 Iron, that's a wonderfully sane and instructive article.
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by MachineGhost » Sat Apr 21, 2012 6:40 am

lazyboy wrote: The conflict, then, would seem to be between regulatory capture and insurance company profits and you won't have one without the other, at least in this set up. To say that one exists purely as good guy and the other purely as villain is unrealistic. And if you had less of one than the other you might run into more abuses of one type or another. There's probably a better way, structurally, to set it up. I agree that focusing on healthier lifestyles is a way out.
http://reason.com/archives/2003/02/12/i ... -commodity

The best way would be to set an individual mandate for a nationally-shared risk pool, end Medicare as a single-payer (switch to vouchers or grants) and rely on competitive consumer-driven health care, nonprofit co-ops, minimal but catastrophobic insurance coverage, etc. just as it was before WWII wage controls, Medicare & HMO's ruined the industry.

But seriously, rational intelligence is the first casualty of politics.  I suspect America will have to collapse before the greedy sicknesscare-industrial complex gives up its pork.

MG
Last edited by MachineGhost on Sat Apr 21, 2012 6:55 am, edited 1 time in total.
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by moda0306 » Thu Apr 26, 2012 2:36 pm

MG,

The market for healthcare is decidedly different than markets for food, clothing, and housing, which the article tries to compare it to.  Also, as a side note, I'd be surprised if the writers of the article didn't also see the gov't subsidizing food, clothing and housing as massive manipulation and morally bankrupt at the first chance they get if we chose that model.

The main point is the existance of commonly observed "market failures."  To start out, I know many, including yourself, don't believe in such a thing, so I'll give you the benefit of the doubt and refer to them as "market inefficiencies."  Even you and libertarians could probably imagine yourself as a consumer who wants to buy a product like a swiss army knife, you know a lot about it, have plenty of time and options from which to buy them, you don't rely on someone else's conflicted interest in advising you on the purchase, there's no externalities associated like 100 tons of CO2 going into the atmosphere, etc... this is a very efficient purchase.  Most purchases in the economy fall into this category to one degree or another, and even if they don't, many aren't life-or-death decisions.  You and I probably feel very comfortable trying to identify and obtain the most value out of the market, and the sellers in the market know that most of their customers are like us, so they actually work to provide that value.

Now, food, clothing and shelter, being necessities, are often subsidized by government for what we see as "moral" reasons as the article points out.  It's not that these are "inefficient markets," but simply that people can quickly suffer if they can't afford the products of these markets.  Overall, though, while we do want some basic level of regulated safety in those markets, we're perfectly fine going shopping for exactly what we want, needing little/no advice on what we need, and engaging the great markets that will respond to people that know what they want.

But once you add some of those "Market inefficiencies," suppliers in the market work less and less hard to produce real value, and more and more hard to fool the buyer.  We discuss on this forum how this works in finance all the time... most of us are disgusted by it.  Most people don't know macroeconomics, investing, tax, retirement planning, etc.  This would be bad enough, left alone, in terms of adding inefficiencies to the market, but compounded to that is the fact that the market tends to exploit this lack of knowledge for the supplier's benefit.  "Informational assymetry" and the "principal-agent problems" tend to allways fall in favor of the agent & the informed.

Healthcare falls much, much more into this market model.  I'm not talking laser eye surgery shopped for weeks in advance online (which the market probably responds wonderfully to), but the purchasing of both health insurance and trusting of a doctor in emergency situations, as well as advisory situations (not suggesting doctors are dishonest so much as consumers being in a horrible spot to negotiate/bargain).  I would have no idea where to start if an insurance company gave me a choice of what emergencies to cover vs what not to cover in a pricing model they decide.  I'd also be in a horrible position to bargain at the hospital if I broke my arm.  I literally know next to nothing about insurance OR surgery, so I'm in NO position to have an equal seat at the bargaining table, which always falls in favor, like I suggested before, of the most informed... aka, the supplier.

Lastly, even if I WAS good at bargaining for insurance and dissecting my doctor's medical advice for flaws in service-level, it would still leave us with a system (in a fully free-market) that didn't truly behave like an insurance system.  For instance, if you are diagnosed with a disease or condition, you have two choices in a free market system:

1) Stay with your current insurance provider, no matter how crappy the service

2) Shop for new insurance but at an exhorbitant rate, now that they know your risk profile

Some would say this is how things should operate, but isn't this almost defeating the purpose of insurance to begin with, and creating a truly awful marketplace for private insurance?  Any market with that kind of rigidity is bound to be just a piss-poor market.

I love the way the market works when two parties come together with equal knowledge on a product/service and work together... and it's not that it has to be perfect lest the gov't to take it over, but overall both the insurance and health service side of healthcare are truly horrible markets to try to be a discerning customer in, and the insurance side especially takes full advantage of their superior bargaining power & knowledge in this situation to a point where seldom is their time spent on trying to improve service vs avoid covering people that might get sick.

So, no, healthcare is nothing like food, clothing and shelter, other than it's a necessity.  It's actually a severely flawed market.
Last edited by moda0306 on Thu Apr 26, 2012 2:43 pm, edited 1 time in total.
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by MachineGhost » Fri Apr 27, 2012 2:22 pm

moda0306 wrote: So, no, healthcare is nothing like food, clothing and shelter, other than it's a necessity.  It's actually a severely flawed market.
True, it's a severely flawed market, but that is because healthcare doesn't operate anywhere near a free market anymore because of extensive government interference (like Ted Kennedy's unmitigated HMO disaster, a response to a so-called "market failure" that was really just previous government interference).  If there is no escape hatch, any market will become dysfunctional and flawed as consumers have no competing alternatives to choose from.  Remember the Soviet Union?   Normally, an extralegal "black market" would crop up to profit from the opportunity to solve such consumers problems, but since healthcare is so tight-fisted controlled by governments, there is not the legal freedom ("Rule of Law") to do so on a wide basis.  We can take care of the "moral hazards", etc. in the free market with appropriate regulation, but that would still pale in comparison to the number of people the FDA kills each year.

I don't equate insurance with healthcare.  The presupposition that insurance is necessary really has to be delineated between true insurance and a group co-op.  In a real free market, insurance would act as the former and not as the latter as it does currently (which is why premiums continue to rise, as everyone is paying a pro-rated share of the co-op's previous year's medical expenses [that aren't limited to just major medical]).  

True healthcare has to start with self-responsibility.  Socialism is the exact opposite.  Once you believe the government "owes" you material comforts, its not a huge leap to become lazy in your lifestyle, eating habits, etc..  Heck, I'd go so far as to say the decline in traditional American values is inversely correlated to America's expanding waistlines!

Essentially, it comes down to what kind of market would you rather have: a market like the current healthcare market where the heavy hand of government controls 99% of everything through a smargasbord of three-lettered agencies, where there is no price transparency, "insurance" co-ops divorce people from self-responsibility as costs spiral ever upwards, or a lightly regulated, competitive market like the dietary supplement market where the exact opposite conditions prevail?  We need a DHSEA for the entire economy, not just healthcare.  I won't hold my breath.

MG

[Edit: Mod cleaning up Kennedy reference]
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by moda0306 » Fri Apr 27, 2012 2:44 pm

MG,

As I pointed out, the market would be horribly flawed even in a purely free market system.

Also, some may call asking for gov't to engage in healthcare as a handout... others would look at the gov't backing land deeds as "private property" of only certain classes of individuals as being a handout.

Myself... well I'm ok with the gov't both engaging in a social safety net and deeding real property to aid the private sector in engaging in economic activity.  Don't think that private property operates outside of gov't to a great degree in our modern society... it's as much a social construct as natural right, and it's secured by gov't say-so at every turn, whether explicitly or implicitly.  The land your house was built on, the house itself, your car, etc, etc... you may have worked for them, but the gov't backing private property is the glue holding it all together, and much of the property that's been allocated to individuals wasn't done on merit but on influence.  Real wealth was handed out.  That's decidedly socialist in nature... or crony-capitalist, to be more specific.

Do you really think people get fat because they think someone else will pay for their heart problems?  Even private insurance doesn't take the time to ask you about your exact eating habits... it's hard for me to believe that they would if the gov't was totally out of the system.  No, private health insurance in a gov't-free system is likely to be a horrible market to interact with because of informational assymetry and the agent/principal problems.

I find it odd that you think the gov't controls 99% of the system.  Tell that to the multi-billionaires in the health insurance industry in our country that they don't have in Europe.  If that's the case, though, and the gov't has their heel on everything, let's just get a medicare-for-all system going and let the private sector do what it's actually good at, and quit acting like it will ever provide us with a good health insurance system, when I've already illustrated that the market for health insurance is predisposed to deliver horrible service because people are in absolutely no position to efficiently shop for it and hold insurance companies accountable when they actually need them.
Last edited by moda0306 on Fri Apr 27, 2012 2:51 pm, edited 1 time in total.
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by Lone Wolf » Fri Apr 27, 2012 4:47 pm

moda0306 wrote: As I pointed out, the market would be horribly flawed even in a purely free market system.
This talk of "market failures" is nothing more than what you guess will happen if the government releases its grip on the >50% of healthcare spending that it currently controls.  Well I "guess" that a free healthcare market would behave... like pretty much every other market known to man.  You're conjuring up "information asymmetry" special cases that likely don't exist.

Speaking of information asymmetry, what do I know about automobiles?  The vast majority of the population has not the first clue what goes into putting a car together.  The car manufacturers know everything and the consumers know barely anything at all.  When you look at it this way, the "asymmetry of information" looks immense.  The deck looks to be utterly stacked against the consumer in every way.

Yet we "clueless consumers" get along just fine.  The job of the market is to convey this information via profit, loss, and the pricing system.  The weak offerings are destroyed by the strong offerings and even a quite uneducated consumer bumbles Mr. Magoo-like into a market of high quality automobiles.

I'm surprised that you so casually brush off procedures like laser eye surgery.  It's no coincidence that these procedures are generally not covered by 3rd-party payers and thus enjoy an experience much closer to what you'd find in a free market.  Note that their costs fall over time, just like what you'd expect in a free market while other procedures rapidly rise in cost over time.  No government subsidies or other general tomfoolery to stand in the way.

What do I know about getting my eyeball lasered?  Absolutely nothing!  Yet the market provides a menu of miraculous procedures that fall in cost over time.  The price system is what dismantles this "informational asymmetry".
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by moda0306 » Fri Apr 27, 2012 4:58 pm

LW,

Regarding Vehicles:

I probably wasn't very clear, but I meant "knowledge about the product" in quite a different way.  When you buy a car, you know you want a few things:  Powerful engine, decent handling, nice interior, comfortable seats... and you can tell those in about one test drive.

There's a few other things you're not so sure about: Safety, gas mileage, reliability... a few big ones that probably cover the vast majority of your concerns.  Now we have gov't regulations around safety levels, as well as how to report gas mileage on a universal basis, and reliability can be "bought" via a warranty, as well as guessed based on past history of the brand.

So there's a huge amount about vehicles that you do know in terms of how you want the package delivered that the private sector is very good at delivering, because they know you know what the difference is between a smooth and rough engine, leather and cloth seats.  They react remarkably well to things that they know their customers can tell the difference between, easily.  However, the Pinto managed to sneak in an explosive gas tank because most customers didn't notice that.

Regarding eye surgery, first off, you have all the time in the world to shop for it.  Insurance is for more severe conditions and/or emergencies (I'd assume we agree on this).  I'm in no position to bargain for most types of surgeries like I would with laser surgery.  First off, they're often much more complex & expensive.  Secondly, you're often either working through insurance, or in an emergency situation (or incredibly sick).

I see these as completely different in nature, and the private sector knows that and reacts differently to them.
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by MediumTex » Fri Apr 27, 2012 5:22 pm

Lone Wolf wrote:
moda0306 wrote: As I pointed out, the market would be horribly flawed even in a purely free market system.
This talk of "market failures" is nothing more than what you guess will happen if the government releases its grip on the >50% of healthcare spending that it currently controls.  Well I "guess" that a free healthcare market would behave... like pretty much every other market known to man.  You're conjuring up "information asymmetry" special cases that likely don't exist.

Speaking of information asymmetry, what do I know about automobiles?  The vast majority of the population has not the first clue what goes into putting a car together.  The car manufacturers know everything and the consumers know barely anything at all.  When you look at it this way, the "asymmetry of information" looks immense.  The deck looks to be utterly stacked against the consumer in every way.

Yet we "clueless consumers" get along just fine.  The job of the market is to convey this information via profit, loss, and the pricing system.  The weak offerings are destroyed by the strong offerings and even a quite uneducated consumer bumbles Mr. Magoo-like into a market of high quality automobiles.

I'm surprised that you so casually brush off procedures like laser eye surgery.  It's no coincidence that these procedures are generally not covered by 3rd-party payers and thus enjoy an experience much closer to what you'd find in a free market.  Note that their costs fall over time, just like what you'd expect in a free market while other procedures rapidly rise in cost over time.  No government subsidies or other general tomfoolery to stand in the way.

What do I know about getting my eyeball lasered?  Absolutely nothing!  Yet the market provides a menu of miraculous procedures that fall in cost over time.  The price system is what dismantles this "informational asymmetry".
Pet medicine is also a great example of what unregulated medicine might look like for humans. 

I often have the feeling when I take my pet to the vet that I wished I could go to a doctor's office like that when I was sick.  It just seems like a much simpler experience and vets and their staffs just seem nicer than the people who treat humans.

U.S. healthcare is like a tree that has become completely overgrown with parasitic vines, shrubs and moss.  You can barely even tell that it was just a tree to start with.  At this point in the game, it's hard to even imagine what the health care tree might look like without all of the leeches, and that is why I offer veterinary medicine as an example of what human medicine might look like if you took away all of the insurance companies, governmental programs, and plaintiffs attorneys.
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by MachineGhost » Fri Apr 27, 2012 7:02 pm

moda0306 wrote: I find it odd that you think the gov't controls 99% of the system.  Tell that to the multi-billionaires in the health insurance industry in our country that they don't have in Europe.  If that's the case, though, and the gov't has their heel on everything, let's just get a medicare-for-all system going and let the private sector do what it's actually good at, and quit acting like it will ever provide us with a good health insurance system, when I've already illustrated that the market for health insurance is predisposed to deliver horrible service because people are in absolutely no position to efficiently shop for it and hold insurance companies accountable when they actually need them.
America’s Socialized Health Care
by Lawrence Wilson, M.D., Posted January 24, 2005

Health-care systems in most developed nations are in financial trouble. Health benefits are being cut back because of exploding costs. Degenerative illnesses such as diabetes and cancer are at epidemic levels in spite of new drugs and treatments. While doctors, politicians, and insurers blame each other, they rarely mention the real problem.

Skyrocketing costs are due to the structure of health care in all these nations. All are mainly socialized, including America’s. This means they operate as top-down bureaucracies, out of touch with people’s real needs. Almost no market forces are allowed to operate for rational decision-making and cost control.

The results are predictable. In 2002, America spent $1.6 trillion on health care, up 9.3 percent from 2001. Drug costs increased 15.3 percent while hospital costs increased 9.5 percent. Out-of-pocket costs, the most market-related, declined.

A graph plotting the percentage of government payment for health care with the total cost of health care would turn almost vertical after the passage of Medicare and Medicaid in 1967.

America really has three health-care sectors. The socialized part or government sector comprises about 65–70 percent and includes Medicare, Medicaid, and the Indian Health Service. It also includes the Department of Veteran Affairs, the Public Health Service, programs such as KidCare, and the bulk of medical research. The latter includes the National Institutes of Health, National Cancer Institute, National Heart Institute, and about 30 other government institutes. The “donors”? for research in these institutes have little say over what or how wisely their health-research dollars are spent.

All the above are funded from taxes confiscated from the people at the point of a gun, making this a less-than-compassionate system. All are insulated from the health-care marketplace and thus from rational decision-making. All are run as huge bureaucracies, with their inherent problems of fraud and high administrative overhead. Medicare rules alone are 133,000 pages in length. This makes the 10,000-page income-tax code look like a model of simplicity.

The war on cancer

An example of the dismal failure of the government sector in America is the “war on cancer,”? which is administered by the National Cancer Institute. It has cost taxpayers some $30 billion over a 35-year period. After adjusting for a longer life span, between 1950 and 1989 the incidence of cancer rose by about 44 percent. Breast cancer and colon cancer in men have risen about 50 percent, while some others have risen 100 percent. A recent article in the Journal of the AMA was entitled “Are Increasing Five-Year Survival Rates Evidence of Success against Cancer?”? The answer was “No.”?

The news mostly announces new cures and new drugs, but nothing about the waste of money in federal cancer research. A recent news broadcast said some cancer had declined “due to lifestyle changes.”? For this the taxpayers paid $30 billion. However, this waste is predictable because national research laboratories are not primarily interested in a cancer cure, no matter what they claim. They are interested foremost in keeping their jobs and second in getting more money next year from Congress. This is the nature of all bureaucracies.

The regulated sector

The so-called private sector of American health care is better termed the regulated sector. It includes insurance companies, HMOs, and licensed pharmacists and physicians. To receive any government reimbursement they must “play by the rules”? imposed by the socialized sector. As a result, this sector is mainly an extension of the socialized sector.

Insurance companies are burdened with a thousand state and federal mandates regarding what services they must supply. HMOs are also heavily regulated and are in fact creations of the U.S. Congress by virtue of the HMO Act of 1973.

Medical schools also receive government subsidies and grants. This means that what is taught is influenced if not dictated by these funding sources. Physicians are regulated by state licensing boards and, of course, must abide by Medicare and HMO regulations if they choose to work in those settings. To call any of these aspects of the health-care system “private”? is a joke.

The free-market sector

Perhaps 2 percent of the health-care system is private or free-market. It is composed of the unregulated, non-mainstream holistic and alternative healing schools and practitioners. People pay cash for their services and products. Practitioners and suppliers must respond to people’s needs to stay in business.

I have a medical degree but have worked as an unlicensed nutrition consultant (not a dietitian) for 23 years. My attention is focused 100 percent on what clients need, not on getting grants or subsidies, receiving insurance reimbursement, or paying lobbyists to plead my case in Washington. In the free-market sector, costs for vitamins, for example, have decreased.

Sad to say, many alternative practitioners who are shut out of mainstream medicine have lobbied for licenses. There is no real need except they can charge more, keep out the competition, and perhaps force insurers or the government to reimburse their services. These include chiropractors, some naturopaths, acupuncturists, and physical therapists.

The medical cartel

Another factor driving up costs and contributing to poor quality care is the medical cartel. A cartel exists when one group works together to set prices and control all steps in the production and distribution of a commodity or service. Through licensing and other laws enacted in the early part of the 20th century, one group, the American Medical Association, controls how many medical schools exist, how many students enroll, what is taught in the schools, the availability of hospital residencies, and, indirectly through licensing laws, who will get jobs in medicine. It would be difficult to find an industry in America that is more tightly controlled by one group or union.

Alternative therapies and practitioners have been ruthlessly suppressed, their proponents often being run out of the country. Thousands of Americans flee each year to Mexico and Europe to obtain products and therapies banned in the United States but in use for as many as 50 years elsewhere.

The kingpin of the cartel is the restrictive state-medical licensing laws, passed in the early part of the 20th century. Previously, there were no licenses and the health-care system worked well. However, one group of physicians, the allopaths or drug doctors, felt they were not making enough money. The AMA, formed in 1847, was quite candid about its intentions. It sought vigorously to reduce the supply of doctors by eliminating the competition and controlling the number of medical graduates. With backing from the Carnegie Foundation and the Rockefeller Institute for Medical Research, the AMA was quite successful. Because of its efforts, the number of healing schools fell from 140 in 1900 to 77 in 1940.

The purpose of a cartel is to improve the income of its members. From this perspective, American health care is a resounding success. John C. Goodman and Gerald L. Musgrave, in their excellent book Patient Power, explain that “the AMA endorsed the idea of a medical cartel and made participation in it ethically mandatory.”?

In his book Price Discrimination in Medicine, Reuben Kessel states,
The delegation by the state legislatures to the AMA of the power to regulate the medical industry in the public interest is on a par with giving the American Iron and Steel Institute the power to determine the output of steel.
The FDA

The large drug companies became part of the medical cartel through their agent, the federal Food and Drug Administration. Anyone who believes the FDA is an impartial or even helpful agency needs to read The History of a Crime; How Could It Happen, by Harvey Wiley, M.D., the first director of the FDA. In the book, he meticulously details how the FDA became infiltrated by food and drug companies and how its mission became completely subverted. As a physician, I believe no other domestic agency has caused more deaths than the FDA.

Physicians are the legal drug pushers in our society. Those who step out of line and prefer to prescribe vitamins, herbs, or non-patentable drugs often lose their licenses, though they do no harm. Only one state, Arizona, has a second medical homeopathic board that allows medical doctors to escape from under the thumb of the state board of medical examiners and practice as they see fit. In the past two years, a few states enacted laws to protect physicians from losing their licenses just because they use methods unapproved by their medical board.

Through physician licensing and hundreds of other rules, only those who practice drug medicine hold licenses, work in hospitals and HMOs, and direct government research institutes. This effectively blocks change. Most alternative-health practitioners who practice a far less expensive type of healing are shut out of the mainstream.

Special-interest laboratory laws also abound. In America one cannot walk into a laboratory and request a cholesterol test. One must first go to a doctor to obtain permission. Results may not be sent to the patient, only back to the doctor. This means another doctor visit. Thanks to these rules, a $10 test may cost $100 or more. The extra cost discourages people from caring for their health. Instead, they wait until a crisis occurs, which further raises the cost of health care. In Mexico, by contrast, one just walks into a laboratory, orders the test, and receives the results.

Deregulating health care

Whenever an industry becomes mired in special-interest rules, deregulation is the answer. It is a healing process that many industries periodically need. America “deregulated”? trucking, airlines, the phone system, and power generation. In every case, dire predictions of chaos did not come true and the public benefited greatly. Power deregulation has also been very successful. What failed in California was not deregulation but simply another form of regulation.

Private regulation of health care is not new. For her first 120 years, America had a true free-market health-care system free of government interference. Herbalists, hydrotherapists, nature-cure practitioners, allopaths or drug doctors, homeopaths, Native American healers, religious healers, osteopaths, and others offered services and competed with one another. Each had its own schools, clinics, and hospitals. I was born in a formerly homeopathic hospital in New York City. There were few licensing laws, so no group had a legal advantage. Whoever helped people the most prospered. Competition between many kinds of practitioners kept prices low — people paid for exactly what they wanted. Our health statistics ranked first in the world. Today America’s worldwide rank in many health-care areas ranges from 19 to 22.

Deregulation in health care would have to be a two-part affair of (1) eliminating government regulation and government involvement; and (2) eliminating the control of the medical cartel. Obviously, this would not be easy to accomplish because (1) the welfare-state concept, which Americans embraced in the 20th century, entails a government “safety net”?; and (2) the medical cartel has been in charge for more than 100 years and most people are unaware of the way it controls the system.

Personal responsibility

The biggest problem with the drug-medicine cartel is that drugs and surgery do not prevent disease, do not address deep causes of disease, and do not make people healthy. They mainly suppress symptoms. According to the American Public Health Association, 48 percent of the determinants of disease are now due to “behavioral lifestyle,”? 25 percent are due to genetic constitution, 16 percent to the environment, and only 11 percent are due to lack of access to medical care. Often drugs make people sicker, which only adds to the cost. Malpractice lawsuits due to harm from the system add even more cost.

According to a recent article in the Journal of the AMA, modern medicine is the fourth leading cause of death in America, just behind cancer, heart disease, and strokes. This study only included deaths that occurred in hospitals. The Nutrition Institute of America just completed the first broad survey of the side effects of drug medicine.

It found that adverse drug effects and medical errors account for some 669,000 deaths, making drug medicine the leading cause of death in America. (See www.nutritioninstituteofamerica.org.) Instead of giving poisons, other healing systems balance body chemistry, correct spinal abnormalities, detoxify the body, or alter subtle electrical or vibrational imbalances in the body.

A new paradigm

An entirely different model of health care is possible. Instead of focusing on diagnosis and treatment of disease entities, it focuses on supplying missing factors of health. The new model is a true science of preventive medicine. There is no reason to wait to supply the factors of health. Prevention is hundreds of times less expensive than treating a condition when it has fully developed.

The new model uses more-sensitive assessment methods that detect imbalances long before a disease occurs. Whether by checking one’s spine, hair tissue mineral analysis, or acupuncture pulses, small problems can be detected and corrected before they become serious ones. It is the only way to control health-care costs and really improve people’s health.

The new model stresses participation and presumes the patient is responsible for his health. Changes in diet and lifestyle can only be recommended. Self-discipline and a desire to be well are required. An adult-adult or client-consultant relationship with the doctor replaces the parent-child relationship that currently exists between doctors and adults. Patients need to ask a lot of questions. Taking responsibility is healing in itself. It is empowering, replacing the futile and energy-wasting attitudes of fear, denial, and self-pity. Natural products can help restore balance and remove toxins from the body. Drugs and surgery would still be used but only as a last resort, as they are far more costly and dangerous.

The new model redefines health. It is not just an absence of cancer or heart disease. It is the state of relating harmoniously with one’s physical, emotional, intellectual, and social environment. Health is never a commodity that can be bought and sold, doled out to the poor or guaranteed by a government agency. All such thinking is incorrect. Health is an outcome of understanding one’s self and perfecting one’s relationship with one’s surroundings.

Adopting the new model

The health-care cost crisis offers an opportunity to view health care like any other industry. There is no market failure. How can there be market failure when there is almost no health-care market in the sense of free agents who willingly buy and sell on the basis of free access to information?

Deregulating health care would have to be part of dismantling the welfare state, as the two are closely related. Medical licenses are not only the basis for the cartel’s control. They are meal tickets for any doctor who wants to participate in the welfare state.

Replacing licensing with private certification would break the power of the cartel and help restore a free market. No physician would be prosecuted and jailed for doing his best. Many people, brainwashed by 100 years of life under the cartel, would object, as they have objected to all the other deregulation efforts. But the American people would be much better off.

Instead of the FDA, several competing consumer rating groups would do far more to protect the American people than the current system. Lest this seem impossible, it was the system used successfully in America for more than 120 years. Several organizations tested new medicines and medical devices and decided which merited their seal of approval.

Though we may not wish to admit it, American health care is only slightly less socialized than the single-payer systems of Europe and Canada. No wonder costs are out of control. Deregulating health care would benefit all Americans and restore a crippled system to sanity. Health care does not have to be costly or dangerous.

Lawrence Wilson is a physician in Arizona.

This article was originally published in the September 2004 edition of Freedom Daily.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
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MachineGhost
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Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by MachineGhost » Fri Apr 27, 2012 7:06 pm

Lone Wolf wrote: I'm surprised that you so casually brush off procedures like laser eye surgery.  It's no coincidence that these procedures are generally not covered by 3rd-party payers and thus enjoy an experience much closer to what you'd find in a free market.  Note that their costs fall over time, just like what you'd expect in a free market while other procedures rapidly rise in cost over time.  No government subsidies or other general tomfoolery to stand in the way.
As a counterpoint, hearing aids are not covered by insurance, but what costs $100 to manufacture, is sold for $1K to $5K or even more per aid due to them being registered as "medical devices" and the crony distribution model.  The industry is just begging for disruption.

MG
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
User avatar
MachineGhost
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Posts: 10054
Joined: Sat Nov 12, 2011 9:31 am

Re: Printing money does not lead to inflation, argues Argentine central bank preside

Post by MachineGhost » Fri Apr 27, 2012 7:14 pm

moda0306 wrote: Regarding eye surgery, first off, you have all the time in the world to shop for it.  Insurance is for more severe conditions and/or emergencies (I'd assume we agree on this).  I'm in no position to bargain for most types of surgeries like I would with laser surgery.  First off, they're often much more complex & expensive.  Secondly, you're often either working through insurance, or in an emergency situation (or incredibly sick).
Its not that difficult.  See http://www.healthcarebluebook.com/ or http://www.pricedoc.com/ for example.

MG
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
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