Could a government run healthcare system compete

[Johnny_L.A]

@bldysabba

I’ve been through lots of John Donne many years ago.

You may have read that verse before, but you seem not to have understood it. Aside from the moral issue, which says that people are valuable even when an individual’s value is not apparent, it reminds us that people contribute to society. When people work, they pay taxes that support all of the things they – and the rest of society – use every day. There’s no such thing as a free lunch, and these things must be paid for. They also buy things. When I go to the office, I buy lunch. When I work from home, I have food that I bought from the market. My $6 to $20 for lunch isn’t going to keep a restaurant in business, nor will my $100 at the market. But my money plus the money of other patrons will. It adds up. The restaurants and stores employ people. Those people need to eat, and those people buy other things. So other people are employed. And so on.

You say that an illness is a ‘private tragedy’. It’s true the greatest impact is private. If I don’t go to the pub for a sandwich and a pint for lunch, they’re not going to close their doors. If enough people don’t they will. (And they did, in fact, reduce their hours for several months.) The cooks and waiters and barmen get paid less, so they have less money to spend to support other businesses. And what about people who go to work sick? Isn’t it better for society to pay for one person to go to the doctor and take some time off, than it is to force that person to go to his job and infect dozens or scores or hundreds of people who go out and infect even more? Sounds like more than a ‘private tragedy’ to me. Of course not everyone who is sick goes to the same place for lunch or buys their gas at the same station or shops at a single store. Not all illnesses are debilitating, either. But please don’t pretend that illnesses are private. To use your own words, that is simplistic. Everything is connected, especially in the modern world.

You say ‘I don’t think too many people contribute to society for free.’ Think again. Nobody pays me to do my shopping. Nobody pays me to buy my gas. Nobody pays me for the DVDs or CDs or car accessories or clothing or anything else I buy. I get paid for doing my job. My taxes support the things society uses such as roads and fire departments and a clean environment and safe airways and myriad other things. Everything else, I pay for voluntarily. Here’s the thing: Nobody gets paid to contribute to society. People get paid for doing their jobs. It’s true that those jobs support society, but that’s different from people being paid to do it. Otherwise, to use your own example, why not just pay people to pay taxes? Bingo! Society is funded!

I don’t know about the Indian economy or government. But here, we have a consumer society. The social needs are met when people work. People work when there is a demand for the products they make and services they provide. A healthy economy and a healthy society require a healthy workforce. Someone pointed out that one of the reasons health costs are lower in Canada is because the population tends to be healthier than in the U.S. That couldn’t possibly be because socialised health care keeps the population healthier, thus reducing costs, can it?

From what I’ve read, and I admit that I have little time to wade through everything, you offer no solutions. You say that taxation is wrong, and that ‘private tragedies’ should be dealt with through private, voluntary donations. Your ‘solution’ is simplistic, and I’ll tell you why: That won’t work here. I have ‘donated’ to the wellbeing of another person. I couldn’t afford it, but if I didn’t this person would have been living in a vehicle. Individuals ‘donating’ funds to other individuals is not a good solution because most people do not have enough money. What about donating to, say, a food bank? I’ve done it, and do it. The personal expense is much lower, and more people are helped. But it’s not enough. To help the most people, the most people have to donate. The most efficient way of doing that is through taxation. And there’s another thing. Do you listen to public radio? Only 10% of listeners donate to the one I listen to. The other 90% are getting free entertainment. Shouldn’t everyone contribute? Of course they should. But they don’t. Why would donating to a hospital be any different? ‘Someone else is already contributing, and I want a bigger TV! Big TVs are expensive. Someone else will donate. I don’t have the money because I want to spend it all on myself.’ How do you ensure people donate their fare share? How do you keep people who don’t donate from using the services they didn’t pay for? Assuming you can get everyone to donate voluntarily, how do you balance the services in places like Los Angeles or New York or Seattle, which have a large population base and so the health system would be well-funded, with Arlington and Hoquiam, Washington that are much smaller and where half the people are unemployed? Do you say, ‘Sorry. You’re poor and live in a poor area, so we can’t afford to treat you.’?

No man is an island. Each individual is part of society. Private health is a public good. People support society, and society, in turn, must support the people. Are there people who take from society and do not contribute? Of course there are. Some of them are mere takers, but most who don’t contribute are unable to contribute. Did you know that a car’s engine is a more efficient heater than it is a powerplant? We use them anyway, even though they are inefficient. We can’t choose to get 100% of the power out of the fuel. We have to accept the inefficiencies for the greater good, and work toward reducing the inefficiencies. But we’ll still have them. In a society many people pay a small amount into it, even though they will never extract all of the ‘power’ they input. Trying to have the good things society provides while ignoring the non-productive parts is like trying to drive your car without generating any heat. It can’t be done. I could do things that make my own engine more efficient, but that’s not going to improve the efficiency of all of the other engines. It’s a good thing for me, but not for the fleet. So with voluntary donations. They help where they’re applied, but they don’t really help the system. Individuals must contribute to society as a whole to make it work. Since the vast majority of people will not voluntarily support society, the only way to keep things moving is through taxation.

[Voyager]

@bldysabba

Mine isn’t a purely philosophical position. And of course you’re right that the UK is not socialist. But I think it’s instructive to examine why attempts to implement Socialism failed. My (very considered) opinion is that it failed because governments tried to take on too much, and because of the factors I presented in the last post (diffuse accountability, poor information) governments are not equipped to take on too much. The question then becomes - where and how do you draw the line? And to me, after a pretty reasonable amount of study the answer is clear - public goods are the domain of the government, and private goods are the domain of the market.

You’ve mentioned air as a public good and food as a private good. I think you make this distinction just because air is free. Say we are living on the moon where we pay an air fee. Person A gets injured and loses his job, and can no longer pay the air fee. Do we tell him to get his friends to give him money for air, and let him suffocate if he cannot, or do we consider air a public good. We can substitute food for air right down here.
I’d say that the dividing line between public and private is the necessity of that item. A TV is not required for life, so the government need not care about whether a person has a TV. Food, water, air, housing and healthcare are all necessities.

In the case of India (and many, if not most developing countries) I’m confident that the problem lies in not focusing on providing public goods - law and order, primary education, public health(sanitation, vaccination, basic primary care), and focusing instead on emotive appeals towards providing private goods like food, housing and employment. The problem is that NOTHING gets delivered - neither public nor private, because governments are over extended and accountability is diffuse, while markets are ill equipped to deliver public goods, and the markets for private goods are distorted by heavy government involvement.

Plenty of countries in the world can and do focus on both at once. Incompetence in one are probably implies incompetence in the other.

Of course in developed countries public good provision is already at an advanced stage, and at that margin you may think it is ok to err towards some private good provision by government. I just think it’s not a smart move.

And you haven’t given a good reason why it is not a smart move, since plenty of prosperous countries do it. I get that you are somehow offended by the government paying for an expensive life saving operation instead of a guy starting a kickstarter for it. I’m unaware of any ethical system which can justify the proposition that a person’s right to life is directly dependent on how many Twitter followers he has. The founding documents of the US speak of our inalienable rights to life, liberty and the pursuit of happiness. There is no footnote saying only applicable to those who are rich or who have enough rich friends to pay for lifesaving procedures.

We don’t live in Victorian England. My reasoning isn’t to cut all support so that the poor should be dumped in the deep end and sink or swim. It is so that the poor don’t look towards the goverment to solve all their problems in procuring private goods. They most definitely should look to society, and society should step up, and I think it would. People are already incredibly kind and generous. I think if they were freed from the expectation that their tax money is supposed to help feed and provide healthcare to the poor, I think people would donate, and pick their donations wisely, because they cared about whether their money was helping or not (solutions like givewell.org would be prominent IMO). May not happen instantly, but I think it would.

The reason we’re not living in Victorian England is that we’ve decided that this is a cruel and unsupportable policy. I used it as a counterexample to your contention that people will donate.
Not just that, but as the US recently discovered, an economic crash causing more demand for things like food banks also reduces the ability of the general public to pay for things like food banks - which are private charities. The government does not have this kind of restriction.
And one wonders how many people will die who don’t need to while the process works itself out - if it ever does.

Here’s the thing though - if they didn’t care about healthcare for the poor, and didn’t donate in large enough numbers, then on what basis can we claim legitimacy for using tax money for the same purpose? Especially since there are no externalities involved?

This is not the way people work. Government support for the poor depends on legislators voting for it, and voters supporting legislators who do. This is a very indirect method of payment. Charity is a very direct form of payment. Do you seriously think that if we cut the portion of taxes going to pay for welfare and food stamps and the like everyone would immediately donate that amount or more? Not bloody likely. Plus, there is a thing called the endowment effect. Things you have have more value to you than things you don’t have. This has been experimentally verified. Money taken from us in taxes before we see it is worth less to us than money we have which we think about donating to charity. That is another reason in the real world the level of donation will never match the need. (And never has.)

[bldysabba]

@Johnny_L.A

You may have read that verse before, but you seem not to have understood it. Aside from the moral issue, which says that people are valuable even when an individual’s value is not apparent, it reminds us that people contribute to society.

I understand and appreciate Donne just fine, thank you. To me, he is worth more on some things more than others, but even on this issue, I understand and value the sentiment he’s trying to express. If you read my posts, I do not at any point deny that individual people and individual lives have value to society, nor that we should try and help those who are unfortunate or otherwise unable to help themselves. My point is that we cannot and should not force people who do not want to - unless we cannot stop them from free-riding on our efforts and enjoy benefits that they do not deserve.

Helping someone who is ill and cannot afford to pay their medical bills for tertiary care has NO externalities. The people who help them from wanting to help benefit because they want to help, and they feel good that they have helped. The person who is helped gets better and goes back to work - for which he is paid. You say he also consumes and pays his taxes henceforth. Here’s the cold economic calculus I spoke about before - if his consumption and taxes are going to be worth what his care costs, (and with functioning financial markets), he could afford the care himself. This is something like your Ford example again that I refuted in the other thread. The math doesn’t add up. There are no externalities here. This does NOT mean I think he should be left to die. But it does mean that tax money should not be used to pay for his care. Tax should only be used for those things we cannot stop from benefitting everybody. Those things which affect everyone and we cannot prevent people from free-riding on. Those of us who feel that poor people who need advanced medical care deserve help, should provide it, and in my eyes, we would be a ‘normatively’ better society if no poor person went without medical care. But not if we used tax to try and get there. Forcing people to do good makes us less good overall, not more.

[Voyager]

@bldysabba

I have no problem in theory with medical insurance as a method of risk pooling where people are concerned enough about low probability catastrophic risk (like you recount) to buy insurance. One could perhaps even make the argument that people being irrationally optimistic, they should be forced to buy insurance (or deposit into HSAs).

In the US medical expenses above a certain level of your income are deductible. That is not to encourage a high level of expenditures, but to recognize that these are not elective expenditures. Encouraging people to buy insurance, which makes insurance cheaper by increasing the size of the risk pool and avoids those without sticking hospitals with the bill when they go bankrupt is certainly a public good. In the US the issue has not been convincing anyone but the young to buy insurance, but in making insurance available to those who cannot get it, either due to expense or pre-existing conditions.

However, there are two problems with that where health care is concerned. For one thing medical insurance as it stands doesn’t work like that - insurance has been given tax breaks to artificially inflate demand for it. It has then been used to pay for every medical cost you incur, not just low probability catastrophic risks. This drives costs up to begin with when large parts of your population are healthy, because you have the money from healthy people and unhealthy people to pay for problems only unhealthy people are having. There is no pressure to innovate to reduce costs(not to mention additional overheads for insurance), and you end up with the sort of high prices you have in the US. But this is just a fault of how the system has developed, and can be mitigated by changing the model for medical insurance to restrict it to low probability catastrophic expenditure.

I have a health care reimbursement account, which allows you to put pre-tax money into an account used to pay for medical expenses not paid by insurance, and I can assure you that insurance does not pay for everything. And I have excellent insurance. Many people in the US have high deductible policies already.
You split the population into healthy and unhealthy people. There is a slight problem with this - you can do that only for a particular point of time. Healthy people can become unhealthy over night, and unhealthy people can become healthy again. The justification for forcing the young to buy insurance (or pay a penalty) is that they are not going to stay young, and that the system cannot afford for only those with above average expected medical costs to buy insurance.
What counts as catastrophic varies greatly with income level. One person might find a $10,000 cost unsustainable, while another might find it painful but tolerable. Bill Gates can pay for anything and not even notice. Since costs are not bimodal, people who buy this kind of insurance usually wind up with a fairly big insurance bill and often moderate to high unreimbursed expenses, for procedures falling under the catastrophic threshold. We’ve already been through why the healthcare market is different from the car market.

This is where the second and perhaps bigger problem comes in - the risk of high expenditure events is not exogenous i.e it isn’t truly random. The die is loaded against some people. And we are beginning, more and more, to be able to identify indicators of this. What that would result in is ever higher premiums for folks that are at higher risk, and an ever increasing number of healthy people that would choose not to participate. That defeats the purpose of risk pooling. And to solve it by forcing everyone to buy insurance, as I think the US has done, is IMO not a good solution.

The easy solution to this, which the US has adopted, is to not let insurance companies charge more for higher risk. (And they haven’t just charged more - they’ve excluded people from purchasing private insurance.) This is because it is immoral to punish someone for something they can not control. Charging more for smokers, say, is different.

[Johnny_L.A]

@bldysabba

This is something like your Ford example again that I refuted in the other thread.

Frankly, I find that your posts contain many words but say little more than ‘No, you’re being simplistic. I don’t have a solution, but I’m sure you’re wrong.’ I don’t recall your refutation of the Ford example, which I contend did much to improve the lot of Ford’s workers and was one of the prime movers of our economy.

Give us solutions instead of just waving things away. Bottom line: Voluntary contributions do not work. They never have worked, and they never will work.

[HoneyBadgerDC]

I kind of like the thought that a person who earns $2,000,000 over his lifetime knows going in that if he just wants good but standard run of the mill healthcare it will cost him 10% of what he makes or $200,000 for him and his family. If he chooses and can afford private health care he would get back maybe 50% of that. Companies who currently pay for healthcare could adjust salaries accordingly. If it stayed private under this system unethical medical billing practices would probably run rampid. The percentage could be adjusted according to how costs run, if they couldn’t save us money and increase the quality of healthcare then we know we have a real problem somewhere.

[bldysabba]

@Johnny_L.A

Frankly, I find that your posts contain many words but say little more than ‘No, you’re being simplistic. I don’t have a solution, but I’m sure you’re wrong.’ I don’t recall your refutation of the Ford example, which I contend did much to improve the lot of Ford’s workers and was one of the prime movers of our economy.

Give us solutions instead of just waving things away.

I plead guilty. In my defence, I don’t claim to be doing anything more than what you accuse me of (in terms of not offering too much by way of a solution. I’m not trying to call you simplistic. Arguments, perhaps. I apologise if I came across as denigrating anyone at any point).

Here, I’m trying to make a very limited point that tax money ought not to be used for private goods because it leads to distortions that eventually end up hurting more people than they help. This may not be the best of all possible contributions, but in my head I’m trying to counter a mindset that I think will cause more pain for more people.

One possible solution, that would address some of my concerns, if you MUST have tax, is to create a directly elected regulatory body/commission with the power to tax and regulate healthcare issues. It prevents problems of diffusion of accountability at the very least, even though it still creates distortions.

Bottom line: Voluntary contributions do not work. They never have worked, and they never will work.

I don’t agree. I think people are better than you give them credit for. If we try and harness the inbuilt desire to help that most people have(and they do), people can achieve remarkable things. If we try and force people to do something, they’re just going to resent it.

As for the Ford refutation, Here it is again, for easier access. Bold font mine.

Quote:

So, if creating that blue collar middle class that could afford the cars wasn’t why Ford brought in his $5 a day wages, what was the reason?
Actually, it was the turnover of his staff.
…
In 1913, Ford hired more than 52,000 men to keep a workforce of only 14,000.

…

It’s also not true that the offer was of $5 a day in wages. It was all rather more complicated than that:

The $5-a-day rate was about half pay and half bonus. The bonus came with character requirements and was enforced by the Socialization Organization. This was a committee that would visit the employees’ homes to ensure that they were doing things the “American way.” They were supposed to avoid social ills such as gambling and drinking. Women were not eligible for the bonus unless they were single and supporting the family.

…

And as a final nail in the coffin of the argument that it was done so that the workers could afford the cars, there’s this.

Car production in the year before the pay rise was 170,000, in the year of it 202,000. As we can see above the total labour establishment was only 14,000 anyway. Even if all of his workers bought a car every year it wasn’t going to make any but a marginal difference to the sales of the firm.

**We can go further too. As we’ve seen the rise in the daily wage was from $2.25 to $5 (including the bonuses etc). Say 240 working days in the year and 14,000 workers and we get a rise in the pay bill of $9 1/4 million over the year. A Model T cost between $550 and $450 (depends on which year we’re talking about). 14,000 cars sold at that price gives us $7 3/4 million to $6 1/4 million in income to the company.

It should be obvious that paying the workforce an extra $9 million so that they can then buy $7 million’s worth of company production just isn’t a way to increase your profits. It’s a great way to increase your losses though.
**

[Voyager]

It strikes me that employer paid or subsidized health insurance is exactly the thing bldysabba seems to want. They provide it to employees because employees are valuable to them, and both as a recruiting tool and as a way of keeping employees working and thus healthy. Further, many big companies are self-insured, and do not agree with the contention that insurance covering a lot is in some way bad.

And, just as you’d expect, employees either not that wanted by a rich employer or wanted and employed by a poor employer get the shaft.

BTW, if he says IMO once more I’m going to scream. Some justification and facts, please. Also, please show the bad effects of tax supported UHC as in Canada and the UK. They seem to have better results at less cost. They are both counterexamples to the claim, so the claim can be said to be falsified. Medicare in the US is also highly successful.

[bldysabba]

I’ve already mentioned (and backed up) how new drug development in other countries is subsidised by US drug spending, and by foreign(typically third world) trained doctors. So the costs that they report spent on healthcare do not reflect true costs. Here’s some data on charitable giving by Americans

Individual and Family Philanthropy

88% of households give to charity.1
The average annual household contribution is $2,213 while the mean is $870.1
Americans gave $298.3 billion in 2011. This reflects a 3.9% increase from 2010

It certainly seems to be on the right sort of scale to be able to help the proportion of poor that require advanced healthcare. Not off by orders of magnitude or anything.

But it’s clear from your post that you’re not reading nor bothering to try and understand mine. Which is cool. You’re under no obligation to. I would appreciate it if you didn’t try and project opinions that you find distasteful onto me though.

[RickG]

@bldysabba

Here’s some data on charitable giving by Americans

It certainly seems to be on the right sort of scale to be able to help the proportion of poor that require advanced healthcare. Not off by orders of magnitude or anything.

A little further down on that link you will note that about a third of that charitable giving is to “religion”, and only 12% to “human services”, which I assume includes, at least in part, charitable giving to health care.

Now religious organizations in the US do provide some health care (notably Catholic hospitals), but that’s only a small fraction of their portfolio.

An awful lot of that ~$300B in charitable giving would have to shift entirely to medical care to cover even a small fraction of US healthcare spending, which exceeds $2T, IIRC.

[Terr]

@RickG

An awful lot of that ~$300B in charitable giving would have to shift entirely to medical care to cover even a small fraction of US healthcare spending, which exceeds $2T, IIRC.

It only needs to cover a small fraction of US healthcare spending - the part that is spent on those who very much need it and cannot possibly afford it. That’s way less than $2T. And why would those charities do it now when the government/hospitals do it for them?

[Really_Not_All_That_Bright]

Why would they do it now when they never did it in the past?

[Voyager]

@Terr

It only needs to cover a small fraction of US healthcare spending - the part that is spent on those who very much need it and cannot possibly afford it. That’s way less than $2T. And why would those charities do it now when the government/hospitals do it for them?

Total Medicaid spending is over $413 billion. So while it is a fraction of $2T it is a big fraction - and more than total charitable giving.

I invite charities to pick up the slack in states where Republican governors refused to expand Medicaid. Think that’s likely to happen? Me neither.

[Terr]

@Voyager

Total Medicaid spending is over $413 billion. So while it is a fraction of $2T it is a big fraction - and more than total charitable giving.

Are you talking about eliminating Medicaid? If not, how is that number relevant?

[clairobscur]

@bldysabba

Helping someone who is ill and cannot afford to pay their medical bills for tertiary care has NO externalities. […]

Tax should only be used for those things we cannot stop from benefitting everybody. Those things which affect everyone and we cannot prevent people from free-riding on.

That tax money should be used only for these things is merely your opinion, and I disagree with it.

[RickG]

@Terr

Are you talking about eliminating Medicaid? If not, how is that number relevant?

The discussion had moved to the proposition that tax money should not be used to pay for private goods, of which (tertiary) health care was posited to be one. The interlocutor further posited that voluntary contributions, presumably to charity, should suffice to cover the expenses of those who could not pay. I and others were expressing skepticism. Even if only a fraction of Medicaid were in the category of tertiary medical care, current levels of charitable giving in all categories would have a tough time meeting the need.

Perhaps the lower tax rates possible with no social safety net would lead to massive increases in charitable giving, but I doubt it.

[HoneyBadgerDC]

I think besides the fact that we have too many uninsured in this country healthcare costs in general are just talking too big of a junk out of the average Americans income. Much larger than we need to be paying considering the level of care we are getting.

[Voyager]

@Terr

Are you talking about eliminating Medicaid? If not, how is that number relevant?

Our friend was. I apologize, I thought you were following the conversation. His position is a bit more extreme than most or any conservatives I’ve read.
If he were running a state he’d reject not just the expansion but Medicaid at all, expecting that the kindness of strangers would take over.

Catch up and tell us what you think.

[Really_Not_All_That_Bright]

@HoneyBadgerDC

I think besides the fact that we have too many uninsured in this country healthcare costs in general are just talking too big of a junk out of the average Americans income. Much larger than we need to be paying considering the level of care we are getting.

In theory, these should come down within a year because of the 80%-of-premiums-to-care requirement.

[HoneyBadgerDC]

I am not sure how to word this question. Concerning the money that americans pay into healthcare through direct payments, insurance, taxes, federal governemnt etc. If compared to other industries how would this money be redistrubted or say how many people are receiving salaries per 1,000,000,000 dollars income. Suppose an oil company may pay 10,000 employees for a billion is sales. How would the medical proffession rate including people who make medical machinery, remodel and build hospitals, all aspects. If this is hard to understand i will try and think of a better way to put it.