Greedy Goblin

Friday, May 6, 2016

Health care can't be for-profit

"Obamacare" is the biggest problem of the free market believing Americans (libertarians and conservatives alike). Similar systems are running and being discussed everywhere in the capitalist World, like creeping communism.

I'm not going to say that Obama is right. I'd rather call Lucas Kell right than Obama. But I think the free market thinkers are much more wrong in this topic and their wrongness in this crucial topic is one big reason why socialists can win elections. We spend awful lot of money on health care, so we need to be right.

Health care isn't special because life depends on it. Life depends on food, electricity and buildings too and these things are proven to be best distributed by free market. Hell, many subsystems of health care - medicine and medical machine production, hospital maintenance - are already purchased on the free market. So the "we can't let money decide who lives" is a dumb answer. Poverty is already the biggest predictor of short lifespan and money would be much better spent on health nutrition of the poor than trying to save their lives when their heart finally gives up after decades of pumping cholesterol instead of blood.

Health care is special for another reason, and it rules out free market. The problem is that the doctor - unlike any other "service provider" cannot be judged by the "customer". No, not because the customer is uninformed. The customer is always uninformed. I'd bet good money that half of the car owners couldn't explain how internal combustion engines work in the vaguest terms. Not to talk about the usual smartphone user and the hardware he uses. I'd love to stop them and ask "what is a transistor and are there any in your smartphone?". But the customer can take the product as a black box and evaluate its usage. If a car runs, it's a good car. If it stops or goes out of control, it's a bad one. If it's uncomfortable, it's a low quality car. Same for smartphones, food, housing, TV, video games. You don't have to know how they work, only evaluate if they meet your expectation or not. If yes, then you become a return customer and may even recommend the product to others. If you are unsatisfied, you stop using it or even demand your money back. That's how free market works.

The problem is that we get old and then die. Some of us also have genetic defects. This means that even at perfectly advanced health care - unless we change people to something doesn't resemble to our current body - people will be dissatisfied by the performance of their doctor. How can a customer be satisfied when he paid for a service and died or developed a disability? Because that's what will happen with every single one of us. Even with perfect health care and healthy lifestyle, we get old, we get weaker and weaker, we start to lose functions and finally we die. There is nothing the doctors can do about that.

The difference between fixing a car and curing a man is that the car is always fixable. So if a car mechanic fails to fix your car, he is a bad car mechanic and you should get your money back. If the doctor fails to save your legs and you have to live in wheelchair, you probably can't get your money back. Without such "customer satisfaction" metrics, you cannot decide which doctor is a good one and which is a bad, so you can't choose between two health care providers. How do you choose if you have to? Only by irrelevant details like which one was nicer or had better hotel services and whatnot. So in a free market the doctor who spends his money on smiling nurses and politeness lectures will have more customers than the one who has actual medical expenses. If we let free market govern health care, we'll eventually get very nice and friendly doctors who give sugar cubes for every disease. That's homeopathy and it sells!

The quality of the work of a doctor can only be judged by a more advanced doctor and not the client. Therefore the optimal system is hierarchical. It isn't without precedent, there is already a "service" that works this way: justice system. Clients can't pick judges and can't reject sentences they don't like. They can appeal to a "more advanced" judge, but that's it. I think the health care system should be just as independent and hierarchical branch as the judicial.

Please note that I said absolutely nothing about financing this health branch. I was talking about how it works: guy goes to the local doctor (can't choose) and either accepts his diagnosis and treatment or appeal to a higher level. His actions have no effect on the income of the doctor, only his superiors can remove or force to change him. Sure, if a doctor gets lots of successful "appeals", he'll be in trouble. The price of the treatment is a different issue: both the socialist "taxpayers pay for it" and the capitalist "you (your insurance) pay for it or you won't get it" works. But free market as a governing force in health care can't work any more than "free market jury". The sooner the free market believers accept this, the sooner we start to win elections.


Anonymous said...

If I'm not mistaken (and I can't seem to find the post), I think you've written about this some really long time ago, but it had a prevention vs curing component, too. You should link that one too, it was very interesting and only a few people saw it.

Stunt Cock said...

> "we'll eventually get very nice and friendly doctors who give sugar cubes for every disease"

We tried that already. They didn't give out sugar cubes; they gave out laudanum. It made people feel better. Regardless of what was wrong with you (even if nothing was wrong with you!), laudanum made you feel better. People bought shit-tons of laudanum.

If we encouraged people to "make their own informed choice" between painful-and-expensive chemotherapy vs drinkable-motherfucking-opium, cancer survival rates would plummet. Everyone would be happy, though! Well, I suppose that the relatives of the dead might be upset ... but we've got the perfect cure for their sadness: more laudanum!

"Clients can't pick judges"
Read up about binding arbitration clauses, especially in the field of consumer arbitration.

dobablo said...

Free markets require the customer to make (semi-)rational decisions. That cannot work with healthcare because the patient isn't rational and you are dealing with monopolistic industry in which there is very little choice.

The UK's attempt at market based reforms to their health service took an interesting spin on who was the customer. Patients choose a local GP but they are effectively choosing an advocate and delegating decisions to their (rational and well informed) doctor. Hence it is the docter that is the customer of the major health providers to whom they subcontracted patient services. In practice this still has failings because,
a) GPs are overworked and underfunded meaning they sometimes fail their advocacy roll due to failing to understand the patient's problems.
b) When it is coming out of their operating budget, Doctors will always be pressured to skimp on performance and choose cost over quality.
c) The market is still underdeveloped. There is very limited choice in healthcare provider.

Biggles said...

Maybe my earlier comment was a bit too short and failed moderation. I'll try again: In the Netherlands, statistics on healthcare are published nationwide. Think about statistics like death rates in hospitals, amount of certain treatments done by departments in hospitals. This gives the consumer an idea on where to go for which treatment. This information must be available in more countries, meaning that consumers can make a choice based on the proven experience of certain health care providers. Would statistics like this influence your statements at all?

Gevlon said...

@Biggles: but yet again not the customer's personal opinion of the service makes the decision but those who make the statistics (the customer will always pick the "better" hospital)

Also, such statistics were made in Hungary and the University Hospitals where the best professors work were found the "worst" because they got the hardest patients, while badly equipped hospitals with only pensioner or fresh doctors got awesome statistics - since they only treated trivial cases and sent everything hard to other hospitals.

dobablo said...

@Biggles: Even experts struggle to understand healthcare statistics. England is currently looking at expanding its healthcare to a full 7-days a week service because death rates are worse at weekends. Some argue ( that death rates are higher at weekends, not because of lower staffing but because hospitals only admit seriously ill people on the weekend and they are more likely to die.

Then, as Gevlon pointed out, you also have the league table problem. People focus on improving the benchmarks against which they are judged as opposed to improving their work as a whole.

maxim said...

Free market has proven more efficient than any plan when you are dealing with expansion of an existing technology in new spaces.

Free market is vastly inferior when it comes to invention and introduction of new technologies and providing adequate maintenance of old ones.

Basically all the technologies we are using right now were originally invented through a direct effort, planned by government entities. Some credit is due to "pirates of Silicon Valley" like Steve Jobs, Bill Gates and founders of Google, but even in these cases we are not looking at free market in action, but rather looking at people who managed to create closed quasi-monopolistic systems within the free market and are benefitting from those.

Food industries in most countries are maintained through intense protectionism. Also, experts in energy believe that we have significantly underinvested in energy frameworks and are slowly entering a worldwide energy crisis.

jonreece said...

An interesting argument, Gevlon, but sadly one that actually has no bearing whatsoever on the applicability of the US's "Patient Protection and Affordable Care Act of 2010" often called "Obamacare". The ACA is primarily targetted at how care is paid for rather than what that care consists of. You argue that the consumer isn't a good judge of what care he receives, but under the ACA many consumers still make those same decisions.

At it's core, the ACA outlines that US residents must purchase a health insurance plan that meets certain outlined government standards from a small list of pre-approved providers (private insurance companies). People without the means to do so will have their plans subsidized by government hand-out so long as they make their purchase off of the list -- for the poorest, that basically means that they can have the lowest-quality (i.e. "bronze") plan entirely paid by other taxpayers.

Anyone that chooses to not make such a purchase is penalized for not buying an approved product off of the list of government providers by having the tax agency (the "Internal Revenue Service") add a penalty of 2.5% of their income or $695 (individual) or $2,085 (per family) whichever is *greater*.

The approved plans do have to have a list of things that they cover. But these are lists of *conditions* not of *treatments*. Most plans in point of fact don't do any quality control at all -- they just list doctors that one may visit and be fully covered and others that one may visit but will only be partially covered. The question of "covered" or not isn't a quality decision, but rather a question of if that doctor is part of a network that has worked out questions of billing. So quite a lot of pure out and out quackery is still entirely covered.

If you think of the ACA as primarily a financial mechanism to (if you are being charitable) provide a way for citizens to be able to afford healthcare without too heavy a burden on hospitals to be stuck with the bill, or (if you are not) a way for insurance companies to have a captive audience required to pay for a product, you won't be too far off the mark. But it actually says very, very little about the care end of the process -- it's almost all about the administrative and financial side.

So Rearden said...

@Gevlon:I completely disagree with you. The free market is the best way and only moral way to achieve a high level of healthcare.

The basic problem you state is that the consumer can't judge the value of the product he is purchasing. He has to be able to judge the differences between the value offered by competing doctors and allegedly can't because for some reason only superficial details will appear more important.

The truth is that by freeing the healthcare market you allow any number of rating agencies, insurance companies, pharmaceutical companies, doctors and many others to prove to you that their service is better then their competitors. In dealing with these companies the Government is suppose to protect you from fraud. These companies have a financial incentive to provide you with accurate and relevant data at a desirable cost.

I really don't understand why hierarchy has to imply Government as the best suited. The fact of a precedent doesn't imply any sort of idealism.

@Maxim: Your facts are in one case misleading and in the other wrong. Firstly that fact that protectionist plans are holding most food industries together is not a value. The food industries have been shrinking for almost two centuries while providing more food. These protectionist plans stop that shrinking alright, but also the production of more food.

With regard to technologies, the technology sector of the economy is one of the freest sectors in America. The fact that Government funded something and it produced something does not mean that it wouldn't have occurred without Government or in any way take into consideration opportunity costs. Moreover straight up full socialism is unable to produce or upkeep existing new technologies. History has shown that over and over again.

@Dobablo: So whom do you wish to saddle the burdens of all these irrational people on? Your paternalism is thinly masked envy. You are punishing the good people for being good. People are far more rational then you would have people believe.

@Stunt: Lots of people don't take chemo because they are old. In their context prolonged chemo use is unbearable and that possibly extending your life a few more years isn't worth it. I'm all for things that help people live better or cope with their problems.

Provi Miner said...

Health care better be for profit.

Otherwise no one would enter a field in which they are not allowed to earn a profit (some call it salary)

Gevlon said...

@So Rearden: All you provided is textbook propaganda, while not answering my point. So I ask in simple terms: how come that free market can't get rid of Homepathy which is by all scientific data is a scam?

Anonymous said...

The big problem with "nice friendly" doctors who give people what they want isn't the sugar cubes - it's the handing out antibiotics and opiates like candy which results in a) antibiotic resistance which affects everyone, and b) opiate addiction.

There are other services which don't do well in the private sector, basically anything that cannot be allowed to fail. We've seen this with old people's homes, if the provider fails then the state picks up the cost (because otherwise a bunch of vulnerable old people have no care) ... so what's the motivation for the provider to operate a safe, sustainable service?

spinksville said...

The other issue with healthcare as a for profit industry is that providers are motivated to encourage repeat customers. Whereas what's best for patients would be not to need to see a doctor because they are well enough without. As a state run system with a motivation to reduce costs, the government is motivated to put money into public health campaigns because their goal is actually for fewer people to drain the resources of the health system.

So private healthcare is motivated to keep inventing new diagnoses which have to be treated by healthcare, including some medication which may have additional side effects. (You see this a lot in psychiatry -- which has many many really good and effective treatments, but also tends to increasingly label issues as being mental health related.)

And the end result is that people in general get more distrusting of their doctors and of healthcare, they learn to believe in conspiracy theories.

Ulysses Rees said...

@Gavlon I have some experience with health courts in Poland. If patient thinks that doctor fuck up, health court checks it out. All members of that court are doctors, each case is evaluated usually by more then one (judge + experts). If they fail flat on legal procedure (they are not lawyers after all) you appeal to High Court.

There is more, but I guess you get the point - its like your "High Doctor". Health court basically evaluates performance of one doctor and whether he performed his duty according to modern standards. So in essence, its the same thing your High Doctor would do. Judge and experts look at data and wonder if their solution would be the same.

Average time of proceedings: 5 years. Proper evaluation of ones physical condition is extremely complex issue. There is always something you might have missed or should have checked more thoroughly. Since experts know that, hardly any doctors are actually found guilty of malpractice. Last time I checked 12 lost their title over past 25 years.

Besides, think about practicality of your solution. Even minor injuries might result in serious implications. Its hard to evaluate risk/reward in case of medicine easily (its very easy in most judicial cases). You would end up with endless appeals. How many "High Doctors" would you need? How would you evaluate who is eligible for that position?

maxim said...

@So Rearden
It is funny how you think that the facts you present contradict me when they do not :)

The notion of "industry is shrinking while providing more food" is self-contradictory. Unless you are measuring the size of the industry not in product, but in something largely lacking in substance like money. Also, the fact that the industries have been putting out more product under protectionism kind of proves my point.

Straight up socialism is indeed unable to upkeep technology development, but it is not like we can only have straight up free market or straight up socialism with no space in-between. Keep your binary way of thinking to yourself, please.

It is, however, a fact that, despite all the free market expansion, we had exactly zero major breakthroughs in fundamental science for over 70 years. We spend all this time fattenning up Higg's Boson, which we are not even certain exists, just because free market is buying into it. Compare it to late XiX and early XX century, when it took a maximum of 20 to 30 years between inventing a new technology and putting it into engineering practice, because the buyer was not a feel-good free-market, but rather powerful entities with actual goals.

maxim said...

@Ulysses Rees
I think Gevlon's point is that any manner of authority, even inefficient one, will do a better job than free market - that is simply not concerned with the actual job.
You are, however, correct in saying that our authority-enacting procedures still require major work.

jonreece said...

@Gevlon: You ask: "So I ask in simple terms: how come that free market can't get rid of Homepathy which is by all scientific data is a scam?"

You know the answer to this. It's the same answer it always is. Three answers: morons, slackers, and the predators that prey on them.

The free market doesn't give what people need, it gives people what they are willing to pay for. As does, by the way, political solutions -- homeopathy is an alternative medicine that is explicitly protected as an available treatment in the ACA ("Obamacare"). See section 2706 of the act. Why? Well, those same three answers apply, I suspect.

NuTroll said...

"@So Rearden: All you provided is textbook propaganda, while not answering my point. So I ask in simple terms: how come that free market can't get rid of Homepathy which is by all scientific data is a scam?"

Because there isn't a viable replacement for Homeopathy. You won't get rid of Homeopathy for the same reason football will never get rid of the Hail Mary play. By all accounts the success rate of Hail Mary plays are abysmal , yet even if they are 1% successful they would still be tried from time to time. Plus if the Hail Mary fails you can always blame the bad refs (actual doctors and scientists).

But a few M&S spending maybe a couple billion on alternative medicine techniques like homeopathy does not extend to the argument that the majority would be unable to contrast the efficacy of different service types. If anything it sounds like a boogey man by lazy officials to pass off modern day laudanum as fairly priced by comparing it to the alternative strawman.

"We spend all this time fattenning up Higg's Boson, which we are not even certain exists, just because free market is buying into it. "

What free market where?

State sponsored protection of the standard model of physics going into obvious cheese projects (last I heard they want to make another, bigger one). Thats why there have been no advancements in 70 years. It would threaten the bottom line.

So Rearden said...

@Gevlon: The point I was addressing was "Without such "customer satisfaction" metrics, you cannot decide which doctor is a good one and which is a bad, so you can't choose between two health care providers." My point was that you use an intermediary instead of getting the Government to decide for you.

It isn't suppose to get rid of homeopathy for you. It is suppose to make you pay the full cost for using it instead of passing it onto someone else. What the free market does as opposed to Government is allow you to choose a good or bad treatment instead of forcing a good or bad one on you. The principle involved is freedom of thought as applied to healthcare for the individual. The fact it is textbook free market doesn't mean I'm right or wrong and is irrelevant.

Gevlon said...

@So Rearden: but paying full cost for something I can't evaluate is simple scamming. Hey, a "magic blessing" costs me $80 as I chant for 4 hours and $20/hour is a decent salary. Please pay!

Unlike homeopathy, there are no flying carpet vendors on the free market, because people can evaluate that the sold product can't fly. So free market works perfectly if people can tell if the service is good or not.

jkmack said...

This discussion is interesting in several aspects. The primary being that after a systems reaches a certain level of complexity, the morons and slackers overcome the informed, and the politicians exploit this to implement systems that server their agenda, instead of the ostensible reason for the complex system itself.

To claim that how a system is paid for is separate from how the outcomes are achieved seems to be a rather ignorant statement. The whole reason you have distortions in markets is due to a separation of the payer to the payee. And obamacare intensifies that problem, by adding a third layer of separation and then dictating both to the payer what benefits his money is ostensibly going to get him, and dictating to the payee what benefits he will be able to deliver and under what circumstances he can do so. Heart bypass at 82, eh denied....

And to make it all worse, your original proposition, that free marketers lose elections to socialists because x or y fails to take into account the real reasons behind the shift.

Politics follow culture, the beliefs of people inform their decisions. Morons and slackers receive their beliefs from the culture and from the news. They will ignore personal experience, if doing so will alienate them from their group or tribe. Therefore, if you control the media, you control a democratic society. If you control the media and academia, you control the society completely. The socialists have that control currently and are using it to remove many well known basic truths of life from common knowledge.

Thus we have people supporting a $15 minimum wage in places like Seattle, because it feels good to be for helping the working poor, yet after it passes, those same working poor are laid off and have to move out of the $15 minimum wage zone to find work.

A free market should never "eliminate" homeopathy. A well informed actor who has limited resources and freely chooses to spend them as they see fit "may" eliminate homeopathy, but a free market implies freedom, and someone may choose homeopathy for the same reason someone may choose chocolate ice cream, because it relieves some internal strife in their psyche.

Ray Kurzweil, a leading technologist at Google, chooses to spend around a million dollars a year on supplements in an attempt to live until life extension technology can give him more years. That is his choice, a free market allows him to spend his resources, which he earned thru his labors, as he sees fit, regardless of how you view his choices. If that type of freedom is going to elect socialists, then all we have left is fascism where we use the force of the state to make people make the "right" decision. No thank you.

Anonymous said...

Insurance is for people with something to lose. If you need to go to the ER, you go to the ER and they will patch you up the best they can. If you incur a debt in the process, then it is no different than an unsecured loan. If that loan is to be defaulted, it makes sense for the lender to negotiate with the debtor, especially if said debtor is largely bullet proof (ie, broke, low-income, or has other debts with higher priority). In such situations, debtors can usually negotiate for pennies on the dollar. In no circumstances are the hospitals in a position to come and unsew your stitches or re-break your knees.

Ultimately, the law doesn't deal in the provision of health "care," but rather the financing aspect of it. If politicians start running around with scalpels, the police will be coming to us for protection.

A smarter form of insurance would cover the bank accounts of the insured rather than that of the service provider. This would put the premium increases in control of the person seeking the protection. As is, insurance functions largely as a gatekeeper of medical service pricing. If you want to get outpatient care without your gatekeeper doing the negotiating, the price quoted to you as an individual will typically be 10x higher before negotiating. In any other sector of the economy, this would be prosecuted under the RICO acts. Despite Hollywood's characterization as that applying to cases against the mafia, it is far more often applied to prosecution of private business practices by an order of magnitude.

The incentive for the hospitals to go through such a pricing scheme is because there is such a high default rate among their clientele. While they might have long range preferences regarding the quantity of their payers, their more immediate operational interest is in having a -reliable- payer.