If Any of Us Showed Up to Work Like This, We'd Get Fired

Steven Horwitz

The next time someone tries, with a straight face, to tell you that the Senate is the world's greatest deliberative body and that elected politicians take their jobs seriously, or that reforming health care was a moral imperative that reflected the utmost in careful thought and planning, just show them this clip of Sen. Max Baucus (D - Montana) drunk off his ass debating health care on the Senate floor.  Too drunk to drive, but drunk enough to argue for nationalizing a sixth of the US economy.  Do we need an interlock system for the voting buttons in Congress?

Comments

[Mario Rizzo]

The drunk Sen. Baucus says the same things that the "sober" one does. Poor.

[mcangeli]

Sad thing is that nothing about the health care reform process has been bi-partisian.

The left hasn't listened to anything the right has had to say, in fact, they've done most of the work behind closed doors....

[Dave Prychitko]

Drunk, but not drunk off his ass. Probably drives well under this state, too.

[Matt]

He asks the Republicans, "Where's the courage?"

Max, I think you drank it all.

But in defense, I'm from Montana and I can say from first hand experience that there only three things to do in Montana- ski and get drunk...

[Matt Stiles]

I'd rather them spend their time drinking and slurring nonsensically than actually doing something.

Less damage that way.

[Tom Dougherty]

Hmmm. I am not too sure that he was drunk. Maybe he had a benadryl and was drowsy.

[Barkley Rosser]

mcangeli,

I think that if the GOP and Dems had actually negotiated, something much better, or at least a lot cheaper, could have been achieved. The GOP could have gotten cost-reducing malpractice tort reform, and, although I know this is a horror for most here (if not for Hayek in RTS), a competition-increasing public option. As it is, and I have a niece who was covering the whole thing for the AP, and I have heard that there was no effort by either side to engage in such a negotiation (I think practically only maybe Obama and McCain could have done it, but if there was ever a conversation about such a possibility between them, it remains unreported).

As it is, there is no substantial change in the current system, all the talk of "nationalizing one sixth of the economy" aside, which is not what is happening (are any healthcare workers or hospitals or insurance companies going to be owned by the government as a result of this?). Yes, there is an increase in regulations (no more insurance companies denying people coverage because of pre-existing conditions, oh woe is us), and there will be government-mandated exchange programs, which look to me to actually increase competition and possibly lower costs, although there will be an expansion of medicaid, which is hiding the costs given that much of that is financed by states. The CBO says the whole thing actually will save money, but it is not counting those states paying more for the already onerous medicaid, and I suspect the booked cuts in medicare spending are not going to happen.

I said this before and will repeat again. There are basically six different medical systems in the world: 1) more or less pure laissez faire, which the US used to have, but which no high (or even middle) income country now has, 2) the US system of many uninsured, some government coverage (medicare and medicaid) with a for-profit insurance system, 3) universal coverage by non-profit but private insurance companies, Switzerland and the Netherlands, 4) universal coverage with non-profit but private insurance companies covering most through their places of work, with a public option covering the rest, Germany and France (rated by the WHO as having the best system in the world), 5) universal coverage under a government-single-payer, but health care workers self-employed, Canada, and 6) full-blown socialized medicine with health care workers employees of the government, UK and the former USSR.

The current bill does not even move us out of system 2), just expands it to cover a few more people and throw in some extra bells and whistles, and most certainly does not "nationalize one sixth of the economy." So, there may be many reasons to oppose or criticize what the Senate passed, but all the hysteria about socialism and this and that is just a joke.

BTW, if anybody out there thinks that there is something wonderful or magical about a for-profit health insurance system, let me ask you if for-profit hospitals in the US are more efficient than the non-profit ones (we have both). A nice little piece of homework for you all to go check out, hack, cough...

Oh, and happy new year everybody.

[Roger Koppl]

Barkley,

The usual short description of the bill we get in the news matches your description and does not represent that big a change. As you might know, I have chided a commenter on this blog for the sort of exaggerated remarks you rightly dismiss. I worry about the fine print, though. Earmarks and all that. What are we really getting? I don't think anyone knows.

I don't know about the efficiency numbers you refer to, which show, presumably, greater efficiency for non-profits. My prejudices are against the idea that they are very informative. It might be that for profit hospitals push a lot of unnecessary tests on their patients or something like that. Sure, why not? But it might also be that their fear of litigation aligns their behavior with the risk preferences of their patients. Or they provide more agreeable service that is medically indistinguishable. Or something else. Their must be really a lot of unobserved variables. I imagine we have reasonable numbers on "adverse events," but lots of bad medical events come shy of the threshold for "adverse event." So there could be an unobservable difference in quality. I'm Chicago enough to change my mind when confronted with good disconfirming observations. I am also Vienna enough, however, to correct bad empirics with good theory!

[Barkley Rosser]

Roger,

Actually the results are "inconclusive." They appear to perform about equally. But this undoes the usual assumption. Certain kinds of services do not seem to do better in for-profit forms than non-profit (which are not state-owned, I note). A more dramatic example is universities. Anybody reading this prefer to either attend, work at, send their kid or grandkid to the University of Phoenix rather than say, NYU? (where one can get that Rizzonian peace... :-)).

[Roger Koppl]

Good point about state ownership!

[Peter G. Klein]

Actually I can think of many cases in which a student would be better off attending UoP than NYU, given the specific services received at the prices charged. Barkley's analogy is a perfect illustration of a major flaw in the health-care debate, the treatment of "health-care" as a homogeneous commodity. People don't buy and sell "education," they transact for particular pieces of instruction, particular courses, books, reading lists, access to other people, etc. Likewise, we don't produce and consume "health-care" but specific, discrete goods and services (procedures, medications, insurance policies, etc.). Saying NYU is "better" than UofP makes no more sense than saying a week at Mt. Sinai is "better" than a trip to the Wal-Mart pharmacy. Providers of health-care services produce radically heterogeneous commodities that can't be lumped together. That's one reason why discussions of "universal rights to health-care" are so silly. No one can say what constitutes a unit of "health-care," let alone how many units each person is entitled to.

I blogged about this earlier in the year:

http://organizationsandmarkets.com/2009/08/11/heterogeneity-and-health-care/

[Roger Koppl]

I'm not sure I really get your point, Peter. Food is heterogeneous, too, but we can still have soup kitchens, food stamps, and WIC vouchers. We do indeed have lots of fuzzy language in the "healthcare" debate as with any other public issue. For starters, we are not really discussing healthcare at all, but health insurance. But I don't think I see how your point about heterogeneity really does any work.

[liberty]

Barkley,

Who ever said that for-profit is better than not-for-profit?

My understanding is that Austrians distinguish between privately owned and socially or state-owned, not between firms that set prices in such a way as to reap profits and reinvest them versus firms that set prices at a level sufficient only to avoid loss (for charitable reasons, for example).

Austrians (unlike neoclassical economists) do not assume profit maximization, but recognize myriad motivations and complexities in human thinking and behavior. Austrians instead focus on institutions, and the way they shape the choices that these complex humans make - and especially when they create necessities, such as avoiding loss (under private property) or setting targets or planning (under public property).

So, your examples of non-profits do not demonstrate anything about a public option, intervention or socialization - they are examples of the market at work. They are examples of options that exist under a system of private property.

[Peter G. Klein]

Roger, I was simply responding to the statement, "Certain kinds of services [e.g., health care] do not seem to do better in for-profit forms than non-profit (which are not state-owned, I note). A more dramatic example is universities." Perhaps the statement was meant as a snark, in which case I shouldn't have responded.

I do think, however, that the heterogeneity point is important in these discussions. What problem, exactly, is health-care "reform" supposed to solve? The answer is usually stated in platitudes: "some people don't have health care" or "health care is too expensive" or "the US spends too much on health care." Now, statements like "third-party health insurance gives patients and providers an incentive to consume more of procedure X than they otherwise would" make more sense, but even then it's hard to say what the "optimal" amount of X would be in the absence of the various market distortions we all know and love.

It's also very hard to make meaningful statements about efficiency in the provision of intangible services, like health care or education (e.g., "The Canadian system is more efficient than the US system"). I once saw a seminar presentation on hospital efficiency -- one of those stochastic-frontier productivity models that attempts to measure technical and allocative efficiency in terms of distance from the frontier. Output was measured as discharges. Someone pointed out that a hospital that killed all its patients immediately after they were admitted would have the highest efficiency score in the sample. The speaker agreed.

[Barkley Rosser]

liberty,

You are right. Nobody mentioned non-profits, and the idea of turning our for-profit insurance companies into non-profits was never remotely on the radar screen, even if improving malpractice tort law and the public option were (the last arguably an actual move towards the "nationalization" alleged in the original post). Most of the other systems (see #'s 3 and 4 on my list) that are not too far from the US's involve using non-profit private insurance companies. As it is, some of the more prominent (and popular) elements of what was passed in the Senate involve putting rules on our for-profit insurance companies to keep them from doing outrageous things that are only justified by them pursuing their profits, e.g. the refusal to take on patients with preexisting conditions. I will only note that much classic Austrian literature (think Mises) does stress that the pursuit of profit is very important for economic efficiency to be achieved, so it is not entirely out to lunch of me to presume that many here might assume that for-profit organizations will do better than non-profit ones.

Peter Klein,

Maybe UofP is better for some people than NYU, but I think most of those people are "challenged" in some way or other, not whom most here would like to go to school with or send their offspring or other relatives to attend with (unless those people were themselves "challenged"). Fine. I have nothing against UofP, and I gather they are expanding (I see their ads plenty). It is a free market, more or less, so let them do their thing. But I am not holding my breath that any of them will become the next Harvard, much less Hillsdale College or Auburn University.

Regarding the "efficiency" of the US health care system, well, that is hard to measure for sure. However, the following are well-known facts. The CIA World Factbook lists the US as being 8th in world real per capita income. It is first by a long shot in money spent on health care, about 50% higher than second place Norway, which has a higher real per capita income than the US. Indeed, the US spends a higher percentage of its GDP on health care than any other country in the world, not just more in absolute real numbers.

Nevertheless, according to the CIA World Factbook the US is 50th in life expectancy and 44th in infant mortality (just behind Cuba). I don't care how you measure it, but there is no way such a record can be remotely labeled as "efficient," spending far more than anybody else for such terrible bottom line results, although our top end care for elective surgery is certainly the world's best.

So, I know there are caveats. We eat a lot more than others, which damages our life expectancy. However, we are better on smoking than many others, which cuts the other way. We have more immigrants than many others, and they have bad health problems. But then some others who do much better than us for less money also have lots of immigrants, think Switzerland and France. We have a higher premature birth rate than other countries, which damages our infant mortality rate. However, premature births are known to occur more for people who have little pre-natal care, and it is well known that avoiding pre-natal care is something very common among those lacking health insurance (and, hack, cough, we remain the only high income country in the world without universal coverage, and that will still be the case even if the Senate bill becomes law). One might also note that we have greater income inequality and a higher poverty rate than most other high income countries, and there is evidence that these are independent factors affecting health performance, but I do not think that is a point many here wish to pursue as an argument against this or any other health care bill.

I would note, quite aside from not doing such things as tort reform nor setting up a nationwide exchange program, there are many other things besides the overloading on medicaid that are not good in this bill. Roger is almost certainly correct that it probably contains some unpleasant stuff that we do not know about, and certainly the dirty deals to get it through the Senate are not appetizing to look at. However, the original charge that this bill would "nationalize one sixth of the US economy" was way overdone, and I stick with pointing out that whatever its flaws, this bill barely moves the US health care system from what it is.

[Roger Koppl]

I'm still not really tracking, Peter. Yes, it is hard to know what is "efficient" in healthcare. So what? If it is inefficient to feed the hungry, then efficiency be damned. I'm sure you would agree with that sentiment. Is "healthcare" different? We can't hope for an efficient insurance program to come out of Washington. We might still wish to extend coverage to the uninsured, mightn't we? I'm still just not seeing where your point really cuts into the issues. Forgive me if I'm being a bit slow on the uptake.

[Bob Murphy]

I'm self-employed Steve. I get drunk all the time before I start working.

[Peter G. Klein]

Barkley, you're exactly making my point. You have to disaggregate. The indicators you list just aren't very meaningful at the level of an entire nation, particularly one as large and heterogeneous as the US. There's no such thing as "the" US health care system. There's a multitude of plans, programs, services, providers, and so on. The aggregate data are misleading at best.

For example, infant mortality and life expectancy rates vary widely among subsets of the US population. (For instance, the infant mortality rate for blacks is twice that of whites.) I don't have the data at hand, but I'm fairly sure that if you take matched samples of Americans and, say, Norwegians -- i.e., find a group of Americans who are similar to the median Norwegian in demographics, occupation, lifestyle, etc. -- you'd find that the Americans are just as healthy as the Norwegians. It has little to do with "the" US health-care system or "the" Norwegian health-care system. BTW, I read recently that the group in the US with the lowest infant-mortality rate is women of Cuban descent, suggesting that the Cuban infant-mortality rate you tout above has more to do with genes or culture than with the Cuban government's health-care programs.

In short, the devil is in the details, details that are totally squashed when you use only national-level data. But why on earth is the nation the appropriate unit of analysis?

(Roger, does this help?)

[Barkley Rosser]

Peter,

Well, your disaggregation may lead us to not be able to say that the US system is definitely worse than others in terms of its outcomes. However, we can still look at what we are spending for those "not necessrily worse than others," which happens to be 50% more per capita than our nearest competitor. Do we need to be spending so much for this not all that outstanding system? I would agree that the current bill, unfortunately, for reasons already discussed, probably will not do very much to address this problem.

[liberty]

Barkley - what about the data that shows that after diagnosis (and we have higher diagnosis rates as well) the US has by far the best cancer survival rates, with life expectancy after diagnosis of I think 6 out of the top 10 cancer-killers about one third higher than the UK and France? There are other such statistics for some other diseases.

And on infant mortality - as I understand it, we have more premature births because (a) we try to save premies rather than abort them more often - maybe because we are a more religious nation and (b) we count them as deaths when we fail, while in Europe and the UK they do not count deaths that occur before a certain number of weeks as infant deaths.

So, maybe you think this is all a waste - but consumer choice (and incentives driven by intervention) has determined that we want to spend more on MRIs and mammograms and other diagnostic tools (which has led to more and earlier diagnoses of things like cancer), and we want to spend more on radiation treatment perhaps, and we want to spend more on saving premature babies, and saving babies that have diseases, and so on.

So, we are a spoiled nation of religious nutcases perhaps, that want to use every technology on the planet to prevent disease and save the babies and the old and the sick - and maybe the cost per life-year (QALY or whatever) is really high and a lot of cost-benefit analysis would say it isn't worth it -- but so what? What if we choose it? What if we - the consumer - choose it, and the governments of other countries don't? What if the marginal benefit is actually worth it and that is why we are choosing it, despite the cost-benefit analysis made by some bureaucrats aggregating a lot of hospital records and pulling a QALY out of a hat?

[Barkley Rosser]

liberty,

Well, lots of people are not able to get a diagnosis.

Some of our higher costs are that we have more high tech than others, good at the top end of our system, which is excellent. We are also partly covering the costs of R&D on pharmaceuticals used by the rest of the world.

Regarding consumer choice, one is limited by what one's insurance company will let one do. One has more choice in many of these other countries with universal coverage, actually.

[liberty]

Barkley - the studies I've seen show that even the poor in the US have better survival rates.

And, I am not sure how in a private system you could have *less* choice than in a system in which there is only one universal provider - how can one have less than no choice?

Isn't that why people flee Canada to come to a private doctor in the US for treatment? Perhaps only those with access to funds (including borrowing) have the full spectrum of choice here, but apparently many people in Canada still think this is something.

Hence those with funds in Canada also have more choice, so long as we still maintain private care in the US.

[Roger Koppl]

@ Peter Klein: Ah! I was indeed being slow to catch on. It looked to me as if you were trying to say that any notion of government health insurance (mandated/provided/subsidized) was somehow a bad idea because healthcare is a bunch of different things. That, of course, would be a complete non sequitur and rather stupid one at that. I now see that you meant only to say that it's hard to sort out national health statistics. I would indeed agree that remark. (As a side note, I personally doubt there are any genetic causes for differences in overall healthfulness among the "races" and ethnicities with which people self identify. I recognize that it's an open question, however.)

Liberty: Why would it threaten the system to extend insurance coverage to a larger number of people? You might not want to do that for various reasons, but I don't see why it would somehow threaten the quality of my care if the state mandates and subsidizes health insurance for much of the population. Isn't that like saying food stamps wilt the lettuce?

[Barkley Rosser]

liberty,

I would remind you of the intermediate mixed systems between that of the US and Canada. And, even in Canada, where physicians are self-employed, one has free choice about which one to go to.

It remains the problem for whatever level of diagonosis that the problem in the US is getting the diagnosis. Given how high our costs are, most people are pretty much stuck with whichever for profit insurer they have, and must do what it says, including no diagnosis.

[liberty]

Roger,

Can you really think of no reason why subsidies might affect the quality of the product being subsidized? Let me give you a hint: when firms do not fear loss they are less likely to serve the customer well.

Barkley,

I could be wrong, but I think the statistics show that we have higher diagnosis rates as well--this is one reason why we have better survival rates. Eventually, cancer becomes self-diagnosing: you don't die without realizing that you got cancer. The question is whether you are diagnosed at stage 1 or stage 4.

Americans tend to be diagnosed at stage 1 while Brits, for example, tend to be diagnosed at stage 2 or later. I also have some personal experience with how this happens: I have known several people here who have gone to the doctor with a problem and been told they must wait three months for a scan. In one case the scan did show cancer. Three months can often be the difference between stage 1 and stage 2.

I don't know where you are getting your statistics, but I am pretty sure that Americans are getting diagnosed earlier and more often than Brits.

[Barkley Rosser]

liberty,

You may have a point here, but the picture looks pretty mixed. Did a bit of checking. US is especially good for prostate and breast cancer. For colon and rectal, Japan and France are tops. Canada and Australia also do well.

I am not surprised that UK might not do so well. Remember, it is system 6 in my scheme, full blown socialized medicine, which I do not support. It also spends much less than other countries on health care, only 8% of GDP, with places like France and Germany more at 1-12% while the US is at 17%.

[Barkley Rosser]

That last line should have read 10-12%.

[Roger Koppl]

Liberty,

I'm talking about subsidizing health *insurance*, not healthcare. Thus, it tends to cut the other way. By reducing the patient's marginal cost of fancy stuff such as early diagnostic tests, subsidized health insurance increases the demand for them, which will improve aggregate health outcomes.

Barkley made a good point about UK having his system 6), which is not on the table for the US. I have expressed a concern over what the current bill really contains, but the short description says it's mostly just extending insurance coverage through mandates and subsidies (to health *insurance*). If the reality really matches the short description, we're talking about a tweak that will likely improve measured health outcomes in the US. Again, you might oppose it for various reasons besides fear of the fine print. But no outcomes meltdown seems likely. On the contrary, the tendency is the opposite.

[Barkley Rosser]

liberty,

It is perfectly consistent to have the US have good treatment after diagnoses, which are early for those who get them, while still having a lousy general performance. Indeed, the issue is coverage. Those 48 million uninsured are not getting those early diagnoses.

[liberty]

Barkley,

For the third time (!) the stats show that rich and poor alike do better in the States once diagnosed--and you can't do better after diagnosis with cancer unless you are diagnosed early. The uninsured show up in these statistics because, as I pointed out earlier, they will have to be diagnosed at some point. The question is only whether they will be diagnosed at stage 1 or stage 4. Apparently even the uninsured in the US get diagnosed earlier than people in the UK.

This is the last I will post, this is getting tiresome.

Roger - good point about the subsidy being only for insurance. You may indeed be correct that this should not affect the quality of care, only the quality of insurance plans.