Thursday, December 10, 2009

Medical Economics for Dummies

Occasionally, a liberal blogger publishes a post that is so stupid, but so perfectly representative of the deranged thinking of the hard left, I have no choice but to respond. It's a dirty job, but somebody needs to do it.

Today Matthew Yglesias posted an ode to Medicare that typifies the willful ignorance of those who contend that a command-and-control economy will save us from the evils of the free market:’s important to understand that [Medicare's] low reimbursement rates are a feature not a bug.

Try explaining that to patients who can't find a doctor who participates in Medicare! Yglesias ignores their plight...but he continues:

Probably the single most persuasive conservative critique of the social democratic agenda is that programs to provide public services have a tendency to become tilted in favor of the interests of public service providers rather than public service users.

I would argue that government-run "public service programs" tend to tilt not necessarily in favor of productive providers, but in favor of politicians and their crooked, politically powerful allies (see: ACORN, labor unions, etc.).

Yglesias builds his case:

Poor people have very little political clout in the United States, anti-tax activists have a lot of political clout in the United States, and public sector unions have a medium amount of clout. So when you set up a program to help poor people, the tendency is for it to be starved of revenue and also for the most powerful advocates for the program to be the providers rather than the clients, meaning that labor costs wind up being a big part of the bundle.

Wow. It almost sounds like liberal Yglesias is saying that public sector labor unions hurt poor people almost as much as stingy rich people do. Interesting...but here's Yglesias' main point:

Medicare is an important exception to all these trends. It’s not a program for poor people, it’s a program for old people. Including lots of old people with high levels of social capital and a large proclivity to participate in the political process. Consequently, there’s strong political pressure for generous benefits...

...there’s a reasonable amount of interest in getting as much health care services per dollar as possible. Consequently, providers are paid enough to make it worth their while to see Medicare patients, but much less than they’d like to make. The result is not a perfect program (far from it) but this particular aspect of Medicare is an example of big government at its best—serving clients’ interests rather than those of providers.

In the private sector, there is a delicate balance between the interests of the provider and the interests of the customer. This balance is constantly adjusted to changes in the market. If a greedy provider charges too much, customers will go elsewhere. If a stingy customer is unwilling to pay enough, the provider can sell the goods and services to another customer. With a competitive market, free from distortions created by power-hungry politicians, the harmony of interests keeps goods and services flowing freely at reasonable prices.

It’s win-win, not zero-sum.

Governments use low reimbursement is an insidious form of rationing. In the health care sector, it’s a form of rationing that will continue to create dire shortages of health care providers and health care resources.

Many on the political left seem to believe that legislators and bureaucrats will somehow be supremely effective, humane, rational, responsive and judicious if given the opportunity control our health care dollars. But legislators and bureaucrats are no more altruistic, beneficent or wise than are clinicians, hospitals and corporate executives. Politicians’ decisions are no less arbitrary, greedy or narrow-minded.

There is one fundamental difference between government and private entities: if you rely exclusively on government for your needs, you can’t shop around when your needs have not been met.

If Medicare is an example of big government at its best, we should all be afraid of big government. A system that “serves clients’ interests rather than those of providers” is no good. If the providers’ interests are slighted, the products and services will dry up. As our wasteful and inefficient Medicare system begins to go bankrupt, we are already seeing this happen. Because of low reimbursement rates and administrative hassles, physicians are opting out of Medicare in droves.

When government chooses winners and losers, the whole system crumbles.


The only doctor in town...Health-care reform hits a small-town reality: Even with insurance, you need somewhere to go.

Medicare Bankrupt in 6-8 Years Without Rationing

Is political self-interest nobler than economic self-interest?

Rich bureaucrats keep getting richer!

Medicare fraudsters rake in billions.

Mayo Clinic alone lost $840 million last year under Medicare.

Why isn't the GOP doing everything it can to stop ObamaCare?

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robert verdi said...

Only someone who has no knowledge or concern with the finances of hospitals could write that piece. Basically he is saying we can cut expenses as much as we want and by magic the hospitals and doctors will keep doing the same thing. In reality hospitals are going bankrupt around the country because more is asked of them as they are getting paid less money leading to the perverse situation that the more business a hospital gets the greater the financial trouble.

Anonymous said...

Allowing sick people to suffer and die costs less than treating them. Treating medical care the same as we treat any other consumer product is economically sound.

RightKlik said...

RV: Eventually they will succeed in creating a collectivist health care system. We'll excel with our public health care system like we excel with our public education system.

G.O.B: We will learn a lot more about suffering and dying when we've finally created health care system that is more like those in Cuba, China and South Korea.

I recommend that you learn something about the tragedy of the commons.

the malcontent said...

And there are plenty of Dummies around these days..