Tuesday, July 18, 2006

The health monopoly dilemma

Al over at What's wrong with health care boils it down.

The problems in cancer treatment reflect the problems in our health care system as a whole. Costs continue to rise as treatments improve, decisions (which we are not a party to) are being made to control costs, and patients are not fully informed as to the basis of those decisions. Since we are not fully informed, we are not fully aware of our options. Not being fully aware of our options can lead to erroneous decisions on our part. Some people may feel that their life is worth twenty five thousand dollars a year or more, but are not given a choice.

(emphasis mine)


John Murney said...

David, I support the idea of more choice in health care. With that in mind, here is my question. Will more choice results in higher health care costs? If so, who should bear that cost?

David MacLean said...

Ultimately health costs should be carried by individuals. We should maintain universality, but there needs to be a price component for health services -- it's the only proven way to ensure resources are effectively allocated.

Chad Moats said...

How can universality and individuals carrying the price component work ?

David MacLean said...

Easily. I believe in Switzerland the government makes health insurance mandatory, and then subisidizes low-income individuals to get insurance. When you have a real insurance policy, price becomes a factor because there are always co-pays and deductibles.

"Universality" does not mean "free." It means everyone has coverage, regardless of income.

Chad Moats said...

I'm confused because one already has a choice in the current system,whether to have a procedure,etc. The only way the system you propose would alleviate an overburdened healthcare system is that people will not seek care due to cost, limiting demand.But by making a choice due to cost, you completely wipe any universality.
Why is it that in every other aspect of economics, you push supply-side theroy except for healthcare ?
Does it fit your ideology better ?

David MacLean said...

It's not about limiting demand sor supply. That's what the keynesians did in the 1980s and early 90s by reducing the number medical and nursing programs -- they chose to reduce supply and created a shortage. That is the normal psychology for a state-run health system -- trying to manage supply.

We need to change the incentives. Hospitals must have incentives to meet demand....as much as that demand may be. Health care consumers must be aware of price, and make informed decisions based on that. When there are real incentives, good behaviour (either on the supplier side or on the consumer side) is rewarded through lower costs.

This isn't about ideology, it's pragmatism. Tommy Douglas himself advocated user fees for almost everything.

If there is no price for services, it essentially has no value to anyone except state planners. That is where we run into problems.

Chad Moats said...

The only reason supply was limited was due to pressure to be efficient, and the application of business models for government, from groups such as yours. Then when the system is as efficients as possible the same lobbyists lament about a lack of supply. Seems almost hypocritical.

David you wrote,"If there is no price for services, it essentially has no value ... "
Are stating that the only measure of value is money ?

David MacLean said...

Oh please.

Chad Moats said...

Masterfull debating skills and a solid rebuke. I can't argue with any of it. Congrats David very George W of ya.

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