Wednesday, July 10, 2013

Discussion on health-care, economics and choice

I've been enjoying a lively discussion with an acquaintance on Facebook of the subject of economics and health-care:

Selim : I probably shouldn't bother with this but I don't understand why you believe that a completely free market is always the ideal solution. There are areas where it works (it's great that I can get 31 flavored of ice cream) but there are areas where it creates additional expense and actually works to cut people out of the system, like healthcare. Most countries that have the government function as the single payer have the lowest expenses and the citizens are happiest with the system.

Todd : Selim, it ultimately comes down to morality, and the idea that the ends do not justify the means. There are plenty of benefits to slavery, but that doesn't make it right. Further you certainly can't justify the practice simply because you're not sure who will pick the cotton without it.

Jacob : Could you explain how you think that a "free market" would "cut people out of the system"? One of the features that I find preferable in a free-market, would be the increase of access and the reduction of cost; those seeking health-care services could choose from a plethora of market choices, unrestricted by regulatory-capture, and/or rent-seeking within the medical establishment.

When you point to the "happiness" of places with a "single payer" system, how do we know they would not be even more pleased with a system in which they would have more choice and less cost? I'm concerned that single-payer systems, in their efforts to control costs, artificially reduce (compared to market demand) options for care, while regulating compensation for medical services, necessarily creates a situation of an economic price-ceiling (the single payer limits what it will pay for, even if the individuals seeking treatment would be paying more in a free-market), which leads to a shortage of supply (delays to treatment, treatment options unavailable); as well as the possibility of creating price-floors where the single-payer has higher compensation rates that individuals seeking care would have been willing to pay under free-market conditions.

Since the single-payer cannot know the subjective-values of each individual in terms of what they would be willing to pay in a free-market condition, therefore the single-payer is going to be less efficient at allocating the goods/services to those persons seeking care, than they themselves.

I'm concerned that the price of health-care in largely inflated due to distortion s of the health-care market... and my understanding of economics has led me to a conclusion that individuals seeking their own happiness are better at effecting their own happiness, than would be any third-party attempting to make them happy at the expense of removing autonomy/choice.

Todd : Two old women are waiting in line for government supplied bread in Soviet Russia. The first woman complains to her friend that the lines are a lot longer than the used to be. The second woman smirks and tells the first woman that she shouldn't complain - they could be living in America, where the government doesn't even supply bread.

Selim : Couple of things - Todd - the Canadians aren't enslaved just because they have single payer healthcare.

Jacob - individuals may be good at figuring out what brand of beer makes them happiest, but healthcare is much more complicated and the reality is that most people don't have the scientific and medical expertise necessary to make the best healthcare decisions.

And the reality is that healthcare costs are vastly inflated in the United States, where administrative costs for all of our vaunted healthcare choices take up close to 27% of our healthcare money, compared to places like Canada where administrative costs for single payer is less than 10% of the revenue - and again - ask your average Canadian and your average American who is happier with their healthcare and Canadians will be ten times more likely to say they are happy.

Jacob I might not have sufficient expertise in a lot of goods/services that I would like, in order to make all of the decisions for them. For instance, I might not have sufficient expertise to build a modern house, therefore I might contract with a business-firm with a good reputation to build the house for me. I might not have sufficient expertise to fix my vehicle, so I might contract/make-agreement with a trusted mechanic to do the work I have insufficient expertise to do myself. I might have insufficient expertise on how a computer should be built, but I can contract/make-agreement to buy a computer from a manufacturer of computer after doing some product research, as to which product might best meet my needs. I might not have sufficient expertise to grow my own food, but I have sufficient expertise to figure out what food I might want to purchase from vendors willing to sell.

I'm sure medicine is very complicated; structural and mechanical engineering is complicated, computer-manufacturing is complicated, soil-science is complicated, yet in all of these complicated fields, I could have sufficient expertise to select an expert in the appropriate field. The advantage of me making the selection rather than someone else, is that since the outcome affects me, my having responsibility for that decision is the more direct connection between what I want and what I might be able to receive. If someone else decides for me, what medical options are available for me, and what they are willing to pay for those options to the medical supplier, then there is a disconnect between my needs and my available choices to meet my needs.

(And such systems create weird distortions of price, such as in the hospital I work at, there is this thing called a "towel clamp" that we pay over a dollar each for, they are all plastic and I'm sure they are something that you could likely find a pack of 24 for a dollar somewhere. But because they are a "medical device" the hospital pays an exorbitant price, which it passes on to the patient and/or the patient's payer; just one example of an artificial market distortion.)

I do not see how a single-payer system can avoid the economic problems created by price-ceilings and price-floors, [ ] where a set-price by a "single payer" for a particular good/service, is necessarily either going to be higher or lower than the natural market equilibrium, causing either a shortage in supply or an over-supply and consequent effects in the quality of the goods/services.

The single payer system, seems to be intractably marred by the economic calculation problem:

Appeals to "happiness" of selected sets of persons by sociological scales fail to be relevant in two ways: The first, is that such a system must be measured by who the system fails (those who might have made other choices in a less controlled/dominated system); if a "single-payer" emerged for the payment of food-services, and that "single-payer" decided what foods, at what prices it would pay for, then the system must be measured, not by the majority of persons for whom get what they wanted out of such a system but those who are deprived of choice/autonomy to make their own food-decisions (to include those potential providers of food-services that were excluded by the "single-payer"). Just because I get all the health-food I would have purchased anyway in the single-payer system, does not mean that the system is a success for someone else who no longer can have KFC, and all persons who are stake-holders in KFC are also not-satisfied. Secondly, appeals to "happiness" metrics seem also to be irrelevant, because the metric points to the "seen" while ignoring the immeasurable "unseen" of foregone opportunities ( ); the question is not which disparate groups while trying to control for potentially significant factors (always vulnerable to the unknown-unknowns, and factors that cloud analysis or are otherwise left out) has the highest happiness metric, the question is rather, would this same group of persons, be able to better satisfy their needs/wants/preferences, in an alternate economic arrangement/marketplace?

I look at the hypothetical simple economic arrangement in which two people work cooperatively together in some kind of exchange and I see two parties who are mutually benefitted; whereas in an alternate economic arrangement, where one party consents and another party does not consent to the exchange, I do not see the same cooperation but rather one-party benefits, while another party has a loss. I have concerns that a "single-payer" system, is going to have many systematic "losses" because it is not a system that relies entirely on voluntary consent, it uses force of law to impose a "single-payer", which has the necessary implication of reducing choices (necessarily because if it were to be willing to pay an unlimited amount {an automatic billion dollars per person for any ailment}, it would soon self-destruct), and therefore, necessarily creates some artificially imposed harm/loss on some individuals, and in the total network of market relationships (that seen versus the unseen principle) harm to one person, causes a ripple effect of a reduction in opportunities for all.

There is an "opportunity cost" to every action, "single-payer healthcare" included, and my question, is if everyone were fully informed of the opportunity cost, would they still do so? If the answer is "no", then the system seems unnecessarily oppressive and burdensome. If the answer is "yes", then there is no reason to have a law to force people to do, what they would freely consent to do anyway.

Price Ceiling | Economics: Government Intervention |
This Cramlet explains the concept of the price ceiling and the impact it can have on pricing, consumer demand, and production.

Heidi : also to consider and it is maybe not the same in Canada....what thing that our government operates works well? nothing.

Todd : Canadians aren't slaves? I assume you say that because they are allowed to keep some of their earnings, right? Well, that definition of freedom just isn't good enough for me.

Selim : Todd - how are you defining Canadians as slaves? Because they have to pay into a healthcare system for all of their citizens? There are lots of countries that have some form of single payer system that aren't slaves.
Matter of fact can we get away from this hyperbole all together? Any argument that degrades into slavery and/or the nazis seem to feel ludicrous.

Selim : Heidi - I'm fairly content with our system of roads run and managed by the department of transportation. Medicare has done an excellent job of taking care of our elderly for the most part. Government does lots of things well. There are things that can be done better but the alternative doesn't mean everything is done poorly.

Selim : Jacob - we don't have a single payer system now and those price distortions are present - that is the result of price distortions that have resulted from the differences in how much a hospital can charge each insurance company. If a hospital can bill Aetna 4000 for a colonoscopy because of a deal they have but can only charge Medicare 2000 for the same procedure then there will be price distortions because of these various deals, which creates an environment for hospitals to create funny charges.
If you don't want to talk about happiness because its too vague that's fine - we can talk numbers. The average American family pays about 5-7000 dollars more in annual medical fees than every developed country but in just about every meaningful medical outcome we have some of the worst health outcomes. A big part of that comes from the huge gap between those who have had insurance and those who haven't. 
The system that you feel is better - where people can choose how much or how little medical insurance they have has been a huge disaster and results in massive expenses in the form of unnecessary medical care in the emergency room, where care is 4-5x more expensive.
Your philosophy that we should be directly in control of our decisions make sense for commodities. For medical care the evidence is incredibly clear - by every single metric, a "laissez faire" approach leads to worse outcomes and significantly greater expenses.
Show me one country that has a system like the one you envision - we are the only one and we are doing a terrible job of taking care of a huge section of our population. It's improving fortunately but your ideas would bring us back to 40-50 million people without insurance.

Selim : And the idea that you alone could make a deal directly with all the medical care professionals you need is laughable - your healthcare is not like your automobile care - the reason we have group insurance is to make a risk profile that allows all of us to get healthcare. Are you going to make a deal with every MRI technician, nurse, doctor, orderly, janitor, etc? Going to a hospital for a simple procedure requires some kind of interaction with over 100 people - are you going to get friendly and directly negotiate when your child needs an emergency appendectomy?

How Government Solved

Jacob : If navigating health-care would be so complex, why couldn't I contract with a medical expert who I trust to guide me through it? Why couldn't my PCP serve that role?

I am in agreement with you that the current system of health-care is flawed; though the current system bears no resemblance to "lasses faire" in my eyes. Every regulation concerning health-care will create market-distortions that will inevitably be higher or lower than the freed-market equilibrium price/quality; if those distortions are present now, more regulation, which is the application of force through institutions of power, will create still more distortions, higher-prices and lower-quality.

If a group of persons sets the price of health-care services, then all services which would have costed more than the artificial set price will not be produced because a business firm cannot long produce a good/service at a loss; they must lower quality to come in under the price ceiling or they must produce something else. All of the services that are not produced because of an artificially set market price, are the unseen/immeasurable opportunity costs which are lost and for which people are not likely to be aware that they lost. 

If Americans are actually paying more for health-care with a lower quality of service, then we must look to the multifarious market-distortions that interrupt voluntary markets: what are regulations concerning health-insurance? What are the procedures of tort in medical matters? What are the regulations of medical devices? What are the regulations of pharmaceuticals? What are the regulations concerning the provision of health-care services? What are the barriers to market entry? What are the barriers of licensure? What are the "intellectual property" regulations? What are the barriers to trade import/export? Each of these creates market distortions and before any relevant comparison of cost or quality of care could be rationally analyzed, we would need to control for all market-distortions created by those laws/regulations. Until then the metrics being used have intractable variables which are not being controlled for.

Selim : Europe has a higher barrier to entry for medical programs than the United States as a whole - most EU countries start tracking students who aspire to go to med school at a much earlier age. .

Doctors tend to make much less money for services because they are salaried in Europe - here most doctors, except doctors at places like the mayo clinic, work on a fee for service scale - the market distortions ere are much greater because there are literally multiple fees for the same program. The NYTIMES did a great article last month talking about colonoscopies and the various charges based upon insurance in the United States. European doctors are flabbergasted by that because there is only one set fee for the procedure in each country. Everyone in Switzerland is charged the same amount for the procedure.
It is a fact that our health outcomes are way worse. You saying that it may be other issues instead of our healthcare system makes no sense to me - nobody in Europe is without healthcare, therefore they have better healthcare - that is pretty straightforward. 
And the idea that a health lodge, an idea from 1905, which worked when "doctor" and "surgeon" were the only two medical specialities could work today is ludicrous. Back then there was no such thing as a "pediatric oncologist" or an "ear, nose and throat" doctor. Our level of specialty makes that system untenable - how much should you pay a "musculoskeletal radiologist" for his/her services?
Our group collective bargaining is called insurance - and in order to provide service for everyone it requires young and healthy people to be inured to balance out the risk for companies - if you want choice and not single payer then we are talking companies - they can't cover every diabetic if healthy 22 year Ike's try to opt out because they don't need much healthcare right now.

I'm not arguing against your life philosophy , I am just saying that the evidence doesn't support total freedom of choice for healthcare - not if we value and believe that everyone should be able to go to a doctor without rushing to the emergency room. 

If you believe that it's not your job to subsidize others while you're healthy that's a different issue - but the numbers clearly show that collective healthcare is not possible or economical without the government as the main collective bargainer. No country on earth has succeeded in providing healthcare to everyone when we just leave it to the market place - none.

Jacob : I am concerned that the evidence that is being selected as purported demonstrative, does not take into account of various and numerous variables of market-distortion; thus making comparisons between different sets using those metrics, fails to acknowledge those intractable variables. The facts you have asserted, do not appear to be simple observations but rather complex analyses relying on assumptions and possible biases that are not accounted for. I'm concerned that there is little account for the "human" factor in these metrics; the individual subjective preferences of each individual in real-time, which would seem to be necessary for a net utility metric analysis. I'm also concerned for the apparent lack of recognition of "opportunity cost"; a feature of economic theory which by its nature is not-measurable and therefore reflected in no metrics, yet is a necessary feature of a theory of action or exchange.

I am willing to agree that the current system is full of unsatisfactory market-distortions. I am also willing to agree that I would like to see a market for health-care such that everyone would have access to qualified/competent care.

I am not confident that there is a strong case to be made that health-care services are some how economically distinct from all other goods/services and that market-processes absent institutions of power/hierarchy, would not be able to provide those health-care services on a voluntary/consensual/mutually-beneficial manner. I prefer to see cooperative and win-win social/economic interactions because this does seem to have a strong case for a maximal net utility analysis; while the use of the force of law to involuntarily compel certain behaviors seems to be a tragic loss of social autonomy.

Selim : I can present the evidence that our healthcare outcomes are much worse than at least a dozen industrialized nations and that we pay significantly more for the healthcare we receive than any of these countries that we can compare ourselves with.
As for my biases of observation, well every opinion has those and we can't remove them. Your biases in favor of some marketplace solution for everything is pretty obvious.
We are the only country that attempts a marketplace solution.
You're telling me you prefer a win-win solution - I'm not sure what's more win-win than doctors being paid for their work, patients being treated at a reasonable cost. I've shown you evidence of why our system doesn't work but you have yet to show me evidence of a system that can work the way you describe.
As for why healthcare is not like commodities - commodities for the most part are things that people can do without if you can't afford them - you don't need to buy brand name soda, go ahead and buy the generic stuff if that's what you can afford or don't buy any soda. Healthcare is not something you can do without and survive. The fact that you can't do without it makes it not like the rest d the marketplace. At some point or another every human being needs medical care of some sort - regardless of whether they can afford it or not...which means we as a community have to get together to ensure that healthcare is provided for others who can't afford it. That's why it can't be treated to normal marketplace solutions.

Selim : Opportunity cost can be measured fairly easily so I'm not sure what you're referring to - 

We have a marketplace solution and it has left huge gaps in how service - no business would cover someone with preconditions if they didn't have to - they are a huge money loss - if a purely market driven system were in place then every HIV positive and cancer patient would have to pay 100k a year for their medication or lose their insurance. 
The financial burden of the sick is too large for any individual to afford - we have group insurance to spread the cost and risk - if healthy patients didn't have to take insurance then the market itself won't work - 
So we have two options - a market system where everyone gets insured and people pay a penalty for not getting insurance, or a single payer system where the government insures everyone. The single payer system is cheaper but at least now everyone is covered.
There is no marketplace solution that could group all the high risk patients into one pool and pay for their medical care. It literally wouldn't e possible.

Jacob Could you explain how you would measure an opportunity-cost?

When you refer to problems/deficiencies of current market conditions, I am very much inclined to agree that they are problematic/deficient. However, because I do not share agreement with you that the current system, operates under freed-market conditions, I identify much of the problems/deficiencies with market-distortions caused by institutions of power/hierarchy (power-over-others with predictable win-lose outcomes). 

I would like to see institutions of cooperation working to meet everyone's needs in a power-with-others structure that would have predictable win-win outcomes guaranteed by individual voluntary consent. 

If a system does not have a peaceful/cooperative/non-sacrificial "opt out" function for individuals to seek other options, then there would seem to be an unnecessary amount of coercion needed to maintain a system that ostensively is put into place to serve people. I prefer options that are peaceful/cooperative; I would prefer to let people make choices for themselves, rather than forcing them to do what you or I might think is "good"? If a system would benefit everyone, why is it necessary to force them to participate? 

I wonder if the current-cost of health-care is a result of market-distortions based on compelling people to do things. I wonder if health-care would be less expensive if there were more-choices=more-market-competition rather than less-choices=controlled/regulated-market.

Jacob : Every regulation, would seem to "regulate"/control (literally means "limit") the expression of the market (into a deformed-market); every limitation of the market to meet needs, limits the market supply, which means an increase in price is necessary for the market to find the new deformed-equilibrium price; therefore every health-care regulation causes an increase in price/cost. Since I would like health-care to be affordable, I would like maximal choice, maximal market supply and therefore maximal human-needs-meeting.

Selim : You keep saying the same thing! 
You keep telling me what you believe and what you would like to see but you don't say how you would address the problems our current market based solutions have - how would you pool the "high risk" patients, whose health related costs are somewhere in the 6 or 7 figures. How would you group those in a way that is "win-win" without low risk people, who pay 10k a year but only utilize 3k of health expenses?

The market is designed to make money not to take care of people. How do you reconcile the need to make money with the greater good of caring for our poor and ill who can't afford to pay their direct costs? Give me something concrete, not just some platitude about seeking a win-win solution without actually giving a way forward.

Jacob : The prediction of what strategies individuals might select to meet their needs, is a precarious exercise of prognostication. If institutions of power-over-others controlled and regulated the production of apples for several years, and someone were to ask me, "In a freed market, how would apples be produced?", to answer with any absoluteness of the actual strategies would be to presume that I had control-over the actions or knowledge of the future subjective-preferences of other individuals, neither of which is the case. 

I suspect that health-care is expensive because of the limitations of supply caused by the distortions of regulations from institutions that exude power-over-others; that without those limitations of supply, a new market equilibrium would be established, such that it may be possible that most medical illness/disease could be treated so inexpensively that insurance would not even be necessary. But there are of course other possibilities; that the lower costs of health-care and the relief from the restriction of supply of insurance services, could create conditions were insurance for medical services could be very minor; then there is also the possibility for group-insurance policies from charitable organizations ("lodge-care" "friendly societies) or worker-cooperatives; there are also the possibilities of charitable medical services. By allowing for a natural market supply of medical services, there would be a vast increase in competition, thereby driving down the price (the equilibrium of supply and demand). 

I imagine a scenario in which institutions of domination, control the production of vehicles; where the supply of vehicles is regulated in various manners, thereby limiting the supply and increasing price but to compensate for that increase in price, every person is given by the institution of domination a subsidy to buy a vehicle. I can understand how important the subsidy might seem given the artificially high-price of vehicular products, but if the price of vehicles is an artifice of political power, then the subsidy serves to artificially increase the demand of vehicles (because the subsidy creates a situation where each person has an inflation of disposable income in relation to the purchase of a vehicle) to compensate for the artificial limitation for the supply caused by regulation.

I do not share agreement with the technical meaning of, "The market is designed to make money not to take care of people"; the market is not designed, the market is a manifestation of spontaneous order organized by people finding mutually-beneficial opportunities for exchange, therefore the market qua market (without the institutionalization of domination) is a process which cares-for/benefits all parties involved.

I analyze the "single-payer" strategy as one that compensates for the exorbitant prices cause by institutional domination; it may be that such a strategy, does indeed decrease the cost of medical services overall, but I am concerned that the decrease in cost may come at the expense of a decrease in quality or further decreases in supply and/or access (waiting-periods). I do not see how one could measure the opportunity-cost of lost opportunities caused by the limitation of supply through regulation but I suspect it could be considerable.

If there are vulnerable populations of persons in need of medical-service that have desperate need for medical services, I suspect that they would be better served by more choices, greater supply, greater competition, less political control over the market, upon which they depend than the system that is currently in place. If there is real and legitimate social interest in protecting vulnerable populations of persons who have much medical-need, and I suspect there is, I reason that they would be better served by charitable organizations that are voluntarily organized because the members actually care about those populations, as opposed to a political bureaucracy. 

If I continually return to my preference for win-win outcomes and cooperative strategies, it is to emphasize that preference in response to what I perceive as false-dilemmas constructed to advocate that some sort of social-domination is necessary to produce a good outcome. I do not share agreement that domination/power-over-others is necessary to produce good outcomes and I am worried that it actually necessarily produces less than satisfactory outcomes. I am worried that many of the political solutions offered, are put into place to benefit corporations (which I do not agree are freed-market manifestations) and other persons in (political) power.

Selim : At risk of putting words in your mouth you are saying that the marketplace has the potential to provide the optimal solution if there was no government or social interference, would that be correct?

If that's correct then this pure market has never existed in any place other than some kind of academic exercise.

Medicine is expensive fundamentally for several reasons; technological innovation and research is expensive - yes a big part of the expense is because of government regulations regarding safety and proving the safety...I am not sure I would want medicine to be made available without rigorous trials.
The other reason it is expensive is the fact that we don't engage in healthcare rationing. Your average elderly patient, in the last six months of life, will cost approximately 2 million dollars - this end of life care is by far the greatest expense in the medical system. This isn't counting elderly assisted living homes which can cost over 24 thousand a month and which Medicaid will pay for once a person runs out of money to pay for said assisted living. Unless we are willing to engage in some kind of healthcare rationing the absolutely largest costs will continue to increase as baby boomers retire and as medical innovations continue to develop new and expensive ways to keep people alive a little while longer.

The point I want to make with all of this is that the market, and most economists would agree, does a poor job of taking on risks associated with developing the kinds of innovation that will be required to solve our major problems especially ones that require large infusions of money for research or infrastructure development. In those cases government is the right tool for the job.
I think my main problem with your outlook is that it sounds like only "one tool" is right for every job. There are many times where the market is the right tool for the job but I refuse to believe that it is the only way or that it is "always" the best way to accomplish things. The market has failed the United States for decades to cover everyone in terms of health insurance and if the market needed to wait for perfect conditions of no government or social interference then it is not the right tool for the job. The market manages to do a good job in other areas despite regulations - if it could have met our needs I think 50+ years that we have been attempting to create a complete safety net would have been enough time.

Jacob : I do not share agreement with your portrayal of the perspective I wish to express; I see the "freed-market" as a abstract corporate manifestation of each individual, acting in the interest of that individual's preferences, values and needs, seeking to maximize that individuals's personal satisfaction, seeking strategies to accomplish that satisfaction in cooperation with other individuals. In any given system where domination/power-over-others is absent (for instance between the two of us conversing, sharing/contributing our ideas for our greater understanding, I perceive no significant effects of the institutionalization of power-over-others; but to include any micro-social/economic interaction/exchange where effects of domination are mitigated/remedied) we might call such interactions of exchange (even if it is merely social exchange) a 'freed market". Such as it is, the those various acts of cooperation/power-with-others that you and I might perceive every day are by no mean hypothetical or academic exercises; just because power/domination/hierarchy are historically pervasive, does not imply that peaceful cooperation a phantom of the imagination. 

Yet if it were the case that such had never existed in the formulation/definition that you have offered, then how could something that does not exist, then how could it have "failed" later in your exposition?

Medicine is not the only field that requires research and technological innovation, yet it seems to be one of the few industries currently being recommended for such a payment system. I do not share agreement that medicine is economically distinct/different from the production->consumption processes of other goods/services; I would share agreement that cooperative/voluntary production processes are efficient in the satisfaction of all goods/services. I do acknowledge that scarcity is a feature of all production, and that there are limitations of the abilities of freed-markets to meet needs, but these limitations are going to be less restrictive that institutionalization of domination systems. The freed-market is not a "single tool", it is the manifestation of diverse distributions of strategies to meet human-need; the institutionalization of domination centralizes, it creates monopoly, it decreases autonomy and choice. Voluntary, consensual and cooperative processes are decentralized, resilient, diverse, distributed, individuated, customized; they increase autonomy and choice, they respect the preferences, values and needs of individuals who consist of the entirety of members of abstract sets like "society".

Selim : The market has failed to create this system you are talking about - frankly I can't even conceive of the structures you are talking about working on the large scale - mutually beneficial cooperatives work for the Amish building barns but when you are dealing in large scale, in terms of hundreds of millions of people I don't believe I have ever seen a system that has the completely mutually beneficial processes that you are describing. Your example in point - lodges from the 1900s could conceivably work in a simple system - a couple of hundred people make arrangements with a bunch of nearby doctors - but I don't see how Aetna, with over 37 million insured could possibly endow all of their patients with e level of autonomy you desire and still be remotely cost competitive.

It seems to me you are willing to let the "perfect" be the enemy of the "good" - I don't agree that your system is feasible, and even if it was, you present no proof that it would provide better care that would be less expensive. I can prove that we spend the highest percent for healthcare

I can also prove that our healthcare outcomes are demonstrably worse despite paying much more

If you want to keep your belief in the realm of what is theoretically possible if our system was perfect that's fine, but it is demonstrably proven that single payer health care systems, while not perfect, are strongly correlated with lower expense and better health outcomes than countries that offer greater "choice" and more "market driven" solutions.

Healthcare spending around the world, country by country
The US spends more than any other country in the world on healthcare - but how does it really compare?

Darrell : Wow, Jacob  I wish I could have helped in adding to your logic, which to my own research seemed flawless. Do you mind if I copy this to repost somewhere? I am sure that Cody (who is not on Facebook) would love to read it, actually, as well as Tony Myers. As to the feelings and motivating factors involved, I think you addressed some of the concerns you had, I think Selim is concerned that with freedom of choice, people will unfortunately make the wrong choices, and many will suffer as a result. Please let me know if I misinterpreted this, Selim.

Selim : Darrell - that's part of the problem - if you're 22 years old and perfectly healthy there is a high probability you will choose to opt out of getting health insurance - it takes 7-12 thousand dollars out of your meager paycheck. 
If enough healthy people opt out of insurance then insurance companies are stuck with a pool of high risk patients. They pay 12-20 thousand a year into their insurance (more because they may have families than out imagined 22 year old) but because they are sick they actually consume over 100 thousand a year in resources. This isn't hard to imagine when you realize that monthly pills for HIV come to anywhere between 2-5 thousand a month. 
So sick people and high risk people cost much more than they put into the system. In a market system for insurance like we have this creates an unacceptable risk profile for companies - if they have more sick people than healthy people then they won't be able to make any money. A single payer system where the government is the main payer then you no longer have to worry about companies making a profit. By taking the profit motivation out of insurance you can insure everyone. Not only that you can do it cheaper. The reason you can do it cheaper is because if there is one payer then that payer has an extraordinary amount of leverage to negotiate prices - Medicare pays doctors a thousand dollars for a colonoscopy for a senior citizen. Aetna pays 5 thousand for that same procedure to doctors. 
Having one Payer eliminates inefficiencies and inequalities. NYC public school teachers have zero copays for their health insurance - that's because the pool of NYC civil servants is huge and has been able to negotiate that. A freelancer or people who work for a small company will have much larger copays.
Rather than making things more "equitable", choice in the case of insurance reduces equality and exacerbates inequality. 
The market doesn't always make things better, more fair or lower cost. The evidence doesn't support any of that.

Jacob : Thanks Darrell.  I alerted you to the discussion because I thought that you might find it of some value. 

Selim : I think that there is a significant distinction between what I call a "freed market" and what you call "the market"; "the market" (the macro structures that are currently observable) are what I might refer to as, "deformed markets" (markets that are significantly influenced-by and adapted-to the market-distortions of institutions of domination). Because I make this distinction, if you desire to find agreement with me, that the current market conditions are unsatisfactory, then I can certainly share agreement with you! But "the market" that is currently observable is not the "freed market" I attribute as having being most efficacious at meeting human-need. I would not agree that the "market has failed to create this system you are talking about" but rather, that institutions of domination have been reticent to abdicate power-over-others/domination.

While the references you provided look to be reliable indicators that the set of persons in the "United States" does spend more per person than other sets, I am not confident that this analysis has eliminated/controlled-for all possible incongruous variables affecting the data to include: market distortions created by, regulations concerning health-insurance, procedures of tort in medical matters, regulations of medical devices, regulations of pharmaceuticals, regulations concerning the provision of health-care services, all barriers to market entry/competition, "intellectual property" regulations, barriers to trade import/export? Until then the metrics being used have resolved all variables which could distort the analysis of the date, then the metrics may not actually measure what they are purported to measure and the resultant comparisons might be dubious.

For health-outcomes (as well as spending) I would expect to see data that has eliminated the variables of different risk-factors in the separate populations (which I don't see in the reference you provided but perhaps I missed it); additionally the data from the health-outcomes link, after a quick glance, seems incongruous with 
I appreciate that you would like to point to measurable-outcomes, but I am concerned that unless the data is carefully controlled for all of the variables mentioned, then the data is not seem particularly useful for meaningful analysis.

I am appreciative that it seems that your motivation is to ensure that most/all persons receive adequate medical-care, even though I do not share agreement with you that a "single-payer" is an efficacious system for accomplishing that goal. I would be willing to agree that it is *possible* that a "single-payer" system *could* be less expensive for consumers as compared to the current systems. However, much of that possibility would be highly contingent on whether the new "single-payer" system would eliminate many of the current market-distortions of political limitation of the supply of medical-services; for if that is not the case, then I would expect that the "single-payer" system would be less responsive to market-forces of supply-demand equilibriums (I would again refer you to: ).

I am highly suspicious of any system which uses political/social-force to compel individuals to act against their conscientious choice. I do not agree that compulsion through political force can bring about a "greater good" when it brings about an immediate harm (if nothing else, the opportunity costs). I would not want to compel my neighbor to act against his will; I would prefer to negotiate more amicable terms in which we might cooperate together; I choose to apply this preference to macro-social analysis and I wonder if we would all be better off with more cooperation and peace, and less compulsion and domination. If peace and cooperation work so well on a micro-level of small sets of individuals and small communities, why would it not work on a global level? Why should force/violence be necessary on the large scale, when peace & cooperation can be shown/demonstrated to produce win-win outcomes on a small scale? Is not the scale of the global, reducible to each of the individual members?

Selim : So what you're saying is that unless you see data that resolves each and every one of those issues you will find it suspect and not agree with it? That sets quite a high bar for what you will accept, especially considering you've provided no evidence to support your position that a freed market would result in lower cost and greater access.

The freed market you're talking about has never existed in society. In essence you're saying that you believe this philosophical abstraction is preferable to what is proven to be better than what we currently have. 

I find that hard to understand from any side - I will never let perfection get in the way of progress. Our current system has been terrible for a long time and we have seen superior results come from other countries. The system Obama has managed to put into place is not perfect but it is vastly improved over what came before. If I understand you correctly you won't see anything shy of your utopian ideal of a freed market, which has never existed, as being good enough,

And scale is not just a reduction of individuals - by that logic we are nothing more than a collection of atoms and what is true for atoms should be true for humans - by definition when you increase in scale and size you increase in connections and complexity. If you take a human body apart it doesn't work - the connections create complexity that is not contained in the sum of its parts - that is fundamentally wrong!

Jacob : I do not share agreement with your characterization/analysis of my position; my perspective is that for data to be relevant and valid in reference to the conclusion that is drawn from the data, the data must be controlled for all meaningful variables. If the data fails to control for meaningful variables, no valid conclusions can be drawn ( I believe this is known by statisticians as "intractable analysis"). I can sympathize that it might be tempting to rely on data when it seems to confirm our suspicions (which is not to say that our suspicions in such a case are necessarily incorrect, only that the data that we have does not necessarily imply the conclusion we would like to reach) but should not the data from which we attempt to draw conclusions have a "high bar"? (especially if we use them as justification for the application of political-force to compel some to obey others).

At the risk of repeating myself, I see the "freed market" as already existing in the diffuse micro-scape between particular individuals; where ever two persons participate in mutually-beneficial exchange, without resort to domination, without significant influence of the institutionalization of domination, there is a particular manifestation of a "freed-market" which I point to as effective for meeting human-need, diffuse though it may be in a macro-perspective. The lack of macro freed-markets does not imply to me to be a failure of cooperation but the pervasiveness of domination/power-over-others.

I believe that reason and rationality is the basis of my cognitive understandings; I have offered as "evidence" for my position, logical/deductive-arguments that have well established basis in economic theory that I believe rationally justify my conclusions. Those arguments have been offered for your consideration and you are welcome to question premises and/or determine if there have been errors/fallacies in my reasoning. Reason and evidence is the basis by which I attempt to construct the frameworks that I develop into my perspectives/lens which I use to understand the world and interpret data.

I have offered to you arguments of significant economists of how artificially opportunity costs, not only causes losses for the individual that experiences the loss but also for the larger economy, as well as significant argumentation that seemingly refutes the possibility for centralized economic structure to make accurate economic calculations, which would seemingly have significant implications for the results of disequilibrium of supply and demand and therefore significant losses in net human-satisfaction/human-needs-meeting.

I do not share agreement that the principle of cooperation/peace/non-violence is some unachievable, unrealistic or undesirable principle upon which to understand and apply to human-interactions. I do not share agreement that compulsion/domination can be considered "progress".

I might share some agreement with your illustration of "humans" and "atoms" (though I'm not entirely sure, because I'm not confident that we have a complete enough understanding of either "atoms" or "humans" sufficient to deny that there is not a significant implication), though my presentation of scale was not between the scale of two real objects (large-object-A: a human; small-object-B: an atom) but between the scale of an abstract-set ("society") where such an abstract set is defined in reference to all of the particular members of that set (all individuals consisting of the set "society") and I believe in such a case, a "set" is defined as composed of its individual members.

Selim : You can't control for all meaningful variables outside of the most rigorous clinical trials - by your standards then any economics paper would be highly suspect since it is impossible to control for all possible variables. Part of the reason we talk about correlations and degrees of confidence is because we can't control for every variable in any published study. That is why I'm saying you are setting too high of a bar for our discussion. And frankly I don't see how demonstrating that our health outcomes are poor in relation to other countries even requires us to look at all of the variables you mentioned. 

if you want to simplify it to smaller variables we can do that - we measure something as simple as our infant mortality rate the United States has the highest level of infant mortality in the developed world - if we spend more money than any other country on health care why should we have the highest rate of infant mortality?

I suspect we will be going around in circles soon if we haven't already - but I don't understand where or when you see your vision ever actually coming to fruition since you can't tell me how this would actually happen. 

My analogy still applies - science talks about predictability; physics, which deals with our smallest objects, are the most predictable. As we increase in scale by definition we lose predictability - genes are less predictable than individual compounds, which are less predictable than individual atoms. This applies at the macro scale too; an individual's behavior or choices are much simpler and can be predicted with much greater accuracy than a groups, or a states or a country's. as we deal with larger amounts of people we deal with much greater complexity than when we are dealing with smaller groups. 

I realize I'm not going to change your mind on anything but I want to find some common ground where we can meet. So far I haven't found it. 

And I don't understand why you are using the term "violence" when you talk about people doing things that they don't want to do - we do lots of things we don't want to do without it being violent or non peaceful. Education is compulsory in the United States when a child reaches age six - you can home school, send them to public school, religious or private but you have to send them. By your definition we are doing violence to parents by forcing them to educate their children even if, for some strange reason, they don't want to educate them.

US surpasses other industrialized countries in infant death rate - World Socialist Web Site
More than 11,000 American babies die on the day of birth, a number 50 percent higher than all other industrialized countries combined.

Selim : Also please read the article - 20% of women coming into hospitals are uninsured, which means they got no prenatal care...couple that with hospitals cutting costs and shutting down maternity wards are big factors in the appealing levels of infant mortality. Why aren't these things happening in Italy or France? It could be lots of variables but logically the fact that there is no such thing as an uninsured person in France is a big reason why they don't have those problems.
I'd like to see some kind of quantitative evidence to support your idea that a freed market would result in better healthcare outcomes - I haven't read your 50 page paper....I was slightly biased against economic papers written in 1920 when they couldn't possibly speak towards modern medicine and the challenges they are faced in 2013.

Jacob : I think we have established some common-ground. We both would like to see an outcome where more persons have access to health-care, rather than less persons. We both value strategies that we perceive are "workable", "feasible" or "realistic" (though we may not agree on what those strategies are). We both would like to see health-care costs be less (though we disagree on what strategies would effectively accomplish this). We both would like to see change/progress; neither of us is content with the current status-quo. 

Jacob : (I perceive that a threat of force to compel or coerce someone to act involuntarily, as a violent act {it is an example to me of power-over-others/domination}; this would include compulsory education. I'm not supportive of punitive strategies and would much prefer outcomes which are win-win rather than win-lose.)

Jacob : In the effort to forge greater common ground, perhaps this submission would more directly speak to many of the concerns you have raised:

Health Care and Radical Monopoly : The Freeman : Foundation for Economic Education
ARTICLEHealth Care and Radical MonopolyFEBRUARY 23, 2010 by KEVIN A. CARSONIn a recent article for Tikkun, Dr. Arnold Relman argued that the versions of health care reform currently proposed by “progressives” all primarily involve financing health care and expanding coverage to the uninsured rather…

Selim : So at the risk of another argument you feel that compulsory education, despite the massive amounts of good it has done society, is bad? You would prefer it be optional? 
This is a world view that makes little sense to me - humans don't always act in their best interests, why would you be against something like making sure kids get some kind of education?

Selim : Some of the stuff in the article made sense to me - I think doctors should not be earning on a fee for service model they should be salaried like they are at the mayo clinic. 
I generally think intellectual property should be respected so hacking an MRI machine sounds like a terrible idea; funding R&D is incredibly expensive, that's why few companies do it. If it was easy and legal to just reverse engineer a new MRI machine what possible incentive would GE have to invest millions into its development? 
Clinics currently exist where a person can go see a NP who can handle most simple cases. Say what you want about artificial scarcity due to licensing but if my kid had a medical emergency I would want a licensed surgeon who had 15 years experience minimum and had done the procedure thousands of times. And the simplest cases like the article mentioned don't cut into the biggest expenses, which are end of life care and high risk patients. 
If our common ground is improving healthcare lets define what we are talking about when we say improve - are we talking about annual insurance costs for a family? Amount of tax money spent on healthcare? Are we talking about total access?

Jacob :  I would not characterize compulsory education as "bad", as this might imply that there is no possible "good" that can result of it and I might be able to find some agreement with you that there might be some benefits to some individuals; after all, some students *want* to go to school, therefore I conclude for those students, school must be an environment/experience that they value. I would not however be able to characterize it as "for the greater good" either, as I would identify some serious short-comings to centralized education models (and especially compulsory ones). I wonder if children would be able to learn a wider breath and richer content, if they were able to explore topics freely.

You have likely seen the research on "inquiry-based" and "student-centered" education models; they are decentralized, they permit the student greater choice/autonomy, they are more fulfilling satisfactory for students and they appear to have greater outcomes. I look at things like this and wonder what could be learned in a rich learning environment, that is completely open and responsive. I suspect you have also been exposed to the research regarding what happens when students do not feel that they are in a safe learning environment; I would suggest that any student that does not want to be in school, is not in a safe-learning environment, whatever their reasons, they have identified that space, as a place that does not meet their needs and likely threatens their capacities for needs-meeting. I'm also confient that you have been exposed to pedagogical researchers/theorists such as Dewey, Vygotsky and Holt; I'm very much persuaded by the scaffolding, learn-by-doing, inquiry-based models they provide.

I'm likely sounding repetitive by now, but I think there are possibilities for strategies for eduction that are voluntary and consensual and do not require a punitive domination model. Montessori is certainly a step in the right direction but there is still much room for improvement there.

Sugata Mitra shows how kids teach themselves | Video on
Speaking at LIFT 2007, Sugata Mitra talks about his Hole in the Wall project. Young kids in this project figured out how to use a PC on their own -- and then taught other kids. He asks, what else can children teach themselves?

Jacob : (By the way, rather than reading Mises whole paper, something like this might suffice to provide the general picture: )

Economic calculation problem - Wikipedia, the free encyclopedia
The economic calculation problem is a criticism of using economic planning as a substitute for market-based allocation of the factors of production. It was first proposed by Ludwig von Mises in his 1920 article "Economic Calculation in the Socialist Commonwealth" and later expanded upon by Friedrich...

Jacob : {I thought you might have been interested in the story about the modern lodge practice, and how it was sued by the state to raise its rates)

Jacob : Would you object to an open-source MRI?

Open Source Ecology
The Global Village Construction Set (GVCS) is a modular, DIY, low-cost, high-performance platform that allows for the easy fabrication of the 50 different Industrial Machines that it takes to build a small, sustainable civilization with modern comforts.

Jacob : As I was reflecting upon this discussion, two wonderings began to rise to my mind. The first is the use of language in regard to what is, or what is not a "fact", when there is an understanding that there are "degrees of confidence"; it seems to me that the language of declaring what is and what is not "fact" is inconsistent with an understanding of "degrees of confidence" and statistical analysis. Perhaps preferable language would be, "Such-and-such a conclusion, seems have a strong supporting evidence, given such-and-such assumptions and such-and-such selected analysis". The language which declares what is and what is not "fact" seems to over-state one's case when one relies on interpretations of data which must necessarily be open to new/alternate interpretations/analyses. My understanding of science is that is is not dogmatic but based upon rational principles toward a particular experimental methodology. If something is claimed to never-have-existed, it would seem that therefore, no data would be available for that which never-has-existed, which would indicate that there is no inductive conclusion that could be drawn when there is a lack of relevant data. I wonder what leads to the over-stating of one's case in terms of absolutes framed in such a way to imply that they are not controvertible, rather than exploring a subject with a fair amount of curiosity.

Another concern I had as I reflected upon this discussion, was language in regard to "principle"/"perfection"/"utopian"; I hear this langage used often and I am inclined to wonder, what do people who object to "principle"/"perfection"/"utopian" think of other people who have advocated for peace, such as Mohandas Karamchand Gandhi or Martin Luther King, Jr.. Some how I would not suspect that the same criticisms of "principle"/"perfection"/"utopian" are leveled at these figures who advocate for a more peaceful/cooperative world and I wonder where that disconnection arises. I wonder why what is expedient or what is traditional, or what is conservative of traditional modes of doing things, somehow is automatically judged to be of greater value than what is principled/reasoned. I do not understand how reasoned argument of how things could possibly be much improved is necessarily inferior to what currently is, especially when there is dissatisfaction for what currently is.

These observations are not specifically in regard to this discussion alone but a far more general curiosity/wondering of discussions that I have had in the past that this discussion has brought up for me.

Selim : If I get what you're saying - you're saying that is that we can't define something as a fact if it is potentially open to interpretation or if there are unanswered variables. 
You're also saying that if something doesn't have any data supporting it, like your idea of a "freed market" then you can't make any conclusion about whether it is possible. 
If Thats what you're saying then I think it makes it difficult for me to provide evidence for my point of view and easier to demonstrate your point of view. I believe that economic data will never be able to control for all variables as you can only observe the economy and can't control it in a clinical or laboratory setting. There will always be unanswered questions and it will always have uncontrolled variables - that's why we talk about correlation and causation. Correlation provides valid data to create reasonably confident conclusions.
You saying that If there is no data to prove it can't exist then we can't make any conclusion about it seems wrong to me. Science can't disprove that astrology is BS - but we say that it's not falsifiable - the fact that we can't disprove it's existence or possibility is a conclusion in and of itself a problem. We can explore the possibility and discuss it but I don't see how your conclusion can go past the realm of the mind as opposed to any kind of reality.

As far as "utopian" goes - Ghandi, MLK and such had a template - they had a vision that was at least based on something that existed before. MLK could look to the story of Moses and say "a people can be freed". I don't see any precedence for the idea that more choices in healthcare will lead to improved outcomes - I see the opposite - we in the United States have more choices than any other developed country and we have worse outcomes and higher costs than other developed countries. No country has a "freed market" but England has a capitalist market just like us, just with more of a safety net. 
I am a big fan of talking about improvement - improvement is something I can measure - I can predict that if we had a single payer healthcare our costs for healthcare would drop by 25-30% - in line with the costs in other European countries.
You are telling me a freed market would result in lower costs and improved outcomes but you can't make a prediction of how much it would lower costs. Science talks about falsifiability and the value of making some predictions. 
You're telling me that there will be a huge improvement but no prediction or idea of how much improvement - If I have to choose between a known improvement and some potential improvement in some unspecified amount I prefer the known quantity.

Jacob : Thank you for that response. I found myself sharing a surprising amount of agreement with you just now. 

I agree that "economic data will never be able to control for all variables"; I agree that there are (nearly) always uncontrolled variables (and we both seem to agree, that this is especially the case of the social sciences); I agree that the "template" of Ghandi and MLK was a powerful part of their vision; I share agreement with your disposition for improvement; I agree with you that I do not claim to be able to make accurate/reliable predictions as to actual supply and demand conditions and the resultant price equilibrium in hypothetical futures (and I would be suspect of any one who claimed to do so). I'm pleased that we have these common understandings.

I would also like to offer some clarifications: in my reflection upon assertions of "fact", what I intend is an understanding of "fact" which is observable, verifiable and not open to alternate interpretations. If something is open to other conceivable interpretations, then either more experimenting is required for a more complete inductive conclusions, or both parties are engaged in a theoretical discussion of alternate possible unverifiable premises. Data does not interpret its self, conclusions are drawn from data using particular analytical methodologies which are based on theoretical assumptions. Discussions of theory, or discussions questioning the assumptions of theory, usually take the form of which theory is the most consistent model for human understanding/reason and human empirical observation. If I am questioning the assumptions upon which data is being analyzed due to errant/fallacious theoretical assumptions, or their implications for their analytical methodology, then to provide further data based on the same conclusions fails to satisfy the objections. I certainly appreciate your desire for what is "measurable" but I question/object to many of the theoretical assumptions of the metrics so often used; they seem to me to substitute the measurements of price, but attempt to conclude something about human choice and human satisfaction with those choices (a utility calculus) when there are significant deformations/limitations on human-choice for the purposes of human-satisfaction that are built into political-violence/force. I can understand that it might be tempting, since a utility calculus is so empirically difficult (how do you calculate and individual's "utile"?) that price data might be used in its stead, but such data would only be a relevant measure of preferable individual choices, when those choice are completely voluntary and consensual; if not then the data is necessarily tainted by the coercion of violence, prices do not necessarily reflect voluntary and consensual choice and if we try to base conclusions about what will make the most people, the most happy (I'm assuming here, that neither of us would desire a net decrease in human-satisfaction) then we can not use such corrupted/deformed data and any applied analysis of correlation may be implication similarly tainted/corrupted. I'm saying that very often the metrics do not measure, what they are purported to measure; the analysis relies on dubious theoretical assumptions; which is why I base my arguments so often on what seems to you to be more theoretical; I wish for a what is most rationally consistent theory, because I like to have the theoretical assumptions that provide me the greatest consistency and clarity.

I'm concerned that use of the language of "fact" can be for some people, expressing that certain assumptions are unquestionable/incontrovertible, as are the analytical methods implied by the underlying theoretical assumptions; I'm concerned that such language shuts-down meaningful dialog by implying that there are no other possible theoretical assumptions to interpret empirical observations. I wish to have open discussion of important ideas and I do not desire to unnecessarily restrict the possibilities for understanding.

I very much like the template of "a people can be freed"; I believe that is the position I support. I want each individual to be free to make choices for themselves; I want social and economic interactions to be free from violence, force, coercion, punishment; I support that for all peoples. I'm concerned that using political-force to compel people to do certain things, makes them less free, it gives them less choices, it restricts their actions, it may restrict their production, it may increase prices, and reduce net human satisfaction and this is highly undesirable to me. The individual is the ultimate social/economic decentralization, while control over an entire market sounds like a monopoly and I do not think that monopolies can be efficient market forces at meeting human need.

If cooperation results in a win-win and domination/violence results in a win-lose, then I predict, by deductive reasoning and confirmed by inductive observation, that the more win-lose, the less human-satisfaction and the more win-win, the more human-satisfaction. I think that's at the core of what I want to share here. I'm open to any improvements that you might like to suggest, that would give people greater choice and not require harm (=violence/coercion/expropriation) to implement.

What did you think of an open-source MRI?