As Dan Mitchell mentions in his post, much of the dysfunction we witness in healthcare are simply symptoms of the distortions that arise when we rely on a third-party payer system, with heavy government involvement, and all its perverse incentives which distort decision making for all participants. And so often the proposed “fixes” are aimed at mitigating symptoms caused by the third-party effect, rather than peeling back the layers to get to the root cause. Is it any wonder things aren’t improving despite billions and billions of subsidies, massive intervention, regulations and various forms of scrutiny!
America’s healthcare system is a mess, largely because government intervention (Medicare, Medicaid, Obamacare, and the tax code’s healthcare exclusion) have produced a system where consumers almost never directly pay for their medical services.
This “third-party payer” system basically means market forces are absent. Consumers have very little reason to focus on cost, after all, if taxpayers or insurance companies are picking up the tab for nearly 90 percent of expenses.
As a result, we get ever-higher prices.
But we also get a lot of featherbedding and inefficiency because providers want to take advantage of this system.
Athenahealth offered some sobering analysis on the system last year.
The number of physicians in the United States grew 150 percent between 1975 and 2010, roughly in keeping with population growth, while the number of healthcare administrators increased 3,200 percent for the same time period.
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From an economic perspective, it certainly is true that this new system is “disorganized” and “a disservice” and an “insult to our intelligence.” Those same words could be used to describe the welfare state, the EEOC, farm subsidies, the tax code, and just about everything else the government does.
But there’s one group of people who are laughing all the way to the bank, The lobbyists, consultants, fixers, and other denizens of the swamp are getting rich. Whether they’re preparing the applications, lobbying for the applications, or lobbying against the applications, they are getting big paychecks.
And the longer this sordid protectionist process continues, we will see a repeat of what happened with Obamacare as senior-level people in government move through the revolving door so they can get lucrative contracts to help clients manipulate the system (yes, Republicans can be just as sleazy as Democrats).
Washington wins and we lose.
- In both cases, government is limiting the freedom of buyers and sellers to engage in unfettered exchange.
- In both cases, the fiscal burden of government increases.
- In both cases, politicians misuse statistics to expand the size and scope of government.
Today, let’s add another item to that list.
- In both cases, the Washington swamp wins thanks to increased cronyism and corruption.
To see what I mean, let’s travel back in time to 2011. I wrote a column about Obamacare and cited some very persuasive arguments by Tim Carney that government-run healthcare (or, to be more accurate, expanded government control of healthcare) was creating a feeding frenzy for additional sleaze in Washington.
Congress imposes mandates on other entities, but gives bureaucrats the…
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One of the mistaken ideas of Marxism (collectivism philosophy) is that wealth accumulation in the hands of a few is inherent, and specific, to Capitalism. This fails to recognize that in any endeavor -regardless of who plans it or who participates – that success in that endeavor will always be disproportionately held by a few for reasons that have nothing to do with oppression or theft. This may help explain why the egalitarian promises of socialism & Communism never plays out as it is conceived.
The RFI goes on to explain the CMS vision of, “direct provider contracting (DPC), through which CMS would directly contract with Medicare providers.” Obviously this interpretation of “DPC” turns the true meaning of Direct Patient Care on its head.
And, in all sincerity, can anything more than the absence of plunder be required of the law? Can the law — which necessarily requires the use of force — rationally be used for anything except protecting the rights of everyone? I defy anyone to extend it beyond this purpose without perverting it and, consequently, turning might against right. This is the most fatal and most illogical social perversion that can possibly be imagined. It must be admitted that the true solution — so long searched for in the area of social relationships — is contained in these simple words: Law is organized justice.
Now this must be said: When justice is organized by law — that is, by force — this excludes the idea of using law (force) to organize any human activity whatever, whether it be labor, charity, agriculture, commerce, industry, education, art, or religion. The organizing by law of any one of these would inevitably destroy the essential organization — justice. For truly, how can we imagine force being used against the liberty of citizens without it also being used against justice, and thus acting against its proper purpose?
Here I encounter the most popular fallacy of our times. It is not considered sufficient that the law should be just; it must be philanthropic. Nor is it sufficient that the law should guarantee to every citizen the free and inoffensive use of his faculties for physical, intellectual, and moral self-improvement. Instead, it is demanded that the law should directly extend welfare, education, and morality throughout the nation.
This is the seductive lure of socialism. And I repeat again: These two uses of the law are in direct contradiction to each other. We must choose between them. A citizen cannot at the same time be free and not free.
Professor Tom W. Bell