“Another Great Moment in the Annals of Government-Run Healthcare”

A classically trained economist will always remind you that, “there is no such a thing as a free lunch.” With debate swirling in leftist circles around single payer and “free” healthcare, we need reminders of the impact of the loss of the profit incentive and the loss of an actionable feedback loop that the free market effectively provides. With government run healthcare (which I would argue America already largely has), the loss of incentives to act and treat customers well is on full and heart-breaking display in this post. 

Dan Mitchell makes his most salient point in the postscript:

To be fair, some screw-ups are inevitable, even in a perfectly designed healthcare system. But I would argue that horror stories are more common when the profit motive is weakened or eliminated. If you’re a Brit and you die or suffer because of crappy government-run healthcare, there’s no feedback mechanism to punish the doctor and/or hospital (or, in the above case, ambulance service). Their budgets already are pre-determined. Likewise, if you’re an American and you die or suffer because of sub-standard Medicare or Medicaid treatment, there’s presumably no effective feedback budgetary mechanism.

This reminds me of a recent experience in which my wife worked for days and was forced to make several trips to get her Texas driver’s license. The problem was that she kept getting documents refused by the friendly bureaucrats down at the Department of Motor Vehicles. The first refusal was related to one of her proof of address documents. Apparently, the fact that my wife’s name was under rather than above the address was a blatant violation of widely known and accepted rules. The second return trip (with four kids in tow) and refusal was due to a date on the mortgage statement meant to prove residency in which the statement date was March 1st while the actual date at the time of the DMV visit was February 27th. Apparently, these thoughtful and pure apparatchicks could not entertain a document whose date had magically leapt into the future.

As a local monopolist, the DMV really has no incentives to treat people well, efficiently, or to set absurd rules aside and use a bit of logic and understanding. Is this the type of organization that we really want to monopolize and run our life and death decisions?

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2 thoughts on ““Another Great Moment in the Annals of Government-Run Healthcare”

  1. In an effort to propel my career, I knew I wanted to take a leap. Heathcare.gov gave the opportunity to find an affordable healthcare option during my unemployment with Health Net of California, Inc. As a 29-year-old, that hasn’t seen the inside of an Emergency Room on my own account, I needed the basics. Today, I have a plan for $83 dollars a month. This is a much better option considering when I graduated, eight years ago, I was removed from the University’s student covered insurance (back then you couldn’t be on your parents’ plan past 18), I was uninsured until my employment months later. I recall calling up insurance brokers and getting outrageous estimates that required lengthy contracts. The new systems’ transparency is remarkable and has made all the difference for me. Prior, I would have thought COBRA was my only option which I was quoted at over 1,800 dollars a month prior to my departure.

    I continue with more person experiences… when I was a University of Iowa student covered under the University. A women’s physical exam, which was required for birth control, costs $386 dollars. Something I didn’t have out of pocket at time coming from a poor rural area. However, the University student insurance covered Viagra. I recall guys at the bars boosting about this. This kind of hypocrisy doesn’t exist anymore thanks to the affordable accountable care act.

    I recognize not everything is right with the system, but some of the advancements are definitely in right direction.

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    1. Jenny, I will agree with you on a couple of points – that transparency in pricing and outcomes are essential if we as consumers are going to make better health decisions. Where I know I would disagree with you is on the causes for the disease of lack of transparency. For you, you likely see it as a natural outcome of rapacious companies that need to be told what to do by government leaders. To me, it is the natural outcome of a highly regulated industry in which the large government-coddled players (large insurance companies and hospitals) have absolutely zero incentive to show outcomes through transparent data. Thus, I see government as the problem and not the cure. Thus, moves to create more regulatory burden will only create more challenges for new entrants and will further entrench those too big to fail organizations that already dominate the market. In my mind, the analogy is that we are building a rickety fence on top of a trash heap. Isn’t it far more effective to remove the trash heap and create a much better system in the first place? My ideal “much better system” would be a highly competitive market where hospitals have to worry about upstarts that can enter the market at any time with better and lower cost services. As it is, there are a tremendous amount of supply-side restrictions preventing new players from entering the market, blocked typically by none other than existing hospitals. Ditto insurance. Make a more competitive market not dominated by the heavy hand of government, and you will force the industry players to compete on outcomes and price.

      And by all means, keep the counterpoints coming!

      Liked by 1 person

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