Peter Hume: "It is vain to consider the respective factual benefits of private versus governmental provision of health care, while ever the advocates of government are permitted the unfair advantage"

I was comparing different nations. When you compare nations, those with heavy government involvement get better bang for the buck than those that don't. The evidence on this is clear and undeniable.

The logic used in the link you gave on the other hand is anything but clear. Particularly this bit: "Given the administrative costs of insuring routine health care, it would make more sense for consumers to pay out of pocket, instead of through insurance." It is true that all insurance has overheads, and so it is probably true that over my lifetime I probably would be better off not having car insurance. Instead I would just pay for accidents out of my own pocket. Its also undeniable that I have the choice, and I take the insurance. Frankly the alternative is insane.

Another example of where government intervention produced a better result is mobile phones. In the USA the various carriers competed, and in the true American way all developed systems slightly incompatible to lock their customers in. The Europeans went the government mandated standard way - the standard originally being GSM. The result - the Europeans wiped the floor. Not only at home where I am sure you will say it was because of government subsidies, but over the entire planet where there was no holds bared competition with the US. The really bizarre thing is, the Americans didn't learn from this. The next round of technology, CDMA, was developed by those ingenious Yanks. And it happened again. The Europeans went the government mandated standard route, refining CDMA into the current 3G standards, and the USA went again for dog eat dog "let the market decide" competition where everybody developed their own standards. Predictably all the American systems have been wiped out, and the only major American manufacturer left standing, Apple, is being sued for billions because they didn't license the European patents.

Rstuart
I think he's distinguishing between ‘routine’ i.e. ordinary costs – like a GP visit for a cold, and extraordinary costs – like major trauma; saying that considering the costs and on-costs of insurance, it’s not worth it to insure for ordinary costs but better to just pay in cash.

Obviously the average person uses the average amount of medical services, and the insurance companies function to spread the costs over the average life. But that financial risk-spreading function breaks down when they are forced into the function of redistributing income, e.g. by being forced to cover everyone’s ordinary visits, or being prevented from pricing specific risks, e.g. HIV, at cost.

I don’t think the evidence is clear and undeniable that nations with heavier government involvement get bigger bang for buck for two reasons.

First, evidence does not interpret itself. Interpreting it requires theory. Even if we could know all those laws, individuals, variables and health outcomes, the mere data still wouldn’t say whether a beneficial outcome coinciding with regulation was *because of*, or *despite* government intervention.

I don’t know much about the regulatory regimes in those countries. But I do know that government regulation in the USA includes controlling the supply of doctors entering the profession, compulsory licensing of the medical schools and through them the required syllabus, compulsory occupational licensing of auxiliary staff, compulsory insurances, absurd levels of tort litigation, heavy regulation of the pharmaceuticals industry, their testing procedures, complementary medicines, the advertising of them. The health insurance market is heavily regulated; there are restrictions on interstate trade; health insurance is compulsorily attached to employment; and insurance companies are unable to differentially price certain classes of risk, which is the whole purpose of insurance. I read somewhere that 90 percent of American hospitals are not-for-profit. Dozens of bureaucracies.

All these interventions have economic consequences: they make health services more expensive, and many reduce the quality as well.

So to characterize this as an exemplar of free markets seems somewhat questionable. It seems possible that, in some or even many ways...

(cont.) the US health market is more heavily regulated than other countries’.

Secondly, in theory, *how* does a compulsory monopoly provide goods or services more economically than competing providers - especially when it is incapable of economic calculation by itself without relying on markets to supply the data?

If it were true that government could provide ‘bigger bang for buck’ ie more effective and economical health care, then why wouldn’t people pay for it voluntarily?

How do we know government isn’t making up any difference by taking the money from somewhere else, in which case, we are back to the double standard of using one rule to judge bang for buck with private providers, and a different one for governments?

It’s too much of a coincidence, isn’t it, that government is supposed to be able to provide better health care, and just happens to be the only party that can forcibly take from someone else without accounting to the person it was taken from, and hide taxes in dozens of ways?

How would we calculate whether the bang was bigger?

If government were able to provide bigger bang for buck, ie provide goods or services more economically, is this a general ability?

If not, how and why does government have this superior ability with one class of goods or services, but not another?

However if it is a general competence, then it’s true, isn’t it, that we could provide all goods and services more efficiently and fairly by vesting total ownership and control of the means of production in government? Yet we already know this is wrong. The empirical approach amounts to wondering whether socialism might work eventually if we keep trying it, perpetually giving the benefit of the doubt to a proposition that we already know in theory cannot work because of the economic calculation problem.

In short, the statist position when analysed, always resolves back to an open-ended or irrational belief in something for nothing, based on an illusion, based on forced redistributions that are more uneconomical and unethical than the original problem.

The problem isn’t so much Medicare as the attitude of the government to considering it all general revenue. That’s the major difference and why the USA can’t fix its health problem. But at least you can write the president and make suggestion. It’s kind of like the Russian American joke. Tex and Ivan discussing their political freedom where tax says
‘In America if we don’t like something we can go to the Whitehouse and slam our fist on the presidents desk and say Mr. President I don’t like how your running the country.
Ivan says ‘we have the same freedom in Russia”
Really says Tex
“Yes sys Ivan, I can go to the Kremlin and slam my fist on the premiers desk and say m premier I don’t like how the USA presidents running his country”

Thankyou for your posts on this topic Peter, very thought provoking!

A good example for your argument might be the difference in taxi fare prices in Australia compared to say the Philippines where there is no government intervention. Anyone can get in their car and advertise their service as a taxi, hence a trip across Manila costs nothing compared to a trip across Melbourne (similar distance) where we have heavy government intervention.

Why in Australia am I not allowed to offer myself as a taxi whenever I feel the need to make a few extra bucks? (Not that I want to, just saying) This might then fix the problem of bus routes for those old people mentioned earlier. It's obvious in this case that government intervention is screwing us.

You are driving yourself into a corner, Peter Hume.

>>It is invalid to argue “it is considered” that a service should be provided by government. The question is *what reason there is to consider* that government should provide a particular service. Else your argument is just a circular appeal to absent authority.<<

The whole point about government is that it is not an "absent authority", but one that we have empowered through our parliamentary democracy.

If you were to substitute the word "community" in about two thirds of your rants against "government", you would see that you are arguing against yourself.

We elect these people to organize services on our behalf, because we believe that it is the responsibility of the community to look after these issues, rather than hand them over to Private Equity Funds.

It is not a perfect system, and is clearly open to abuse by politicians and public servants with gravy-train instincts.

But letting the community decide whether a bus service should be laid on for the old folk, despite the fact that it is not intrinsically profitable, and paying for it through their taxes, seems to me a perfectly logical act.

What is it that upsets you about that?