American Elephants

How to Think About Health Care. They’re Talking About the Wrong Things. by The Elephant's Child


The late Milton Friedman had a way of clarifying the subject. Contrary to “conventional wisdom — health insurance does not make health care more affordable. Perhaps you have noticed.

In his masterpiece Free to Choose, Milton Friedman wrote of four ways to spend money.

  • Category I — You spend your money on something for yourself. Here you are very careful, because it is your money, and the good or service you are buying is for you.
  • Category II — You spend your money on something for someone else. Here you have the same incentive as in Category I to economize, but since you are buying something for someone else, you are not quite as meticulous when it comes to the purchase meeting the needs or values of the recipient.
  • Category III — You spend someone else’s money on something for yourself. Here you are not concerned about how much you spend, because it is not your money. But because you are spending on yourself, you make sure you are getting what you want.
  • Category IVYou spend someone else’s money on something for yet another person or persons (This is what we ask our legislative representatives to do every day.) Here you are the least incentivized to economize, or to buy something that meets the needs or values of the recipient.

Third party payers operate under Friedman’s Category IV — think Medicare and Medicaid. When the government buys goods or services for other people with other peoples’ money, special interest pleading, politics and cronyism run the game. And “leakage” of money through “waste fraud and abuse” is a given.

Private insurance companies are also spending other people’s money — the premiums paid into a risk pool — on medical services for other people. When they negotiate compensation schedules with providers and facilities, they don’t have to bargain hard enough to reach the best price possible. They just have to reach a price that is good enough — one that allows them to charge premiums that compete well with rival insurance companies. They pass on the difference between what they could have negotiated and what they actually negotiated to the customers who pay the premiums.

People who negotiate direct payment from providers get better deals than the insurance companies get. When health care providers give discounts for direct payment they don’t lose money on the process, or they wouldn’t do it. To keep from losing the direct-pay patient  they need to keep their prices acceptable to those paying the bill.

The foregoing is from an article by Dr. Jeffrey A. Singer. It should give you glimmerings of how health care insurance could be better done. Health savings accounts, where tried, have been both extremely popular and extremely effective.

Here’s another example of how medicine can be more affordable and more effective. Competition improves everything. And that goes for insurance too. With stiff competition, insurers will bargain harder to get good prices. When insurance policies have to compete on a national basis, and policies are sold across state lines, costs will come down significantly.  There are hundreds of good ideas from Republicans. Keeping costs down doesn’t have to be slashing payments to doctors and hospitals, increasing deductibles to astronomical levels — that’s a command and control theme, where the left is always stuck. They just can’t give up control.

A small company called 23andMe offers a genetic-testing kit. It consists of a tube into which the customer spits and returns to the company. The actual test is conducted at a lab that is regulated by another agency. The FDA has chosen to go after 23andMe aggressively for marketing a “medical device” even though the only “device” is a plastic tube, and the client cannot cannot undertake further action on the test result without  consulting a health care provider. This kind of device is part of the new economy, favoring the free flow of information. It is completely at odds with the old paternalistic model, in which regulators and the medical establishment control what patients may learn.

Liberals place great faith in the perfectibility of politics. They believe that the next law or the next regulation will make up for imperfect human nature. Freedom, to be sure, is frightening. There is no telling what values free people will hold, or even what they might do. That’s why they are so frightened by the Tea Party. They must be controlled.


Over-Regulated America; A Problem the Left Cannot Recognize. by The Elephant's Child

“Americans love to laugh at ridiculous regulations.” So begins an article from The Economist on “Over-regulated America: The home of laissez-faire is being suffocated by excessive and badly written regulation.” That’s certainly true enough. The big story on the radio and on the internet was the saga of a 4-year-old’s pre-school lunch packed by her mother, and the arrival of the regulator who took away her lunch and gave the child three chicken nuggets and some veggies she wouldn’t eat.

The food-police bit is getting out of control. Yes, some parents may send their kids to school with Cheetos, but that is the business of the parent, not the government.  Michelle Obama recently visited Little Rock Air Force Base to announced  a new Pentagon obesity nutritional awareness campaign that will change nutrition standards across the services for the first time in 20 years.  She wants them to eat their veggies. (You’ll notice this is a British paper).  Actually, they should probably increase the protein in their diet instead, and add a few more miles to the daily run.

Mrs. Obama cited an Army study that says more than one-quarter of 17-24 year-olds are too overweight to serve in the military. [Doesn’t that say that she’s changing the nutrition of the military people who are NOT too overweight or they wouldn’t be in the service?]

The Economist picks up on some of the funnier regulations like the Railroad Administration insisting that trains have a “F” on the front so you can tell which end is which, and the children’s lemonade stands shut down because they hadn’t the proper licenses. But this is making light of a serious problem. The article is more concerned with Dodd-Frank, and the disaster of badly written regulations and over-regulation.

The Small Business Association and the Chamber of Commerce have been vocal about the extent to which small business, the engine of job growth, is being seriously harmed by excessive regulation, and the threat of regulation yet to come. One of the biggest problems is ObamaCare. Regulations are issued, complaints ensue, waivers are granted to some, not to others. Threats of increased taxes, increased regulation create a business climate in which potential employers are unwilling to risk taking on the extra cost of another employee.

There are roughly 330 million people in the United States. Why do Progressives think that they can write regulations to cover every aspect of human life and business — and believe that it will work? Why does Michelle Obama believe that she should direct the diet of 1.45 million troops a day at 1,100 military dining facilities and decide what America’s schoolchildren should eat. Yet the Obamas believed that America’s problems derived from a lack of regulation. Liberty is not a dirty word.

What has made America great is liberty— the freedom to invent and create and grow. To dream and to attempt, to work towards our own goals. The elites have always feared the “common people>”

“The clear lesson of history is that individual liberty, the basic underpinning of American society, requires constant defense against the encroachment of the state.”
Walter Wriston

“Freedom is, to be sure, frightening.  There is no telling what values
someone will choose to hold. Decent and well-meaning
guardians of values were horrified by the monstrous principles
of the Declaration of Independence.
It is, of course, out of fear that the guardians preach
the inculcation of values, fear of knowledge and thought.”
Richard Mitchell

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