Fiatch

I highly recommend you read the entire “How American Health Care Killed My Father.”

Check this sample:

“All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer of value.”

Many elected officials would likely characterize this point of view as originating from an evil-mongering, hijacking, racist, terrorist, Brooks Brothers Brigade.  However:

“I’m a Democrat, and have long been concerned about America’s lack of a health safety net. But based on my own work experience, I also believe that unless we fix the problems at the foundation of our health system—largely problems of incentives—our reforms won’t do much good, and may do harm. To achieve maximum coverage at acceptable cost with acceptable quality, health care will need to become subject to the same forces that have boosted efficiency and value throughout the economy. We will need to reduce, rather than expand, the role of insurance; focus the government’s role exclusively on things that only government can do (protect the poor, cover us against true catastrophe, enforce safety standards, and ensure provider competition); overcome our addiction to Ponzi-scheme financing, hidden subsidies, manipulated prices, and undisclosed results; and rely more on ourselves, the consumers, as the ultimate guarantors of good service, reasonable prices, and sensible trade-offs between health-care spending and spending on all the other good things money can buy.

“These ideas stand well outside the emerging political consensus about reform. So before exploring alternative policies, let’s reexamine our basic assumptions about health care—what it actually is, how it’s financed, its accountability to patients, and finally its relationship to the eternal laws of supply and demand.”

“Incentives? Reforms that harm? Same forces that have boosted efficiency and value? Focus the government’s role only on…? Ponzi-scheme financing? Rely more on ourselves? Reexamine our assumptions?”  This man thinks like an Austrian economist whether or not he recognizes it. 

Later, he writes:

“The housing bubble offers some important lessons for health-care policy. The claim that something—whether housing or health care—is an undersupplied social good is commonly used to justify government intervention, and policy makers have long striven to make housing more affordable. But by making housing investments eligible for special tax benefits and subsidized borrowing rates, the government has stimulated not only the construction of more houses but also the willingness of people to borrow and spend more on houses than they otherwise would have. The result is now tragically clear.

“As with housing, directing so much of society’s resources to health care is stimulating the provision of vastly more care. Along the way, it’s also distorting demand, raising prices, and making us all poorer by crowding out other, possibly more beneficial, uses for the resources now air-dropped onto the island of health care.”

Austrian.  And totally correct.

Please make sure you read about our fixation on health insurance in light of WWII-era wage freezes, tax changes in 1954, Medicare / Medicaid in 1965 — and the disastrous effects that have naturally flowed from such distorting government interventions into the marketplace.

He later writes:

“Cost control is a feature of decentralized, competitive markets, not of centralized bureaucracy—a matter of incentives, not mandates. What’s more, cost control is dynamic. Even the simplest business faces constant variation in its costs for labor, facilities, and capital; to compete, management must react quickly, efficiently, and, most often, prospectively. By contrast, government bureaucracies set regulations and reimbursement rates through carefully evaluated and broadly applied rules. These bureaucracies first must notice market changes and resource misallocations, and then (sometimes subject to political considerations) issue additional regulations or change reimbursement rates to address each problem retrospectively.

“As a result, strange distortions crop up constantly in health care.”

“Incentives, not mandates. Dynamic… constant variation.  Distortions.”  Austrian.  And totally correct.

He continues to rock the mike:

“In competitive markets, high profits serve an important social purpose: encouraging capital to flow to the production of a service not adequately supplied. But as long as our government shovels ever-greater resources into health care with one hand, while with the other restricting competition that would ensure those resources are used efficiently, sustained high profits will be the rule.

“Health care is an exceptionally heavily regulated industry. Health-insurance companies are regulated by states, which limits interstate competition. And many of the materials, machines, and even software programs used by health-care facilities must be licensed by state or federal authorities, or approved for use by Medicare; these requirements form large barriers to entry for both new facilities and new vendors that could equip and supply them.

“Many health-care regulations are justified as safety precautions. But many also result from attempts to redress the distortions that our system of financing health care has created. And whatever their purpose, almost all of these regulations can be shaped over time by the powerful institutions that dominate the health-care landscape, and that are often looking to protect themselves from competition.”

Please read the above section again. Please allow the notion to enter your mind that powerful, connected, private enterprises use government access, regulation, and force to protect themselves from markets, from competition, from capitalism.  What we have here is not capitalism.  It is nowhere close.  The government should get the out of the way and stop doing so much horrendous damage.

“The net effect of the endless layers of health-care regulation is to stifle competition in the classic economic sense. What we have instead is a noncompetitive system where services and reimbursement are negotiated above consumers’ heads by large private and government institutions. And the primary goal of any large noncompetitive institution is not cost control or product innovation or customer service: it’s maintenance of the status quo.”

This article then details and praises the value and utility of the price mechanism in a way that would make Hayek proud.  It also discusses moral hazard, transparency, dynamism, technology, and other vital concepts.  In addition, it addresses health and health care in a proper context.  This article is deeply personal and also wonderfully informative regarding the larger issues.  Read it please, and pass it on.

Dr. Ron Paul spoke with Lew Rockwell on the ever-advancing federal power.

“More people died from the innoculation than they did from the flu” is both a direct tragedy and also a sadly apt metaphor for all this corporatist government intrusion.

HT C4L

All this “death panel” talk strikes me as side-show theater.  Regardless, I am surprised that so many Americans seem to want to insert the federal government between themselves and the health-care system.  It’s naive and likely hazardous to your health.

What builds trust? What destroys it?  Why do we still pretend?

an interesting read

Also add:

• Brooks Brothers Brigade!
• Hijacker!
• Racist!
• Terrorist!

These rolling ad-hominem attacks confess intellectual weakness.  These officials and their media proxies are afraid.

They should not fear their fellow citizens.  It is, though, appropriate for them to wonder if perhaps all this attention threatens their boondoggling and bad ideas.

“All tyranny needs to gain a foothold is for people of conscience to remain silent.”

We are well past the foothold stage.  What are you prepared to do with your voice?

[source: Nate Beeler’s “In Defense of Dissent on Health Care Reform” via Washington Examiner, HT Instapundit]

Congressman David Scott’s high-profile fail yesterday is but the tip of an iceberg.  These officials are only beginning to feel the strain.  They are, by design, setting themselves (and us) up for inevitable, ceaseless FAIL.

His response is almost understandable.  Given that government cannot fairly (so-called) allocate scarce resources across the entire health-care system, of course it would make his life easier to:

• shout people down;
• loudly proclaim his own position of power;
• hide behind bureaucracy to disguise accountability;
• attack the decency of anyone who dares to disagree;
• falsely imply openness and benevolence while actually embodying their opposites;
• deny the legitimacy of opposition by counting only those who agree with him as constituents; and
• avoid answering the press.

The Fatal Conceit is real and unavoidable.  This tiny group of government bureaucrats cannot possibly hope to manage the health-care economy.  Clearly, some things that should not have been forgotten were lost.  They are going to fail, and it is going to hurt.

Also understand — health-care reform characterized by market allocation instead of central command would bring many benefits.  Within such an effort, there would naturally be many failures.  Competition and free trade, though, would sift among alternatives to uncover successes, further innovations, and yield progress.

That’s how it works.

I admit this video made me laugh a little.  This series of botched misdirections shows the desperate situation faced by members of Congress confronted by calm, logical, yet unrelenting citizens.

US Representative David Scott (D, GA) failed all over the place.  It started with a simple question about his health-care-reform intentions, and it all fell apart for him as follows:

Fail #1: Constituency

US Rep. David Scott:

“I am listening to MY constituents.  These are people who LIVE in the 13th Congressional District, who VOTE in this district, and THAT’S who I’ve got to respond to…”

Scott’s Fail:

Crowd: [indistinct] informing their Congressman that they are from his district.

Reporter: “We caught up with Dr. Brian Hill, the doctor who asked about health care.  It turns out, he is one of Scott’s constituents.”

Dr. Hill: “I did not go to a meeting to create any problems.  I went to the meeting to literally ask a question that I thought was very, very important for my patients.”

His “Constituency” ploy having failed immediately, Rep. Scott then tried to duck under the agenda of the meeting, which leads to:

Fail #2: Agenda

Rep. Scott:

“Those of you who are here who have taken and came and HIJACKED this event…This IS NOT A HEALTH CARE EVENT! You made the choice to come here!”

Scott’s Fail:

Reporter: “The meeting was primarily about a highway project, but later it was opened up for any questions from the crowd.  Hill was one of two people who got to ask about health care.”

His Agenda ploy exposed as an obvious false front, Rep. Scott next attacked the decency of these “hijackers,” which produced:

Fail # 3: Personal Attack

Rep. Scott:

“Not a SINGLE ONE OF YOU HAD THE DECENCY to call my office and set up for a meeting.  Ok. Then DO THAT!  DO THAT!  But don’t DON’T  come and take advantage of what these individuals have done.  You want a meeting with me on health care?  I’ll GIVE it to you!”

Scott’s Fail:

Reporter: “Dr. Hill says he has called Scott’s office, several times.”

Dr. Hill: “I’ve asked, ‘Is he going to be having any health-care forums? Is he going to have an area where we can address his thoughts and express our ideas and our thoughts as well?’ and I was told, ‘No,’ and that’s why I said to myself, I then need to go to an area where I’ve got access to him.  We depend on our Congressman to do what’s right for us, and I just don’t see that happening.”

The report closes with:

Fail # 4: No comment

Reporter: “By the way, Congressman David Scott, we asked, and he refuses to comment about what happened.”

What builds trust?  What destroys it?

HT Instapundit

Listen to “The Canadian Health Care Experience” with Sally Pipes.

Health-care reform under President Obama will bring painful taxes, rationing of care, misallocation of resources, and diminished outcomes throughout the system primarily because it will also transfer yet more power to a central federal authority.

The good news is bad ideas such as these, if enacted, cannot remain in effect for long without eroding liberty and harming economy.  Maybe folks will notice, eventually.

“Many health-care reformers want to pattern reform after Medicare, a program riddled with waste that will take tens of trillions of dollars from taxpayers in the coming decades.”

“What’s not to love?”

Listen to “Medicare: A Model for Reform?”

Ad hominem.  Sigh.

Entrepreneurship is hope and change that yields an open tomorrow.  Centralized power is an old, sad, terrible road that leads to a dead end.

Please read “F. A. Hayek and the Fatal Conceit of [President] Barack Obama:”

BY STEVEN HORWITZ

The headlines blare that President Obama will “restructure the financial services industry” and “fix the health care crisis.” A 31-year-old with no experience in the business world, but a lot of experience in politics, has been put in charge of dismantling General Motors.

Members of Congress lecture car manufacturers and mortgage lenders on how to do their jobs. Politicians keep taking on more and more responsibility for the U.S. economy, as each industry appears to be getting its own “czar.” Unfortunately, more czars will not produce better cars, or health care, or mortgages, or much of anything else.

The belief that one person or group, no matter how smart, can know how best to allocate resources is a classic example of what the Nobel Laureate economist F. A. Hayek called “the fatal conceit.”

In Hayek’s view, what enables businesspeople to make good decisions about the allocation of resources is not that they are smarter than other people. Instead, two other factors are key.

First, businesspeople have very detailed knowledge of their particular corners of the world. They know where resources are, where their customers are and what they want, and have the experience of knowing how to deliver it. This is not about being “smarter,” but about having local and contextual knowledge that others don’t have.

Second, entrepreneurs develop this knowledge by making use of the signals provided by prices, profits, and losses. Prices guide entrepreneurial decision-making by enabling them to formulate budgets and estimate the profitability of the various choices they might make.

Profits and losses provide information after the fact about how well they chose. Profits signal them to continue, while losses tell them that resources need to be reallocated. By acting on the basis of that information, each entrepreneur contributes to the overall improved allocation of resources.

The lesson from Hayek is that when the rules are right, markets are collectively much smarter than any individual or group within them. This is the lesson that the Obama administration has utterly missed.

The administration evidently believes that experience in policymaking is an effective substitute for the local and contextual knowledge of how to produce goods and services. This is a complete misunderstanding of the way in which markets work and what kinds of knowledge matter.

Much of the same is true with Obama’s supposed fixes for health care and financial services. Imposing a vision of how an industry “should” work and how it should produce and deliver its products from the top down is the height of political hubris.

The conceit behind it is one that dates back to the earliest visions of socialist central planning. Even as belief in that more comprehensive vision has died, the mindset behind it is still manifested in the belief that top-down fixes driven by well-meaning political actors are more rational than letting individuals with their local knowledge coordinate and cooperate via markets.

When politicians such as Barney Frank lecture financial executives on their lending practices, they too are guilty of the sort of hubris Hayek identifies.

How they know better what it takes to run a business is not at all clear, especially since many of them have never done so. This sort of second-guessing of business inevitably gets politicized as there is no other basis for decision-making by politicians who are ignorant of the detailed, contextual knowledge on which effective entrepreneurship relies.

Absent the signals of the marketplace, czars, presidents, and members of Congress are thrashing around in the dark in their attempts to improve upon the outcomes generated in actual markets. Top-down directives forgo the opportunity to learn from the decentralized knowledge of those actually producing the goods and services in question.

Obama’s reliance on experts and czars and top-down restructuring is particularly ironic in light of his promises of change and bringing the spirit of 21st century technology to government.

The clearest lesson of the networked world is that decentralized, bottom-up collaboration works much more effectively than top-down solutions. From Wikipedia, to open source software, to the Internet itself, the 21st century is quickly becoming the century of the “wisdom of crowds.”

Young people understand how contributing their own contextual knowledge to aggregating and signaling processes on the Web make all of us more effective users of information through shared knowledge. Whatever its flaws, Wikipedia could never be written by an Information Czar or Task Force.

Hayek recognized decades ago that markets work in precisely the same way. To think otherwise would be to suffer from the fatal conceit. Czars and second-guessing politicians with grand designs will only frustrate the much more effective decentralized processes of the market.

Even as they communicate constantly through the Internet, probably using open source software in the process, Obama and his administration, in their hubris, continue to believe that industries need czars and that individuals and committees are smarter than collaborating, distributed collectives. We can only hope that conceit will not be as fatal as Hayek feared.

ABC 20/20 takes on health care reform.  This is no joke.

HT to Robert Wenzel

Listen as one citizen politely confronts a Senator (emphasis added):

Largely, I think, people’s apprehension about what’s pending in Congress at this point is because they are unsure of what is going to wind up happening.  It’s a matter of trust and whether or not they are being represented in Congress the right way.

So my question to you is when Congressman scoff at the notion of reading legislation because they aren’t qualified or they aren’t competent to understand it, how can we be confident that those Congressmen are competent to re-engineer the entire health care system?

First, let’s quickly dispense with Senator Specter’s response.  He claims that he and his staff divide up the reading and do the best they can.  “We have to make judgments very fast…”  “And [somehow] every bill is understood by me before I vote.”

This is no joke.  This is happening.

Second, and more importantly, consider the Fatal Conceit at play here. Because we have allowed the federal government to acquire massive, centralized power, our representatives now confront a totally hopeless task.

At this point, they cannot possibly execute their duties responsibly.  A body of people this small in number cannot run entire industries including banking, housing, and health care.  It is utterly impossible.  They will inevitably squander resources, fall prey to manipulation, become corrupted, trample liberties, and do serious economic damage.

Let’s hope and pray that we can unwind this travesty peacefully before this fundamentally flawed design does irreparable harm.  Let’s also get to work fixing this damn mess.

What builds trust?  What destroys it?   What store of value is safe?  What happens next?  What are you prepared to do?

HT Instapundit