Prescription for Competition

by David D’Amato
Prescription for Competition

As part of his March 29 GPS (Global Public Square) feature for CNN, Fareed Zakaria demonstrates that he’s not really paying attention, arguing that “[t]he central debate between Democrats and Republicans is over whether the free market works well in health care.” Zakaria is not alone in his misunderstanding about what it is that politicians of either major party actually advocate. As much as I hate to spoil the ending, neither Democrats nor Republicans are interested in anything like a real free market.

Among the most interesting features of the debate on health care in the United States is the relationship it assumes between the major corporate players and the federal government. The mainstreams of both right and left perpetuate the accepted orthodoxy — that the two are locked in a permanent clash, with the state as a bulwark preventing the free market from leaving the poor and elderly without medical care.

The foregoing account breaks down, however, when we observe that, as a practical matter, the relationship between powerhouse business interests and the central state is far from adversarial. Health insurance, pharmaceutical and medical supply companies spend millions lobbying policymakers for just the kinds of legal privileges that have cut competitive pressure off at its knees.

Following the money, it isn’t hard to understand why consumers and especially vulnerable groups are an afterthought in the corporate quest for higher profits; the most entrenched commercial groups have the state bought and paid for, outlawing meaningful competition that could actually rescue us from the crisis we’re witnessing in health care. In fact, among all of the billions that American corporations spend on lobbying each year, Big Pharma leads the pack, spending about $2.6 billion from 1998 to 2012.

If you wonder what that kind of money buys from the country’s “public servants,” the United States has some of the strictest, most stifling intellectual property laws in the world, granting rich companies exclusive rights that translate to monopoly mark-ups for consumers. And if you think that the coming implementation of the Affordable Care Act — better known as Obamacare — will allay the pain of those in need, guess again.

The centerpieces of the new law are a powerful inducement for pressing the states to expand a decaying Medicaid system and a rule forcing everyone to buy health insurance. Rather than hanging the poor out to dry by funneling them into Medicaid, where they’ll receive notoriously low quality treatment, market anarchists suggest simply eliminating the special, anti-competitive rules that now fill our supposed “free market” system.

End the subsidies, regulatory and licensing barriers to market entry, and extreme intellectual property rules (just to name a few broad categories of privilege), and we’ll start to see a very different health care system and level of quality coverage. With legitimately free and open competition, consumers will no longer be fed directly to a handful of oligopoly firms in each state, and the poor won’t be relegated to a rickety Medicaid system with such low reimbursement rates that many providers won’t even accept it. Instead, the real welfare queens (to redeem an ugly phrase), the privileged corporate elite, would see their profit margins dwindle in the face of experimentation by free individuals and communities.

Market anarchists understand that a real change, one that would actually benefit ordinary, working people, requires an end to the state’s protectorship of big money interest — which indeed is the state’s ultimate purpose. Anything short of that, and we’re leaving the problem and all attending future crises in place.

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7 responses to “Prescription for Competition

  1. One does not have to be an anarchocapitalist to understand that the two principle reasons for the increase in health care costs in the United States over the last few decades have been SUBSIDIES and REGULATIONS.

    Medicare, Medicaid, SCHIP (and other subsidy programs) have the same effect on medical costs as government backing of student tuition fees has on the cost of higher education – they make the cost expload over time.

    And the vast web of mandates and other regulations on medical insurance (and medical matters generally), together with the utter perversion of the principles of tort law (sueing for things that are NOT negligence) and the other main reason for the increase in health costs. And a key reglulation change came in the 1980s – when private hospitals were told, by Act of Congress, that anyone who turned up at the doors of their E.R. had to be treated (hence all the FALSE talk from Mitt Romney in 2006 about how Romneycare was needed because of the E.R. mess – the E.R. mess was caused by government in the first place, and Romneycare did not deal with it).

    Almost needless to say – Obamacare INCREASES subsidies and regulations, its effects are predictable to anyone with a basic grasp of economics,

    Medical costs will increase still further – real private coveage will go out existance for most people (with companies paying the fines rather than the inflated costs) and most people will be forced into the government financed “Exchanges”.

    “But there will be private providers” – for awhile there will be crony “private providers” paid by the government, but (like the student loan providers) they will, in turn, be forced out.

    Then the big drug companies will be betrayed – all the money they have paid Obama and co will be forgotten (that is the thing about corrupt people – they are errr corrupt, paying them does NOT stop them backstabbing you).

    But as Milton Friedman so often pointed out – competition is restricted by FDA anyway. Although there are two stages to that – as there normally are with regulations.

    At first regulations protect established enterprises against competition – but then (the second stage) the regulations get so bad, that even the established enterprises are undermined by them.

    The same is true of doctor licensing – Milton Friedman spent so many decades not just showing that the doctor licensing was a union-guild scam to increase incomes, but also showing that IN THE END not even the licensed doctors would benefit.

    And doctors facing ever growing mountains of paperwork (even more government mandates and orders and…..) may be starting to see that M. F. was correct.

  2. A bit complex in some areas, but yes I get the point, the same thing is happening in the UK, of course the paper work and the pen pushes are a big cause of the problem, as well as health tourists, who think the UK NHS is an iternational health service, The situation in the UK is rediculous, may of my associates and relatives have worked in the NHS at high level, although now deceased, I still have contacts employed there, the situation has simply gone bad, there is no doubt a “Situation” here, firstly my friends father went in hospital for an emergency heart condition, he had only been in hospital twice in his life, when they brought his medical records,to the ward they had to use a trolly, they were 3ft high, it would take a graduate 2 months to read them, before they could even start giving treatment. hence the problem, you may not believe this but I swear this is true, last year I went for a routine appointment, I alway’s keep on eye on my records due to the serious errors being made at the N.N. to my amazement, when I looked at my record file it had the name of another patient on the file cover, I immediately reported the incident to a senoir nurse, they simply stuck on a fresh lable over the wrong patients name on the file. I was horrified at what I witnessed. it turned out that somehow both patients records had been completely removed from their files and mine placed in his file and vise versa. There’s no complaints system, the lawyers take a couple of grand and then lose the case file. The NHS in england is in serious trouble, we have people waiting for hours for emergency treatment RTA and other serious medical emergencies, it looks as if it’s sinking for sure. The money is all going on pen pushers, investigations, sick leave, and 70% interest in the loans they owe, and also considerable internal fraud that keeps getting covered up.

  3. There more or less stated last night if there was a real emergency, they would not be able to cope, lack of staff resources etc, everyone in the
    county is frightened of whats going on.

  4. One mistake one should try and avoid is falling for the old Russian saying “first they smash your face in – then they say you were always ugly”.

    American medical care has never been a pure free market – but it used to be a lot less messed up than it now is. Dr Ron Paul was not lying when he talked of how medical care used to be (with less government involvment) when he started out as a doctor.

    In Britain also medical care was not always dominated by the state. The vast majority of people used to either have insurance or be covered by a mutual aid (“Friendly”) society (some 80% of industrial workers were covered in 1911 and the percentage was rising).

    There were also free hospitals long before the NHS – indeed the tradtion of service is what the NHS TOOK from these hospitals (and from organisations such as the WRVS – just as the rest of the Welfare State took over the traditions and people of such organisations as the COS).

    At the time of the take over (1948) some suggested that the traditions of service (of a sense of obligation to the sick) was so strong that it would take “two generations” for it to start to die.

    I think that is about right – service is going out (and has been for some time) now it is becomming just another bureaucracy,

    Will the government paying private companies (and charities) to do the work make a real difference to the decline?

    Well I would like to think so but….. – central government funding, in the end. corrupts the “independent sector” making it not independent at all.

  5. Of course in front of me I have acouple of copies of journalsists reports, Note: there has been months of concern about ambulance delays with some patients, quote waiting up to four hours, the problem is they need a bigger AE department, and must hire more senior nurses. The government reply, we are setting up commissioning groups to discuss the matter. Anna Dougdale say’s we are looking at our capacity needs for the future. we are working hard to improve the standards, over the next eighteen months we will be recruiting new nurses. I think any normal person would be able to identify the problem, no need for more millions to be wasted on buearucacry. can anyone else see that at least.

  6. This is a simple probem to resolve, but we will see another paper mountain
    the size of mount everest before it gets resolved.

  7. Julie near Chicago

    O.T. as to the specific issue, but not off the more general point: Paul writes,

    Will the government paying private companies (and charities) to do the work make a real difference to the decline?

    Well I would like to think so but….. – central government funding, in the end. corrupts the “independent sector” making it not independent at all.

    Which is the problem (one of the problems) with the “school vouchers” system.