Peter Schiff on PMSNBC - Healthcare

Off Topic Politics & World Issues
21

[quote]LIFTICVSMAXIMVS wrote:
DrSkeptix wrote:
How do we establish sound pricing in a market which is not driven by free and efficient markets?

I told you how. By allowing doctors to choose their prices and allowing customers – you know, the patients – to also be aware of prices. But you are right about insurance being part of the problem. The fact that most people do not have a choice about who their provider is has much to do with this issue.

But we can establish a sound pricing structure by allowing voluntary associations in medical care (between insurer, care giver, and patient) and thus the market will become efficient. Free floating prices are the only signal that allow for the most optimal efficiency to happen in the market.

No one ever questioned the efficiency of the market in medicine before the government became involved 40 years ago. Oh, I am sure many government economists claimed so but that was for the sake of THEM collecting a pay check from tax payers and nothing to do with the actual efficiency of the markets.[/quote]

We are talking past each other.
You see, I do not agree that there can be symmetric voluntary exchanges between patients and doctors for medical care.
I have made the distinction between “health care”–surveillance, advice, management of predictable minor medical problems, public health issues–and “medical care”–intervention and active management of the unpredictable, the potentially disabling, the catastrophic.

For the former, one can save, schedule, dicker and agree on price. (The price of what? Do you believe a doctor or provider actually provides a verifiable service comparable to another in the marketplace? I do not believe any health provider who advertises and self-promotes.) I presume you do this: save, invest, schedule and bargain for the best service at the best price.

But for the latter, there can be no ready market efficiency: information is held disproportionately by the provider, the consumer cannot study and catch up, the product and its benefits are disputable and unverifiable at the outset. This is the reason for medical insurance, not “health care.”

I have gone over this before. But it helps to know this now, especially to understand Kenneth Arrow’s seminal work, “Uncertainty and the Welfare Economics of Medical Care.” (Which I promise to re-read this weekend. Honest.) Reading this requires thinking outside an Austrian box.

22

[quote]orion wrote:
DrSkeptix wrote:
LIFTICVSMAXIMVS wrote:

No one in the Executive Branch has any interest in a rational approach. That is clear now, as it was in 1993 and 1972.
No one leader in Congress thinks like this, and none are calling on the expertise of academics in the field.
However much I respect pluralist democracy, the constellation of interests will not coalesce behind this type of plan.

I almost seems like there are only so many things a democratic political system can accomplish.

So, what are we going to sacrifice?

Democracy or free healthcare for all?

[/quote]

You present the fallacy of the false choice: “Do you want lunch or would you rather carry a cane?”

A nation can choose to have both. I would be very interested in the opinions of our Dutch posters. By my primitive understanding of their health system, it may approach an optimal welfare model.

Peter Schiff’s answer to your question might be the same as the difference between ignorance and apathy, “I don’t know and I don’t care”–i.e., all welfare and all insurance is evil because it distorts human exchanges from some idealized notion of a market, a notion that I argue cannot be reconstructed.

So if I could re-formulate your question it would be: “Can pluralist democracy provide a Pareto optimal medical care policy?”
Funny, I think Arrow adumbrated the answer in his other great classic, the Impossibility Theorem (Social Choice and Individual Values), yet another classic I have not read.

23

[quote]pushharder wrote:
DrSkeptix wrote:
LIFTICVSMAXIMVS wrote:
…

What might this accomplish? Well, it is redistributive–an absolute curse word around here. But I have news: we are both redistributive and inefficient and it will get worse. At least it calls on individuals to recapture responsibility, use market forces, limit expensive treatment of marginal personal value, and prices might even come down. And perhaps the poor in need of medical care would not be so dehumanized.

And it won’t happen.

No one in the Executive Branch has any interest in a rational approach. That is clear now, as it was in 1993 and 1972.
No one leader in Congress thinks like this, and none are calling on the expertise of academics in the field.
However much I respect pluralist democracy, the constellation of interests will not coalesce behind this type of plan.

But don’t let that keep you and others from shouting it from the mountaintops.[/quote]

Mountaintops tend to be lonely places: hermits, prophets, and the shards of Noah’s ark.

25

[quote]DrSkeptix wrote:
But for the latter, there can be no ready market efficiency: information is held disproportionately by the provider, the consumer cannot study and catch up, the product and its benefits are disputable and unverifiable at the outset. This is the reason for medical insurance, not “health care.”
[/quote]

This is where you are wrong. Doctors holding more information than the patient has nothing to do with market efficency. Only freely floating prices will determine efficiency. If what you say were true we could see the same effect in all industries with expert providers but yet the market works in those industries because the relationships between producer and consumer is voluntary.

Besides, consumer groups do exist that help patients over coming this problem. In a freer health care system there would be more of them to fill the void.

Why was the lack of “information” held by the consumer not an issue before the government became involved in the health care industry. In fact it wasn’t. You just served up red herring for dinner.

26

I would just like to say that Pete Schiff has just passed the $850,000 mark.

27

[quote]LIFTICVSMAXIMVS wrote:
DrSkeptix wrote:
But for the latter, there can be no ready market efficiency: information is held disproportionately by the provider, the consumer cannot study and catch up, the product and its benefits are disputable and unverifiable at the outset. This is the reason for medical insurance, not “health care.”

This is where you are wrong. Doctors holding more information than the patient has nothing to do with market efficency. Only freely floating prices will determine efficiency. If what you say were true we could see the same effect in all industries with expert providers but yet the market works in those industries because the relationships between producer and consumer is voluntary.
[/quote]

I think he denies the voluntary element of an emergency situation and he also thinks that the problem of information asymmetries is insurmountable in such situations.

28

[quote]orion wrote:
LIFTICVSMAXIMVS wrote:
DrSkeptix wrote:
But for the latter, there can be no ready market efficiency: information is held disproportionately by the provider, the consumer cannot study and catch up, the product and its benefits are disputable and unverifiable at the outset. This is the reason for medical insurance, not “health care.”

This is where you are wrong. Doctors holding more information than the patient has nothing to do with market efficency. Only freely floating prices will determine efficiency. If what you say were true we could see the same effect in all industries with expert providers but yet the market works in those industries because the relationships between producer and consumer is voluntary.

I think he denies the voluntary element of an emergency situation and he also thinks that the problem of information asymmetries is insurmountable in such situations.
[/quote]

Yes, and in emergency situations insurance can work especially if the insurer can pre-negotiate prices for specific emergencies. There should be no reason voluntary contracts cannot work to fix health care.

A doctor may not consider an emergency situation voluntary but he can determine beforehand via contract how that situation will play out billing wise voluntarily.

29

[quote]LIFTICVSMAXIMVS wrote:
orion wrote:
LIFTICVSMAXIMVS wrote:
DrSkeptix wrote:
But for the latter, there can be no ready market efficiency: information is held disproportionately by the provider, the consumer cannot study and catch up, the product and its benefits are disputable and unverifiable at the outset. This is the reason for medical insurance, not “health care.”

This is where you are wrong. Doctors holding more information than the patient has nothing to do with market efficency. Only freely floating prices will determine efficiency. If what you say were true we could see the same effect in all industries with expert providers but yet the market works in those industries because the relationships between producer and consumer is voluntary.

I think he denies the voluntary element of an emergency situation and he also thinks that the problem of information asymmetries is insurmountable in such situations.

Yes, and in emergency situations insurance can work especially if the insurer can pre-negotiate prices for specific emergencies. There should be no reason voluntary contracts cannot work to fix health care.

A doctor may not consider an emergency situation voluntary but he can determine beforehand via contract how that situation will play out billing wise voluntarily.[/quote]

Why not have a pre arranged emergency card on you?

Come to think of it, I already have one for bike accidents, 10 EUR a month.

Back to Dr Sceptix.

30

[quote]orion wrote:
LIFTICVSMAXIMVS wrote:
DrSkeptix wrote:
But for the latter, there can be no ready market efficiency: information is held disproportionately by the provider, the consumer cannot study and catch up, the product and its benefits are disputable and unverifiable at the outset. This is the reason for medical insurance, not “health care.”

This is where you are wrong. Doctors holding more information than the patient has nothing to do with market efficency. Only freely floating prices will determine efficiency. If what you say were true we could see the same effect in all industries with expert providers but yet the market works in those industries because the relationships between producer and consumer is voluntary.

I think he denies the voluntary element of an emergency situation and he also thinks that the problem of information asymmetries is insurmountable in such situations.
[/quote]

Yes, this!

And more. The same asymmetries also apply to “non-emergencies,” the non-elective catastrophes that are unpredictable and almost inescapable. Chronic heart disease, cancer and neurologic disease are simply trauma in slow motion, and although the time scale is shorter than a emergent trauma, the asymmetry of information and outcome is the same. People want to buy protection, and shift the risk of expense.

But you get my drift: ordinary events are predictable and can be paid out. Extraordinary medical events are unpredictable, expensive, and the patient cannot assemble a market of providers in which to mitigate costs, despite LM’s protest to the contrary.

31

[quote]LIFTICVSMAXIMVS wrote:
orion wrote:
LIFTICVSMAXIMVS wrote:
DrSkeptix wrote:
But for the latter, there can be no ready market efficiency: information is held disproportionately by the provider, the consumer cannot study and catch up, the product and its benefits are disputable and unverifiable at the outset. This is the reason for medical insurance, not “health care.”

This is where you are wrong. Doctors holding more information than the patient has nothing to do with market efficency. Only freely floating prices will determine efficiency. If what you say were true we could see the same effect in all industries with expert providers but yet the market works in those industries because the relationships between producer and consumer is voluntary.

I think he denies the voluntary element of an emergency situation and he also thinks that the problem of information asymmetries is insurmountable in such situations.

Yes, and in emergency situations insurance can work especially if the insurer can pre-negotiate prices for specific emergencies. There should be no reason voluntary contracts cannot work to fix health care.

A doctor may not consider an emergency situation voluntary but he can determine beforehand via contract how that situation will play out billing wise voluntarily.[/quote]

You are getting warmer.

How would you establish a utility for “specific emergencies?” Let’s see, I would need an actuary to calculate the risks of a meteor shower, a car chase, the costs of a sternal compression, broken clavicle, closed head injury, a rampaging grizzly on a hike to Grinnel Glacieer… This would be an undertaking for 300 million people and 350,000 doctors.

“There should be no reason voluntary contracts cannot work to fix health care.”
Yes, and it exists and it is called “major medical insurance” and it comes with a high deductible. Many healthy people really want this choice, and pay out-of-pocket for routine things. Zoom. Your wish exists. Doctors will discount for cash, and do. Most routine stuff needs no meds, no xrays or procedures. Costs and utilization declines without effecting the quality of medical care.

Do we see this as an option in public policy debates? No. Democrats and liberal circles demand first-dollar coverage, or entitlements. Teddy Kennedy, in 1972-73, blocked every proposal to consider major medical insurance in preference to elaborate “health care” provisions (entitlements, mandatory benefits, etc.)

32

[quote]LIFTICVSMAXIMVS wrote:
DrSkeptix wrote:
But for the latter, there can be no ready market efficiency: information is held disproportionately by the provider, the consumer cannot study and catch up, the product and its benefits are disputable and unverifiable at the outset. This is the reason for medical insurance, not “health care.”

This is where you are wrong. Doctors holding more information than the patient has nothing to do with market efficency. Only freely floating prices will determine efficiency. If what you say were true we could see the same effect in all industries with expert providers but yet the market works in those industries because the relationships between producer and consumer is voluntary.

Besides, consumer groups do exist that help patients over coming this problem. In a freer health care system there would be more of them to fill the void.

Why was the lack of “information” held by the consumer not an issue before the government became involved in the health care industry. In fact it wasn’t. You just served up red herring for dinner.[/quote]

You may believe I am wrong and I may believe you have it backwards.
Rational pricing cannot occur where information is held almost entirely by one party, where the events are uncertain, the product unverifiable, and the outcome unpredictable. How can you get an “efficient market” when you cannot rationally price the value of Doctor System A vs Doctor System B, for conditions x1 through xn? You may think you know, but you do not know, and neither do the consumer groups, of which there are many.
I may remind you that you, LM, could not or would not do what for me is a simple exercise: to calculate an anterior utility for the situation in which you had colon cancer, and price out the procedures and the value of adjuvant chemotherapy for a year. If you need a consumer group to help you figure this out, they do exist. Give it a try.

Nope. This is what insurance is for.

–
I remember your aversion to historical fact, but your last dogmatic contention–" the lack of “information” held by the consumer [was] not an issue before the government became involved in the health care industry"–is simply wrong. Prof Arrow published his article, which I had paraphrased from memory, in 1963, before the “mass intrusion” of Uncle Sam after the passage of Titles 18 and 19. (True, the Feds had the VA system and a health plan for federal employees, but this did not cause massive market distortions. There was already a growing number of families insured by employment-based plans.) The consumer/patient disadvantges were clearly outlined then, and for Arrow, it was not theoretical.

If you disagree with this historical fact, or with my skepticism of a “pure market” theory of medical care (not “health care”), then you will have to take it up with Prof Arrow, who won his Nobel Prize largely on the observations in this work:
http://www.who.int/bulletin/volumes/82/2/PHCBP.pdf

Nine pages. And 46 years of commentary and development followed.

33

Doc, the fact of the matter is that “information asymmetries” do not negatively affect the market. If this were the case every industry would be affected by it. Not just the “high and mighty” MDs. Most people are not in possession of all the information the expert provider is but this does not matter. All the customer needs to know is that his actions will lead to the greatest satisfaction – whether it plays out that way or not.

My point about predetermined prices was not to establish prices for every type of emergency event but rather that we know right now how much a tongue depressor costs, for example…we can bet that the price may not change much in the contract period. We can price the goods that are used to treat patients. We can price the time the doctor spends in surgery or on consults. It isn’t rocket science. It’s just a service – like a massage or a haircut – but more expensive.

There is no special economic case for medicine.

34

Typical liberal Ed thinks that lowering government involvement is doing nothing.

Ed is a douche. He kept raising his voice and trying to put words into Schiff’s mouth. I realy don’t know how Schiff keeps his composure during that. Schiff never had a chance to say what he wanted to say.

35

Typical liberal Ed thinks that lowering government involvement is doing nothing.

Ed is a douche. He kept raising his voice and trying to put words into Schiff’s mouth. I realy don’t know how Schiff keeps his composure during that. Schiff never had a chance to say what he wanted to say.

36

Ah damn, I had to exit. I want to hear Schiff’s point, and the host won’t let him talk. Schiff does seem really solid though.

37

[quote]LIFTICVSMAXIMVS wrote:
… It isn’t rocket science.
[/quote]
But it is on occasion brain surgery.

You are being purposefully naive.

[quote]
There is no special economic case for medicine.[/quote]

But there is; it is not the case that medical services are unique, they are just an extreme example of uncertainty.

I can see that you have not read the Arrow article. Each of your contentions is addressed in it. It is a good thing to read against one’s established prejudices. I suggest you do so, because it is a better description of reality.

38

[quote]DrSkeptix wrote:
LIFTICVSMAXIMVS wrote:
… It isn’t rocket science.

But it is on occasion brain surgery.

It’s just a service – like a massage or a haircut – but more expensive.

You are being purposefully naive.

There is no special economic case for medicine.

But there is; it is not the case that medical services are unique, they are just an extreme example of uncertainty.

I can see that you have not read the Arrow article. Each of your contentions is addressed in it. It is a good thing to read against one’s established prejudices. I suggest you do so, because it is a better description of reality.

[/quote]

I did try to read it but it was just too absurd. I do not have time to dismantle any of it today…maybe this weekend.

And yes, I was being purposefully naive.

39

[quote]LIFTICVSMAXIMVS wrote:
DrSkeptix wrote:
…
I can see that you have not read the Arrow article. Each of your contentions is addressed in it. It is a good thing to read against one’s established prejudices. I suggest you do so, because it is a better description of reality.

I did try to read it but it was just too absurd. I do not have time to dismantle any of it today…maybe this weekend.

…[/quote]

Now that LM has had 4 weekends to “dismantle” the Arrow article, and has not done so, I will presume the work of the Nobel Laureate still stands.

I bump in preparation for Mr. Obama’s Wednesday’s speech in which he will enlighten us all in the road to happiness in healthcare.

Here are questions, which if Mr. Obama answers fully, he will have achieved his goal. If not…well, that is politics and not policy.

  1. Where are the controls on aggregate costs? How are market costs controlled, if at all?
  2. When costs are controlled, how is access limited? Who rations what, and by what right?
  3. Who pays? Could a dollar taken from an individual better spent? Does it get maximum value?
  4. Who benefits? Would a dollar spent be better spent on others?

I ask these questions because of a primitive acquaintance with some prinicpals of welfare economics, a subject which Peter Schiff no doubt abjures entirely.

Now, a word on ideology.
Mr. Schiff has made a name and a living in investing, in valuation of assets. I would not detract from that, but we live in society, but society has an interest, not in valuation alone, but in value. For those who adhere strictly to the ideology of von Mises, the entire sum of human experience should be encompassed by questions of exchange only. They exclude the notion of government, welfare and other mechanisms–i.e., insurance–from rational thought and behavior. Ok, then…they exclude themselves as well from the discussion of policy.

So, if neither Mr. Obama nor Mr. Schiff can find answers, it will fall to others to find them.

40

[quote]DrSkeptix wrote:

Now, a word on ideology.
Mr. Schiff has made a name and a living in investing, in valuation of assets. I would not detract from that, but we live in society, but society has an interest, not in valuation alone, but in value. For those who adhere strictly to the ideology of von Mises, the entire sum of human experience should be encompassed by questions of exchange only. They exclude the notion of government, welfare and other mechanisms–i.e., insurance–from rational thought and behavior. Ok, then…they exclude themselves as well from the discussion of policy.

[/quote]

Nonsense.

And I am not even going to go into that the mere notion of divorcing value from the nature of exchange is flawed.

Plus, the “ideology” stems from economic understanding which just goes to show that it is ridiculous to claim that something is ideological just because you do not care to understand the basics.

It is like claiming that mathematics is ideological just because you do not like the results of an equation.

Since the nature of Austrian economics is axiomatic and deductive it is actually exactly like that.

You might understand that if someone does not understand the nature of multiplication and yet insists that 3x4=12 is an ideological claim those who know how to multiply fail to be impressed.

And that is not even taking into account that Rothbard as well as Hoppe have destroyed some of von Mises ideological claims without being able to attack his economic underpinnings.