Thursday, September 22, 2011

Things Fall Apart. A Closer View on Ron Paul's Health Care Ideas

Skylanda wrote extensively on the case of Ron Paul's staffer, Kent Snyder, who died uninsured. The case has returned to news because of Paul's comments in one of the Republican debates about an imaginary healthy thirty-year old man who becomes comatose and has no health insurance. What should happen to him?

Some in the audience wanted him to die without medical care, Paul advocated charity as the source of funds. But in Snyder's case charity may have only covered ten percent of the costs billed for his care.

Now Paul has elaborated on his views:
“Well first off, people do get care, even under this terrible situation we have in medicine today,” Paul told reporters when asked about his former aide. “Kent, my campaign manager, wasn’t denied any care at all.”
Tut, tut, Ron. That's a free lunch you advocate there, and Libertarians are not supposed to advocate those. Besides, how can you tell if Snyder got all the care he medically required? Could it not be the case that he sought help quite late because of not having health coverage? Might it not be the case that his care became so expensive (and ultimately futile) for that very reason?

Perhaps not. But it's simplistic to assume that the uninsured get the same medical care than those who have coverage or at equally appropriate stages in the disease process. Even if emergency care is not denied to patients who cannot pay.

Who is going to pay for that care, in Paul's Libertarian utopia? His answer in the debate was charity. You know what would be a fun piece of research? To look at overall charitable giving in the field of health and to see what percentage of the unpaid care it could cover. One would have to remove charitable giving for research purposes and such, naturally, before drawing any conclusions about the adequacy of such giving as a working method of health care funding.

But given the size of the unpaid expenses in Snyder's case I see little chance that charity could be a viable general alternative to funding currently unpaid care.

Let's see whom Ron Paul blames for this situation. It will come as no surprise to you that he blames the government:
Paul blamed government interference and regulation designed to benefit insurance and pharmaceutical companies for shooting up medical prices for people like Kent, which he said explained why health care was no longer as affordable as it was in the 1950s and 1960s, when he said he charged $3 for an office visit.
“If you look at your cell phone or TV or computer the prices have crashed, they’re real low and we get higher quality,” he told reporters. “Except in medicine it has pushed prices up because there’s no market there, there’s no competition.”
He also blamed the government for regulating medicine: “The federal government comes in and closes down shops that try to sell nutritional medicine and vitamins because the drug companies don’t want competition. That drives the prices up.”
Now that's a real muddle! It's government regulations which drive up prices, but then it's the drug companies who don't want competition which drives up prices. To let those drug companies (often global oligopolies with market power) loose in an unregulated markets would certainly not help the shops which sell vitamins and such! Talk about sharks and sprats in the same waters.

Or put in other terms, if Paul is correct about the impact of government regulation and interference in general, then we should see much higher prices in other countries where the governments have much larger roles. But we see the opposite.

As even blind chickens sometimes find the worm, Paul is quite correct that the competition in health care markets is severely and chronically ill and that regulation can be captured by those to be regulated in a way which is bad for competition.

But his remedy would not help at all, because the reasons why competition works so differently in health care than in the case of cell phones or computers are in inherent differences between health care and those other products he mentioned.

To keep using bad animal analogies, if computers and cell phones are fishes and the market for them is a giant aquarium, recommending more water in it makes sense. But health care services are more like, say, horses, and keeping them in a giant aquarium (with grass) would not make the idea of filling it up with water a good one.