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June 21, 2006

Reality-Based Medicine

But...but...but...I thought the free market was always better!?

For-profit nursing homes and hospitals on average provide an inferior quality of care compared with their nonprofit peers, according to an extensive review of studies published on Tuesday.

Authors writing in the journal Health Affairs found that a systematic analysis of 162 studies of nonprofit versus for-profit health care providers supports the concept that a facility's ownership status makes a difference in outcomes and in the cost of health care.
journal. [...]

In what they called the biggest review of the literature to date, authors reported that eight studies found nonprofit hospitals have lower mortality rates, versus one study finding for-profits have lower rates of death.

Nonprofit hospitals are also better at keeping costs down, the review found.

Meanwhile, free marketeers like Chuck Grassley have been musing over a legislative end to non-profit care centers. Unlike, say, megachurches, they apparently don't provide enough social benefit to justify their tax exempt status. Back to the study:

Nonprofits provide benefits that are not easy to quantify, the study argues. For example, it said, there is evidence that for-profits are more likely to mark up prices to maximize revenue and to have complaints lodged against them.

There is also evidence that nonprofits have a "spillover effect" in markets where they co-exist with for-profits, the study said. That is, they "enhance the quality and trustworthiness" of for-profits in a given market.

All this fits with the preponderance of the evidence: publicly provided care is better, profit incentives work perversely in medicine. We've talked before about the VA's superiority, but here you have the for-profit sector's inferiority. And yet, and yet, and yet the energy remains with the rightwing's effort to inject more privatization and risk into medicine. It's nuts.

Update: Can anyone explain this to me?

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Comments

and yet the energy remains with the rightwing's effort to inject more privatization and risk into medicine. It's nuts.

Speaking of big ideas.....
Just which Dems in office are talking universal health care, of any kind, especially single-payer? I'm not sure if it is very few or none.

The wimpiness can no longer be attributed to the Dems not controlling either house of Congress. There's a big election ahead, and their meekness stinks (maybe because they are afraid of doughy pantload).

Posted by: JimPortlandOR | Jun 21, 2006 12:22:16 PM

Well, that seems like a no-brainer to me. Of course for profits are going to cost more because (duh) someone is trying to make a profit. Services cost a certain amount to provide, and if you are trying to make money, well then, you are going to charge more.

I've found that many on Capitol Hill take it as an article of faith that the private market place can offer better services for less money, and yet I've never seen an objective study that can offer any proof of this.

Posted by: Baaaa | Jun 21, 2006 12:42:48 PM

It's not quite a fair comparison, though, is it? Nanny state regulations prohibit for-profit nursing homes from creating affiliated Soylent (tm) producing enterprises. If they could, people of all ages would benefit from abundant, cheap, nutritious crackers. And more Soylent production vats means more jobs.

Posted by: sglover | Jun 21, 2006 1:19:00 PM

That comment you asked about at Cato.. just another person with nothing to add to the argument other then to snipe because he doesnt like yours. He sould be ignored until he has something substantive to say either for or against.

Posted by: david b | Jun 21, 2006 3:14:38 PM

Uh, david b, i don't like being put in the position of defending Cato. But the Cato guy who made those comments, Michael Cannon, has said many, many, many substantive things about health care reform (go to his Cato bio page: http://www.cato.org/people/cannon.html ). Now you can disagree with him if you want. I certainly do. But to claim that he has nothing to add to the argument makes you (and us) look foolish.

Posted by: Neal | Jun 21, 2006 3:23:03 PM

Update: Can anyone explain this to me?

Some of it seemed completely out of left field, but the theme and most important item on their list seemed to be the first equation, er, inequality:
U.S. health care sector ≠ free market

I think that guy is saying that your criticism is invalid because the U.S. does not have a free market system. Medicare Part D is the most recent and controversial reason why, but it came on the heels of less extreme corporate giveaways, patent law written by drug companies, Social Security, Medicare, the VA, etc. etc. etc. He thinks that if the U.S. really did have a free market health care system it would be better than the foreign countries you're always comparing it to. At least, that's how I understood it.

The problem with that (and I think I got some of this from you, so it's probably preaching to the choir, but anyways) is the biggest reasons Adam Smith's invisible hand is absent has nothing to with the U.S. in particular. The free market isn't such a great thing because it's the will of God, it's such a great thing because competition for the business of well-informed consumers who can always take their money elsewhere pushes companies toward innovation and efficiency.

But of those conditions (well-informed consumers, consumers who can choose to buy from someone else or not at all, competition instead of monopoly or oligopoly), few or none exist in health care. Unless Mr. Cannon there at Cato has a way to provide medical school for everyone, a fully-stocked hospital every 40 miles, and an end to unexpected crises, there will never be anything remotely close to that libertopian ideal of well-informed people shopping around for the best health care they can get.

Posted by: Cyrus | Jun 21, 2006 3:42:24 PM

We don't really need to pay too much attention to Cannon's remarks. The purpose is to remind his readers to put the proper filters on before venturing into the reality-based world, one where facts and figures, not presuppositions, reign supreme.

Neal: Cannon, a guy at the freaking Cato Institute, couldn't find anything more authoritative than a Wikipedia article to help his readers understand what a "free marketer" is. Perhaps you are being overly generous in your estimation of him.

Posted by: Stephen | Jun 21, 2006 3:51:51 PM

A free market would be that you could shop around for doctors each time you get sick, take the time to get perfect information and make an informed choice.

Except that it's hard to do, because you're sick, dammit! And hope that you don't die first.

In a pefect free market, we would be selling our kidneys to the highest bidder and having the lowest bidder doing the operation.

Posted by: fasteddie | Jun 21, 2006 4:25:45 PM

Mock us libertarians all you want, but you'll never, ever, ever have a constructive dialogue with us if you think Chuck Grassley is a "free-marketeer." It shows a profound ignorance of our philosophy. I wouldn't expect to be taken seriously if I called, say, Joe Biden a "communist."

And not-so-cleverly tarring the laissez-faire community with the "faith-based" brush is lame-- I don't know if you've realized this yet, but we haven't been Republicans since the days of Barry Goldwater. When so many of the arguments coming out of the "reality-based community" are equal parts broken-window fallacy and post hoc reasoning, it's not surprising that so many of its members resort to throwing stones.

Posted by: Bob Dobalina | Jun 21, 2006 5:55:34 PM

The infuriating thing about responses such as the Cato's (and I get them a lot from free-market friends) is that they are ultimately just 'No True Scotsman' arguments; anything that doesn't coincide with their model of a free market must not be a true free market, because the only other possibility is that their model isn't correct (at least when applied to the problem at hand). And that couldn't possibly be the case.

Posted by: Paul | Jun 22, 2006 7:49:04 AM

"...we haven't been Republicans since the days of Barry Goldwater."

Perhaps, but large numbers of libertarians have been voting Republican for the past three decades. As Murray Rothbard wrote:

"The truth is that since we have been stuck with a two-party system, any electoral revolution against big government had to be expressed through a Republican victory."

And I haven't seen any major attempts by libertarians to shake up the two-party system in the decade since he wrote that.

So no, libertarian is not synonymous with republican. But when libertarians have an effect on elections, it is to get Republicans elected.

Posted by: Kylroy | Jun 22, 2006 9:24:35 AM

And not-so-cleverly tarring the laissez-faire community with the "faith-based" brush is lame-- I don't know if you've realized this yet, but we haven't been Republicans since the days of Barry Goldwater.

I don't know how you personally vote, but I think it's safe to assume that most self-proclaimed libertarians do, in fact, vote (R) much more often than (D). Do you disagree with that?

When libertarians stop voting Republican, I'll stop assuming they are. If you're offended at being associated with Republicans, don't blame us. Your problem is politicians who don't live up to the ideals they claim to support. Either that, or — hmmm, this is familiar — people who call themselves libertarians but are "No True Libertarian".

Posted by: Cyrus | Jun 22, 2006 10:03:25 AM

Belief that the market does everything--and anything--better than government is a matter of ideology--making it very difficult for free market enthusiasts to take in the numbers which prove that the VA, for instance, is delivering higher quality care at a lower price.
But one of the most persuasive arguments that I have come across is based on economist William Baumol's work. Baumol points out that in certain industries--like healthcare and education-- the quality of the product is linked to the quantity of workers--i.e. if you cut the quantity of workers, the quality of the product falls.
Thus fewer teachers per student dilutes the qualtiy of educaiton just as fewer nurses per patient means that patients die. (For-profit hospitals discovered this quite quickly when they tried "right-sizing" hospitals.)
Over the past 25 years many for-profit industires have achieved greater productivity by "down-sizing" while taking advangtage of advances in technology that let these industires do more with fewer workers.
But, as Baumol points out, that doesn't work in education and healthcare--two areas where the government is heavily involved (public schools, public hospitals etc.)
Despite technologoical advances, it's no easier for one teacher to teach 25 students--or one nurse to watch over 25 patient than it was 25 years ago. (Theoreticlaly, advances in healthcare IT might make the nurse's job easier--she would spend less time chasing down lost paperwork. But overall, advances in medical tehcnology have made her job more difficult-- more is happening to patients, creating more possibliy for errors.)
This is, I think, a major reason why government is often seen as "less efficent" than the private sector--because it is involved in areas where downsizing isn't the answer to enhancing productivity.
When for-profits try to move into those areas, they flounder. (One reason why the for-profit hospital industry's share of the market has failed to advance beyond 16% for more than a dozen years. For-profit hosptials have a very hard time delivering care while simultaneously turning a profit for shareholders (in this they may be rather like the airline industry) .
Thus over the past 20 year or so, the for-profit hospital industry has been stalked by scandal, as one chain after another has been indicted for fraud. It seems that for-profit hosptials have a very hard time "making their numbers" (the numbers Wall Street expects from a growth industry) without making them up-- lying to Medicare and private insurers (NME HCA and Tenet), lying to shareholders (HealthSouth) and in some cases shanghaiing patients--hospitalizing and operating on people who are perfectly healthy (NME and Tenet).
Maggie Mahar (
(If anyone is interested in the topic, I expand on all of this, in detail, in "Money-Driven Medicine: The Real Reason Healthcare Costs So Much." (Harper/Collins May 2006).

Posted by: Maggie Mahar | Jun 22, 2006 1:17:06 PM

I don't know how you personally vote, but I think it's safe to assume that most self-proclaimed libertarians do, in fact, vote (R) much more often than (D). Do you disagree with that?

Yes. And I freely admit that I am talking out of my arse here, but my guess is that the percentage of small-l libertarians voting (R) has gone from about 85% to 50% over the past 12 or so years. The Gingrich Republicans may have actually been serious about reducing the size of government (a reasonable person could certainly find examples, but the matter will never be "settled."), but that species has long been dead. Many of the laissez-faire advocates who I know personally (myself included) will be voting for divided government for the forseeable future.

We're sick and tired of corporate welfare, the war on drugs, the war on terror, the expansion of police power, and the systematic weakening of the rights of the accused. We're willing to put up with feelgood Clintonesque policies like Urban Empowerment Zones and the One America Initiative in exchange for a Democrat not named Feingold who would have voted against USA PATRIOT.

Unfortunately, the civil libertarian wing of the Democratic Party has abandoned its roots for the pursuit of positive liberties. Until the Democrats cut that out, they won't break 50% of our caucus. If you don't want us, that's fine, but that's the way it is.

Posted by: Bob Dobalina | Jun 22, 2006 1:31:08 PM

Speaking only for myself, I'm not interested in having traditional American libertarians in the Democratic caucus. The distrust of government, the belief that government programs funded by taxes are fundamentally illegitimate - these are things that disqualify one from governing, and the reason that contemporary libertarian-themed conservatism has failed.

Now, the new libertarian Democrats, though I may disagree with some of their principles, are welcome in the Democratic caucus.

Free markets do not solve all problems; they are a hammer in a world where you sometimes need a screwdriver. Health care needs a screwdriver...

Posted by: Adam Piontek | Jun 22, 2006 3:03:03 PM

For-profit ≠ free-market
Non-profit ≠ public provision

How are these for the money inequalities?

Say it with me: non-profits are businesses; they opperate on a market; as long a people prefere non-profits over for for-profits, then they will be competetive; the effectiveness of non-profts says nothing about the effectiveness of public provision; ineffective non-profits will go out of business while the government does not have that luxury.

Oh, and as a libertarian Democrat, I get offended when libertarians are painted as corporate shills. I don't like corporate medicine, but I also don't like socialized medicine.

Posted by: Chris Gioffre | Jun 22, 2006 3:36:13 PM

A well-designed national healthcare plan is neither "socialized" nor, as that implies, socialist.

It simply gives you greater choice of doctors, is less expensive than private insurance, helps rein in spiraling costs, helps out small companies, helps out big companies, and covers everyone all the time even if you temporarily lose your job or have a preexisting condition.

As for libertarians being "corporate shills" - I don't think so. But I do think the traditional American libertarian is and has been quite useful to corporate power. I think there used to be a phrase for that sort of thing... "Useful ___" ...I can't quite recall...

Posted by: Adam Piontek | Jun 22, 2006 4:17:03 PM

Beside, a libertarian is just a conservative who'd like to smoke pot

Posted by: Anon | Jun 23, 2006 6:09:14 AM

Two remarks stand out as quite useful for identifying and defining "libertarians":

The infuriating thing about responses such as the Cato's (and I get them a lot from free-market friends) is that they are ultimately just 'No True Scotsman' arguments; anything that doesn't coincide with their model of a free market must not be a true free market, because the only other possibility is that their model isn't correct

and

Beside, a libertarian is just a conservative who'd like to smoke pot

Pretty much sums it up.

PS - Heh. Indeed.

Posted by: Stephen | Jun 23, 2006 12:35:45 PM

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