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The Price of Healthcare and the Value of Health

The Cost Curve and the Cure Curve: Part One of Two

American policymakers and chatterers are preoccupied with “bending the curve” on healthcare. That is, they wish to stop, or at least lower, the upward slope of healthcare cost increases. Bending the cost curve is a laudable objective, to be sure; it’s always a good idea to economize whenever possible.

Yet something strange keeps happening–or not happening. The cost curve that preoccupies the policy elite never seems to bend downward. Indeed, after decades of discussion and debate over healthcare, the elite haven’t had much success at all; the curve is going in the other direction, upward. A half-century ago, in 1963, the national health expenditure was a mere $34.7 billion, or five percent of the gross domestic product; this year, it will total over $2.7 trillion, more than 17 percent of GDP.

So today, three years after the enactment of the optimistically named Affordable Care Act, the issue of that stubborn cost curve is still a predominant topic inside the Washington beltway. Indeed, any possible “grand compromise” on the overall budget seems inevitably to involve reductions in healthcare entitlement spending. 


However, there’s another metric of healthcare that’s more important to ordinary people.  That metric is health itself; as the Kaiser Family Foundation reports [1], the American people, by a more than 4:1 margin, want more healthcare, not less. We can safely infer that since few enjoy being poked and prodded, when the public says it wants more healthcare, it really means it wants more health.

The political elite would undoubtedly be disturbed by this polling reality, because it flies in the face of any effort to ratchet down healthcare spending. Yet politicians don’t seem to have noticed this Kaiser data, or thought about its implications; that’s why both parties continue to push their efforts to bend down the cost curve. And if they don’t succeed? Well, they just try, try, again. As W. H. Auden once wrote, “We would rather be ruined than changed.”

Some will observe that plenty of polls show that Americans are upset by high healthcare costs; they’d like something done about them. And that’s true. However, what the average American would say–if he or she had a personal publication portal, or the ability to fine-tune polling questions–is that folks want not only lower healthcare costs, but also better health. Note the two points in tandem: lower costs, better health. The public, perhaps unconsciously, wants both–and, in effect, is holding out for both.

Yet the political elite seem interested only in “lower healthcare costs,” and not “better health”; at least, that’s the way the public sees it. Yes, there’s plenty of elite talk about behavioral health issues, including the battle against obesity, but those discussions and subsequent policies seem wrapped up in social snobbery and condescension, enough to make the average American recoil.

So for our purposes here, we will confine ourselves only to health considerations that occur within the healthcare framework, e.g., curing an ailment or disease. And in that vein, the vein of medical research, we might ask: When’s the last time a prominent politician took to the national stage and called for an end to Alzheimer’s? When’s the last time a leader proposed an energetic and coordinated national campaign to achieve such an outcome? Answer: a long time. Like, never.

Right now, it seems as if the elite budget-cutters are more interested in reducing Medicare than in reducing, say, bank bailouts, welfare and foreign aid.  In other words, these elite efforts at cost-reduction, even if they are bolstered by Beltway coalitions of billionaires and bureaucrats, have proven to be toxic politics, as the polls all show [2], for the majority of Americans. Moreover, the public is perfectly willing to entertain tax increases, if need be, to protect popular middle-class programs.

Indeed, on fundamental issues–from jobs at home, to immigration, to military interventions abroad–the elite seem to be in a distinctly different place than the public. And the same is true for healthcare; the elite class is just not thinking about healthcare in the same way as the general public.

Yet until a cure-message–for Alzheimer’s, for diabetes, or perhaps for the injuries of wounded warriors coming back from Afghanistan–punches through, the average American will be forgiven for thinking that the elite discussion of healthcare reform consists only of squeezing current healthcare recipients.

So leaders should pay heed, for a change, to these public concerns. Indeed, if only for the sake of furthering their own cost-cutting agenda, leaders should give more thought to the public’s cure-gaining agenda. If they did, something remarkable might happen: Healthcare costs might go down. Yes, costs might go down for the simple reason that healthy people are less costly–to themselves, to the rest of us. Good health is cheaper than sickness. And healthy people invent things, generate wealth, and pay taxes.

Polio went away in the US, thanks to the 1955 vaccine, and now we don’t spend much on that once-dread disease; the scientific-medical intervention of Drs. Salk and Sabin saved far more money than the recent political-managerial interventions of Democrats or Republicans.

Uncle Sam is now responsible, ultimately, for everyone’s health insurance, and so the goal should be to make that insurance as inexpensive as possible–in a way that’s both politically feasible and sustainable. After all, the draconian cuts eyed by some on the right have a way of not actually happening–or of being undone in the wake of the next election.

Meanwhile, let’s look at a recent news item that shines a light on some current problems in  healthcare–namely, the buzzy and muckraking Time magazine cover story [3], dated March 4, “Bitter Pill: Why Medical Bills Are Killing US.” The 26,000-word piece, written by veteran journalist Steven Brill, brims with shocking anecdotes and startling statistics about healthcare costs.   

Brill chronicles, for example, the case of a California man, one Steven D., who died of lung cancer, but not before his family had racked up a more than $348,000 bill from a single healthcare provider. Brill details some of the charges: “$18 each for 88 diabetes-test strips that Amazon sells in boxes of 50 for $27.85; $24 each for 19 niacin pills that are sold in drugstores for about a nickel apiece. There were also four boxes of sterile gauze pads for $77 each.”

Those are stunning markups, for sure–and yet, as the article notes, the bill was ultimately discounted by 82 percent, and a further 17 percent was paid for by the Steven D’s insurance company. Ultimately, Steven D.’s family paid just $3,000, less than one percent of the original invoice. But what a strange and complicated finagling of figures!

All the details of the article help to explain how the US has come to be spending $2.7 trillion a year on healthcare. Brill concludes by quoting a healthcare economist as saying that the “obvious and only issue” is that “all the prices are too damn high.”

For his part, Brill has plenty of solutions, mostly of a left-Naderite nature. One such: “We should tax hospital profits at 75% and have a tax surcharge on all non-doctor hospital salaries that exceed, say, $750,000.” Ideas such as that will make Brill the toast of progressive healthcare thinking; indeed, he is making the rounds [4] of left-of-center think-tanks in DC.

But here’s a prediction: Brill’s article will go the way of all the other left-leaning critiques and debunking efforts on US healthcare over the last half-century or more. That is, it will get a lot of media attention, someone in Congress will hold a hearing or two, and then not much will happen.

Why? In part because, in addition to its cost, the current system is opaque and byzantine–and it is so by design. Today, nine-tenths of American healthcare spending is paid for by third parties–that is, public or private insurers. So it’s easy to see how the system is rife with moral hazards. The healthcare consumer, relying on his or her insurance, consumes healthcare without really knowing or caring about its cost. Meanwhile, purveyors are always happy, of course, to purvey. It’s a system full of red tape and regulation, but no truly adequate checks and balances.   

Other factors are at work as well. For example, hospital emergency rooms are generally a huge cost-center for hospitals, for the simple reason that relatively few ER patients can pay–especially if they are not US citizens. It’s a bit un-p.c. to mention the cost of caring for non-citizens, but their costs are altogether real. Thus hospitals have to “cost-shift” their losses elsewhere. The national cost of such cost-shifting for the poor–an issue unmentioned by Brill–runs into the tens of billions.

Finally, as we saw in the case of Steven D., the bills seem to be entirely notional, that is, subject to massive renegotiation. And all this adds up to a formula for massive costs–and massively random and unequal costs, as each bill is boosted up, and then wheedled down, according to the skill of the boosters and the wheedlers.

Many on the right seize on this issue, calling for a free market in medicine, so that empowered sovereign consumers can make their own choices, forcing suppliers to behave better.   

We needn’t get into all the concerns about free-market medicine, and yet we might note that those concerns include: Can consumers really make good choices about complex issues, especially when they are incapacitated or in a life-threatening situation? Do we really want to reduce the whole of the healthcare system to a cash nexus? And oh yes, will the American people actually support such a change, especially if free-market reforms are linked–as they almost always are–to a stated desire to reduce costs? If folks get the feeling that their leaders see healthcare merely as a huge source for cost-savings, they will shut down on any proposed change.     

For our purposes here, we can simply note one obvious and politically road-blocking fact about free-market medicine: The left strongly opposes it. The left likes the idea of national health insurance–as insurance. As in somebody else pays; as in we are, in fact, our brother’s keeper.

So for reasons of compassion–some might say paternalism–the left strongly supports collective social insurance, not individual consumer sovereignty. Indeed, the pro-health insurance forces, standing on just that platform, won a rather big national election last year.

Moreover, the public seems supportive of even further health insurance expansion.  A survey [5] taken for the Robert Wood Johnson Foundation, the Harvard School of Public Health, and the Kaiser Family Foundation found that a modest majority of Americans wish to see Medicaid expanded, as the 2010 Affordable Care Act–aka Obamacare–seeks to do. Indeed, by a much larger margin, Americans want to see Medicare stay exactly the way it is now.

In other words, the political left has a dilemma all its own. For a century, it has sought to expand health insurance, bringing with it all the moral hazards of third-party-payment. And now, realizing that it has built a cost-machine–although a very popular cost-machine–the left, particularly of the Brill-ish debunking wing, is now seeking to publicize, and then regulate, its costs downward.

Some on the progressive side, of course, seek to go all the way to a UK-style “single payer” system, on the theory that only a bureaucratic monolith can hold prices down. And perhaps, solely in terms of flattening the cost curve, they have a point–although Medicare, to be sure, is a kind of single payer, and it costs plenty.   

However, single payer is not in the cards, because most Democratic elected officials can readily see that the prospect of the full socialization of national healthcare would ignite a majority-killing Tea Party 2.0–and then some.

So absent some sudden lurch to the far left, today’s left is stuck with the policy equivalent of Dr. Dolittle’s pushmi-pullyu, the two-headed beast looking, and moving, in both directions. On the push side, the progressive project of providing ever more health insurance keeps pushing, while on the pull side, the resulting spiral of third-party facilitated healthcare costs keeps pulling.

We might also note an additional political consideration that’s more important to the left than to the right: In creating that vast and byzantine network of healthcare providers that rely on the government for much or all of their funding, the left has created a constituency within itself that openly, and effectively, argues for still greater spending. After all, someone’s spending is someone else’s job or income.

Those jobs from healthcare, we might note, are often numerous and working-class, as in the 2.1 million members of the Service Employees International Union, many of whom work in hospitals. Indeed, total employment in the US healthcare sector is some 13 million; that’s a big bloc of votes, and thus a big obstacle to any kind of reformist cost-change in the system.

In addition, many of the incomes derived from healthcare are distinctly upper-bracket. In this upper-bracket category we might think of, for example, Dr. Salomon Melgen of Florida, the Medicare/Medicaid tycoon who became good friends with Sen. Robert Menendez, Democrat of New Jersey. Many of the media allegations against Melgen and Menendez remain unproven, but it is inarguably true [6] that Melgen made enough money from his string of Florida eye clinics to fly Menendez on his private jet to and from his plush condo in the Dominican Republic. In addition, Melgen has contributed $1.1 million to political candidates–mostly Democrats–over the last decade, and still has had another $68 million to lose on various failed investments [7]. There’s a lot of money to be made in healthcare, and both parties are often receptive to the entreaties of those with a lot of money.

In other words, if leaders in the Democratic and Republican parties have to choose, between muckrakers such as Brill and muck-makers such as Melgen, they often prefer Melgen. Brill may be good for the soul, especially the liberal soul, but Melgen is better for the re-election campaign–and maybe a free trip to the DR in between.   

Moreover, if the history of political and economic reform in a pluralistic system is any indicator, the Melgen class will likely have most of its employees and patients on their side in any big fight. Why? Because for employees and patients, the plump bird in the hand is worth more than the mysterious reform-birds in the bush.

So let’s agree, for the sake of non-argument, that every item in the Brill piece is true.  And that his Time cover story, and all its outrageous and over-the-top anecdotes, will become a permanent part of the healthcare discussion–even if that renewed discussion is unlikely to yield up any sort of breakthrough.  

Still, there’s something missing from Brill’s argument: Yes, the cost curve is important, but the life curve is important, too. The price of healthcare is significant, and yet the value of health itself is even more significant.

Let’s return, for example, to the story of Steven D., the lung cancer victim. One bottom line of that case, as Brill emphasizes, is that his family got stuck with a huge hospital bill, although, in the end, the family paid only $3000.

Yet there’s another bottom line to the Steven D. story: The man died.

The death of Steven D. ought to be of interest to the elite, too, alongside the cost of his care. And the moment that the elite class shows as much concern about the life of the average of American as it does about the cost of his or her healthcare, then the path will open up for a genuine reform that saves lives, as well as money.    

Next: The Supply-Side Strategy: Saving Money by Saving Lives.  

 James P. Pinkerton is a contributor to the Fox News Channel and a TAC contributing editor. Follow him on Twitter [8].

34 Comments (Open | Close)

34 Comments To "The Price of Healthcare and the Value of Health"

#1 Comment By Michael Morrissey On March 21, 2013 @ 4:54 am

Steve Brill started his recent 26,000 word Time Magazine cover story with a simple health policy question: “Why exactly are medical bills so high?” The title should have been, “Why exactly are hospital bills so high”

Brill explains that hospitals set prices based on subjective lists known as charge-masters. Also known as charge-description-master or CDM. These are highly inflated prices at several times actual cost.

People without or inadequate insurance pay list price since no one is negotiating for them. Medicare, Medicaid and insurance companies get substantial discounts from the charge-master.

Many hospitals are classified as “non-profit” but closely resemble for profit corporations in their behavior. Their desire to hide as much as they can of cost accounting, the charge-master, and the way they pursue people that don’t pay them.

Some hospitals bear the name or have affiliation with churches, however, some hospitals behave in a way that is antithetical to the core message of most churches.

Florida Hospital, Our Mission: Extending the healing ministry of Christ.
“Our mission, extending the healing ministry of Christ comes from the study of scripture. Jesus spent a great deal of his ministry on this Earth healing the sick, helping those in need, and offering them a new and better life”

Florida Hospital, a so-called non-profit hospital here in Orlando made a profit of 352 million dollars based on the most recent available yearly reports. Their CEO was paid three million dollars.

They make enormous profits and do not pay taxes. If society is going to waive large tax burdens to billion dollar hospitals, what does society get in return?

The IRS should be auditing the suggested 5% threshold of net patient billing for indigent care at non-profit hospitals. Are they using charge-master values which would distort and inflate the hospital‘s charity care, not the actual cost to the hospital ?

What is the true cost accounting that non-profit hospitals use to write off bad debts? Are bad debts considered charity care ?

There is no such thing as a free market in healthcare, if one defines a free market as a place where there is some balance of power between the buyer and the seller. You can not shop around for an emergency room or a hospital when you need one.

Physician payments only comprise a small portion of our healthcare costs and play no role in the article. We are squeezing the wrong component of the HC system.

The middle class is getting hit especially hard, research indicates that medical bills are the second leading cause of personal bankruptcy. The people getting wiped out are in the middle.

Respectfully yours,

Michael F. Morrissey

#2 Comment By JonF On March 21, 2013 @ 6:04 am

Re: Some on the progressive side, of course, seek to go all the way to a UK-style “single payer” system,

The UK is not a single-payer system– it goes beyond that toward a single-provider model (the government provides healthcare via the NHS). It’s a rare American liberal who espouses full-bore medical socialism of that sort. Many just want a single-payer system like Canada’s: the government pays the bills but healthcare itself is still privately provided.

#3 Comment By Michael N Moore On March 21, 2013 @ 9:47 am

I recently scheduled minor out-patient skin surgery; a very standard procedure. I have called twice to ask how much it would cost. This just flabbergasted the provider. Who said “you have insurance”. I have still not received a reply to my inquiry.

Can you imagine any other service provider flat-out refusing to provide cost information to a customer? My dentist’s office has mastered dental insurance and always tells me what I will have to pay. The medical-industrial complex, like the military-industrial complex, has become completely unaccountable.

#4 Comment By John F On March 21, 2013 @ 9:57 am

Cure-based, preventative medicine would be nice, and while I’m sure many employers would like it, I’m interested to see how your free-market solution would address the Chris Rock objection (no money in the cure; the money is in the medicine).

#5 Comment By EliteCommInc. On March 21, 2013 @ 10:57 am

“Polio went away in the US, thanks to the 1955 vaccine, and now we don’t spend much on that once-dread disease; the scientific-medical intervention of Drs. Salk and Sabin saved far more money than the recent political-managerial interventions of Democrats or Republicans.”

I have not reread “The River” recently, but the introduction of HIV which I am convinced was man made by the protocols of those very same researchers has certainly outstripped any financial gains. I am aware of the Royal Academy’s response on theissue and it is wholly unresponsive. One must test the original vaccine’s to challenge Edward hooper’s exhaustive research.

If in fact americans want better health they could themselves a favor and live more healthy lives.

#6 Comment By OldVet On March 21, 2013 @ 11:37 am

Stem cell therapy is offering some promise for our disastrous healthcare situation. I’m invested in a couple of biotechs that are in Phase I trials that have shown remarkable results in the areas of blindness and neurological diseases like Parkinson’s. The basic idea with regenerative medicine is to introduce healthy new cells into the body, rather than carving ourselves up with surgery and bombarding our systems with pharmaceuticals. I’ve already got titanium in three places in my legs– but someday soon there will be injections of stem cells into the joints that will regenerate new cartilage.

#7 Comment By Michael N. Moore On March 21, 2013 @ 12:07 pm

Michael Morrissey makes some great points.

We have watched the demise of values-based medical care run by medical professionals and its replacement by for-profit or pseudo non-profits run by MBAs. Organized crime has a more humane value system than the people that business schools churn out.

Squeezing the last dime out of everyone for basic necessities is not a good long term basis for a society, but this has become the value that pushes out all others.

#8 Comment By James from Durham, England On March 21, 2013 @ 12:14 pm

“For employees and patients, the plump bird in the hand is worth more than the mysterious reform-birds in the bush”.

Isn’t this the essence of conservatism?

#9 Comment By WorkingClass On March 21, 2013 @ 12:33 pm

You keep saying left when you mean Democrats. Talk to the Nader/Kucinich people and they will tell you that single payer is the way to lower cost, better outcomes and universal access.

Obamacare is a Corporatist plan written by the insurance lobby. It institutionalizes extortion. Crime is not an ideology. When Americans are sick or injured they need a doctor. That human need is exploited by rent seekers (via corruption in high places) to steal everything we have. It’s literally your money or your life.

The cost curve is the ever accelerating rate at which the wealth of the people is redistributed to the Oligarchs. The rich get richer and the poor get sick and die.

Learn to take care of yourself y’all and be prepared to meet your maker. Life is short and brutal in the third world.

#10 Comment By EliteCommInc. On March 21, 2013 @ 1:20 pm

Laughing Chris Rock’s comments are part of urban legend as well as urban myth. I am not sure there is evidence to sustain the idea.

There is intense and serious research in almost every aspect of medicine. In fact, cure based solutions have a very imporatant advocate. Private citizens who are engaged in research and push for faster and more effecient protocol practices to get certain treatments and medications to market sooner. I am not a big fan of public anything.

Your comments remind me of an article in Bloomberg View, I think. That the way to foster economic growth is for the federal government to invest in healthcare research. The downside is that research never pays off unless it works and reaches the general market place. And the government has a lousy track record in healthcare. Case in point, a national measure entitled, The Affordable Care Act, which does nothing to address healthcare costs – comical.

Taxing profits sounds very counter intuitive. Taxing the profits that a company spends on healthcare would only reduce the available funds for research. Taxing for the purposes of introducing government research — well, I think the term government speaks volumes. Any here are encouraged to read the billions of dollars already invested by a myriad of grants in medical research and study.

#11 Comment By Marc On March 21, 2013 @ 1:36 pm

WorkingClass says:

Learn to take care of yourself y’all and be prepared to meet your maker. Life is short and brutal in the third world.

How long has the US been a 3rd world country?

#12 Comment By Marc On March 21, 2013 @ 1:58 pm

Time and time again people refuse to see the elephant in the room. Everyone admits that health care costs are spiraling out of control but they refuse to admit that the problem is government’s involvement in health care. There was a time when health care in the US was affordable. [9] you will see a bill for a six day hospital totaling $102.60 (around $965 in today’s dollars). The health care market was freer in 1950 than it is today so who says that free markets don’t work in health care? So here is my proposal. If you want affordable health care you have to eliminate government’s involvement in it. I propose that every law and regulation pertaining to health care that has been created since 1950. This includes Medicare and Medicaid. Once government has been rolled back we will have affordable health care again.

#13 Comment By Michael N Moore On March 21, 2013 @ 4:52 pm

The US actually instituted socialist medicine in 1986 when it banned hospital emergency rooms from turning people away (42 U.S.C. §§ 1395cc, 1395dd). If you don’t want socialized medicine then work to repeal that law.

Americans hate the word “Socialism”, but they seem to like the policies. Obamacare is actually a roll-back of this law designed to benefit the hospitals and insurance companies, both of whom contribute huge sums to political campaigns.

The Massachusetts General Hospital in Boston (900 beds) employs 350 non-medical people just to process insurance claims. The Toronto General Hospital in Canada (471 beds) employs 3 people for the same task. This is what you call the inefficient diversion of resources.

#14 Comment By Adam On March 21, 2013 @ 6:26 pm

The medical market was freer in 1950 because a)there were many fewer treatment options, b) it was treated more as service rather than a giant bucket of cash, which is related to c) it wasn’t perversely incentivized to reward fees for service. You also had fewer if any medical malpractice suits and there wasn’t the never ending patent train for medication that exists today. The other elephant in the room is the prepackaged crap that is called food being cheaper and more available than actual food, hastening the expansion of our waistelines as the cash in our wallets decline.

#15 Comment By stef On March 22, 2013 @ 12:17 am

@Marc, if health care was cheaper in 1950, it’s because many people who got sick simply died. You can’t pay for treatments that don’t exist.

” Can consumers really make good choices about complex issues, especially when they are incapacitated or in a life-threatening situation?”

Answer: No.

#16 Comment By C. L. H. Daniels On March 22, 2013 @ 11:02 am

The idea that deregulating the healthcare market will magically solve all our healthcare problems is frankly as naively utopian as the idea that deregulating all the banks will prevent future financial crises.

Here is my problem with the very idea of healthcare as a market: What the consumer is buying is no less than their personal health and well being. Unlike say, the market for cars, the choice of whether or not to purchase healthcare is going to be a life or death choice at some point in everyone’s life (sooner if they wait until it IS life or death), which is to say that it’s no choice at all. The massive inflation of healthcare costs is roughly analogous to the same thing happening in the market for food, or water. These are things that people will literally die without, and so ultimately they will pay any price for them, no matter how outrageous. That’s not a “free” market at all, it’s a compulsory one. Consumers have no choice but to participate in the healthcare market, and unlike the markets for food or water, the healthcare market is service-based and rife with complexities and a lack of transparency that make it all but impossible for an average consumer to make intelligent decisions about what to “purchase.”

We should have socialized medicine; the good health of Americans is a public interest, a good that we all need, and socializing both the risks and the cost is not only good policy (in my opinion), it’s also the moral thing to do. If we all have a right to “life, liberty and the pursuit of happiness,” then I posit that by extension we have a right to access health care. After all, that kind of goes with the “life” and “happiness” parts, right? Your right to life shouldn’t be conditioned on your ability to pay.

#17 Comment By Marc On March 22, 2013 @ 12:11 pm


Although there are more treatments available today, that’s not the reason why healthcare has become so expensive. In the example I noted above was for the healthcare cost for child delivery and subsequent hospitalization. Although there is more technology associated with prenatal care (e.g. ultrasound) childbirth today has a lot in common with childbirth in the 1950s. Therefore, this a good basis for performing a cost comparison between today and the 1950s. Note on the bill that the cost to stay at the hospital was $10 per day (around $95 per day in today’s dollars). It is amazing that the cost for staying at a hospital in the 1950s cost as much as a 3 star hotel. Can’t say that today.

#18 Comment By Nathan On March 22, 2013 @ 12:12 pm

In all these discussions we run head long into Madison again. I’m really sorry but we do. “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constitutents.” If the “father” of the Constitution can’t find anything in the document that authorizes congressional expenditures on behalf of “benevolence” then it isn’t there which means all such expenditures, however well intentioned, are unconstitutional regardless of what any justice on the SCOTUS may have ruled later. (Conservatives by definition do not subscribe to the “living document” concept here.)

“Conservatives” can’t yell at democrats for ignoring the document over their “good intentions” and then turn around and do it themselves. So for all of you, you need to frame both the debate and solutions in terms of what is “constitutional” and for this Madison gets the final word. Sorry but he does.

Again, “good intentions” do not justify ignoring the document and the Supreme Court in 1866 made that abundantly clear regarding Lincoln’s actions.

Now please continue.

#19 Comment By Marc On March 22, 2013 @ 1:08 pm

@ C. L. H. Daniels says:

1. You say that the belief that deregulating healthcare markets will solve all of our problems is naively utopian. I don’t any advocates of free markets claim that we will have perfect results. Since people and life in general are imperfect no one can makes the claim that a free market would lead to a perfect healthcare system. What we are saying is that a free market healthcare system would lead to an abundance of choices and low prices. Those who are naively utopian are those who proclaim that the government can run healthcare and that it will result in a perfect healthcare system.

2. You stated that a true market cannot exist for healthcare because consumers don’t have the option decline services since their life is on the line. Can you point to an example of this occurring regularly prior to The 3rd party payer system that we have today? I showed an example of how affordable healthcare was treated as a fee for service and it was actually affordable. It cost $10 ($95 dollars today) to spend a night at the hospital in 1950. Things weren’t perfect but healthcare was affordable. How many middle class people could afford to spend 6 days in the hospital? Not many.

3. You stated that since we have the right to life, liberty, and the pursuit of happiness then it shoul be extended to health care. A person’s right to life, liberty, and the pursuit of happiness does impose a financial obligation onto other people achieve those ends. For example, a trip to Hawaii would make me very happy. Would this be justification to force you to pay for my trip?

4. Lastly, it is not proper for you to take your personal policy preferences and try to couch them in moralistic terms. The socialized medicine system that you want requires for government to use its coersive powers to force people, under the threat of imprisonment, into forced participation. It is not moral to threaten agression towards people for their wish to not participate in a socialized medical system.

#20 Comment By Marc On March 22, 2013 @ 1:28 pm

Here is a bill from 1958. Four days in a private room in a hospital cost $95.35 or about $750 in today’s dollars.


Here is a bill from 1947 totaling $69.25 or about $705 in today’s dollar for 10 days in the hospital


Things were so much better before the Federal government spent the last 50 years “fixing” our healthcare.

#21 Comment By Marc On March 22, 2013 @ 1:31 pm

Excuse me but in the above example the 10 stay cost $120 and not $69.25. That’s $1220 in today’s dollars for a 10 day stay at the hospital.

#22 Comment By Marc On March 22, 2013 @ 2:06 pm

Here is another tidbit of information. This is Beacker’s hospital review average inpatient cost per day.


Note that for inflation adjusted dollars a hospital stay is 20 times more expensive today than it was in the 40s and 50s. Also note the for the US as a whole. for profit hospitals had lower cost than non profit and state/government hospitals. I recommend that everyone call/write the congressman and senator and demand that the Federal government repeal every law related to healthcare for the last 50-60 years. Afterwards we can get back to having affordable healthcare again.

#23 Comment By C. L. H. Daniels On March 22, 2013 @ 2:36 pm


Everyone knows that healthcare inflation is real. We don’t need to look at bills from 1958 to understand how it works. Conversely, seeing them constitutes exactly zero evidence to support your contention that it’s all the government’s fault.

#24 Comment By Bud Wood On March 22, 2013 @ 3:32 pm

Well, yes, I do want more “healthcare”. However, I really don’t want more medical care, which is what “healthcare” insurance provides.

If there are difficulties in understanding the difference, just look at the care (cost) of sickness as compared to the cost of being sufficiently aware to take reasonable care of one’s own health. Here I am, at 87 years of age and probably more fit than many people in their fifties. The reason? Most probably because I am aware that little things like the effects of corn syrup sweetened colas, rushing around in smoke filled cities, drinking poisoned water, etc., etc., are life threatening.

#25 Comment By Pat Devine On March 22, 2013 @ 4:19 pm

This article is a really couragous stretch to avoid the real issue which is cost.

#26 Comment By C. L. H. Daniels On March 22, 2013 @ 5:32 pm


1. Re: Free Markets. Truly free markets often result in exactly the opposite, namely monopolies, i.e less choice and higher prices because of cartels. We regulate our markets to prevent this from happening. Is that also bad? I don’t believe socialized medicine is perfect either, but I do think it’s better policy as a starting point, into which you then introduce market principles to increase efficiency and drive down costs.

2. I’m not 100% sure of what you’re asking for here, but median family income in 1958 was about $5,000 according to census data. I rather doubt in that context that a $95 hospital bill was as affordable as you make it out to be for a family well below the median, as 24% of families still earned under $3,000. For a family at that mark, $95 represents a significant expense, and there were still over 2 million families that earned $1,000 or less, for whom a $95 bill likely would have been ruinous. In point of fact, $95 represents roughly double the fraction of the median income in 1958 than $750 does of the median income today.

3. I’ve never particularly liked that argument. It’s rational in the abstract, certainly, but also profoundly libertarian and utterly impractical in the society that we actually live in. Your current standard of living, for example, rests on a foundation created by (presumably unfairly seized) tax money. The roads and other transportation infrastructure that the government builds and maintains with tax money permit commerce, and thus a modern economy. Your argument can be equally applied to say that it’s not fair for you to pay for roads because you don’t drive, and is thus revealed as something of a straw man. You might not drive, but the fact that other people can and have roads on which to do so contributes materially to your standard of living.

4. Why isn’t it proper? You can certainly argue about the morality of it, but I don’t see how that has anything to do with whether it’s proper for me to couch my personal policy preferences in moral terms, particularly when that’s how I arrived at those preferences in the first place. As to your point regarding the morality of the policy, you argument is extremely broad. As in your second point, if your argument is followed to its logical conclusion, then all taxes and by extension modern government itself are immoral. In fact any obligation placed by a community on an individual would be immoral unless it was entirely voluntary. The draft would be immoral. So is making drugs illegal.

#27 Comment By Marc On March 22, 2013 @ 6:38 pm

@ C. L. H. Daniels

1. A monopoly in most industries can sustain themselves unless they are able to leverage government to keep out/drive out competitors. In a truly free market government would not enact any such laws or regulations to prevent new players from entering market. The laws and regulations that you are a proponent of has lead to the cartelization of the US healthcare industry. A cartel is formed when competing companies create a formal agreement to regulate the supply chain or prices etc. The AMA has worked over the years to limit the number of MDs who can legally practice medicine in order to drive up the salaries of MDs. Government laws and regulations regarding the licensure of MD have sustained the medical industry’s cartels. The regulations that you advocate for is what has led to the healthcare mess that we have today.

2. So you are admitting that a median income family could afford a six day hospital stay. Great!!! How many median can say that today? A system that allowed the average family to afford hospital expenses is a system that works quite well. Even for the 24% of families still earned under $3,000/yr, a six day hospital stay would not drive them into bankruptcy. Could the same be said for a family making $25,000/yr? For those who earned less than $1000, it would put a strain on their finances but many hospitals and doctors adjusted their fees based on their client’s ability to pay. Free markets provide options to those who had lower incomes. For one, if the hospital stay could have been reduced by 2 or 3 days then 1/4 to 1/3 of the cost could have been eliminated. There were other options. There were charity hospitals and as I said, many hospitals adjusted their rates based on their client’s income.

3. We can argue about government versus private roads another day. But the US’s infrastructure is largely paid out of fuel excise taxes. I can significantly reduce or mostly eliminate these taxes by reducing or eliminating driving. Plus fuel taxes is a tax based on usage which is far more equitable. Income and payroll taxes, which currently funds the US welfare state, is a totally different matter.

4. Since taxation, in particular taxes on income and property, is theft so yes it is immoral. Furthermore, government and its coercive use of power to threaten peaceful people for non compliance is also immoral. The draft (slavery) is also immoral. Th government’s wars are immoral. And the Drug War is also immoral.

#28 Comment By Michael Kaiser On March 22, 2013 @ 9:18 pm

It is time for us as human beings to enter a new stage of awareness–the awareness that people can not live forever. In fact, an increasing aging population living longer, and in fact an increasing population period, is putting tremendous stress on the planet and other humans and it only is going to get exponentially worse. The cold, hard reality is that we need to be focusing on the exact opposite of what the author proposes. We need to be focusing on how to put a lid on the number of humans living on the planet. The one sure way to help bring this about would be to stop trying to save everyone.

#29 Comment By David from England On March 23, 2013 @ 5:37 am

More ‘health’ is not the same as more treatment even at a much reduced price.

Right up front let’s recognise that there are three medical sectors, surgery as a required as a result of external inury or risk prevention e.g. broken limbs and obstetrics, communicable disease e.g. malaria, and non-communiable diseases and health issues. Have a look at the data, but it’s this last group that takes up the bulk of the money; drugs are developed because they are patentable and therefore profitable and the causes are what we do to ourselves.

A surprisingly few posters have referred to the issue of why illness is more prevalent today than forty or fifty years ago.

Those few posters have refered to the poor quality of food and poor food choices. Although true the real problem is ‘vested interest’.

I have been reading both popular books and other documents from the 1970’s and it is interesting to see how the problems identified then (and foretold) have come to be realiesd. Get a copy of Sugar Blues (William Dufty) and read about the motives of the food industry to make cheaper and more addictive products which are nutritionally deficient, for the diagnostic medical services to prescribe treatments (often based on biased training material produced by the drug companies). Diabetes is a classic. People who eat well do not get diabetes.

To find out about really how we eat ourselves sick search the net for ‘The Saccarine Disease’ T L Cleave, you can get it for free.

Mr Cleave was a surgeon (British surgeons don’t call themselves Doctor) and head of naval medical research. He was born in around 1906 so forgive his style of english and he writes for the medicalprofession so it can be a bit heavy going but it’s worth it.

This document continues his postualation that many differnt diseases all spring from the consumption of REFINED carbohydrates.

Please note that this does not condemn carbohydrates just the dehulled, de husked, milled, polished and denuded wheat, rice and similar so prevalent today along with table sugar (sucrose), HFCS and other artifical sweetners. The title refers therefore to this group of ‘sugars’ which are added and harmful as opposed to other natural and whole sugars already in foods that the body needs.

The range of conditions runs from dental carries with a gestation period of weeks (Coke anyone) to diabetes that takes fourty years to develop. Included are obesity, peptic ulcers (for which medicine claims there is no cure) and schitzophrenia.

The evidence used is long term historical references and specific epedimilogical reports many of which would be difficult or impossible to conduct today. He cites doctors in tribal africa reporting no diabetes present but commonplace in the towns where a more westernised diet was prevalent and intermediate levels in the ‘school’ population that journeyed on a daily basis and thus was exposed to both.

Please read it and share. It is compelling.

I am 57 and my life has changed. As a post war child I enjoyed every food available, my mother is a prolifc baker! Already with signifcant caries at 17 I developed a skin condition for which I was prescribed topical steroids. Over 30 years later I still had the condition and my skin was thinning. My new wife has weaned me off high sugar foods and wheat products ( I am still a sucker and therefore obviously an addict!). I have eaten very little meat in the last four years but eat prodigeous amounts of vegetables, pulses and whole grains such as spelt and kamut (don’t know what you call them in the US), fruit and always the best I can find and organic (reduces the toxic load) I have dropped from around 200lbs and rising to a stable 140 or so and for the first time in my life can wear ‘501s.

An historical document starts ‘We the people’. It’s time that we the people refound our own determination to take care of ourselves and to rebuff the demands of others.

Knowledge is power so inform your self. Do not believe what you are ‘told’, not this nor anything else you read. Listen and verify, counter verify and use your eyes. Cleave said that too many get so caught up with the minutiae that they can’t see what’s obvious.

What’s obvious is that ‘system’ has no incentive to reform itself. We have to take back control if we want real change.

Good luck

#30 Comment By TGGP On March 23, 2013 @ 3:53 pm

The RAND corporation did a study in which they randomly assigned people different amounts of health insurance. People who got more did receive more “health care”, but they weren’t any healthier. The conclusions is that, on the margin, health-care doesn’t make us healthier. That’s why Robin Hanson argues we should cut it in half:

#31 Comment By Michael N Moore On March 24, 2013 @ 9:59 am

Good point from TGGP. We seem to focus only on the problem of under-treatment, while ignoring the problem of over-treatment. The elderly, many of whom have nothing else to do, have become cows to be milked by the medical-industrial complex. I have been stuck in line behind elders at the pharmacy window. They cannot stop chatting with the pharmacist because the are so lonely and aimless. We could move a lot of funds from expensive medical care to low-cost social programs for the elderly.

#32 Comment By Valerie Curl On March 24, 2013 @ 11:39 pm

There are many things wrong with this essay including how modern liberals think about health care and equity. The best that can be said for it is that Hospitals do offset ER loss leaders by charging more elsewhere in their systems. Regardless, this article promotes the same failed ideology of liberal thinking from decades ago. Dems and liberals, over the last 20 some years, have changed as a response to transnationalism and globalization. What we liberals don’t understand is why conservatives continue to look backwards to bygone, perhaps mythical, eras for answers when its obvious those eras provide no answers to a modern, global society. Even Hayek said a nation needs to look towards the future rather than the past, which in his opinion most conservatives choose to do.

#33 Comment By Marc On March 25, 2013 @ 9:41 pm


Although I don’t consider myself a conservative I have no problem looking to the past for solutions to today’s. Studying the past provides a lot of historical context. By the way, those medical bills that I posted are not mythical. They are real and they are proof that the people in the US had access affordable healthcare before the Federal government stepped in and ruined it. I always hear people on the Left say how the past doesn’t apply to today’s complex world. In a complex world, less central planning of healthcare policy makes even more sense now than it did in the past.

#34 Comment By Nick On March 27, 2013 @ 2:04 am

@ C.L.H. Daniels

There is no right to the “pursuit of happiness.” The Declaration of Independence is not the basis of any law in the United States. And, in any event, I sincerely doubt that any of its signers would have recognized a fundamental right to have the state subsidize that which we think would make us “happy.”

Also, the mere fact that you want somebody else to pay for something does not automatically render that thing a public good.