There\’s a solution here you know

As societies become richer, citizens tend to want better schools, better medical care and other government services. This country is following that pattern, but without paying the necessary taxes. That combination has us on a course to Greece-like debt.

Make those things the citizenry want not government services and taxes don\’t have to rise, do they?

24 thoughts on “There\’s a solution here you know”

  1. how is that a solution?

    There are two ways to pay for health and education, privately or via taxation. Deciding to go private might mean taxes don’t rise, but its means private expenditures will rise, and it doesn’t necessarily mean we are getting health and education more cheaply, it doesn’t mean we’ll be better off.

    I don’t know about education, but there’s plenty of reason to think the cost of private healthcare insurance would be much higher than the NHS.

    see citation here

    I’m not rabidly opposed to private provision but nobody should be fooled into thinking private provision will necessarily be more affordable, and hence a solution to the problem of unaffordable taxpayer funded healthcare

  2. Regardless of how rich p[people are, or whether they are getting richer or poorer, they always want more of everything- and will demand it from government if they think that they are not paying for it.
    The point of running things privately where possible- is that they see the cost of getting whatever and check the quality. They can have, as the USA still does have, the best health care system in the world- but if so they have to pay markedly more for it. And that is best in the eyes of the buyer- not according to an academic who may well have different priorities.

  3. Pat,

    I appreciate the advantages of buyer choice etc. and I trust you appreciate some of the potential efficiencies of universal healthcare insurance (no adverse selection, no marketing costs, no incentives for unnecessary treatments etc.)

    but the big point is that US citizen have not (and cannot be) faced with the choice of private care or a universal tax-payer funded health insurance. US citizens might consider their health spending “best in the eyes of the buyer” but that’s conditional on them not having the choice of an NHS. I’m not interested in what’s best in the eyes of some academic, I am interested in what’s best in the eyes of the buyer, and it might be that “buyers” of healthcare in Europe consider themselves better off than buyers in the US… the fact it’s impossible to make the inter-personal comparison does not rule out the possibility

  4. @Pat
    Funny the best in the World American system had to be changed,against tremendous odds to force the insurance companies to cover more people. The reported evidence of American insurance companies welshing on paying for treatment on grounds of prior medical conditions is confirmation of the British people’s instinct not to trust privatised medicine. That and Americans taking trips to Canada to buy pharmateuticals because of the wonders of the market in the USA is enough to
    put off most people.That and checking what Bupa charges.As per usual the over-manning in competitive firms ,not least in recording and billing treatment is not taken into account in the American Neo Con argument.

  5. @Luis “and I trust you appreciate some of the potential efficiencies of universal healthcare insurance”

    A monopoly, more like. Not a natural one.

    Monopolies become inefficient, self-serving. A plurality of providers might appear to have marketing “inefficiencies”, but they tend to more than make it up in dramatically better operational efficiencies and responsiveness. It does not take a wait until the next once-in-5-year elections to get things sorted.

    Oh, and yet again we get dragged into the “US Healthcare is nasty market sector” canard. It is bad because of Govt meddling. It will get much worse.

    Fact is the State builds monopolies and monopolies are bad for the consumer of the services unless it is a natural monopoly, which is very very rare.

    Ergo the State should do as little as possible and a much as possible devolve to the individual or as close to them as practicable.

  6. “As societies become richer, citizens tend to want better schools, better medical care and other government services “ without having to pay for it.

  7. Agreed. Re the usual Luis/Roger spat:

    1. Go to a price comparison website and do a bit of searching, you’d find you could privately insure the entire UK population for about half the cost of the NHS, and that’s before haggling a bulk discount. (OK, private insurers are cheats and liars and don’t cover A&E, that’s just details)

    2. Do not confuse the ‘provision’ side with the ‘funding’ side.

    3. Clearly there are arguments for private or competing providers rather than a self-serving, monolithic state near-monopoly. Although again, by international standards, the NHS is not that terribly expensive.

    4. Similarly, there are arguments that there should be some universal health insurance, funded by taxes. That’s a social/political issue, not an economic/medical one.

    5. So do like the Europeans – taxpayer funded vouchers to fund a reasonable standard of care, competing/private healthcare providers, and any extras you have to pay privately.

    Job done. Next.

  8. @ Mr. Reed- had to be changed to meet a government whim- the people didn’t want change (hence the fight), And I think you’ll find it’s more a case of forcing people to buy insurance who otherwise wouldn’t than forcing insurance companies to accept business. Those too poor to pay the premiums, a minority of the uninsured, will now face fines- and still not get insurance.
    Sure pre-existing conditions are a problem- I didn’t say the system was perfect.

  9. @Luis- We in Britain have no choice but to pay for NHS care, whether we like it or not. I’m sure BUPA would thrive if it could charge it’s non customers as much as it charges it’s customers- which is what the NHS does (and so does the BBC- some other time)

  10. @Wad

    “Job done. Next.”

    Exactly. The various forms are also in a sense political, as you have issues of is it HSA.

    We need to break the employer as commissioner link too, as with pensions.

  11. @DBC
    Americans take trips to Canada to buy drugs because Canada sets drug prices based on the marginal cost of production. The vast costs of R&D and clinical trials are ignored. These costs are paid by USA buyers, while Canada (and most of the rest of the world) freeloads.

  12. @Pat
    I should imagine that universal health insurance is best suited to providing healthcare as the people with long term pre-existing conditions will get cover by being cross-subsidised by people who never go to the doctors in their lives.
    Something like a National Health Service.But hey the American Neo Cons have got the wind in their sails with the recession they created and are using the opportunity to destroy workable mixed economies (round the world,it looks like) and replace them with cobbled up schemes for
    the private ownership of everything,(people who rocked the boat by saying they wanted public ownership of everything were harried out of politics,of course, and put under surveillance as subversives and enemies of the state).

  13. @TGS
    I did n’t say it was that good,just that medicine was cheaper.Which brings to mind ZT’s remarks about why they’re cheaper : most exporting companies recover their costs by stinging their home market then selling abroad very competitively.That’s capitalism and ,if you don’t like it, you’ll get it anyway.

  14. “most exporting companies recover their costs by stinging their home market then selling abroad very competitively.”

    Ah I see, that’s why Chevrolet’s and Cadillac’s are sold at higher prices in the US than elswhere, right? The same way that Fiat’s are also more expensive in Italy than in Germany and Mercedes’ are more expensive in Germany, right?

    Also, of course Roche and Astra Zeneca charge higher prices in their respective home markets than they do the in the US, right?

    The truth is instead of course that each company that wants to be competitive on a certain market will adapt its prices to the market prices of that market. (this is really one stuff they teach you during one of the first lessons of economics or of marketing)

  15. I am very glad indeed to have escaped being taught marketing (are they’re universities of marketing?) but I will gracefully concede that not all companies sell the same things dearer at home than abroad (I suppose there is some marketing rigmarole to express this more pretentiously).
    As a Parthian shot I would say that i) I didn’t say all companies ii) the explanation that prices go up and down according to an estimate of what prices can be gouged out of a country is more in keeping with my explanation of why pharmateutucals are relatively cheaper in Canada than ZT’s, (which is more of a complaint).Anyway that’s the way capitalism works.You saying that its not the best of all possible worlds?

  16. “I am very glad indeed to have escaped being taught marketing”

    Well, given your comments here it would appear that you learn some basics of marketing

    “i) I didn’t say all companies”

    No you said most – something I still don’t believe in, especially if you consider retail prices (which can obviously be influenced not only by producers but also by e.g. distributors and retailers)

    “ii) the explanation that prices go up and down according to an estimate of what prices can be gouged out of a country is more in keeping with my explanation of why pharmateutucals are relatively cheaper in Canada than ZT’s”

    No it’s not since your explanation was that this is because of most exporters stinging their home markets which I have just proven is wrong

    “Anyway that’s the way capitalism works.You saying that its not the best of all possible worlds?”

    Capitalism is only one ingredient for a well functioning market, others are e.g. liberalisation, limited public sector involvement and free flow of goods and capital. The Canadian market for pharmaceuticals doesn’t really appear to be very liberalised, now does it?

  17. “you’d find you could privately insure the entire UK population for about half the cost of the NHS”

    Well if that was true, that would settle it, because it would mean the cost of providing healthcare in the private sector would be less than state production. The link I supplied in my first comment describes research suggesting the opposite – that private provision would be much more expensive. When you look at your price comparison website Mark, you aren’t looking at the quote for a healthy adult with no chronic conditions, and assuming the UK is entirely made up of such people? The NHS will (more or less) spend what it takes on you, regardless of past medical history and (more or less) never says “sorry your policy doesn’t cover that” (with some exceptions – certain drugs being obvious ones). And how would private provision deal with the millions of households with income of less than say £22,000? Assuming, that is, you are bothered about such things.

    I’m not concerned with winning the argument that the tax-funded health is better than private, merely with trying to persuade people to look at both sides of the argument and appreciate the pros and cons of both sides. If you are “anti” NHS but don’t bother to understand how and why tax-funded healthcare can have advantages, then your opinion is about as valuable as a socialist who never bother to understand the merits of markets.

    This isn’t some bizarre lefty world view, lots of very mainstream economists (like him) can tell you lots about why private provision of healthcare can be inefficient. Here’s one, but anybody who has done undergrad econ ought to be familiar with the basic adverse selection argument.

  18. from paper linked to above:

    ” With private provision, health care providers may compete to improve their reputation by taking actions that make people feel better in the short run but do not improve their long-run health. For example, US hospitals provide more nonmedical amenities than British hospitals, which face less competition. Although it is certainly possible that British hospitals may be providing suboptimal nonmedical amenities, the evidence is also consistent with the notion that in the more market-based US system, hospitals are trying to signal quality by providing easily observed nonmedical amenities. This would suggest that the ratio of spending on these amenities to spending on medical care is too high in the United States, and perhaps explain why the UK manages to achieve health outcomes nearly as good as the United States, while spending only 7.3% of gross domestic product on health compared to the 13% the United States spends (OECD Health Data 2002).”

    and that is just one mechanism.

  19. vouchers are not a panacea.

    does everybody get the same quantity of vouchers? Healthy people and the chronically ill? How do you match what you are given to spend with what you need to spend?

    private providers competing for business are interested in getting people to spend their vouchers with them, and there are big problems where consumers have difficulty observing the quality of service in healthcare. Problems of unnecessary treatments and/or costly marketing expenditure are still there.

    haven’t thought through adverse selection, not sure how that’d play out under a voucher system

  20. An entirely unbiassed observer of this argument ,such as myself,would be forced to conclude that Luis Enrique has pretty well disposed of the privatise everything school of thought( next door to the University of Marketing) as regards health care.
    BTW I accept that Canadian medicine is probably cheaper because of the reasons apparently drummed into marketing students in their first lectures (or worshops) i.e. because prices enforced depend on how much the market can afford, not the cost of production including R’n’D . I should imagine that a country with huge export firms such as USA would be quite flush with wages and so could charge to the hilt on its home market,while countries with no exports,being less flush, would have to pay marginal cost prices for imports.Quite how this disproves my original contention that the USA’s Big Pharma can afford to sell to Canada cheaper escapes me .Most pharmateutical firms are in prosperous countries (the pharmateutucal companies contributing to that prosperity) so they sell at lower prices in less prosperous markets.

  21. The wit of “an entirely unbiased observer…such as myself” is much appreciated.

    I can’t help observing, myself, that, with Big Pharma charging “to the hilt” to them as is able, while “they sell at lower prices”–near marginal cost–“in less prosperous markets,” a treasured ideal of socialists is, indeed, realized: “from each according to his abilities and to each according to his needs.”

    Ricardo imagined that paper money offered “a path through the air” but laissez-faire capitalism is even more wondrous: omelettes for all without
    “breaking eggs.”

  22. “An entirely unbiassed observer of this argument ,such as myself”

    Yeah right, of course you are totally unbiased …

    “Quite how this disproves my original contention that the USA’s Big Pharma can afford to sell to Canada cheaper escapes me .”

    But that was not your original contention, now was it? For your original contention was that: “most exporting companies recover their costs by stinging their home market then selling abroad very competitively.”

    Which is of course complete bullocks

    “Most pharmateutical firms are in prosperous countries (the pharmateutucal companies contributing to that prosperity) so they sell at lower prices in less prosperous markets.”

    Mostly correct as a more prosperous country is likely to have higher market prices but this is not really the difference between pharma prices in Canada and the US, now is it? Canada may be slightly less wealthy than the US but the main factor determining prices of pharmaceutics in the two countries is of course different regulatory regimes (something that cannot really be blamed on capitalism or liberalisation).

Leave a Reply

Your email address will not be published. Required fields are marked *