Tag Archives: Government

Thomas Sowell explains the economics of cutting health care costs

The Democrats are talking a lot of about their plan to reduce the costs of health care. And they think that the way to do that is by having government take a bigger role in health care provision. Well, Thomas Sowell doesn’t like the idea that the government can reduce health care costs by using govenrment, and he’s written a four part series on it.

Here’s a quote from the first part about how Democrats attack the suppliers of health care products and services:

Despite all the demonizing of insurance companies, pharmaceutical companies or doctors for what they charge, the fundamental costs of goods and services are the costs of producing them.

If highly paid chief executives of insurance companies or pharmaceutical companies agreed to work free of charge, it would make very little difference in the cost of insurance or medications. If doctors’ incomes were cut in half, that would not lower the cost of producing doctors through years of expensive training in medical schools and hospitals, nor the overhead costs of running doctors’ offices.

What it would do is reduce the number of very able people who are willing to take on the high costs of a medical education when the return on that investment is greatly reduced and the aggravations of dealing with government bureaucrats are added to the burdens of the work.

Britain has had a government-run medical system for more than half a century and it has to import doctors, including some from Third World countries where the medical training may not be the best.

And a quote from the second part about how reducing costs means rationing:

There is no question that you can reduce the payments for medical care by having either a lower quantity or a lower quality of medical care. That has already been done in countries with government-run medical systems.

In the United States, the government has already reduced payments for patients on Medicare and Medicaid, with the result that some doctors no longer accept new patients with Medicare or Medicaid. That has not reduced the cost of medical care. It has reduced the availability of medical care, just as buying a pint of milk reduces the payment below what a quart of milk would cost.

Letting old people die instead of saving their lives will undoubtedly reduce medical payments considerably. But old people have that option already— and seldom choose to exercise it, despite clever people who talk about a “duty to die.”

A government-run system will take that decision out of the hands of the elderly or their families, and thereby “bring down the cost of medical care.” A stranger’s death is much easier to take, especially if you are a bureaucrat making that decision in Washington.

[…]You can even save money by cutting down on medications to relieve pain, as is already being done in Britain’s government-run medical system.

You can save money by not having as many high-tech medical devices like CAT scans or MRIs, and not using the latest medications. Countries with government-run medical systems have less of all these things than the United States has.But reducing these things is not “bringing down the cost of medical care.” It is simply refusing to pay those costs— and taking the consequences.

And a quote from the third part talks about free markets versus government price controls:

If you think the government can lower medical costs by eliminating “waste, fraud and abuse,” as some Washington politicians claim, the logical question is: Why haven’t they done that already?

Over the years, scandal after scandal has shown waste, fraud and abuse to be rampant in Medicare and Medicaid. Why would anyone imagine that a new government medical program will do what existing government medical programs have clearly failed to do?

If we cannot afford to pay for doctors, hospitals and pharmaceutical drugs now, how can we afford to pay for doctors, hospitals and pharmaceutical drugs, in addition to a new federal bureaucracy to administer a government-run medical system?

And a quote from the fourth part talks about equality versus liberty in health care:

What about insurance companies denying reimbursements for treatments? Does anyone imagine that a government bureaucracy will not do that?

Moreover, the worst that an insurance company can do is refuse to pay for medication or treatment. In some countries with government-run medical systems, the government can prevent you from spending your own money to get the medication or treatment that their bureaucracy has denied you. Your choice is to leave the country or smuggle in what you need.

However appalling such a situation may be, it is perfectly consistent with elites wanting to control your life. As far as those elites are concerned, it would not be “social justice” to allow some people to get medical care that others are denied, just because some people “happen to have money.”

But very few people just “happen to have money.” Most people have earned money by producing something that other people wanted. But getting what you want by what you have earned, rather than by what elites will deign to allow you to have, is completely incompatible with the vision of an elite-controlled world, which they call “social justice” or other politically attractive phrases.

What’s frustrating to me is how quickly people think of growing government as the solution to their problems. They don’t want to deal with paying for health care themselves. But what the government does to solve the high prices is fix prices and regulate the producers of health care, like doctors and medical device manufacturers. They make the supply smaller. But when the cost apparently goes down, people are signaled to use more health care. That makes the demand larger. And this is why there is a shortage of health care in countries that have health care provisioning highly regulated by the government.

You can even save money by cutting down on medications to relieve pain, as is already being done in Britain’s government-run medical system.

You can save money by not having as many high-tech medical devices like CAT scans or MRIs, and not using the latest medications. Countries with government-run medical systems have less of all these things than the United States has.But reducing these things is not “bringing down the cost of medical care.” It is simply refusing to pay those costs— and taking the consequences.

New study reveals how school choice benefits the poorest students

Article in the Wall Street Journal. (H/T Jay P. Greene)

Excerpt:

Opponents of school choice are running out of excuses as evidence continues to roll in about the positive impact of charter schools.

Stanford economist Caroline Hoxby recently found that poor urban children who attend a charter school from kindergarten through 8th grade can close the learning gap with affluent suburban kids by 86% in reading and 66% in math. And now Marcus Winters, who follows education for the Manhattan Institute, has released a paper showing that even students who don’t attend a charter school benefit academically when their public school is exposed to charter competition.

Mr. Winters focuses on New York City public school students in grades 3 through 8. “For every one percent of a public school’s students who leave for a charter,” concludes Mr. Winters, “reading proficiency among those who remain increases by about 0.02 standard deviations, a small but not insignificant number, in view of the widely held suspicion that the impact on local public schools . . . would be negative.” It tuns out that traditional public schools respond to competition in a way that benefits their students.

[…]One of the most encouraging findings by Mr. Winters is how charter competition reduces the black-white achievement gap. He found that the worst-performing public school students, who tend to be low-income minorities, have the most to gain from the nearby presence of a charter school. Overall, charter competition improved reading performance but did not affect math skills. By contrast, low-performing students had gains in both areas, and their reading improvement was above average relative to the higher-performing students.

Conservatives love choice and competition, especially in education. We oppose equalizing outcomes regardless of individual liberty and responsibility. Liberals want government to run everything to make sure that everyone gets the same crap level of service. This is what the lazy teacher unions prefer. But conservatives want teachers to be responsive to their customers – the children.

Scientists discover how fathers improve brain development of children

Story from the Wall Street Journal. (H/T Andrew)

Excerpt:

Dr. Braun’s group found that at 21 days, the fatherless animals had less dense dendritic spines compared to animals raised by both parents, though they “caught up” by day 90. However, the length of some types of dendrites was significantly shorter in some parts of the brain, even in adulthood, in fatherless animals.

“It just shows that parents are leaving footprints on the brain of their kids,” says Dr. Braun, 54 years old.

The neuronal differences were observed in a part of the brain called the amygdala, which is related to emotional responses and fear, and the orbitofrontal cortex, or OFC, the brain’s decision-making center.

[…]The balance between these two brain parts is critical to normal emotional and cognitive functioning, according to Dr. Braun. If the OFC isn’t active, the amygdala “goes crazy, like a horse without a rider,” she says. In the case of the fatherless pups, there were fewer dendritic spines in the OFC, while the dendrite trees in the amygdala grew more and longer branches.

A preliminary analysis of the degus’ behavior showed that fatherless animals seemed to have a lack of impulse control, Dr. Braun says. And, when they played with siblings, they engaged in more play-fighting or aggressive behavior.

In a separate study in Dr. Braun’s lab conducted by post-doctoral researcher Joerg Bock, degu pups were removed from their caregivers for one hour a day. Just this small amount of stress leads the pups to exhibit more hyperactive behaviors and less focused attention, compared to those who aren’t separated, Dr. Braun says. They also exhibit changes in their brain.

The basic wiring between the brain regions in the degus is the same as in humans, and the nerve cells are identical in their function. “So on that level we can assume that what happens in the animal’s brain when it’s raised in an impoverished environment … should be very similar to what happens in our children’s brain,” Dr. Braun says.

Read the whole thing.

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