Monday, June 14, 2010

Crony Healthcare in Action

Obamacare is pretty much modeled after the monstrosity that Mitt Romney designed for Massachusetts. WSJ has a report on how that experiment is going:
High health-care costs are so sensitive in Massachusetts that when two health-care company executives suggested consumers could help by watching their weight, the Boston Herald ran a sarcastic page-one headline: "It's Your Fault, Fatso."
Here's WSJ on how well RomneyCare is reining in costs:
Four years after Massachusetts passed a health-care overhaul similar to the recently enacted national plan, small businesses are seeing their premiums rise 22% this year. People in the state have some of the highest premiums in the nation.
Then it just turns into Crony Healthcare:
In Massachusetts, a few prestigious hospitals enjoy considerable bargaining power. State and federal authorities are looking into allegations that Partners HealthCare System Inc., which operates Massachusetts General Hospital and Brigham and Women's Hospital, engaged in anti-competitive behavior. Insurers generally swallow the high prices and pass them on to people buying coverage.
What's really scary about this madness is the solution that most in Massachusetts seem to be in favor of:
There is fairly broad agreement on how to fix the system. A state commission —including representatives of government, insurers, doctors and hospitals—recommended in July that Massachusetts adopt a "global payment" system. Health professionals would be paid for caring for patients over a certain period of time, rather than compensated for each test or treatment. Implementing the fixes, though, will take years.
Of course, this nutty solution will result in fewer tests and fewer treatments, but it sure sounds like doctors will have incentive to drag things out over longer periods. This will, of course, result in limits on the period allowed for treatments of different illnesses, and heaven help you if treatment for you is required beyond the period designated for your illness.

Then, of course, there is the favorite solution of every politician for climbing prices, price controls:
[Governor] Patrick's answer is to cap insurance-company rate increases at 7.7% this year. Insurers say that is draconian, and have sued to reverse Mr. Patrick's action.

Picture all this madness at the national level because it is coming with Obamacare. It's all about politicians who have no idea how free markets work and police themselves. It's all about politicians who have no idea of the impossibility of replacing the huge number of calculations made by individuals in a free market, by a central planning authority. It's about politicians who don't understand the incentive system. It's about politicians who fail to understand that the creation of power centers (new regulations and agencies) ultimately leads to those who will attempt to influence and capture the thinking in such power centers. It's about cronyism. In healthcare, it will mean crony healthcare--which will mean less care, care directed toward the treatments offered by those who have captured the regulators. It will mean higher prices for less, and ultimately more pain more suffering and earlier deaths for most of us.


  1. When you say, "It's all about politicians who have no idea of the impossibility of replacing the huge number of calculations made by individuals in a free market..." you do realize there is no free market in healthcare? Billions of dollars of subsidies are shoveled in and the alleged-capitalist market now functions more like organized crime - skimming those dollars. All this talk about free markets would have to include letting pricing in healthcare collapse to what people could actually afford and/or accepting that care in our country is only available to the elite 1%. Free market proponents keep overlooking these realities.

  2. We love it here in Canada and it is less expensive than your system.

  3. Anon #1, whats wrong with letting prices collapse? Anon #2, what do you mean "we" Keemosobee? If the system in Canada is so good, thousands of people would stop coming to the US for treatment.

    However, RW, blaming the politicians is fun but the fact that Romney remains competitive for the next presidential election reveals its not just about politicians. Crony capitalism won't stop because people won't stop using government to beat up on their competition. This won't end until a lot more people are suffering a lot more pain.