The Death of American Capitalism

[JayB]

I think you are correct in that sense Mat. I don't think that public control over a given sector is always sub-optimal, and I think it's a safe assumption that no doctor that I know of intentionally goes about their job in an unsafe manner. The doctors that work at the VA, for example, don't seem to care about their patients any less, but I am not sure I'd be comfortable extending that model to the entire medical economy, especially the segment driven by innovation.

 

I count myself amongst those who think that attorneys have played and do play a significant role in insuring that patients get quality care. This includes everything from doctors being careful to hospitals trying to devise redundant mechanisms to prevent lapses in care. Nothing focuses the mind like the prospect of a significant hit to the pocket-book. This isn't to say that I think that the role that they play is perfect, or couldn't be enhanced by some prudent regulatory reform - reform which, incidentally, might improve their public image quite a bit - but I am not sure that I'd necessarily want them to disappear from the medical ecosystem altogether.

 

I am also not sure that the advantages and disadvantages associated with state control over a given sector are equal in all circumstances, but that is a topic for another discussion.

[mattp]

Actually, I think State control is THE topic of this conversation - at least the stated topic when we started. However, hoping for a response to a post I made earlier today, I'll quote myself: Here, about "malpractice tort reform:"

 

1. Insurance companies are largely behind the promotion of the idea that medical malpractice is causing a crisis in public health.

They want to reduce the cost of malpractice awards for obvious reasons (these are a big cost to them) but, where liability caps and other measures they have requested have been put in place, the insurance rates that doctors pay have not gone down.

 

2. Insurance companies are lying about the causes for systematic increases in insurance rates.

Multiple studies have indicated the real reason for higher rates that are complained about in this "malpractice crisis" is a declining return on investment. Most insurance company profit comes from investment, not from the premiums paid.

 

3. Medical malpractice lawsuits and awards are actually fairly consistent or dropping, not increasing, and costs related to malpractice are actually a tiny percent of the cost of operating a medical practice.

Statistically, there really has not been any huge spike in lawsuits and malpractice insurance is something like 3 pecent of a doctor's overhead, and 1 percent of the overall system costs.

 

4. Most malpractice is caused by a small number of doctors, and the "system" is not adequately correcting this situation.

Most people who complain about the medical malpractice crisis are the same people who generally argue that regulation and government bureaucracy is bad. However, where bad doctors are licensed to hurt their patients, we either need more regulation and government or oversite, or we have to let the "market" deal with the situation through allowing them to be held accountable for what they do.

 

 

Here's more info for you:

http://www.makethemaccountable.com/myth/RisingCostOfMedicalMalpracticeInsurance.htm

 

There are probably better sites out there, but I found this as the first or second hit when I typed "medical malpractice cost" on Google.

[JayB]

I still think a reform or two would provide less opportunity for the public to get the wrong impression about this situation, and that nothing will galvanize public opinion in a manner that's contrary to the interests of folks who make their living persuing medical liability claims like a single payer system, but I am aware that there are quite a number of other factors to consider beyond the costs associated with medical liability.

 

From my vantage point, it seems as though these costs are, at a minumum, having a very-real effect on the decisions people make about what speciality they want to practice, and where they want to practice it, and that this has implications that might also be worth considering - but again, that's part of a larger discussion.

[mattp]

Again, I think that is part of THIS discusison Jay. The purported "malpractice crisis" was mentioned in the very first post as being a major contributor to our over expensive and clumsy healthcare system.

 

You continue to assume that liability awards are behind the increases in the costs of malpractice insurance. However, in five minutes on the web or at the library you can figure out that is a highly questionnable conclusion. ( (here's another link - CBS News - the first hit when I typed "malpractice insurance cost" on Google)

 

As to how the threat of malpractice may affect decisions about what specialty to practice or how it may drive unnecessary expense apart from the cost of insurance? It certainly does. Nobody like getting sued, and this included any professional whether they are a doctor, engineer, or for that matter even an attorney. Some are more "risk averse" than others, but all of us develop practices that are intended to protect us from being blamed when things go wrong or whatever.

[mattp]

And I'm surprised that you - you're a "free market" guy, aren't you? - would be against a "free market" solution to problems with bad doctors. Surely, even with insurance in the equation, Personal Liability lawsuits are much more about personal responsibility and free market than any regulatory reform would be.

[JayB]

If the economy were a highway, the free market side wouldn't be for a system with no lanes lanes, no speed-limits, etc - they'd be for a set of rules which optimizes everyone's ability to use their own judgement to get to wherever they want to go as quickly and as safely as possible. If you extended this analogy to socialist thinking, there'd be a central committe determing who could drive and who couldn't and a minder in every car to insure that everyone went where the state wanted them to go.

 

Since you couldn't have an efficient market without the rule of law, which translates into regulations, I am not opposed to any and all regulations - just bad ones. A regulation that made it legal to drive any vehicle backwards on the highway so long as it weighed at least 5 tons would be a bad law that would be both dangerous and inhibit the flow of traffic. I think that laws that extent, say, an OB/gyn's liability for 18-years after the delivery are just about as asinine as my example. If an OB/gyn is negligent in his duties, a 6-year claims-window should be more than enough time to establish liability/responsibility.

 

I do think that bringing things like price and performance information into the public domain, and coupling that with an insurance model where individuals, rather than corporations get tp deduct health-insurance premiums against their income, and most insurance couples high-deductibles with tax-free savings accounts that let you store money in them for life - would provide the information necessary to make the health care market work more like a real market, and that this would bring health insurance costs down considerably. Couple this with mandatory coverage, subsidies for poor people, and outright coverage for children, the elderly, and the indigent/insane that aren't otherwise covered, and I think we'd be well on our way to dealing with some of the biggest challenges that the health-care system faces.

 

I think you can boil a lot of the problems with health-care at the moment down to the fact that the price-mechanism is effectively missing. This distorts things both on the demand side and on the supply-side, and the changes that I've outlined above would go a long way towards addressing them.

 

As far as malpractice costs go, the actual cost of medical claims is only one factor. Another factor that drives up insurance-costs is uncertainty. If insurers - whether they be insuring against a freak storm or a spectacular settlement - can't determine the probabilities of a particular event happening well enough, you can be certain that they are not going to err on the side of undercharging the folks that they insure and leave themselves exposed and/or insolvent. I also think that the regulatory environment in a given state makes a difference in what the insured pay.

 

This is clearly true in the case of auto-insurance, and I'd have a hard time believing it's any less true of any other insurance market.