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July 2008

Epstein on fixing health care

The University of Chicago's Richard A. Epstein (along with David A. Hyman, U. of Illinois) explains how we should fix our health care system. Short answer: less regulation, more market. Here's the second half of the abstract:

In section I, we offer a brief critique of the system of positive rights and merit goods that underlie the case for most forms of universal health care coverage. In section II, we identify three practical problems that no working politician can wish away in the effort to implement universal health care coverage: the fundamental principle of diminishing marginal utility; the destabilizing impact of heavily subsidized government-provided coverage on the private market; and the treatment of the full range of existing regulations affecting the delivery of health care services as an exogenous given. We address each of these deficiencies in turn. In section III, we examine briefly six areas where we think massive deregulation is in order: medical malpractice, HIPAA, federal tax law, fraud and abuse, health insurance regulation, and certificate of need/scope of practice limitations.

We anticipate that our proposals will be met by howls of protest from those who benefit from the status quo and their apologists. Such complaints should be seen for what they (mostly) are - a defense of rent-seeking by incumbent providers. The whole point of deregulation is to limit the opportunity and rewards of rent-seeking, thereby increasing consumer surplus. No administrative agency or committee of experts, no matter how well intentioned and knowledgeable, will be able to do a better job of meeting consumer demands than the private market. To think otherwise is to repeat the mistakes of the past, instead of learning from them.

"The Death of Google's Patents?"

John F. Duffy thinks so:

The Patent and Trademark Office has now made clear that its newly developed position on patentable subject matter will invalidate many and perhaps most software patents, including pioneering patent claims to such innovators as Google, Inc. . . .

The apparent death of Google’s pioneering PageRank patent under the PTO’s new rule for patentable subject matter may be a cause for celebration among those who are philosophically opposed to property rights in innovation and are eager to confine the patent system’s ambit.  It will surely be cause for mourning among those who believe that allowing patents on cutting edge technologies has served the country well for more than two centuries and that a radical departure from the traditional approach would be unwise.

Two comments on Saletan's pathbreaking analysis

William Saletan notes a New York Times article that discussed a nearly 100-year-old woman who got a pacemaker and a defibrillator, "apparently courtesy of Medicare". That article also noted that not surprisingly, more and more 90- and 100-year-olds are getting relatively expensive surgeries. Mr. Saletan states, "The objection to spending Medicare funds on all these procedures is obvious: The money would be better spent on younger patients." And he concludes with this pathbreaking analysis:

Isn't health, like wealth, an unequally distributed asset? Isn't it, in fact, the ultimate asset? And if that's the case, should we means-test people on Medicare not just for wealth, but for age? . . .

If you make it to 100 and can fund your own surgery, that's terrific. But Medicare should focus its resources on people who haven't been as lucky as you.

Comment #1: why stop with Medicare? Why not apply this idea to Social Security, too? Sorry, Granny, you're too old for Social Security now! Heck, why not for almost any government benefit? Ladies and gentlemen, the Saletan Plan for eliminating America's long-term fiscal problem!

Comment #2: do you think, for one moment, if Saletan's proposal were accepted--"age-testing" Medicare benefits--that it would stop with government-provided medical care? Wouldn't some people--you know who--suggest that privately financed medical care also be age-tested? After all, a surgeon spending his or her valuable time operating on a 100-year-old can't spend that time operating on a 25-year-old. The logic would sooner or later demand extending the non-price rationing to everyone.