Monday, January 18, 2010

If our health care system really is more efficient than the Europeans', then why...

We spend about $100 billion per year on medical research, public and private combined (see here).

We spend about $2 trillion per year on health care delivery, the doctors, hospitals, administration, etc. If we adopted a European style system, cutting our spending per person in half, as in European countries (that I think the evidence shows have about as good or better health care and results anyway; see for example here), then we would save about $1 trillion per year.

Now, what if we spent that $1 trillion in savings on medical research? It would increase medical research spending more than 10 fold.

Even if delivery did get a little worse, even if we did get a little bit less of our brightest and best becoming doctors due to lower pay, it seems like this would be totally outweighed over the long run by tremendously more advanced medical understanding and treatments due to the 10 fold increase in medical research spending (or more, as some advanced universal healthcare countries provide comparable health care to the US at about a quarter of the cost per person) .

So it looks like if you want better medical results, better treatment, breakthroughs in rejuvenation, better odds of surviving cancer, you name it, you should support going to a European style system, and using the immense savings to increase medical research more than 10 fold.

So if our health care system really is more efficient than the Europeans, then why is it possible to make such a vastly favorable trade?

If the Republicans really care about our children and grandchildren so much why don't they do this, so in 50 years they could have medicine as advanced as it would take perhaps 150 years to achieve with our current system. I don't care how bad you imagine European health care to be, you cannot think a European medical center of today is less effective than even the Mayo Clinic of 100 years ago, when penicillin and polio vaccines hadn't even been invented.

Sunday, January 17, 2010

Why government regualtion of finance can work and how to make it a lot better

Mark Thoma writes today:
Adam Smith believed that competition was the best regulator of economic behavior. You can't trust government to intervene and protect people because the rich and powerful will bend government to satisfy their needs [although Mark himself favors finance regulation].
Ok, this is a point you often hear from anti-government people. But if it's really a good enough excuse always, we should have no government at all. Obviously, sometimes the good of government outweighs this cost.

And why does it sometimes, and in fact often, outweigh this cost in America. Because we have a highly democratic country, so the vast majority does have a strong say with their ability to vote. Obviously, we aren't completely democratic. The fact that Wyoming gets as many senators as California (and the District of Columbia gets none with a population larger than Wyoming's) means that a bill desired by representatives of 90% of the population can be stopped by representatives of 10% of the population. But we still are a highly democratic country, so there still is a strong incentive to not do anything that looks too bad to the public.

And we've seen that regulation and government can work very well for generations. Post World War II through the 70s we had effective banking regulation that led to the Great Moderation and a golden age of extremely high economic growth evenly spread that built the great middle class. But then we elected a party that didn't want government to work, and we've paid a very high price for that over the last generation (see here, here, here, and here).

So regulation can work in spite of the oversized influence of the wealthy and corporations. We saw that it could for decades. But how to make it work better? Two crucial steps are needed, and both would make our country far more democratic:

1) Eliminate the filibuster, which has not been with us as a de facto supermajority requirement since inception. It's only very recently that it's been used that way.

2) Greatly increase public campaign finance and/or corporate donation limits. If limits don't work because of Republican Supreme Court Justices and/or loopholes, certainly the government giving candidates and parties more campaign money than they could ever raise from corporations and private parties would destroy the incentive to cater to them for donations (they get the government money only if they decline private money). This is the idea behind (large) public campaign finance.

Some would say they support (2) but not (1), but it will be extremely hard to get a strong (2) without doing (1) first. In fact, it will be extremely hard to do any great good, from truly strong climate change action to truly strong finance reform, without doing (1) first. For more on why I support (1), please see here.