Archive for June 6th, 2013

I’ve complained ad nauseam about how government has screwed up the health sector, both because of spending programs such as Medicare and Medicaid and because of tax and regulatory distortions that have mutated the supposedly private insurance market into some bizarre form of pre-paid, all-you-can-eat healthcare.

These policies have created a third-party payer crisis.

https://danieljmitchell.wordpress.com/2010/12/08/everything-you-need-to-know-about-healthcare-economics-in-one-chart/There are a few tiny parts of our healthcare system where markets are allowed to operate and consumers are in charge of spending their own money, and in these areas – such as cosmetic surgery, laser eye surgery, and abortion – we find stable prices and rising quality.

But how do we move free market from isolated niches into the mainstream of the healthcare sector?

Well, it’s happening in small ways organically, largely because the current system has become an even bigger mess under Obamacare.

I’ve already cited the case of a North Carolina doctor who decided to use market-based pricing, and I’ve shared a very powerful video from Reason TV about  a hospital in Oklahoma that’s doing the same thing.

Now we have a free market revolution by a doctor in Maine.

Dr. Michael Ciampi took a step this spring that many of his fellow physicians would describe as radical. The family physician stopped accepting all forms of health insurance. In early 2013, Ciampi sent a letter to his patients informing them that he would no longer accept any kind of health coverage, both private and government-sponsored. Given that he was now asking patients to pay for his services out of pocket, he posted his prices on the practice’s website. …“It’s been almost unanimous that patients have expressed understanding at why I’m doing what I’m doing… the decision to do away with insurance allows Ciampi to practice medicine the way he sees fit, he said. Insurance companies no longer dictate how much he charges. He can offer discounts to patients struggling with their medical bills. He can make house calls. “I’m freed up to do what I think is right for the patients,” Ciampi said. “If I’m providing them a service that they value, they can pay me, and we cut the insurance out as the middleman and cut out a lot of the expense.”

His expenses have come down, and consumers benefit from much lower prices.

Ciampi expects his practice to perform just as well financially, if not better, than before he ditched insurance. The new approach will likely attract new patients…because Ciampi has slashed his prices. “I’ve been able to cut my prices in half because my overhead will be so much less,” he said. Before, Ciampi charged $160 for an office visit with an existing patient facing one or more complicated health problems. Now, he charges $75. Patients with an earache or strep throat can spend $300 at their local hospital emergency room, or promptly get an appointment at his office and pay $50, he said. Ciampi collects payment at the end of the visit, freeing him of the time and costs associated with sending bills, he said. …“If more doctors were able to do this, that would be real health care reform,” he said. “That’s when we’d see the cost of medicine truly go down.”

I have no idea if all medical costs would fall by 50 percent in a market-based system, but even if the system-wide savings were only half that much, that would be an enormous benefit to the economy.

In other words, it would be great to repeal Obamacare, but fixing the healthcare system requires far more sweeping reform.

We’ve tried everything else, and all these other options have failed. Maybe it’s time to give the free market a chance.

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I had the gall to share a video yesterday of me lecturing for an hour about the economics of public policy (followed by another hour of Q&A).

Though I also included this link to a six-minute video on the same topic for folks who just wanted to skim the surface.

Well, for those who like detailed expositions, here’s a video giving the Austrian school’s view of macroeconomics.

In the past, I’ve only briefly addressed Austrian theory, linking once to a deliberate argument for Austria economics by Robert Higgs and once to an unintentional argument for the Austrian school by Robert Samuelson.

This video will eat up about one hour of your day, but it will be time well spent. It’s a thorough explanation showing why the Austrian school offers the best insight about how a real-world economy operates.

P.S. If you want an Austrian-based critique of the Federal Reserve, this George Selgin video will give you everything you could possibly want.

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