Here’s best article I have ever read on the economics of health care (from the September Atlantic). Absolutely every point the author makes rings clear and true from my experience:

“How American Health Care Killed My Father” http://www.theatlantic.com/doc/200909/health-care/1

I think it answers a lot of the remaining questions in our exchange.

Speaking of Dr. Iliff, his essay dealt or more accurately posed questions concerning the pesky problem of patient expectations and increasingly, demands. In a recent NPR interview with author/surgeon Atul Guwande, he was forced on questioning to admit that patients get what they demand–If I want grandpa to have a a CT scan or to see a doctor instead of a nurse or the opposite, and I yell or threaten loud enough, it happens. Given our American distaste for anyone telling us what is or is not appropriate, how and who should limit the demand side of the equation or determine what will be considered appropriate therapy, therapy often without clear data regarding “benefit.” Does your plan offer help? Finally, would you anticipate a need for tort reform?

It seems to that your guild system is very similar to the German regional single-payer system that have community funds (from private and state insurance) that negotiates prices every couple of years with “provider unions” that represent hospitals and doctors.

I think the commie pinko green left-Connecticut-and-moved-to-Berkeley Michael Pollan summed up the “food” issue by naming most of the contents of our gleaming supermarkets as “feed”. He recommends sticking to primarily the extreme perimeter where fresh baked goods, dairy products, produce and meats are present but observe a proper Jihad over the vast center realm of packaged chemicals with sugar. I don’t know why but we seem to like our food to issue forth from a brightly painted cardboard or plastic carapace.

The europeans used to follow Pollans regimen with daily jaunts to the corner markets because their home refrigeration stunk but i’m not sure they still do . They also make mealtime into a social art and this alone, is bound to extend one’s lifespan and good health.

But you know those europeans….commie pinko socialist malingerers to a last man.

Or maybe not. My godfather smoked a pack of cigarettes and 10 cigars every day of his life, (okay, maybe not when he was six), and died tragically, at 99. Had he given up the cigars, I’m sure he could have made it an even 100. The Europeans indulge fats and wine and tobacco in amounts that would kill an American, but it doesn’t seem to do them much harm. I wonder why there is not more in the way of cross-cultural food studies, in this wonderful age of multi-culturalism. Every week, we get a new warning about something that will kill us, but that other nations do without great harm. Maybe its all the warnings that are killing us. Who knows?

You got a lot of nerve bringing the issue of supply and demand into a discussion of Health Care costs buster, just what are you trying to pull?

Supply and demand…hhhmmmph. Fat chance. Theres nothing like Fiat Money to create a good old fashioned Command Economy

As to Beemer and his idea that abolishing professional licensing would require a pay cut , licenses never dictate pricing, the quality of service does. Does licensing guarantee minimum standards of service? Perhaps but they also sanction widespread levels of mediocrity made even more mediocre by the fruitlessly expensive conventioneering industry of “continuing education”. Not that I minded dropping $2 grand on a Chicago Convention but I would have rather spent $1,000 instead and gone to the King Biscuit Blues Festival instead….you know, down where folks eat grits in bacon fat, wash it down with corn liquor , smoke hand-rolls and live to be a hundred and ten because they have joy in their lives, not hypertension.

But, in the end, I for one would like to see a supply and demand scenario that has one cost for fat lethargic drunken slobs with a multiple generation record of preposterously bad health and another for those who actually care about health or don’t care about their health but spring from hardy peasant stock. Not that it is always this easy but sometimes it is. I think this might have something to do with supply and demand.

Once again Medaille, for a bolshevik, you always show signs of civilization.

Red Hat is not owned by Dell, though they do partner pretty closely in some areas, particularly JBoss. But that was precisely my point: that we don’t need patents or, necessarily, even licensing.

I like the licensing idea, though, as long as it allows others not only to manufacture the drug, but also to produce derivative products, which the new company will then possess rights to license independent of the original company. This will provide both incentive and opportunity for innovation without contributing to an oligopoly.

Someone mentioned applying the guild system to other professions. From the legal standpoint, an entirely different type of guild would be necessary. State laws vary widely and require state-level organizations, which is what we have now. The American Bar Association is voluntary (I’m not a member, personally), while most, perhaps all, states have mandatory state bars, which bars govern entrance into the profession as well as ability to remain within it. Various faults, such as commission of certain crimes or violation of the often esoteric ethical rules of the profession, can result in discipline, from the written reprimand all the way to formal and permanent expulsion. Still, despite the bar’s efforts to raise the entrance bar (failure rate in Virginia for first-time bar takers is around one-third), the bar’s problem has been an inability to limit entrance, rather than the reverse. There are too many lawyers, by far. This results in a private sector which is often grotesquely overpaid, while the public sector, like prosecutors and public defenders, is grotesquely underpaid, often insufficiently even to repay the voluminous loans their legal education required. The public sector can afford to keep salaries low because they know there’s an endless crop of attorneys ineligible for various reasons for employment in the obscenely lucrative large private firms willing to come work for a comparative pittance.

In other words, the legal profession needs reform in an entirely different way from the medical one, up to and including serious reconsideration of how we treat criminal and civil matters. Why, for example, does a civil trial regarding mere money take weeks or months, while a typical capital murder trial, in which there is at least one dead victim and a defendant whose life is at stake, will rarely extend for more than a few days? This clearly reflects some very warped priorities.

Don’t get me wrong; the pseudo-guild system currently in place does fairly well at regulating lawyers’ conduct. But what’s needed here is clearly much different from what’s needed with the AMA.

While there are many generics, patent medicines are still a large percentage of the market, particularly since doctors are often “rewarded” for sticking with the more expensive brands. And then there is the problem of equipment patents.

The more interesting question is why there are medicines so cheap once they go off-patent? The manufacture of most medicines is a simple enough process, and great quantities can be produced at low cost. Even at $10/month, the manufacturers make a profit, which indicates how cheap they are to make. There are exceptions, to be sure, such as vaccines, which are “grown and harvested” rather than manufactured, but they are a smaller part of the market.

Brett, I think there are still states where you can take the bar exam after apprenticing at a law office. But then, the bar exam is designed to keep such riff-raff out of the profession.

Donald, Red Hat (which I believe is owned by Dell) is a Linux service company. They deal in open-source software. The open source movement proves that patents aren’t necessary for real progress.

Bruce, good point but I think doctors would have no way of limiting the entrants to the medical profession or the start of new guilds.

John, no question that Bell was predatory and monopolistic. But the point was that they were willing to spend good money and the labor of their most brilliant programmers to create an operating system which they proceeded to give away. They did this to create good will—and it worked. This paradigm has become quite common in the software world, where many people labor essentially without pay because it makes them more respected, it spreads their labor, or simply because it solves a problem that they personally want solved.

A good example would be Red Hat. Red Hat gives away its software for free; it does this because it wants to make a good name for itself in the community (in which it has succeeded), which makes people more likely to choose its system than others. It can then leverage this good will to encourage people to pay them for things like services and maintenance. This paradigm has resulted in great leaps forward in computer technology, while patented computer technology has comparatively stagnated.

The point being that direct payment of money isn’t the only, or even the greatest, incentive for making new discoveries and developing new products. This is particularly true when advances are sequential; that is, new advances require building upon old ones. If these are subject to patent, it’s impossible for anyone but the original inventor to build upon the invention without violating that patent. So when a company develops a blood pressure pill, no one can improve on the formula except that company; they have to abandon the field entirely, or try to come up with a new formula from scratch. This makes it take much longer for new formulas to arise, since only one company can legitimately work on them. Licensing rather than patents, though, would go a long way to alleviating this problem—provided that the licensing fees were kept reasonable.

Re: licensing. Are you saying that the R&D companies would be *required* to license it to anyone who was willing to pay the fee? That would certainly prevent the development of oligopoly, provided that the licensing fee is reasonable. It would also remove the necessity of strictly segregating R&D and manufacturing companies, as you observe.

Before I add a couple of “amens”, however, I need to quote Mr. Sarkozy again, this time from a couple of days ago in his rebuke of Mr. Obama’s disarmament speech: “We live in the real world, not a virtual one”. As long as we understand that due to the lobbying power of rich and powerful organizations none of your suggestions has a snowball’s chance in hell of being enacted (in contrast, my HSAs are only a 30-to-1 longshot!), let’s enjoy the conversation.

With regard to drugs and patents, what most laypersons don’t know is that a terrific constellation of drugs, mostly available for $10 for a 3-month supply, are current available in generic form. I rarely need to use patented drugs for hypertension, hyperlipidemia, or diabetes, which are the Triumvirate of chronic diseases. The few exceptions are coming off patent soon. The expensive new drugs, on the other hand, are Me-Toos which I don’t need, and survive because physicians are too lazy to seek out generics; and boutique drugs for rare conditions. So we’ve already won the price war, and are engaged in a mop-up operation.

I have always maintained that medicine is an apprenticeship trade, and so your “guild” analogy fits right in. Medical schools impart knowledge that is 50% useless to physicians (what the hell did I need to learn about embryology or biochemistry?) but is necessary to support another guild, that of the University. We wouldn’t want to unemploy professors, would we?

Furthermore, as you surmise, many tasks in medicine could be done by dexterous high school graduates. Many an auto mechanic or video gamer could have been a colonoscopist, and disenfranchised many a gastroenterologist, at a huge cost saving to the public. There are, at the other end of the spectrum, extremely difficult tasks in medicine which require extraordinary skills and/or native abilities. In between, as you point out, are intermediary positions, which in fact are being filled by physicians’ assistants and nurse practitioners. A dermatology nurse practitioner knows far more about dermatology esoterica than I do, and I willingly refer my unknowables to her. Like I said, it’s an apprenticeship trade.

The world you envision would be much to my preference and liking. Too bad.

Mr. Medaille, well yes, it’s certainly true that large businesses wouldn’t be motivated to do R&D unless they also had monopoly pricing on the drugs they produce, which is the reason, I thought, why they are allowed to have that monopoly currently. You suggest that the R&D will happen without the monopoly profits from drug production but with revenues from licensing. That may very well be true.

I haven’t commented on the guilds yet: I am wondering, with great ignorance, whether the AMA and other such professional organizations are much different than guilds. Do they not police their members, at least in theory? I’m not sure what differences you see between current professional organizations, armed with the power of accreditation, and guilds, armed with the power of licenses. The one difference mentioned is the guild’s capacity to set prices; are professional associations forbidden to do so due to limitations on collusion, etc.?

If you are going after how Doctor’s are licensed would that apply to other professions and technical jobs? Lawyer’s, Accountant’s, Plumber’s and contractor’s? It seems that if one is better served than all are. Are all these groups willing to take a pay cut?

Brett

Donald, there is nothing except to prevent a company from being both R&D and a producer, but I seriously doubt it would work that way if they had to license all products to all comers. But if they wanted to, why stop them?

As for AT&T, it was one of the most predatory companies in the area of patents, which was the whole point of the Carterphone case. Whatever patents they gave away (they were not interested in developing computers, except as they related to switching systems) they were more interested in retaining them for the core business.

Kellogg’s et al. is a matter of branding, not patenting. They spend a lot of money to convince us that their corn chips are superior to anybody else’s corn chips. The point of a brand is to remove the product from the competitive environment that homogeneous products would normally have.