Health Care Mythology

There has been much recent debate about the merits of traditional capitalization weighted indexing, the chief propents being Jack Bogle and Burton Malkiel, and newer “fundamental weighted” indexes advocated by the likes of Rob Arnott, Jeremy Siegel, and

Myth #1 Health Care Costs are Soaring

You cannot judge the “cost” of something by simply what you spend. You must also judge what you get. I’m reasonably certain the cost of 1950’s level health care has dropped in real terms over the last 60 years (and you can probably have a barber from the year 1500 bleed you for almost nothing nowadays).

Myth #2 The Canadian Drug Story

So, repeat after me. We could go with the Canadian system and have super cheap drugs, if only we can find a much bigger, more medically advanced, freer country right next to us to make miracle drugs for themselves, and then we insist that we pay them only a bit above their variable cost for our share, and then they in turn agree to let us be their parasite. Mexico, would you mind helping us out?

Myth #3 Socialized Medicine Works In Some Places

This is a corollary to the “Canada as parasite” parable above. The funny part is socialized medicine has never been truly tested. Those touting socialism’s success have never seen a world without a relatively (for now) free US to make or pay for their new drugs, surgical techniques, and other medical advancements for them. When (and I hope this doesn’t happen) the US joins in the insanity of socialized medicine we will see that when you remove the brain from the body, the engine from a car, the candy from the striper, it just does not work.

Myth #4 Socialized Medicine Is Better Because Their Cost/GDP For Health Care is Lower

* Measuring cost/GDP is inaccurate as it leaves out most of the cost, the cost of lower GDP growth. As one would expect, countries with larger government sectors (including socialized medicine) generally seem to experience slower GDP growth. People are great at measuring costs that they easily can look up, but those are not all the costs!

* If I’m right about the US subsidizing the world of course their costs would be lower!

Myth #5 A Public Option Can Co-Exist with a Private Option

The government does not co-exist or compete fairly with private enterprise, anywhere. It does not play well with others. The regulator cannot be a competitor at the same time. It cannot compete fairly while it owns the armed forces and courts. Finally, it cannot be a fair competitor if when the “public option” screws up (can’t pay its bills), the government implicitly or explicitly guarantees its debts. We have seen what happens in that case and don’t need a re-run.

Myth #6 We Can Have Health Care Without Rationing

Rationing has to occur. This sounds cold and cruel, but it is reality. A=A. If you have a material good or service, like health care, that is ever increasing in quality, and therefore cost, there is no way everyone on Earth can have the best at all times (actually the quality increases are not necessary for rationing to be needed, it just makes the example clearer). It’s going to be rationed by some means. The alternatives come down to the marketplace or the government. To choose between those alternatives you judge on morality and efficacy.

Myth #7 Health Care is A Right

Nope, it’s not.