SOCIALIZED MARKETS... the answer to the health care crisis?

[ulTRAX]

I love it when an idea doesn't fit any of the exiting conceptual straightjackets. For instance is the answer to the health care crisis a socialized market?

One of the big problems with our society is that corporations can get away without paying for the full price of their externalities... their social costs. Often one of those costs is the public health.

Another problem is that health insurance is doesn't usually try to reduce costs by promoting healthy lifestyles. It just socializes the risk.

So what of a hybrid system to deal with both issues... and possibly provide universal health care as well? What if this system placed pressure on big chemical corporations and subsidized organic activities?

Obviously I have no numbers but here's the concept.

All unhealthy activities would be taxed in direct proportion to their social costs. By this I mean anything from saturated fats to pesticides. If skydiving poses a health risk... tax it.

These taxes are to be used by the universal health care system SOLELY to deal with problems arising from the taxed activities. Conversely, healthy activities... possibly health supplements, gyms, organic foods, whatever... get a health subsidy from the savings those activities save the health system. Costs would be adjusted based upon the best science and actuarial tables.

This builds into the economic system negative incentives for unhealthy activities and positive incentives for healthy ones. It makes corporations responsible for the full price of their activities and people more aware of their lifestyle choices. Isn't this the way markets are supposed to make us all more responsible? Of course the only way to implement this system is with government involvement. Government would have to tax and distribute funds. Since all would be paying into the system, there'd have to be some sort of universal heath care. This certainly would not get rid of all heath insurance fees. Some accidents and illnesses are not related to lifestyle choices. So the spreading of the risks... the role traditional insurance provides... would still have to exist.

[RC]

1. Like cigarettes, tax the hell out of them then restrict the activity

to make it socially unacceptable. Another way to enforce the nanny state.

[ulTRAX]

3. nanny state? ROTF

I'm hardly proposing a nanny state.

I personally believe there's dignity in risk. Here's my view: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104x4100747

I believe that this sort of system could work for the legalization of some drugs. Just tax them in direct proportion to their social costs... and no more. However I'd want heavy penalties for anyone using drugs irresponsibly where they place people or property in danger.

[ulTRAX]

6. using your cigarettes example.....

What's the point in suing Big Tobacco when states are diverting much of the settlement money away from prevention programs into their general funds?

OK.. that settlement money partially pays for the PAST sins of Big Tobacco. But where is all that NEW cigarette tax money going? Into some health fund? Or is it again being raided by politicians and placed into the general fund?

The approach I'm using would hopefully prevent politicians from using "sin taxes" as general revenue. As long as those involved pay the price for their activities.... then is it the government's business? Yes... if those activities have a negative effect on others. Otherwise.... I believe the government has NO right to interfere with our personal lifestyle choices.

So I ask again.... just where is the Nanny State in this idea? It SHOULD be an idea that appeals to true Libertarians who believe that we have a right to do anything that does not negatively affect others.... those who want us to be responsible for our own actions... and Progressives who want universal heath care.

Where's the problem here?

Oh ya... those corporations making profits off products that harm others would have to pay more.

[bluestateguy]

2. Seems kind of nanny statish to me

I'm all for educating people about risky behaviors, but that's about the extent to which government should play a role.

[ulTRAX]

4. all this does is make people RESPONSIBLE

This system makes people and corporations RESPONSIBLE for what they now don't have to pay for.

I think the traditional insurance system that socializes costs is closer to the nanny model.

[ulTRAX]

5. why should I subsidize someone else's lifestyle choices?

Another aspect of this approach is that currently we all subsidize the unhealthy lifestyle choices of others though traditional insurance and taxes that go in to programs like Medicaid.

How does THAT make sense?

[ulTRAX]

7. a bump for the morning crowd......

Maybe I can get some better feedback then what's been offered.

[many a good man]

8. Greatest health risk is poverty

and lack of access to health care. Take care of those things and we'll be on our way to a healthier society.

Most things you've mentioned are already being done. We have sin taxes galore. Health plans provide incentives and programs for healthier lifestyles.

The problem with penalizing unhealthy lifestyle choices is that individuals vary so much in their risks. For example, my great-grandfather smoked and drank and chased women up till the day he dropped dead at age 93. With DNA testing you run the "slippery-slope" risk of penalizing people who may have genetic predispositions.

Taxing the dangerous additives in the food supply is a good idea, but it would be hard to reach agreement on their true social costs. The costs would be passed on to consumers, which might make organic products more competitive. But then again you're penalizing the poor. And there's still the point about not being able to trust politicians to dedicate the revenue to health. They tend to use the money to build football stadiums instead.


A few months ago I saw a thread that proposed something similar but using a different angle. It provided market incentives to health providers to encourage cost-effective treatments and discourage gouging. It provided disincentives for practices that run up costs with little benefit to society. It sounds like a good first step, but it doesn't go nearly far enoug. Our health care "system" is rapidly becoming a disaster and needs to be overhauled.

Skyrocketing health care costs pose the greatest danger to our society in the years ahead. I'm not exaggerating. It will bust the entitlement programs, ruin people's economic security, and weaken businesses. The most important thing we need to do IMHO is to enact draconian health care cost controls and enact a single-payer health care system.

[ulTRAX]

9. isn't your approach just throwing money at the problem?

Thanks for responding.

TorchesAndPitchforks wrote: " Greatest health risk is poverty
and lack of access to health care. Take care of those things and we'll be on our way to a healthier society."

Isn't that the same as saying we should just throw money at the problem? That the root problem is ONLY our ability to pay for health care? I'm looking at a system that makes all parties responsible for their choices... corporations and individuals. I'm looking to change the incentives and let market pressures move an entire economy away from harmful activities and dangerous products thus reducing overall costs. Your approach can not do that.

"Most things you've mentioned are already being done. We have sin taxes galore. Health plans provide incentives and programs for healthier lifestyles."

Sin taxes are not based on social costs and revenues usually go into a general fund so there's no economic feedback. SOME health plans do provide incentives... but again there's no feedback mechanism to the nation/economy as a whole. Paradoxically that market feedback can ONLY be done with some a national form of taxing risk and a universal health care system

"The problem with penalizing unhealthy lifestyle choices is that individuals vary so much in their risks. For example, my great-grandfather smoked and drank and chased women up till the day he dropped dead at age 93. With DNA testing you run the "slippery-slope" risk of penalizing people who may have genetic predispositions."

I want to get insurance away from cherry picking health customers. Our genetic dispositions to disease will always have to fall under the traditional role insurance plays: socializing risk. Having universal heath care seems to be the only way to take the incentive out of cherry picking.

"Taxing the dangerous additives in the food supply is a good idea, but it would be hard to reach agreement on their true social costs. The costs would be passed on to consumers, which might make organic products more competitive. But then again you're penalizing the poor. And there's still the point about not being able to trust politicians to dedicate the revenue to health. They tend to use the money to build football stadiums instead."

Deciding costs would have to be based on best available science of the time. I understand that it's often conflicting. I envision periodic reviews and adjustments. This process would have to be insulated from political and economic pressures. I see this as one social reform of many. For instance it won't work well in an environment that allows free trade... which is putting downward pressure on wages. (It's ironic that free traders implicitly are in favor of corporations NOT being responsible for the true cost of their profit making activities.)

"Skyrocketing health care costs pose the greatest danger to our society in the years ahead. I'm not exaggerating. It will bust the entitlement programs, ruin people's economic security, and weaken businesses. The most important thing we need to do IMHO is to enact draconian health care cost controls and enact a single-payer health care system."

I, too, believe in universal health care with a single payer system. What form would these price controls take?

We have to have a system that uses market pressures REDUCE costs not just control them. Right now the incentives are often to INCREASE costs. For example, we MUST also take on the FDA and pharmaceutical industry. The entire model we have now is dysfunctional and wasteful. Because companies only have to prove a new drugs is safe and better than a placebo... there's a built in incentive to promote new drugs that may be inferior to existing drugs. Drug companies piss away resources creating me-too drugs instead of putting those resources into new research. All too often they are reinventing each others wheel. I think all research should be centralized and new drugs, one proven to be better than existing drugs, should be licensed as generics so companies compete to LOWER prices... not devise ways ridiculous ways to keep patents from expiring on cash cow drugs. More research dollars are pissed away trying to find some unique claim for drugs in a crowded marketplace. All drug advertising would only be to inform... comparing the various drugs and the test data.

[many a good man]

10. Costs rise regardless of our health

You wrote:

I'm looking to change the incentives and let market pressures move an entire economy away from harmful activities and dangerous products thus reducing overall costs. Your approach can not do that.

I disagree with your premise. You are insinuating that our unhealthy lifestyle choices are responsible for rising costs. Evidence suggests Americans are already leading healthier lifestyles. Costs are rising because of profit-taking, not because we're less healthy. The public is being better informed through educational programs that teach nutrition, diet and exercise. This fact is not very well known, all we hear about is how we are all getting fat. They're trying to shift the blame away from corporations and lay it on the people. I will try to get you some links on this later.

I think your proposal would in fact be an unnecessary attack on personal freedoms and really is an example of "nanny state" activism.
It would be greeted with widespread opposition. We can improve people's health in aggregate through better education, and govt policies that lead to less poverty and stress.

Stress and obesity are bigger problems to health. Our national obsession with junk food, fast food, and sugary drinks are driven by marketing. I'm not a one-dimensional basher of corporations, but advertising IMHO is doing a great disservice to promoting unhealthy lifestyles. Maybe we should look there. Stress is often caused by economic insecurity; we should look to make improvements there, too.


You asked:

Isn't that the same as saying we should just throw money at the problem?

Its well-documented that lower income groups suffer more health problems through bad nutrition, alcoholism, and drug abuse. These are the consequences of the social disease known as poverty. Don't throw money at the corporations that profit from it, work toward demanding a living wage for everyone. Raising wages for the bottom four quintiles will reduce these risks and will also benefit society in other ways.

Its also well-documented that interruptions in health care coverage result in greater societal costs in the long run. Regardless of costs, it makes sense to ensure people never lose their coverage. I'll say it again, regardless of costs, these steps will lessen the demand for health care.

Health care costs will nevertheless keep rising regardless of demand until costs are controlled.

[ulTRAX]

11. can we agree on this?

I've lost my draft response so I'll make this short so this thread doesn't get archived.

You've expressed some understandable distrust that politicians raid funds to build stadiums etc. So what is a better use of sin taxes on alcohol.... to act as a price deterrent to use and funds go into a general fund? Or that there be a tax on alcohol determined NOT by some arbitrary political method... but by the best estimate of the social costs of alcohol abuse and that tax was earmarked ONLY to cover those social cost?

Which fits your definition of a nanny state? The first or second approach?

[many a good man]

14. Sin tax usually not for puposes of public health

In general, sin taxes are levied to add revenue to the general fund, not for health. Its more expeditious to raise taxes this way because very few politicians are likely to come out to defend the leprous smokers or drinkers. Govt is not seen as telling you how to live, its just taking advantage of unrepresented "sinners" so the nanny state aspect isn't so obvous.


How about taxes on the advertising of junk food, fast food, smokes and alcohol earmarked to health/education programs?

[ulTRAX]

15. nanny state is the mind of the beholder

I know sin taxes are easier to pass than other taxes but that was not my question. You already expressed a concern that politicians would raid such funds. So what if that tax WAS related to public health? I suspect this concept of the nanny state is in the mind of the beholder.

Even WITH taxing an activity in direct proportion to its social costs it is NOT the government telling anyone how to live. As I said in another post I think this mechanism is liberating. For instance I can see it used for legalization of some drugs... that is drugs aside from alcohol.

I have no problem with your proposal. Since I generally feel societal rationally is all our concern... a collective mental health issue if you will.... and the evolution of society is too important to be left up to sociopathic corporations... if we can't challenge their rights to free speech then we should find other ways to limit ads that encourage irrationality or self-destructive behaviors all for their profit.

[blondeatlast]

12. Talk about a slippery slope...

If I, an insulin dependent diabetic, eat a Hershey bar a month (and I do), am I to pay additional taxes?

How about people who eat hamburgers and steak?

Drink nothing but soft drinks?

Drive at excessive speeds?

Never exercise?

Where does one draw the line?

Cover everyone--it dilutes the risk-pool to an indefinite level so we all pay less for health care.

[ulTRAX]

16. then where would you draw the line?

So are you saying the PRINCIPLE is unworkable? Or just that it can be carried too far?

Would you object to taxing alcohol in direct proportion to the social cost of alcohol abuse? Or should such taxes just get diverted into a general fund without conditions?

[blondeatlast]

17. I wouldn't draw the line, period. I'd want everyone covered, as is

very clear from my post.

That said, it should come as no surprise that I object to your entire premise.

I've been pushing for UHC for many, many years, and nothing is going to convince me otherwise. IMHO, the most efficient way to deliver healthcare is universal care, period.

[ulTRAX]

18. there is nothing inconsistant here with UHC

As I said in my very first post: "Government would have to tax and distribute funds. Since all would be paying into the system, there'd have to be some sort of universal heath care. This certainly would not get rid of all heath insurance fees. Some accidents and illnesses are not related to lifestyle choices. So the spreading of the risks... the role traditional insurance provides... would still have to exist."

What I mean by fees is that even with UHC there will probably be some payroll deductions or fee leveled on the self-employed. When I refer to "traditional insurance" that only referred to the function of insurance... not that it had to be privately run.


The purpose of my proposal is to create economic incentives to reduce activities/toxins/whatever that can raise health costs while providing incentives to do whatever cuts those costs. It makes individuals and corporations responsible in ways they are not now and uses market pressures to move towards a more health conscious society by insisting those making profit off certain harmful products pick up the tab for dealing with the social costs. In the process it helps fund the health care system that otherwise spreads these costs to its members/taxpayers.

[flaminbats]

28. let democracy determine how high and how many sin taxes we have..

no healthcare system is perfect, but universal healthcare is better than no healthcare for any who need it. In a perfect world we would all be needless, sinless, and healthy. No laws would be needed, no government would exist, and no taxes would be payed.

But we live in a world filled with problems, depend on a government under mountains of debt, and are employed by institutions driven by greed. Universal healthcare is something we need, but can become reality only if taxpayers tell the government we are willing to pay for it.

[rman]

13. Well, we could start with socialized health care, no need to socialize

everything else at the same time.

Where "socialized" should perhaps more accurately be described as "collective", as in "collective health care", as it was back when there was basically no problem with health care.

[ulTRAX]

20. isn't that just a backdoor subsidy........

If we just move to socialized health care... isn't that just a backdoor subsidy to cover the social costs of some profit making activities?

By that I mean if X number of people made ill by coal particulates... and there's X damage to property caused by acid rain... what are the options?

We can ban coal... but that's politically impossible. We can regulate emissions yet allow some to profit while not covering ALL the social costs. That's what we do today.

Or we can regulate it AND tax it to cover the TRUE social costs of coal's use. This has the added benefit of giving cleaner renewable forms of energy a fairer shot in the market.

[rman]

23. Environmental regulation does not require socialized markets,

it just requires environmental regulation.
You say emissions are regulated now, i say they are not regulated good enough, after all the Bush admin did in effect relax the emission standards. Also this does not merely "allow some to profit", rather it allows big corporations to make *a lot* of profit.

And yes of course industry must be taxed. One could argue it is already taxed, but i'd argue it is not taxed enough; to many loopholes, to much of a blind eye turned on corporate tax evasion.
But taxing industry in and of itself does not equate to socializing of the market.

on edit:
There's a big difference between the health risk involved in something like sky diving, and that of say, the energy industry. The former is a health risk only to the person doing the sky diving, the latter is a health risk to all of society. In fact if emissions are not properly regulated it is more then a risk, it is sure to be harmful to the population.

[ulTRAX]

31. sadly, anything short of banning pollution is a half measure

rman wrote: "You say emissions are regulated now, i say they are not regulated good enough, after all the Bush admin did in effect relax the emission standards. Also this does not merely "allow some to profit", rather it allows big corporations to make *a lot* of profit."

I never said I approve of the current regulations. In another thread I said I favor ending all practices that in any way harm others... but I understood that approach was politically impossible. Bad regulations and taxing pollution are both in different ways half measures... though the later has the possibility of changing the incentive system to discourage polluting activities and possibly subsidizing non-polluting ones.

As for your issue with skydiving... yes it COULD affect just one person... though a few years ago in my area there was a case of a skydiver hitting a plane causing it to crash. I believe 2-3 died. My only goal is to prevent these health care costs being socialized if they are caused by individuals. It doesn't affect anyone's freedom to take up skydiving. In fact I'd like to see this approach applied to the legalization of pot.

[Warren DeMontague]

19. Single Payer. Rather than letting the insurance industry take 20% off the

top of Health Care Expenditures, make the Government one big insurance pool. It's simple, elegant, would work, would insure everyone and would save us all a ton of money.

I think we should address the need for a SPHC system first, and separately.

[ulTRAX]

21. I worry UHC will become a backdoor subsidy to hide social costs

I also believe we should have a universal single-payer health care system.

But what I worry about is that this can become a backdoor subsidy to cover the social costs of profit making activities. Here are a few examples.

We know the use of coal in the Midwest can cause acid rain damage to forests, property, and crops in the northeast. Those affected in the northeast essentially subsidize the use of cheap coal though this backdoor mechanism. It's easy to ignore since the cost of the damages are difficult to calculate. This battle has been going on since the early Reagan administration.

And what about the social costs of tobacco use and alcohol abuse? How about the health effects of fine particulates from the use of coal and diesel fuels? If we just socialize the risk... where the nation just picks up the tab for dealing the health effects of the above... isn't that just allowing corporations to profit from socially harmful products? How can the market EVER work when total costs are not calculated? If they were then renewable energy might have a fighting chance.

At some point... if there's ever to be a semi-sane society we have to deal with our tendency to impose flawed ideologies such as unregulated free market capitalism upon complex systems that don't neatly fit into the conceptual pigeon-holes the rabid ideologues have constructed.

Money has nothing to do with true economics.

[Warren DeMontague]

22. I think environmental regulation of corporations is more realistic

than a wholesale bottom-up restructuring of the entire economic system.

And if social costs of blasting particulates into the air are factored in, but pollution still occurs, it's not going to help my lungs any. I'd rather avoid the emphysema in the first place instead of having the iron lung paid for by the companies that polluted the air.

I also agree with you about the complexity of systems; however, it is my belief in the inherent complexities of human interaction that make me wary of ANY artificial large-scale attempts to restructure or redefine natural human behavior.. In the long run, I think most are doomed to failure.

I think simpler solutions tend to work better, and in my mind, decent environmental regulations are simpler than completely restructuring the way our society and economy works. JMO.

[ulTRAX]

24. more realistic?

I have to say when it comes to pollution from coal I too prefer regulations over a market approach.... either pollution trading or even my suggestion to tax the pollutants to cover social costs. Why should ANYONE have to subsidize though the backdoor by damage to health or property... some other citizens having cheap power from old coal plants?

But I think it's clear that trying to get these regulations the past 25 years has NOT worked and older, inadequate, regulations have been further sabotaged by Bush's EPA.

So is that approach realistic? Probably no more than mine. Maybe less so given the ascendancy of the free market Right. At some point the American Left has to have a coherent critique of free market madness. That government MUST play a role in the economy. Perhaps the socialized markets approach can serve that purpose.

As for any "wholesale bottom-up restructuring of the entire economic system"... that's somewhat of a red herring. I think it can start by establishing the principle with a tax say on a product such as alcohol. It would replace all existing taxes and be earmarked ONLY for public health purposes.

[Warren DeMontague]

25. I'll grant you, it's a fascinating idea.

but I lean toward the left-libertarian side of the spectrum, so I don't know if I can even speak for "the American Left". I'm of the opinion that capitalism, per se, isn't the problem, rather the crony, old-boy network version that we have increasingly embraced in this country. Add to that the fact that corporations, as legal entities, are granted ever-increasing rights and essentially zero social responsibilities, whereas individuals are increasingly micro-managed and restricted.

But I don't think free markets, given a true level playing field and reasonable, effective laws pertaining to things like environmental impact, are a bad thing. Again, that's just my take.

[ulTRAX]

26. this idea IS libertarian.......... sort of

I think most Libertarians today have become corporate shills. They seem to have given up on the principle that we should have the right to do anything that doesn't harm others... and instead by concentrating on monetary transactions, they have blinded themselves to these hidden backdoor subsidies where some citizens pay with degraded health or property to keep someone else's profits high. Currently such costs are outside the market and have to be deduced. Yet if one believes in the above principle... then they have to gravitate to regulation or this sort of market approach. It puts pressure on those activities that are harmful while providing positive incentives on activities that are not.

What is ironic is that for such a market to work at all requires government intervention.

[Warren DeMontague]

27. Big-L libertarians, and much of the Libertarian party, yes.

small-l social libertarianism as a philosophy, particularly when wedded to a strong social compact involving a safetey net, a SPHC system, that kind of thing, I consider a wholly different animal.

Regarding your idea, I would figure given the complexity of real-world interactions and effects, figuring out said costs would be a gargantuan project... Although perhaps not impossible. Again, it's a fascinating concept. I've said before that if we legalized drugs (or at least pot) and took the money we'd save on the "drug war" along with the tax revenues, and plugged them back into the health care system, I suspect it would be a huge net gain, because I don't believe the social costs of people smoking pot are really that huge.

[eridani]

29. Healthy lifestyles INCREASE total lifetime health care costs

--because they result in more people with lousy genes getting old enough to join the most expensive age demographic. RJ Reynolds got in a lot of trouble ten years ago for advising the Czech government to promote smoking on the grounds that by killing people off in theri 40s and 50s they'd save a lot of money on pensions and old-age related health care expenses. That they were being amoral assholes did not stop them from being right.

Healthy lifestyles dramatically improve the quality of life (and should be promoted for that reason), but they have little or no effect on costs. In every single age demographic, 20% of the population (those with serious chronic or acute problems) are responsible for 80% of health care costs of that demographic.

Our problem is legalized theft by private insurance, whose sole reason for existence is to take money from healthy people and give it to shareholders and obscenely paid CEOs. Public insurance takes money from healthy people and uses 95% of it to care for sick people. Why do we tolerate this when we don't tolerate making only people who have fires pay the whole cost of maintaining a fire department?

[ulTRAX]

30. RJ Reynolds would HATE my idea

The "problem" you mention affects some health care systems more than others. It would take more a toll on systems that socialize the risk while the proposal I made would tax cigarettes in direct proportion to the social costs of their use... at least as best as these costs can be determined.

So if the Czech Republic was taxing cigarettes with funds going to public health, then RJ Reynolds sociopath suggestion would never have been made.

One more consideration.... while I don't have any figures whether healthy people ultimately cost a health care system more.... or whether it's really end of life care... I think that's irrelevant. Healthy people can remain more productive offsetting that cost.

[eridani]

32. Healthy people live longer

--and on average people who live longer have higher lifetime medical expenses.