Avik Roy, Uber, and Stupid Idea Healthcare Ideas

Avik RoyInvestor’s Business Daily (IBD) has an editorial asking one of the stupidest questions you are likely to hear this year, Why Is There No Uber For Health Care? It is based on a paper by pretend wonk Avik Roy, Health Care 2.0: Ushering in Medicine’s Digital Revolution (pdf). Before I get to the specifics of the stupid question, let’s go over a few issues that the editorial raises.

First, IBD thinks healthcare costs are all about technology. This isn’t even close to being true. For one thing, in Japan, they have a lot more healthcare technology than we do, yet their healthcare spending is much lower. People who make these kinds of arguments are all free marketeers who are just looking for some reason to claim that the free market will save us if we just let it.

Well, a free market in healthcare might be just fine. But the people at IBD aren’t interested in that. And Avik Roy certainly isn’t interested in that. They aren’t calling for an end to licensing of doctors. In fact, they aren’t even calling for an end to restrictions in doctors immigrating to the US. Because that’s the reason healthcare costs so much: doctors get paid two to three times as much in the United States as they do in other advanced countries. Do we have better doctors than they do in Canada and Japan and Germany? I don’t think so.

Then IBD asks a question about all this technology, not understanding its wider ramifications, “Why would any consumer demand a more expensive product if they had no idea whether it would work?” Well, the truth is that most people do not demand a more expensive product. But generally speaking, healthcare customers are not knowledgeable enough to make good healthcare buying decisions. This is why the neoliberal approach (Not to mention the free market approach!) is not a good way to provide healthcare.

The great Avik Roy trick in all this is that technology will save us. This is the answer that conservatives have for every problem.

But the editors — based upon Avik Roy — go in the opposite direction. The real solution is to get rid of insurance! It’s the conservatives’ great solution to everything: health savings accounts so that people can count every penny and not go in for expensive procedures! Of course, they started with the understanding that people don’t know what they are doing when it comes to healthcare.

But there’s another issue here. Ultimately, conservatives all think we should save money on healthcare by getting less of it. They don’t want to deal with the issue that the healthcare itself is too expensive. And let’s face it: it’s a false saving. Because if you get people to count their pennies, many of them will decide they can save a buck by not getting preventative care or taking drugs that will lead to much more expensive care later on.

Big on Avik Roy’s radar is that the insurance that people get, they don’t pay for directly. Thus the “direct consumer is largely indifferent to the price.” But surely the businesses and government agencies that are paying for the insurance care about price and are in a much better position to negotiate it. Again we are back to the idea that the more the individual has to pay for care, the better. But the truth is that increasing co-pays and similar devices have not been shown to cut down on unnecessary care.

The great Avik Roy trick in all this is that technology will save us. This is the answer that conservatives have for every problem. And there is no doubt that technology can help. But the kind of technology that Roy and Carly Fiorina and the editors at IBD want is market innovation. They want a way to make it easier for customers to compare prices. They want a little app that will allow people to get the best price on a colonoscopy. Okay. I’m not saying that might not save a few pennies.

But it wouldn’t be like Uber. Uber saves money because it is a low-skill service. It has thrived because there are a bunch of out of work, desperate people. And it effectively placed all the burden on these powerless people. In as much as it has changed the market, it has taken a pretty bad job and made it worse. Yet in the entire IBD editorial, the word “doctor” is used only once — and then in a quote that they attack. Do they really think that doctors are going to allow themselves to be Uberred?

No. What it all comes down to is that the people at IBD and Avik Roy (who I’ve been following for years), don’t give a damn about providing healthcare. They just want to keep taxes down and salaries high for the already rich. So they will nibble around the edges. Medical technology! Skin the game! Malpractice insurance! In fact, the article even talks about the high price of drug entrepreneurship, without discussing all the billions of dollars that the government does in drug research that makes the drug companies rich.

A couple years ago, Avik Roy went through a cycle. He kept writing articles about this or that country that had a supposed free market healthcare system that worked. And then, an actual healthcare wonk would point out why he was wrong. So Roy would move onto another country. Because there just isn’t a country that provides reasonably priced high quality healthcare without having the government very much involved.

The problem is as it always is with conservatives on any issue. They are constrained by conclusions. Yes, they would like everyone to have good paying jobs, but only if the solution is that we lower taxes on the rich and get rid of regulation. And they would like everyone to have good affordable healthcare — but only if it involves the government only helping the rich stakeholders in the process. If it involves subsidizing individuals, forget it.

For more on this, see my article from three years ago: Avik Roy: Healthcare Apologist.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

22 thoughts on “Avik Roy, Uber, and Stupid Idea Healthcare Ideas

  1. ” So they will nibble around the edges. Medical technology! Skin the game! ”

    Sure, I know what you meant to say — but I like it better as written.

  2. Get rid of insurance? Yes, please! Considering that the US spends over twice as much as Great Britain does on healthcare, we should at least be able to do as well as they. No British doctors are starving, either. I suppose single-payer will do as a fallback ask, and Medicare as a third-place choice.

    I believe the original British NHS legislation ran to about 95 pages. Now that’s small government!

    • I believe the NHS was set up at least partly funded by the Marshall Plan. Or maybe that’s folklore. Too tired to look it up.

      • I looked up the timelines-the Marshall Plan was enacted in 1948 however the National Health Service Act of 1946 was already in effect. There may have been some effort to fund it using a portion of the money but it was not a direct consequence of the Marshall Plan.

        Part VI, section 52(I) and (2) simply says that it is to be paid for by Parliament. Unlike our Medicare system there was no directed revenue source.

        The 40s health care bills were actually very short in their pages-the Truman proposed bill was only 85 pages. However thanks to things like Medicare/caid, SCHIP, the VA and a few other programs, it is not as easy as it was in 1948 when there was no real government health insurance. That said, the ACA was in its bound version only about 278 pages since the one everyone saw online was the pre-passed version double spaced and enlarged to allow for on the spot modifications as the various congresscritter staffers worked on it.

        Everything I have ever read about the history of our country’s medical development says to me “you need insurance. Even if it is for the catastrophic care.” A surgery like my dad’s originally supposed to be triple turned quintuple bypass surgery with an added bonus of hole repair is going to take more than saving up for a year for it while he tries to not keel over dead as he works to save the money. Now I may have my problems with my father, but I don’t want him to drop dead because we were too poor to pay for his complicated surgery. Most Americans actually like their family and want the same.

        • That’s outrageous! And I’m very sorry to hear about it. There have been a couple of notable kickstart campaigns where people got money for necessary surgeries and I just thought, “Not everyone can have a kickstart campaign.” This is what taxes are for.

          I know you are destined for greater things, but you would make a great fact checker!

          • Dad is fine now. It was pretty freaky when we walked into his hospital room and the doctor said “oh so we had to do a quintuple and he had a hole in his heart from birth…” For a man who was 68 at the time, it was odd he had gone that long without anyone noticing it.

            Plenty of gofundme campaigns as well for people who need health care. It is ridiculous-that should be for living expenses while someone gets better, not for the actual treatment.

            Thank you on the fact checking. I would offer to help you out but you never remember until after you have ripped all your hair out.

            • I’m glad your dad is better. I tell ya, they made men tougher in that generation.

              I think it is outrageous that gofundme is used for anything like that. It should be used for things like MST3K and “Todd & The Book of Pure Evil” (which I love, but everyone I know thinks is terrible).

              The problem is the speed of publishing. It isn’t just here. It isn’t even just online. I’m reading a very technical book that is riddled with typographical and formatting errors. And this is a book that great care was taken to make it look good. It’s just that no one ever read it. Too bad because it has fantastic information and the writing style is very nice. I once had this idea that I was going to keep a list of the page numbers on which the first grammar error occurred in a book. It would make a great site, because people could compete to find the first one. The best books (usually academic publishers) take 100+ pages. But I commonly find errors in the first couple of pages. The same thing is clearly happening with fact checking at newspapers and magazines.

              • I always thought the Toughest Generation (TM) was my grandfather’s-he was in WWII and Korea and everything along with all the other young men of his generation.

                I am putting that on the list for when I finish Brisco County, Jr. since Amazon has it for streaming. Yes, GoFundMe and other crowdsourcing should be for fun stuff not to keep people alive.

                Oh since people love to criticize, that probably would be a massively popular website.

  3. Robert Kuttner in The Washington Post back in 1995:

    [In medical care, for example,] the consumer may have no practical alternative. Caveat emptor is pretty thin armor. An elderly patient in a nursing home with a feeding tube is not exactly a sovereign consumer.

    I’m also reminded of Tom Braden telling Pat Buchanan back in the late 1970s: “When my mother suddenly died, was I supposed to throw her in the back of the station wagon and drive around to different funeral homes looking for the best price?”

    • Excellent!

      “Sovereign consumer” also gets to the only place Roy is slightly right, but isn’t capable of understanding why. Medicare is vastly more efficient than private health insurance — and this, amazingly, despite the fact Medicare gets ripped off, all the time, constantly, by greedy/crooked companies.

      Wheelchair/medical equipment supply companies are virtually all crooks (although, in my experience, they have kind and proficient service technicians.) They double-bill for services. If you order a part you can easily install yourself in five minutes, they insist on delivering the part, billing an hour of labor charges to drop it off at your door.

      That’s just one example. Pharmaceuticals are another. So is over-testing (and testing fees are also outrageous.) All this happens because Medicare will pay for it. Because Medicare, despite being way better than any private insurance, has no muscle. The government has virtually no power to rein in these costs (some double-billing crooks get slaps on the wrist occasionally.) And private insurers, who all (legally) collude with each other to keep rates around the same level, have no incentive to tamp prices down. Any cost hikes get passed on strictly to the consumer, and we will pay whatever they say.

      Because Roy’s an idiot, he can’t see what the solution is — a real, honest-to-God government-run health-care system. That sets prices. Your company makes plastic walking canes? Fine — you get to charge $2 for that $0.20 worth of material, not $20. If you charge the English or French health-care system $20 for these pills, stop charging American insurance $100. And, as Frank noted, stop overpaying doctors! (Although I’d be open to a customer-rating system where doctors who are consistently graded the most compassionate and best listeners get paid a little more.)

      This shit’s a mess. It’s like the railroad robber barons of long ago. And numbskulls like Roy keep pimping deregulation as the solution. So, what, we can have health-insurance companies based in Guam that cover nothing and run customer complaints through eternal hours of phone robo-menus? What lunacy.

      First, we need Medicare for all. But that’s just a start. Then, we need Medicare to start breaking the fingers of all these private interests who have been feeding off America’s sick for decades.

      • Finally something we completely agree on. In fact the 2003 Medicare bill’s provision prohibiting negotiation ticked me off so much I ran for Congress against one of the idiots who inserted it in there.

        Medicare needs to have some real teeth-they are, by law, required to be fair to the private providers. So if I get medical treatment without insurance I am damn well getting a FOIA and finding out what Medicare/Caid pays and telling the hospital they can charge me that because that is what it actually cost.

        • Madam: if everyone agreed on everything, ours would be a dull world indeed.

          Fight those hospital bills when you can! Often, you can’t. That plastic cup of applesauce will cost $10 and there’s nothing you can do about it. But there will almost certainly be parts of your bill you can fight, if you want to spend a week in phone hell.

          Apparently, libertarians think economies work best if everyone is constantly on hold trying to get companies to stop cheating us they way they all do. No-one should work at a job. We should all just be on the phone, constantly, trying to get a warranty honored or double-bill eliminated by the Invisible Hand.

          A few years back, I did some cold-calling for a campaign, and I’ll never do it again; cold-calling is the worst. The few people I talked to, who didn’t cuss at me and hang up the phone, invariably went on rants about “government can’t do anything, all the bureaucracy.”

          Seriously? They thought government was a bureaucratic nightmare? Had these people never spent a day in phone hell with a corporation? (My guess is, they had, and they blamed it on Socialist Obama.)

          Keep in mind: most hospitals are non-profit. And they’re still robbing you blind. For-profit anything is far, far worse.

            • History will, alas, forget how funny the “thanks Obama” joke on the Internet always was. (It’s a good joke, I like it!) And probably it’ll remember us all as terribly frightened of the climate catastrophe which ensued, ignoring how distracted we were by cat videos. History just gets things wrong like that, it’s what history does.

              Probably, during the Black Plague, most people were preoccupied with the latest variety of turnip or some such.

    • The Tom Braden line reminds me of funeral home scene in The Big Lebowski.

      In a more general sense, that’s what Joseph Stiglitz’s work was all about: asymmetric information. One thing that amazes me when I think back on my libertarian days is how I thought it was a good idea to force everyone to become uber-consumers — as if working wasn’t enough, you had to spend the rest of your waking hours figuring out the best “choice.” And just as I was getting over that, the Democratic Party turned to neoliberalism based on pretty much the same idea. The real problem is that these ideologies reduce people to their functions as economic actors. This is why I’m so focused on economics. If people can just depend upon a living, they can engage with more important things. It seems to me that if social conservatives were serious, they would necessarily be economic liberals. Social conservatism combined with economic conservatism basically says, “It’s important to take care of your kids — if you’re rich.”

      • Add in how there is a lot of incentive for hospitals to keep their costs secret? You cannot find out this information without having an inside source so how can you shop for anything if you cannot get the price?!

        • Yeah, I there was an article (Bitter Pill?) about that. I thought it missed the bigger issue, but it was shocking the variability in the prices of things. Of course, even if one did cost compare on heart surgery, they wouldn’t cost compare on minutia like IVs.

          • Yep! I read that article and was like “so the solution is….say it with me now class…A Single Third Party Payer Like Medicare Since It Is So Much Better Run.”

            But yeah, try putting that in Time and you will never get to write another article again.

            • Well, in that regard, it is better to go with actual socialized medicine. I still find it interesting that normal people don’t get the difference between socialized medicine and socialized insurance. It does seem to be the case that socialized insurance works better. But either is preferable to what we have now. And what we have now is way better than what we had when Obama came into office.

              • They assume it will be like going to MVD. Which if you plan correctly and do a bit of checking first, is not that bad.

                I remember having no idea what to say when an English friend demanded to know why we cannot nationalize the hospitals. But that would be the sole reason as far as I can tell.

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