The invisible fist of the free market

I think Josh Marshall nailed the worst part of Jeb Bush’s week so far: not one of the GOP’s usual hacks jumped to defend him over Iraq, and in fact he seems to have kicked off a Republican stampede away from Iraq and his now twice retracted position on it. That pretty much guaranteed that Jeb would have to clarify, face humiliating questions about it and then double back and ultimately toss his brother’s war back under the bus where he found it.

His Friday is not looking much better. In a nut, the most generous way to interpret what he just said to some supporters in Arizona is that tech innovation and the free market makes great things like the Apple watch, so it ougt to make great health insurance as well.

The health beat is usually Richard’s bailiwick, but I think I can handle this. If we imagine that Bush meant something completely different from what he actually said, that tech and the market can provide great care, then he’d be on the right track. Hospitals are full of all kinds of nifty gadgets. On the other hand I can think of plenty of reasons why that counterfactual argument is just as stupid. Innovation to make people healthier is also known as biomedical research science. I do that all day and have done for a while in a variety of settings, and I can say that without constant government investment new advances would dry up in a hurry. Even private research firms like Pfizer would grind down to a near-halt since, little known fact, a lot of what they do is license intellectual developments made in government-funded research and get them ready for market.

Even when it comes to fancy new scanners and such the invisible hand needs help. A lot of fancy tech fails to deliver on its marketing promises and some technologies actually make things worse. Without independent, publicly-funded research to test the usefulness of a new device most products of the free market will make health care more exclusive, a lot more expensive but no better at making anyone less sick. Come to think of it health care technology that is unnecessarily expensive, exclusive, buggy and not very useful for its intended purpose is a great analogy for the Apple watch.

But there really is not any ambiguity about innovation in health insurance. Without government oversight more or less every single innovation in the insurance marketplace will be solely dedicated to separating patients and hospitals from their money. In the pre-PPACA dark ages major insurers kept massive divisions of denial experts in a constant state of fevered competition to find the greatest loopholes, small print and outright fraud to keep customers from collecting on their claims, and that only counts the lucky customers whose clean health record earned them entry in the first place. For people lime me who truly understand the capabilities of genetic sequencing, the value of cheap genomics for insurance denial was, frankly, scary as hell. To people on the receiving end that invisible hand would look and feel a lot more like a, well, you get the idea.

19 replies
  1. 1
    Richard Mayhew says:

    My only quibble —

    government oversight more or less every single innovation in the insurance marketplace will be solely dedicated to separating patients and hospitals from their money.

    Pre-PPACA, we wanted to seperate consumers from their money while not paying hospitals/docs for what they did… we seldom wanted to take money back from hospitals as hospital finance departments are structured like drywall anchors, easy entry one way, hard to remove

  2. 2
    low-tech cyclist says:

    For people lime me who truly understand the capabilities of genetic sequencing, the potential ‘innovation’ power of modern genomics was frankly terrifying.

    I was thinking about this while reading Charles P. Pierce’s book Hard To Forget, about Alzheimer’s, the way his family dealt with it, and the way our society is dealing with it.

    He wrote it back in 1999 and 2000, and while he would likely have declined to be tested anyway to see if he was genetically likely to have Alzheimer’s himself, one concern was that if he knew he had the gene, he might well be kissing goodbye to any hope of having health insurance.

    And it was just one more reason to be deeply grateful that we have the PPACA. Thank God for Obamacare, so that people don’t have to worry that having the wrong genes (among many other things) might forever disqualify them from being able to afford medical care.

  3. 3
    Just Some Fuckhead, Thought Leader says:

    They have a museum dedicated to free market medical innovation

  4. 4
    Benw says:

    I always lime your posts, Tim! I lime them a lot.

  5. 5
    ET says:

    While people who know anything about medical advances know the government is a big sponsor most people – which in this case includes Jebbie – don’t. Which is why he made this stupid comment.

    Most people do not have a clue, how much of the advances in all sorts of things impacting their daily lives were and are, subsidized by the federal government.

  6. 6
    the Conster says:

    @ET:

    Part of the education I received as a kid in the 60s was how much just the space program contributed to our daily lives- I remember some presentation in the auditorium by a guy who brought all the things we use every day and the genesis of it for astronauts. I don’t remember him talking about military research, but hey we were little kids. It stuck.

  7. 7
    C.V. Danes says:

    . In the pre-PPACA dark ages major insurers kept massive divisions of denial experts in a constant state of fevered competition to find the greatest loopholes, small print and outright fraud to keep customers from collecting on their claims

    Now they just push you into high deductible plans where you pay for most everything yourself.

  8. 8
    Stella B says:

    You are being unfair to pharmaceutical companies. They actually spend ever so much money on research — marketing research, to be exact — but it’s still research.

    I heard about an unfamiliar drug on another forum yesterday, so I looked it up. Brisdelle, for the treatment of hot flashes, costs $158 for thirty tablets. It’s a 7.5 mg tablet of paroxetine. Generic paroxetine is only available in 10 and 20 mg tablets which retail between $4.70 and $12 per thirty count. Obviously it took some extensive research to come up with a dose that could not be easily reached by splitting generic tablets. Boo-yah! American innovation!

  9. 9
    cthulhu says:

    @Stella B:

    I heard about an unfamiliar drug on another forum yesterday, so I looked it up. Brisdelle, for the treatment of hot flashes, costs $158 for thirty tablets. It’s a 7.5 mg tablet of paroxetine. Generic paroxetine is only available in 10 and 20 mg tablets which retail between $4.70 and $12 per thirty count. Obviously it took some extensive research to come up with a dose that could not be easily reached by splitting generic tablets. Boo-yah! American innovation!

    Tis true, the much cheaper path for additional patent protection and market exclusivity for secondary indications is something Big Pharma does quite well.

    With few exceptions, the largest companies have reduced their internal R&D budgets and now mostly look to government, small and mid-sized companies to do the early work. In fact, another source of research “grant” funding comes from the big players who have plenty of cash but are not particularly agile and are wary of taking on the risks of innovation.

    In that way they might be like Apple in that Apple doesn’t seem to take many risks.

  10. 10
    Jon Marcus says:

    Free markets work because they allow for failure. Creative destruction and all that. On a consumer level, you can decide whether it’s a good idea to buy insurance for your phone or pay for a new one when you drop it. If you screw up, maybe maybe you have to get by with a lousy phone or none at all.

    But we (or at least the non-psychopaths among us) aren’t willing to see patients fail and get “creatively destroyed” (i.e. die on the street from treatable conditions). We won’t stand for a free market (thank God), and anyone (like Jebbie) arguing for one is peddling BS.

  11. 11
    WereBear says:

    @Stella B: The cure for many ailments can be natural replacement of the missing element, be it insulin for diabetes, thyroid hormone for hypothyroid, or HRT for hot flashes.

    However, no one makes enough money by selling things they can’t patent. Thus, the incredible prices to jigger around our delicately balanced organisms in ways that aren’t good for the patient, but quite lucrative for the pill companies.

  12. 12
    Lurking Canadian says:

    Come to think of it health care technology that is unnecessarily expensive, exclusive, buggy and not very useful for its intended purpose is a great analogy for the Apple watch.

    Oh, that’s going to leave a mark.

  13. 13
    Javier says:

    Doesn’t matter how awesome it is, I can’t afford an applewatch.

  14. 14
    Rekster says:

    This is a medical technology advance that proves the axiom that not all technology is better than the previous treatment:

    http://www.npr.org/sections/he.....erectomies

    Previous “non robot” surgeries have been proven to be more effective and less expensive than the great robotic surgery. Alas, when a hospital has purchased one of these pieces of equipment it will need to be paid for so then you see that a larger percentage of surgeries are being performed by the more expensive robot.

    ‘Murica, home of the corporate raiders.

  15. 15
    Brachiator says:

    @Tim F:

    Even when it comes to fancy new scanners and such the invisible hand needs help. A lot of fancy tech fails to deliver on its marketing promises and some technologies actually make things worse. Without independent, publicly-funded research to test the usefulness of a new device most products of the free market will make health care more exclusive, a lot more expensive but no better at making anyone less sick.

    Your assertions here are too vague and disjointed and simply do not make your case. Today’s fancy new scanners becomes tomorrow’s standard equipment. “A lot of fancy tech” and “some technologies” says nothing. You may well be an expert on this subject, and your assertions here may be a synthesis of your experience, but do you have a link to anything that actually proves your case?

    I can even see that independent research is crucial in certifying the usefulness of devices, but how much is public and how much is private?

    And the elephant in the room is this: In any country (I don’t care if the health care system is private or government subsidized), how much R&D, new products, new tech comes directly from government research?

    You are also skirting close here to the typical “natural” and “organic” nonsense peddled to the stupid anti-science crowd that technology is fancy, complicated and bad and expensive and that the government can magically winnow out the bad, purely profit driven stuff. The more accurate issue is the competence of independent review agencies, and simply being from the government is no guarantee of anything.

    Come to think of it health care technology that is unnecessarily expensive, exclusive, buggy and not very useful for its intended purpose is a great analogy for the Apple watch.

    Does everyone commenting in this thread have a smart phone or is posting on a tablet? Anyone still using Blackberry or a Nokia device? I didn’t think so. The smartphone you are using is the direct result of Apple’s development of the iPhone, which was originally buggy and expensive.

    The improvements to smartphone and wearable technology has everything to do with competition between Apple and the Android crew and others, and has absolutely nothing to do with government oversight, review or intervention. This might suggest something about medical tech.

    Any complaint here about technology is strangely uninformed. And the attempt to carve out a medical technology exception is bizarre. It might be possible, but this is not making the case.

  16. 16
    Elie says:

    — Actually, a fair amount of poor health has nothing to do with access to technology but is related to sociological and economic factors. It turns out that having a stable roof over your head, strong family support and ties and a steady job or income actually are associated with higher degree of health. After that, of course, we have other factors such as too much food or too much of the wrong food, but the first ones I cited come first in priority.

    The American healthcare system is in part as expensive and dysfunctional because it is a source of income for a fair number of people.. Let me amend that to “high” income for some docs and other providers as well as other hangers on like IT companies and the ubiquitous “consultants”. For that reason, things cost a lot but don’t necessarily get to the brass tacks of preventing illness or improving health. One way many first world countries have improved the health of Moms and babies is by having paid family leave for many times, several months. This gives Moms real support when bonding with their babies is extremely important and probably results in healthier Moms and babies. We don’t do that and we have the highest maternal mortality rates of any advanced country. We are also rank poorly in infant mortality — esp among the poors and black people who definitely barely get standard prenatal care that starts before the 6 month of gestation.

    Jeb is looking like a bigger and bigger fool each day (praise be!). I hope he keeps it up. Those who wanted Hillary to speak to anything are nuts… with “opponents” like these, you just have to stay out of the way while they destroy themselves.

  17. 17
    Ruckus says:

    @WereBear:
    Actually they can make enough money, what they can’t make is MORE THAN ENOUGH MONEY.

  18. 18
    Brachiator says:

    @WereBear:

    The cure for many ailments can be natural replacement of the missing element, be it insulin for diabetes, thyroid hormone for hypothyroid, or HRT for hot flashes.

    I am not sure that I understand your complaint here. I don’t think your distinction between “pills” and “natural” is meaningful. The discovery of the relationship between insulin and diabetes is all about medicine, scientific research and technology. The improvement of insulin delivery systems is all about improved technology. Issues of purification of insulin and the development of various biosynthetic insulins is all about technology.

    Even supposed natural therapies are in fact a profit driven industry, and most of this stuff is flat out fraudulent snake oil.

    A friend had a medical crisis and had thyroid surgery. That she had surgery and survived is all about scientific medicine and medical technology. Now, she believes and is looking at natural nutritional methods as a supplement or possible replacement for some of the medication she has to take. But she has not found some slam dunk “this is the natural treatment that makes pills unnecessary” therapy.

  19. 19
    trnc says:

    I can say that without constant government investment new advances would dry up in a hurry.

    A thousand times, yes. If the Internet had been left up to private industry to develop with no gov’t subsidy, I doubt we’d be having this conversation right now.

Comments are closed.