So Hayek Basically Had Ezra Klein’s Views on Health Care, Right?

by Will Wilkinson on July 11, 2010

Dylan Matthews, apparently a bit surprised that Hayek favored of a scheme of social insurance, offers Ezra Klein’s readers an excerpt, emphasis added, from The Road to Serfdom:

There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.

Matthews goes on to to say:

[I]t’s more than a little jarring to hear [Hayek] invoked in opposition to a health care bill that’s, if anything, less ambitious than the sort of thing he’s talking about here.

At a cosmetic level, there’s something to this. Hayek was open to the idea of mandating the purchase of health insurance on the grounds that “many who could thus provide for themselves might otherwise become a public charge.” But I think it’s safe to say that Hayek would not have supported the recent health care legislation. Why not?

Well, Obamacare builds upon and consolidates some of the worst features of the American health care system from a Hayekian perspective, such as (a) It is more or less illegal to sell actual insurance, and (b) There is at best a grievously hobbled price mechanism in the health care market, if you can call it market.

If Hayek stood for anything, he stood for the importance of the informational function of freely moving prices for both individual planning and effective social coordination. (a) and (b) screw it up bad.

The exact set of regulations governing the sale of health “insurance” varies from state the state, but mostly it’s illegal to price insurance policies according to actuarial risk. At the limit, you have states where it is illegal to charge different people different prices and also illegal to refuse to offer coverage to anyone who applies for it. Hayek has a lot to say about price controls and none of it is good.

As many of you know, our dog recently broke his leg and had surgery that involved installing a plate and some pins. (He’s doing really well, thanks!) Do you know what I got when we came to pick him up? AN ITEMIZED RECEIPT?! I could see what the pins cost! The tube for the IV bag! Can you believe it? Later that week I had a doctor’s appointment at the university hospital and mentioned the itemized receipt to the resident and his supervising physician. Man, did they laugh. “How much does this appointment cost?” Hoo! Good times, good times.

Call a hospital and ask “How much for a hip replacement?” and they’ll almost certainly ask, “What insurance do you have?” This is not what Hayek had in mind in “The Use of Knowledge in Society.”

Prices, prices, prices, prices.

What Hayek had in mind was a competitive market in risk-rated insurance and a competitive market in medical services. No price controls. Let the markets rip. Mandate a certain minimum level of insurance coverage. If you’re uninsurable or can’t afford a policy, then the state pitches in. I’m fairly certain that his idea was nowhere in the neighborhood of making Aetna a quasi-governmental mechanism for redistribution.

Singapore, I think, has the closest thing to the sort of system Hayek had in mind. Among wealthy countries, it spends the smallest percentage of GDP on health care, and it gets about the best results. You know what that’s called? Efficiency. How do you get it? Competitive markets with freely moving prices under the rule of law! It’s the sort of thing you’re in favor of if you want everybody to have access to really good health care and money to spend on things other than health care.

  • stonetools
    Hayek was born and grew up in Austria . When he talked about "social insurance" , he was probably thinking of the Bismarckian universal health insurance model, which he would have been familiar with. I think a very simplified version of Hayek's view on UHC would be " Bismarckian model UHC good, Beveridge NHS model not good. "
    ACA is much closer to the Bismarck model. Its just less generous and less comprehensive. Hayek wouldn't not have been a cheerleader for the ACA, but I doubt he would have fervently opposed it. Hayek lived the last 15 years of his life in Germany- home of the Bismarck model.
  • Eduardomontez
    It's been a day, and Wilkinson has failed to reply to several posts that claim his description of the Singapore health care system is quite inaccurate.
  • DTM
    The fact is that all the lowest-cost health care systems in the developed world involve massive intervention by the relevant governments, Singapore being no exception. Wilkinson basically has to choose whether he is going to be intellectually dishonest, or abandon low costs/high efficiency as a measure, or have the courage to depart from his standard ideological predispositions in light of the actual facts.
  • DMonteith
    Wilkinson basically has to choose...

    I know where my money is. In my experience, Wilkinson has never once failed to dismiss out of hand, or ignore entirely, arguments or data that are inconvenient to his position.

    He proves the wisdom of Sinclair's dictum: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
  • I agree, let's adopt Singapore's system of MASSIVE state involvement in healthcare delivery, pricing, and insurance.

    Wikipedia:

    Singapore has a universal healthcare system where government ensures affordability, largely through compulsory savings and price controls, while the private sector provides most care. Overall spending on healthcare amounts to only 3% of annual GDP. Of that, 66% comes from private sources.[1] Singapore currently has the lowest infant mortality rate in the world (equaled only by Iceland) and among the highest life expectancies from birth, according to the World Health Organization.[2] Singapore has "one of the most successful healthcare systems in the world, in terms of both efficiency in financing and the results achieved in community health outcomes," according to an analysis by global consulting firm Watson Wyatt.[3] Singapore's system uses a combination of compulsory savings from payroll deductions (funded by both employers and workers) a nationalized catastrophic health insurance plan, and government subsidies, as well as "actively regulating the supply and prices of healthcare services in the country" to keep costs in check; the specific features have been described as potentially a "very difficult system to replicate in many other countries." Many Singaporeans also have supplemental private health insurance (often provided by employers) for services not covered by the government's programs.[3]
  • Thomas
    So the "MASSIVE state involvement" is 1% of GDP? Not too bad, I'd say.

    The quoted text mentions that someone thinks it would be hard to replicate. I'm not so sure about that for, say, Western Europe. I already have my payroll deducted at a brisk clip to pay for state health insurance and a state controlling most of the health care system and its pricing. Moving to transparent prices and transparent benefits (ie, savings accounts) would seem to be an improvement in itself, as well as opening up for further betterment.

    And finally, consider that Singapore today might not be the apex of health care, just a place where they think a bit and in practice get better results than most or perhaps all. Further reforms might do even better.
  • Arkady
    Sully gets a letter:

    "As an American living in Singapore for over 20 years, I'd like to comment on Will Wilkinson's statement that the reason behind its health care efficiency and ability to successfully deliver quality health care to all at a reasonable cost is entirely due to competitive markets at play. Perhaps he should investigate how heavily involved the Singapore government is in the local health care sector - from owning hospital groups that compete with the private sector, directing retail prices for doctors, ensuring low cost drugs are available, mandating individual health accounts and restricting how they can be used, etc. While there are veneers of private sector activity and free markets at play, the Singapore government is well in control of everything that happens in this area. I for one would welcome this level of involvement by the US Government in the American health sector but suspect the Tea Partiers and their ilk would go completely insane at the thought. " Would Hayek Vote for Obamacare,? Ctd
  • Will

    I lived in singapore for a while. I am afraid your description of how health care works there is almost completeley inaccurate. Prices and cost are low primarily becuase the government intervenes AND competes with the private sector - yes, Singapore has a public option!

    Next time, do the research first.
  • dean
    >Let the markets rip. Mandate a certain minimum level of insurance coverage. If you’re uninsurable or can’t afford a policy, then the state pitches in.

    That's pretty much how the ACA works. The difference is in how you define "minimum," "uninsurable" and "can't afford."

    The things you need to remember from an economics perspective are these: There will never be an economic rationale for selling health insurance to a sick person or an old person. When people are paying out-of-pocket, the incentive is to skimp on primary care. In a pure version of your proposal, anyone who gets sick and can't work goes straight onto the dole.

    And it's worth remembering that the GOP alternative was to eliminate tax breaks for employer-supported coverage, eliminate the mandate, and let people barter chickens for health care.
  • It really, really, really isn't the way the ACA works. Legalize markets in insurance and restore price-sensitive consumer behavior in medical markets and then we can talk!
  • DTM
    I'm just going to note again that is very much NOT what Singapore does (rely on consumers to control health care costs). I also happen to think it is a prima facie implausible notion: health care consumers will never have the expertise, knowledge, or at-the-moment incentives necessary to serve as the primary constraint on health care costs. Instead they will defer to their providers, who have every incentive to increase costs. So Singapore, like every other country with reasonable health care costs, has consciously intervened to control costs.
  • Edimickeastman
    Hmm. Dean's post does kind of sound like the language in the law, but if Will "really, really, really" says it isn't I guess I have to believe him. I just hope Dean doesn't know the "really times infinity" trick.

    I suppose Will only has to "talk" (ie. provide any facts or arguments) AFTER we implement his ideologically pure fantasy plan which in impossible in actual reality. How convenient for him.
  • DTM
    Sorry, Wilkinson!
  • DTM
    Singapore runs a network of highly-subsidized public hospitals. It also offers a "public option" through a price-controlled (albeit nominally privatized) insurance company, thereby de facto setting prices for all private insurance. It also compells participation in Medisave, with disbursements for services requiring government approval, and Medishield, a catastrophic insurance program.

    So actually, Singapore controls costs by intervening to regulate both supply and price. I can't claim to speak for Hayek, but I wonder if these revelations will make Wilkerson reconsider his ideological presuppositions.
  • ThaomasH
    So why did no opponent of "Obamacare" try to move it in the direction of something better? Instead we got "death panels" and "keep the government out of my Medicare."
  • Edimickeastman
    I'm intrigued by Singapore's system. What is that system? What makes you think it could be scaled/adapted for the MASSIVE differences between Singapore and the US? Why is there no link to find out more?

    Our family is an example of how broken our current system is. When my son was born we instantly went from "Two perfectly healthy 20-somethings doing everything right" to "Preemie in intensive care". When our health insurance renewed 2 months later the rates skyrocketed. Without Ronald Reagan's expansion of Medicare, we would have been forced into bankruptcy. I was a free-market, libertarianish person going into this experience, but the waste, incompetence, and I'd go as far as to say corruption in the private insurance/PPO system is staggering. Dealing with Medicare was always a breath of fresh air by comparison.

    "Obamacare" isn't perfect, but at least it was a step away from the abysmal system we had before. It is the start of an opportunity for further reform. Let's stop yelling about it and get the best ideas for further reform on the table.

    I'll start: The heath insurance you have when an accident/diagnosis occurs pays for all the treatment for the duration of that condition. This is how all other insurance works.
  • Brian_2
    I was a free-market, libertarianish person going into this experience, but the waste, incompetence, and I'd go as far as to say corruption in the private insurance/PPO system is staggering. Dealing with Medicare was always a breath of fresh air by comparison.

    The private insurance/PPO system has very little to do with the free market. In a real free market, you would have paid the expected cost of a normal pregnancy out of pocket (because "insuring" against a sure thing is an incoherent concept), and then been able to purchase actual insurance against expensive complications, which in your case would have paid out without soaking you with massively increased premiums.

    I'll start: The heath insurance you have when an accident/diagnosis occurs pays for all the treatment for the duration of that condition. This is how all other insurance works.

    That's "health status insurance", supported by the Cato Institute among others: http://www.cato.org/pub_display.php?pub_id=9986
  • eannie
    the country that has the closest thing to Hayek is the netherlands.....everyone is required to have health insurance there are two options basic package around 80 euros a month or better package around 125 euros a month you buy it from private insurance companies poor people are subsidized there is competition among the insurance companies it works.....i am sick of know nothings screaming socialism....at every attempt to bring sanity and fairness to the health care system in america.....if they would shut up for 5 seconds and actually look around at other countries who actually do this pretty well...and learn something for once.....the quality of life in this country would improve and health care is a good place to begin
  • Sounds pretty good. I think you'll find I'm not among those who think Canada is a hell on Earth. Why the limitation to two insurance options in Holland?
  • Jeff McM.
    If Singapore's system is so great, why hasn't every country on earth adopted it?
  • Because not every country can adopt it first.
  • Mdg1111
    Oh, to inhabit the fantasy world of Will Wilkinson. The Affordable Care Act is not "Obama" Care - it is Joe Lieberman and Blanche Lincoln and Ben Nelson and Olympia Snowe-care. That's why the damned thing serves all of the vested interests and doesn't take effect for four years.

    I've listened to a few moron "libertarians" I know go one about how the perfect solution is catastrophic care and HSAs. But then they lost their minds over the individual mandate, which offers you government catastrophic care for $70 a month.

    One of these days you should look a little deeper and stop shouting "Yay! Team Red!" You never had more than a handful of votes for any of your ridiculous so-called libertarian schemes. You had eight years of R congress and R president, and all you got was Medicare Part D, and today you have Rs posing as staunch defenders of Medicare.

    Who cares if some random college student got Hayek wrong? You got everything wrong and it hasn't fazed you yet.
  • Brian_2
    When was "HSAs + subsidized catastrophic care + individual mandate" ever on the table?
  • I'm sorry. I didn't realize the widespread nickname was such a sensitive issue. Anyway, I think I remember Obama taking a very active part in helping to negotiate the details of the legislation, and I feel sure that his administration has not hesitated to cover itself in the glory of this historic legislative achievement.

    If you care, I'm not a Republican.
  • Mdg1111
    Do we have any idea what Obama actually wanted? He appears to have surveyed the landscape and tried to figure out what could get 60 votes for and appease the AMA, AARP, drug companies, hospitals and insurance companies.

    Go back and watch the replays sometime - what we ultimately got was the bill that Joe Lieberman wanted. The notion that Lieberman would be on the same page as some great thinker is ridiculous.
  • Oh well, as long as socialism is more affordable, why worry? $70 a month is a bargain.
  • Mdg1111
    How much do you think catastrophic insurance with an annual $10000 deductible should cost someone under 65? I know it's tougher than typing "socialism", but you should run the numbers and figure out how much revenue $70 x 12 months x 187 million people aged 19-64 generates and compare that to the costs people run up over and above $10000.

    There's no way you'll ever be happy, buddy. But you should focus on Rand Paul - who wants to keep Medicare payments high because he thinks doctors have a right to make a lot of money - before you attack catastrophic insurance.
  • Hopefully Anonymous
    Why the glorification of Hayeck over living health insurance economic policy experts. Because he's dead?

    http://www.hopeanon.typepad.com
  • Ask Mr Matthews why he brought up Hayek in this context. In any case, dead or not, Hayek's timeless insights about the informational function of prices deserve to taken to heart, since they are true.
  • Hopefully Anonymous
    At some point can we start to call it "informational function of prices"?

    What's the best 2010 insights on informational function of prices. I think grounding discussions on glorified dead people and old texts is a bad norm, and leads our epistemology in fundamentalist directions.

    http://www.hopeanon.typepad.com
  • Damon
    I think Ezra or Matthews or whatever idiot who wrote the aforementioned to get laid could learn a thing or two about quoting others, particularly out of the context. The key quote is "in such a way as to make competition ineffective over wide fields". As a pharmacist, health economist and avid reader of the man, Hayek would respond in his Austrian accent, "Scheiße!"
  • Tim Kowal
    The passage from Hayek used in support of social welfare was making its rounds a few months back, conspicuously omitting the passage explaining the concern over efficiency that Will explained in this post. See here: http://notesfrombabel.wordpress.com/2009/10/03/mis-applying-hayek-to-government-health-care/
  • musa1
    Such a free market sounds great in theory.
  • John V
    Case in point about above average intelligence and failure to grasp or understand when it's convenient to do so:

    Mr Matthews here is a Harvard Student. I see no excuse for writing this junk:

    "Now, Hayek obviously isn't an idol of liberal economic policy folks for a whole batch of reasons, not least the central premise of Road to Serfdom that the sorts of social democratic policies being pursued in the United Kingdom and elsewhere in Europe during and after World War II would open the door to totalitarianism. But it's more than a little jarring to hear him invoked in opposition to a health care bill that's, if anything, less ambitious than the sort of thing he's talking about here."

    What? So much wrong here.

    1. Hayek's number one reason for not being a darling of the economic Left is his total and vehement opposition to "dirigisme" in economic policy. Hayek is right and the Left is wrong on that point.

    2. Less ambitious? Again, the blurring of redistribution and regulation.

    Either Dylan's professors are doing a poor job of teaching Hayek at Harvard or they aren't teaching it at all and Dylan's is a bad a self-teaching concepts whose authors he has bias against.

    Either way, it's unaccpetable.
  • John V
    Well done, Will. And you could have gone a lot further. As a huge fan of Hayek, I find the use of bits and pieces of what he said to prop up anything and everything to be beyond silly.

    This common social democratic "ah-HA" ploy of using Hayek to bolster arguments for any and every imaginable type of social insurance is one of the silliest there is. I don't consider myself to be a genius or of some extraordinary level of intelligence. Yet, I manage to understand Hayek's point. It's on those grounds that I find the butchering of Hayek's ideas most infuriating. Surely, people who think and write for a living should be more than capable of taking the time to read and understand what exactly Hayek meant. But, obviously, that's much too difficult for some. Either that or that they are simply dishonest and don't care to learn because it's more fun for them to live in their bubble where things are conveniently gray or black and white depending on the subject matter.

    People who make such arguments about social insurance in Hayek's name are engaging in lazy, low-grade dialog and discussion....and probably intentionally IMHO.

    Hayek's number one concept is the power of and NEED for decentralized knowledge and decision-making authority in the maket process. PERIOD. Any suggestions he makes beyond that, like social insurance, are based on the idea that economic reality is being respected in terms of knowledge, prices and decentralized decision-making. AND YES, it is perfectly possible and plausible to liberalize the economic process while providing some kind of catastrophic safety net at the same time.

    The problem, Will, is that people who are not libertarians grounded in Hayek's world (especially Modern Liberals) blur the completely detached concepts of government redistribution and government command and control and they also assume there's no distinction when classical liberals discuss economics. WRONG. AND, they also don't realize that Hayekian thinking AT ITS CORE totally distinguishes between the two concepts. I certainly do and I know you and many others do as well.

    Some forms of redistribution...be they large or small....do NOT truly undermine the effciency and integrity of the economic market process. They simply take a little money from many and give it to a few. In general, there's nothing terribly wrong with that in a general economic sense. HOWEVER, short-sighted thinking that advocates changing rules and making exceptions on who can and can't do this or that or what levels prices can or can't rise/fall to or who can make decisions/use local knowledge and who can't and so on and so forth can and will be harmful to the economic process over time and create new problems with the use of resources. THIS LATTER POINT is pure Hayek. ANYTHING else he said is simply footnote with specific context.
  • bbb
    I completely agree with you (except for the last sentence).

    I think the point you are making deserves to be more widely understood and appreciated.
  • kevindv
    Eventually, someone will point out that Hayek was his most social democratic in 1944 when the Road to Serfdom was published. This was, arguably, one of the most statist points, if not THE most statist point in world history. The fact that he was much more radical before AND after that should say something. Hayek was comfortable on the hard economic right, but never the radical economic right and suspect that his views modified to some degree by where the 'center' of world political ideologies was at the time.
  • kevindv
    Actually, is Hayek more or less social democratic in RTS than in the Constitution of Liberty? I just woke up and I can't remember.
  • As I see it, Hayek's views are almost exactly the same in the Constitution of Liberty, in which he supports old-age insurance, unemployment insurance, entertains compulsory health insurance, but argues very strongly against the kind of social security and health care systems that American liberals support. The fact that people see this as a for-or-against issue rather than a what-kind-of-institutions issue, such that Hayek's pro-safety net views cannot be understood as anything other than some kind of endorsement of the New Deal-Great Society social insurance state, is symptomatic of our generally idiotic level of policy discourse.

    Hayek, like Milton Friedman and James Buchanan, was always a "liberaltarian". That the basic neo-classical liberal position seems like some kind of crazy compromised hybrid to most people is, I think, largely the fault of rather more radical libertarians who have tried to press the prestige and reasonableness of these thinkers into the service of an agenda they never shared.
  • That the basic neo-classical liberal position seems like some kind of crazy compromised hybrid to most people is, I think, largely the fault of rather more radical libertarians who have tried to press the prestige and reasonableness of these thinkers into the service of an agenda they never shared.

    Given the Hayek-ness of the current state of our system, do you really feel like it's the fault of radical libertarians that "we should have a safety-net for our elderly and poor" has been transmuted to "the New Deal-Great Society social insurance state"? I mean, I know lots of radical libertarians, and I don't necessarily always agree with them on healthcare issues, but I don't feel like they deserve the blame for this, at least not compared to liberals or we-must-protect-medicare-conservatives. They're a distant third at best.

    I mean, just look how liberal defenders of either the status quo or the ACA defend it: they say that if we cut these things, grandma will be thrown out on the street, sick people will die -- that's what ACA supporters said during the debate, that tens of thousands of poor people were dying for lack of this bill. How on earth can radical libertarians be more to blame for this policy transmutation?
  • kevindv
    As for as CL and RTS go, from the text alone I can see that you're right.

    I agree with you entirely about Hayek, Friedman and Buchanan. I think even Mises has sometimes been used in this way, but that's a harder case.
  • Jtapp
    My guess is that Hayek would have supported the "Brad Delong plan" espoused by Ross Douthat and Reihan Salam of mandatory health savings accounts with the government backing catastrophic insurance for everyone. That would fall under the definition of "a comprehensive system of social insurance." That would also be easier than the bloated mess that Congress passed. Matthews clearly misses this point and misleads Ezra Klein's readers.
  • Hyena
    I think that it is actually a fairly good representation of Klein's healthcare ideals. I don't think I know anyone who was actually satisfied with ACA and most people who supported it, myself included, did so because we felt the tradeoffs between the provisions we liked and those we did not were acceptable.

    To my reading, what Klein wanted was a streamlined insurance structure and subsidies for the poor. IIRC he wanted to eliminate the ties to employers as well. The political reality was that this sort of reform was impossible and likely still is.
  • Dylan Matthews
    This is exactly right. The regulatory-heavy tilt of the Affordable Care Act is not a preference of mine, or Ezra's, or even, I suspect, the administration's. Liberals' preferred alternatives, from single-payer to the Wyden-Bennett bill, are all less regulatory. But the opposition to them from the right--that is, the right that's capable of stopping or watering down legislation, not the right that actually reads Hayek--was, if anything, fiercer.

    That's the point I was trying to make in the post. Your and other philosophical libertarians' invocation of Hayek in opposition to the bill is made in good faith, Will. But I think Road to Serfdom-citing politicians like Mitch Daniels and Paul Ryan, not to mention the droves of readers flocking to the book at Glenn Beck's instruction, would have fought less market-intrusive reform just as hard, which makes it hard to take their use of Hayek seriously.
  • "But I think Road to Serfdom-citing politicians like Mitch Daniels and Paul Ryan, not to mention the droves of readers flocking to the book at Glenn Beck's instruction, would have fought less market-intrusive reform just as hard, which makes it hard to take their use of Hayek seriously."

    I don't really think I'm in that camp, but I'm not sure it's really fair to blame the regulatory heavy tilt of the ACA on those people. It was pretty regulatory heavy from the very beginning, and those people opposed it. You can say they didn't oppose it the right way, which is fair, but is it really fair to heap more blame on the opponents of a regulatory-heavy bill than the supporters? At the end of the day, they voted against it, and the supporters voted for it. If it is A) regulatory-heavy and B) that is bad, then whatever blame we have for those opponents, surely it is less than that we should have for it's supporters.

    You can argue that the heavy regulation was worth it, from your perspective, but it's really weird to say they "would have fought less market-intrusive reform just as hard" if they would have considered those also bad. Is the current form of ACA closer to Hayek than not having it? I don't think anyone can say it is, for the reasons Will lists above. If so, and if being closer to Hayek is good, then I find it hard to be more mad at Glenn Beck (as much as I dislike him) for this specific reason, than I am mad at those who actually voted for the thing.

    For what it's worth, I do support this:
    What Hayek had in mind was a competitive market in risk-rated insurance and a competitive market in medical services. No price controls. Let the markets rip. Mandate a certain minimum level of insurance coverage. If you’re uninsurable or can’t afford a policy, then the state pitches in.

    I'd say that's 10 on the 1-10 Hayek-O-meter, and it may be what you want as well. The current version of ACA, coupled with the rest of the regulations we have, is at like a 2; they only get a point or two for incorporating the mandate and govt subsidization. Maybe without the regulation-heavy stuff, it would be a 3 or 4. But it is just really weird to complain that Daniels, Beck and Ryan, Hayek-hypocrites that they may be, were wrong to oppose it -- since it's pretty damn obvious that it isn't Hayek-friendly in any serious way at all. Is it really a strange argument to say that perhaps they felt that the Democratic ACA supporters were perfectly capable of inserting heavy regulation on their own? If those 3 people would have proposed a policy that was a perfect 10, (or even a 7 or 8) do you really think more than a tiny number of ACA supporters would have gone for it? If not, why blame them?
  • david3368
    For what it's worth, Singapore really does have very good healthcare policy - the most important features are probably the absolute powerlessness of the doctor's associations and other labor unions, the compulsory publication of prices (even by private services!), vigorous means-testing, and the very small geographical size (meaning that you can easily find a dozen general practitioners within twenty minutes of virtually everywhere on the island). Prices like these are representative. Competition is stiff.

    But there are good reasons to exercise caution with the medical spending/GDP figures; remember that 20% of Singapore's population are guest workers who contribute to GDP but consume little healthcare. And the citizen population are also disproportionately young compared to the rest of the developed world. And Singapore has compulsory military service for its male citizens up to the age of forty to fifty (depending), which obviously includes a large amount of regularly exercise.

    It does achieve good results; just not a dramatic an improvement as the numbers might suggest. I doubt Americans would accept the degree of means-testing Singapore does - Singapore sees no problem in telling you to sell your house if you want to afford your op. Of course, Singapore will also find you government-built public housing of a very high quality should you then not have a house, and is probably one of very few governments capable of efficiently doing so, but I think Americans would still balk at the first bit.
  • agorabum
    I would like to see Will flesh out the comparison to Singapore. It seems like, from what you've written, that it has some very unusual and non-reproducible features.

    Also, since Singapore is a (somewhat) benevolent dictatorship, I'd like to see Will explain how to implement their system here, especially in the face of a Republican party that laid its marker on being the defender of medicare / status quo during the HCR debate.
  • Guest
    I think you put Hayek even further to the left in the healthcare debate than he was. By "social insurance" he was surely talking about catastrophic health insurance, and less as an "insurance plan" like Aetna that paid for your birth control pills and autism treatments and more as government picking up the check when you got hit by a car or got cancer.
  • Sigivald
    Exactly.

    Remember, the quote is "some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision."

    Not, "whatever is necessary to keep one perfectly healthy", but the minimum of food, shelter, and clothing necessary to preserve whatever health is there. IE, not sleeping in the streets and getting pneumonia, or starving.

    And those health issues which "few can make adequate provision for" are few and far between indeed (especially when there still is private insurance available!), hardly "full coverage for everyone", which is much more like what Klein seems to want (in my admittedly limited experience, as I can't stand reading Klein).
  • Regirock
    Assuming that the Singapore system is also less corrupt, how do they avoid regulatory capture due to private insurance interests buying politicians?

    For me the single biggest problem with libertarianism and anarcho-capitalism is how to keep the rich from rigging the game in their interests.
  • PirateRothbard
    I agree that that's a "problem", but I think all political systems have this problem. So I don't see it as a strike against anarcho-capitalism, since powerful interests exist in every political system.
  • david3368
    (or, to put it another way, Singapore maintains its relative economic freedom by resolutely restricting its political freedom. The rich cannot rig the game in their interests when there is no game; campaign contributions cannot buy politicians when campaigning itself is heavily controlled. Singapore is an authoritarian state, and libertarians really ought to stop forgetting that when they praise Singapore for the former: it only persists by sacrificing the latter. Hong Kong unshackled from London has already gotten to work on increasing welfare spending, and creating a minimum wage, and so on - economic libertarianism just isn't popular enough for it to coexist with political freedom, even in the city that is its biggest success in history)
  • Thomas
    "Singapore is an authoritarian state, and libertarians really ought to stop forgetting that when they praise Singapore for the former: it only persists by sacrificing the latter."

    On the contrary, I first of all think it's heartening that these policies have been shown to work so well. I'm also saddened to know that sound policies can be more or less easily corrupted by the constituents for whatever reasons, but this would be true in whatever system. It's all ephemeral. Even if the Singaporean system had been written into the constitution of the US, that great and successful democratic experiment, we would today likely have a great deal of fun with penumbras, etc.
  • david3368
    Singapore keeps its professional groups in line by threatening them with all its weapons of the state every now and then. It doesn't matter whether you're a white collar professional; Singapore has exactly one interest group (namely, its ruling party) and said interest group likes to keep things that way. It still has imprisonment without trial, etc., and it still uses many of these powers regularly.

    Kuan Yew, 1986, on the Law Society of Singapore (the bar association):

    "[I]t is my job as the Prime Minister in charge of the Government of Singapore to put a stop to politicking in professional bodies… An alteration in the law which leaves you without that cover and therefore you have to form yourselves properly into a political society or political association and the lawyers will have to learn the lesson of having allowed themselves to be manipulated."

    Francis Seow, the then-President of the Law Society, is still in exile from Singapore, having fled after being detained (during then-ongoing elections) by Singapore's Internal Security Department without trial. The message is clear: no matter how high you climb, the government makes its own decisions - any would-be interest groups exist strictly at its pleasure.

    As for how this system produces its famed efficiency, it's basically Olson's stationary government with a very long time-discounting period.
  • Of course the point of the post isn't that Hayek would have approved of the particular mechanism of social insurance, but that "Hayek" is now used only to assert a comically irresponsible anarcho-capitalism. If anything, those who appreciate Hayek should be the ones making this point, and forcefully, or the absurdity of his claims about the coming totalitarianism now running riot through the Gulags of Western Europe will seem even more pronounced.
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