AN ARMEY OF ONE. I'm sure bringing Dick Armey onto Swampland seemed like a good idea to those more accustomed to his reputation for principled conservatism and intellectual honesty than to his actual commentary, but what he's actually offered up is disappointing swill. After being twice pounded by Joe Klein for his offhand denunciations of "socialized medicine" and public health care, Armey decided to expound on his ideas a bit -- and it's not pretty.
"Regulation is a formidable force in the health care game," he complains. "By one estimate, health care regulations leave us worse off by an amount equal to 11 percent of health spending. For every $100 Americans spend on health care, we pay $11 to the regulator." There are two replies to this question. The first is which regulations, kemosabe? Among the regulations you're paying for are those that ensure purity in medications, sanitary conditions in hospitals, and standards in treatment. So if we're going to play the cutting game, I'd like a list of what regulations Armey plans to cut, and how much each one of them costs. And I'd like it stat. And maybe, while we're at it, a reference for that 11 percent figure, as a quick search turned up no similar data.
What I do have a reference for are private vs. public administrative costs. Studies have found that overhead in the private insurance system -- little things like underwriting, and trying to deny you coverage, and advertising -- account for up to 31 percent of US health care spending. If we had a Canadian style system, we would've saved $209 billion in 1999 -- far more than Armey's nameless "regulations" are costing us. And I'd take some sanitation regulations over the claims department at my insurer anyday. Meanwhile, here's a fun fact -- government systems hold down bureaucracy more effectively than private system. The study found that "between 1969 and 1999, administrative and clerical personnel in the United States grew from 18.2 percent to 27.3 percent of the health work force. In Canada, those personnel grew from 16 percent in 1971 to 19.1 percent in 1996." Armey seems unconcerned by these costs.
What does concern him is the lack of consumer control over care. "For example, eye surgery centers, fertility specialists and cosmetic dental surgery. Costs have fallen dramatically, innovation abounds and safety improves. Economists have a fancy term for this phenomenon. It is called price posting. When consumers see the prices available, they make better informed decisions and competitive pressures emerge and more information results which starts the virtuous circle anew." Where to begin? First, price posting just means...posting prices. It's a method of displaying goods, and is usually set in opposition to bargaining. If Armey wants to impress with fancy terminology, he should get it right.
Meanwhile, it's telling that the examples he uses are entirely constrained to predictable and optional procedures. It's easy to shop for an OB/GYN, or ask around for LASIK. Try demanding the lowest cost emergency room when you're on an ambulance gurney and hooked up to an oxygen tank after a heart attack, or when your doctor diagnoses you with cancer and says this is the specialist he recommends. At those moments, consumers aren't, to use another fancy economics term, particularly price sensitive, and nor are they even equipped to judge quality. Health care isn't just another widget.
At no point in any of his commentary does Armey explain why we pay twice what any other nation does, or why our outcomes appear to be worse than Canada's, at twice the cost and with 45 million more uninsured. Indeed, he doesn't even betray an awareness of these facts. And this is, we're told, the best the conservative movement has to offer. Oy.
More: Justin Fox smacks Armey down.