Dan Popp
Triangulating health care
By Dan Popp
It is amazing that people who think we cannot afford to pay for doctors, hospitals, and medication somehow think that we can afford to pay for doctors, hospitals, medication and a government bureaucracy to administer it. — Thomas Sowell
Some years ago I walked into a business and noticed a sign that read:
"Good, Fast, Cheap — Pick Any Two."
That's the classic "Quality Triangle," and as far as I can tell it applies to just about everything that has a price tag. You can send a document across the country in a few days for pennies via the Post Office. It's good, it's cheap, but it ain't fast. You could get that same piece of paper to the same place overnight — good and fast, but about 50 times the price of the US Mail. Or you could transmit it by fax, which is both cheap and quick ... but it may not be legible at the other end.
The Quality Triangle is not some crazy rule created by an overstressed receptionist. It's a model, like the law of gravity, that describes predictable phenomena. In this world, resources are "scarce," as economists say — talent and materials are limited. There is only so much time. Skills require investments of time and effort, and perhaps money for training. And, just to make life interesting, other customers besides you are bidding for the same limited resources, time and skills.
What this means to you as a health care consumer is that all medical decisions will require some negotiation with our old friends Good, Fast and Cheap. You won't be able to get the best cancer specialist on the planet, tomorrow, for the price of a cup of coffee.
True Lies
When socialists say "we can make health care affordable for everyone," they're telling the truth. "Yes, they can." But listen to what they're not saying. If what you hear is, "we can make the same quality of health care affordable, within the same time frame you expect from the current system," then you've heard a lie. Just as Scotty "canna change the laws of physics," Nancy canna redraw the Quality Triangle.
Sure, Congress can issue a diktat that the maximum charge for a tonsillectomy shall be $1.
But common sense should tell you that you might not get the pinnacle of skill and care along with that affordable tonsillectomy. And how long will you have to wait for your operation? Will you actually be able to obtain a tonsillectomy at all at this price? The government can magically make your operation affordable, but it can't make it available. Real doctors have to do that. Real doctors who have expenses, debts they incurred to develop their skills, and time constraints. How many of them will be able — in the real world, not the enchanted swamp where Congress lives — to do a $1 tonsillectomy?
The principle is the same whether Congress artificially sets the price at $1, $100 or any point below the market price. Your waiting time goes up (which could be dangerous), and the quality goes down, the greater the difference between the fiat price and the real price. So the more "help" you receive from the overlords in DC, the sicker you may get.
Remedial Geometry
The farce that more government meddling can somehow improve our health care system might be illuminated by pulling on the other corners of the Quality Triangle. Let's get some really Fast health care (we're Americans — its our right!). The government could decree that all surgeries must be done in one hour or less, like drycleaning. "If we can put a man on the moon," some elected dimwit like Maxine Waters would say, "we can give all Americans fast health care." Will your 60-minute brain surgery cost a billion dollars because we need armies of highly-trained specialists standing by 24/7 to give immediate service? Or will the operation leave something to be desired in the area of quality? Maybe both.
Or let's imagine that the feds decided to bless everyone with the right to the "best" health care humanly possible. If we want to keep that dangerous waiting-time down too, we'll have to pay a bit more for the higher level of expertise and follow-up.
Hmm. Isn't that pretty close to what we have now? Up to this point in time American purchasers of health care have chosen to pay more for higher quality, and they've elected to trade money for speed. After all, if you wind up sicker, or dead, was that discount appendectomy really a bargain?
This manifest consumer preference for Good, and fairly Fast, over Cheap, is the "broken" health care system that Barack Obama wants to "fix."
Case Studies
When government makes housing artificially affordable under compassionate "rent control" laws, demand rises, causing shortages; and the general quality of housing deteriorates. It's happened not just in New York, but in China, Sweden and everywhere else it's been imposed. It was the socialist economist Assar Lindbeck who famously said, "Rent control appears to be the most efficient technique presently known to destroy a city — except for bombing."
Here's a great idea: let's apply the rent control concept to medicine!
When Washington set prices for gasoline in the 1970s, there were long lines at gas stations, even though gas was actually plentiful.
This pattern does not change just because we're talking about pharmaceuticals rather than rent or super unleaded. Whenever government commands prices lower than what buyers would be willing to pay, the effects are shortages, waiting lines, and lower quality. Typically, a black market will emerge, further eroding availability of the restricted good. Thanks for nothing, DC.
Every country with socialized medicine has waiting lists for what Americans now consider to be routine surgeries. Every such country has complaints about the quality of care. Their governments have expanded the Cheap corner of the triangle, and the Fast and Good corners were pinched. In a world of limited resources, it could not be otherwise.
Medical Leeches
To get a hefty decrease in the price of health care without sacrificing service and/or quality, there would have to be some kind of parasite attached to the system that we could simply lop off.
Let's pretend that a group of busybodies with no expertise in either health care or business developed a stranglehold on the practice of medicine. Just to pick a random unsavory group, how about a gang of hundreds of used car salesmen? No — better yet — lawyers.
What if these (purely hypothetical) attorneys overrode the choices of doctors, patients, insurance companies and anyone else in the path of their ignorance? It would produce inefficiency and dysfunction, no doubt. If only that were the diagnosis for our "broken" health care system. Then we could find free savings quite easily: just remove the usurping lawyers, and undo their stupid ideas about business and medicine.
Now that's a prescription we could all live with.
Good health care, Fast health care, Cheap health care — pick any two.
Click here to discuss this article.
© Dan Popp
May 20, 2009
It is amazing that people who think we cannot afford to pay for doctors, hospitals, and medication somehow think that we can afford to pay for doctors, hospitals, medication and a government bureaucracy to administer it. — Thomas Sowell
Some years ago I walked into a business and noticed a sign that read:
"Good, Fast, Cheap — Pick Any Two."
That's the classic "Quality Triangle," and as far as I can tell it applies to just about everything that has a price tag. You can send a document across the country in a few days for pennies via the Post Office. It's good, it's cheap, but it ain't fast. You could get that same piece of paper to the same place overnight — good and fast, but about 50 times the price of the US Mail. Or you could transmit it by fax, which is both cheap and quick ... but it may not be legible at the other end.
The Quality Triangle is not some crazy rule created by an overstressed receptionist. It's a model, like the law of gravity, that describes predictable phenomena. In this world, resources are "scarce," as economists say — talent and materials are limited. There is only so much time. Skills require investments of time and effort, and perhaps money for training. And, just to make life interesting, other customers besides you are bidding for the same limited resources, time and skills.
What this means to you as a health care consumer is that all medical decisions will require some negotiation with our old friends Good, Fast and Cheap. You won't be able to get the best cancer specialist on the planet, tomorrow, for the price of a cup of coffee.
True Lies
When socialists say "we can make health care affordable for everyone," they're telling the truth. "Yes, they can." But listen to what they're not saying. If what you hear is, "we can make the same quality of health care affordable, within the same time frame you expect from the current system," then you've heard a lie. Just as Scotty "canna change the laws of physics," Nancy canna redraw the Quality Triangle.
Sure, Congress can issue a diktat that the maximum charge for a tonsillectomy shall be $1.
But common sense should tell you that you might not get the pinnacle of skill and care along with that affordable tonsillectomy. And how long will you have to wait for your operation? Will you actually be able to obtain a tonsillectomy at all at this price? The government can magically make your operation affordable, but it can't make it available. Real doctors have to do that. Real doctors who have expenses, debts they incurred to develop their skills, and time constraints. How many of them will be able — in the real world, not the enchanted swamp where Congress lives — to do a $1 tonsillectomy?
The principle is the same whether Congress artificially sets the price at $1, $100 or any point below the market price. Your waiting time goes up (which could be dangerous), and the quality goes down, the greater the difference between the fiat price and the real price. So the more "help" you receive from the overlords in DC, the sicker you may get.
Remedial Geometry
The farce that more government meddling can somehow improve our health care system might be illuminated by pulling on the other corners of the Quality Triangle. Let's get some really Fast health care (we're Americans — its our right!). The government could decree that all surgeries must be done in one hour or less, like drycleaning. "If we can put a man on the moon," some elected dimwit like Maxine Waters would say, "we can give all Americans fast health care." Will your 60-minute brain surgery cost a billion dollars because we need armies of highly-trained specialists standing by 24/7 to give immediate service? Or will the operation leave something to be desired in the area of quality? Maybe both.
Or let's imagine that the feds decided to bless everyone with the right to the "best" health care humanly possible. If we want to keep that dangerous waiting-time down too, we'll have to pay a bit more for the higher level of expertise and follow-up.
Hmm. Isn't that pretty close to what we have now? Up to this point in time American purchasers of health care have chosen to pay more for higher quality, and they've elected to trade money for speed. After all, if you wind up sicker, or dead, was that discount appendectomy really a bargain?
This manifest consumer preference for Good, and fairly Fast, over Cheap, is the "broken" health care system that Barack Obama wants to "fix."
Case Studies
When government makes housing artificially affordable under compassionate "rent control" laws, demand rises, causing shortages; and the general quality of housing deteriorates. It's happened not just in New York, but in China, Sweden and everywhere else it's been imposed. It was the socialist economist Assar Lindbeck who famously said, "Rent control appears to be the most efficient technique presently known to destroy a city — except for bombing."
Here's a great idea: let's apply the rent control concept to medicine!
When Washington set prices for gasoline in the 1970s, there were long lines at gas stations, even though gas was actually plentiful.
This pattern does not change just because we're talking about pharmaceuticals rather than rent or super unleaded. Whenever government commands prices lower than what buyers would be willing to pay, the effects are shortages, waiting lines, and lower quality. Typically, a black market will emerge, further eroding availability of the restricted good. Thanks for nothing, DC.
Every country with socialized medicine has waiting lists for what Americans now consider to be routine surgeries. Every such country has complaints about the quality of care. Their governments have expanded the Cheap corner of the triangle, and the Fast and Good corners were pinched. In a world of limited resources, it could not be otherwise.
Medical Leeches
To get a hefty decrease in the price of health care without sacrificing service and/or quality, there would have to be some kind of parasite attached to the system that we could simply lop off.
Let's pretend that a group of busybodies with no expertise in either health care or business developed a stranglehold on the practice of medicine. Just to pick a random unsavory group, how about a gang of hundreds of used car salesmen? No — better yet — lawyers.
What if these (purely hypothetical) attorneys overrode the choices of doctors, patients, insurance companies and anyone else in the path of their ignorance? It would produce inefficiency and dysfunction, no doubt. If only that were the diagnosis for our "broken" health care system. Then we could find free savings quite easily: just remove the usurping lawyers, and undo their stupid ideas about business and medicine.
Now that's a prescription we could all live with.
Good health care, Fast health care, Cheap health care — pick any two.
Click here to discuss this article.
© Dan Popp
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(See RenewAmerica's publishing standards.)
