Re: Overriding the S-Chip Veto

George Z. Bush wrote:
Islander wrote:
Wow, lots of stuff to catch up on this morning. Let me begin with my
take on Emily's questions.

We have a history of benefits including health care insurance provided
by employers in this country because it was in the interests of
companies to provide these benefits in order to attract and hold
employees. To some extent, the unions forced this, but it doesn't take
a very deep look at the conditions under which benefits are provided to
understand that it is a competitive advantage of companies in scarce
labor markets that kept it going for as long as it did. It was a
product of our capitalistic economic system.

That companies are now suffering under the increasing costs of medical
insurance, many (if not most) are searching for ways to avoid paying
benefits. This is most obvious in manufacturing where US companies are
no longer competitive and the competition for labor is not as important.
Other sectors suffer as well and use "private contractors" or half
time employment to avoid paying benefits. This is all because the
competition for labor has become less important and the increasing costs
of health care are a tempting target for cost savings.

So, why are health insurance costs in particular and health care costs
in general inflating so rapidly?

As George points out, there are many causes. I disagree with John (and
others who have argued this point here) that it is inflated because the
free market has somehow been subverted. For most of us, when a loved
one desperately needs medical care, we will sacrifice anything to get
that care. If time allows, we might do a bit of shopping around, but
often that is to find the best care that is available. For example,
have you ever used HealthGrades? http://www.healthgrades.com/ There is
some attention given to cost, but the primary objective of this service
is to help you find the very best physician. There is a reason that the
cause of most bankruptcy's is medical bills. The free market limits
only come into play when most of us have exhausted our resources. The
reasons are the same as those for fire protection. Free market
capitalism simply does not work when the demand is urgent, catastrophic
and not rational.

I also disagree with George that it is (at least in part) due to the
cost of medical research. IMV, what the medical industry (and
especially the drug industry) call research is really marketing. This
is a pet peeve of mine since I saw first hand the difference between
research in universities and in private industry. This is especially
relevant when scarce government funding produces highly valuable
intellectual property. Universities place the knowledge in the public
domain and advance the art while industry fights hard to protect
intellectual property (given that right by the Nixon administration)
even when it was paid for by the public. The most egregious abuse of
this was by the companies that participated in the human genome project.

Aren't you lumping basic and applied research into the same pot? Basic research is generally done in the university milieu, whereas applied research more often is accomplished within the private sector, where attempts to use the results of the basic research are undertaken in an effort to provide profit for the innovative entrepreneur. While it all may end up in the same pill, the contributing costs are quite different, are they not?

(Snip)

George Z.


That is supposed to be the basic idea, but it doesn't work out that way in many programs. There is very little basic research done in industry because, by definition, you don't necessarily have a clear picture of how that research will ultimately become a product. It is basically a search for knowledge. Funding for basic research is primarily funded by the government with a little coming from foundations. I've posted figures here before and could probably find them again if you wish. Applied research proceeds with an application of the science clearly in mind, but not necessarily a specific product. It is also done in universities since one usually cannot get funding for research without some idea of what the application of that science will be. Industry comes into its own once the basic science is understood and a specific product can be identified. A scientist will tell you that this is no longer research, but product development including clinical trials and (groan) marketing.

Sometimes, like in the human genome project, there is so much potential for future products that people get secretive, even in basic research. There were two primary contractors on the human genome project, one industry and the other a university consortium. The industrial researcher wanted to keep all discoveries including the basic data mapping the human genome private. The payoff would have been astronomical. Fortunately, the universities insisted on open publication of their research. This stimulated a very broad study of health issues related to genetics. In this case, at least, the industry claim of how much research costs and why they need to protect intellectual property was pure bullshit.

I should also add, at the risk of bothering Glenn again, that universities work for far less than industry. Graduate students are very hard working and very cheap. Likewise, university overhead is considerably less than that in industry.
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