As could be expected, our podcast with Adam Gaffney on the merits of a single payer system has led to many arguments on Twitter, none of which were particularly productive at persuading one side or the other.
However, at the end of a back-and-forth that I had with Dr. Mark Hoofnagle, an academic trauma surgeon from St. Louis and a national health plan advocate, he tweeted a comment with which I agreed in part:
…the difference in our attitudes has to do with trust, we each trust a different actor more, but the source of our distrust is common. It’s the influence of money on politics to game and corrupt intent.
I agree with Mark that we each trust a different actor more, but I disagree that we hold the source of our distrust in common.
In my last post, I precisely focused on the question of trust and proposed that the best strategy to counter the single payer movement is to insist that government cannot be trusted. But my reason for distrusting the government is not primarily the corruption of money coming from the private sector—although that is obviously also a huge factor to be considered.
In his devastating 1920 essay on economic calculation, Ludwig von Mises showed that once you interfere with the normal market mechanisms of pricing goods and services, it really doesn’t matter how corrupt or honest government employees are. Once market prices have been interfered with, the problem of allocating resources becomes insurmountable. It’s a problem of knowledge not probity.
The argument applies to healthcare, of course, and is still valid with the “hybrid” systems that Mark seems to be in favor of, like those of Germany, France or the Netherlands. Switzerland is also one such system, and if you’ve missed listening to our podcast about it, you should definitely hear what our guest Swiss doctor and economist Marc Fouradoulas had to say about the Swiss system.
Once a government interferes with prices, you will have mis-allocation and mal-distribution of healthcare: Shortages here, surpluses there, the exact kinds of problems that Dr. Hoofnagle seems to be concerned about when he laments the lack or cost of insulin in the US.
The reasons the Swiss and these other systems seem—on the surface—to be able to get away with it (temporarily, to be sure) has more to do with other aspects of their economies than it does with the wisdom of their government employees. Switzerland, for example, is a much wealthier nation, has a much smaller defense budget (which I would certainly favor for the US), etc. Likewise for the Dutch, I suspect.
The other reason to not trust the government is that unlike the private sector, the public sector is not subject to any significant competitive pressure. There is no effective or efficient mechanism to hold it accountable for its errors.
And if we add to those reasons the question of corruption and inherent disincentives in the bureaucracy, then mistrusting the government is really a no-brainer.