Pets, Vets, and Borders
A tale of two health care systems.
Libertarians frequently point out that, despite the claims of critics, the U.S. health care system is far from what a free-market health care system might look like. Aside from the obvious large role played by programs such as Medicare and Medicaid, which account for almost 50 percent of health care spending in the United States, various other government interventions have led, largely unintentionally, to the crazy, complex employment-related system we have.
One of the most problematic features of the system is the predominance of third-party payments in which negotiations over prices and services take place between provider and insurance company rather than between provider and patient. When most Americans go to the doctor or hospital, no one tells them how much things are going to cost. Those messy details are between the insurance company (or the government) and the provider. Patients are therefore unable to make informed decisions about whether certain procedures are worth it, nor are they able to shop around to find the necessary services at a better price. Since they pay only a small fraction of the bill, most people don’t much care. This third-party payment very much diminishes the competitiveness of the health care system, driving up costs and alienating patients.
Detailed Cost Estimates
By contrast, consider veterinary medicine. My dog required extensive vet care recently, and in several ways our experience is relevant to the debate over human health care. At both our local vet clinic and an animal hospital in a larger city, we were presented detailed estimates of the services to be provided, including low- and high-end estimates of the total cost. In both cases we were able to discuss what the providers would be doing and why, as well as the costs of other options. Had we been unhappy with what we heard, we could have very easily gone elsewhere. Not surprisingly, the quality of care at both facilities appears to have been excellent. That’s what competition does.
It’s also worth noting that on the supply side of the market, the vet industry is much less hampered by regulations and monopoly than is human medicine. The number of MDs is controlled by the American Medical Association, which keeps the supply low and ensures monopoly profits for doctors. Regulations on what nurses and others can do compared to doctors also prevent competition and keep prices higher than they would be otherwise. Veterinary medicine faces fewer regulations and barriers, which keeps the supply of vets larger and offers pet owners many more options at more competitive prices. In fact the final bill at the animal hospital came in around 10 percent lower than the low-end estimate. I’m not sure the final cost of a human hospital stay in the United States has ever come in below estimate!
Dogs without a Country
As it turns out, the story is even more interesting. The animal hospital in question is in Ottawa, Ontario. For all the contrasts between U.S. and Canadian human health care, vet care is pretty similar. If you’ve ever crossed the border into Canada for health care (the traffic usually runs south) or needed care when abroad, you know how complicated dealing with different government regulations can be. Not if you’re a dog. Our records were transferred by email. Despite the two countries’ different approaches to human health care, the less-regulated vet system works well enough for both to adopt it. (Vet fees are subject to some regulation in Ontario.)
All this goes to show that the artificial political boundaries human beings draw virtually disappear when it comes to nonhuman beings that are not subject to citizenship rules.
Finally, it’s worth noting that while my wife and I had to have our passports at the ready to show the border guards in both countries, all we needed for the dog was a certificate of up-to-date rabies shots. I can only wish that were our standard for human immigration: “You have all your vaccinations? Welcome to the U.S.”
My recent experience with veterinary medicine provides even more evidence that a truly free market in health care can work and work well. When people say the U.S. health care system is going to the dogs, my new response is: I wish.
Comment by Alex on 16 February 2012:
I hate to be put in a position where it seems I’m defending the rabid dogs (pun intended) on the left, but your argument doesn’t really stand the test of reason.
The dog is the vet’s patient, and you (the owner) are the third party making decisions for the patient. Therefore, veterinary medicine is in fact very much like human medicine in that regard. The good leftist will point out that government takes the role of the owner as it negotiates with the physician on your behalf. If it works for dogs, why not for humans? (YOUR argument, not mine)
Of course, now you might say that you were simply making a point, or an analogy, or a simile, or whatever, and that I shouldn’t take your example literally. Alas, it is you who has compared dogs to humans and veterinary medicine to human medicine, so you’re stuck with your own example.
My sincerest apologies for once again spoiling the “Another great one!” party.
Comment by Steve Horwitz on 16 February 2012:
If you can’t see the difference between a third party making decisions for a dog and for a human, then you deserve the health care system we have, or the one that many folks want.
Comment by Miguel on 16 February 2012:
I would have to disagree with Alex’s contention on the human being the third party in the dog-vet scenerio. Technically speaking, the human is the 3rd party payer but for the purpose of this article it is as close as you can get. The points of market driven supply (of vets and care) & the ability to negotiate the level of care and pricing are still very valid. The US sick care system is anything but free market. I really liked the points made in this article. To get a feel for a more free market US health care model, look at the US pre-medicare.
Comment by Sheldon Richman on 16 February 2012:
So it’s settled then: Government is the master and we are its pets.
Comment by Diane on 16 February 2012:
As much as I hate anthropomorphic comparisons, the pet in always more like a child and the human, the “parent” making decisions for a minor. Hope your dog is feeling better!
Comment by Bryan on 16 February 2012:
A dog can no more make health care decisions that my car can, nor is he really the customer, since the funds aren’t coming from the fruits of his labor. The dog is my property.
With HUMAN transactions, any time the direct connection between the consumer and producer is severed, market distortions result.
(By consumer and producer, I am, of course, referring to two individuals trading their legitimately acquired wealth, goods or services.)
Comment by Jason Kelly on 16 February 2012:
Nicely put, Sheldon.
Alex,
The dog is not an independent party in the transaction. The person is the customer in both situations, but in one he pays directly, and in the other someone else foots the bill. That is the distinction. This isn’t an analogy or a simile. It is a comparison of two transactions using different payment schemes. Using your logic, if I go to the doctor for a broken arm, my arm is the patient, I am the third party payer, and the insurance company is the fourth party payer.
Comment by Derek on 16 February 2012:
Alex… seriously? That’s your rebuttal?
Comment by norman on 16 February 2012:
You say: “U.S. health care system is far from what a free-market health care system might look like”
Obviously most Americans are content with government intervention or otherwise they would not vote for politicians who support intervention.
If a time comes when people are discontented with medical care they will inform their congressmen that they want “Change,” but I agree with your contention.
Comment by Candace on 16 February 2012:
I am old enough to remember the U.S. health care system in the 1960′s & 70′s. I, as a divorced mother of 2, could easily use with the doctor of my choice. We paid for routine services as needed. Extraordinary services were negotiated and most doctors would set up a payment plan to cover the costs. In fact I was actually told by a staff person in my doctor’s office that because I was paying for services personally my fees would be 25% less than they charged patients who wanted insurance claims processed due to additional work the practice was required to perform. Additionally, most doctors regularly volunteered at Urgent Care facilities and emergency rooms. Then Health Maintenance Organizations (HMO’s) were created patients were told that they simply needed to pay a small co-pay and they didn’t need to worry about the total cost. Pretty soon costs started rising, deductibles rose and the patient lost control of managing their own health care and look where we are today.
Comment by Alex on 16 February 2012:
“If you can’t see the difference between a third party making decisions for a dog and for a human, then you deserve the health care system we have, or the one that many folks want.”
If *I* can’t see the difference? Who brought dogs into the discussion? Who equated vets with MDs? Who compared human healthcare with pet healthcare? It is I who should say to you, “If you can’t see the difference between dog healthcare and human healthcare…”
“So it’s settled then: Government is the master and we are its pets.”
That’s what a leftist would say, using the great professor’s argument as justification. As I said, he made the argument, and now he’s stuck with it.
“Alex… seriously? That’s your rebuttal?”
No, that was not a rebuttal. When someone disagrees with your logic, it does not mean he’s a leftist who wants socialized healthcare. Healthcare, like anything else, should be private, free of government control and interference, and ruled by market forces, not bureaucrats. Nevertheless, Horwitz’s arguments are facile if not childish. The fact that I agree with his opinions does not mean I agree with his arguments. If you argued that murder is wrong because it’s bad for business, I’d mock your argument, even though I agree that murder is wrong.
Note that none of you bots are able to grasp my argument. You all automatically jump to the conclusion that I want government control, when in fact I was merely pointing out faulty logic.
Comment by Alex on 16 February 2012:
“A dog can no more make health care decisions that my car can,”
Neither can a month-old baby.
“…nor is he really the customer, since the funds aren’t coming from the fruits of his labor.”
Neither is a month-old baby. But both baby and dog are patients.
“The dog is my property.”
Finally, a distinction!
“The person is the customer in both situations…”
Yes, but the patient isn’t. Several of you mentioned the obvious fact that the owner is the customer, bur that doesn’t change the fact that the dog is the patient.
“Using your logic, if I go to the doctor for a broken arm, my arm is the patient, I am the third party payer, and the insurance company is the fourth party payer.”
No, that’s not true. The patient is the individual receiving treatment.
Comment by Nick on 16 February 2012:
I purchased health insurance for my pet.
When the pet got sick, they did not pay for anything.
Comment by Fed-up on 16 February 2012:
Whether we should have a third party payment system is not a left-v-right argument it’s a matter of how free the market for health care really is.
Horwitz is simply drawing a distinction in a similar healthcare example to show the failures of the current system. For the sake of journalistic or artistic license he could have used a less engaging subject but the message would have been the same
In Vet medicine, the market is relatively free – as Horwitz explains – it works like any other free market engaged in a maintenance function similar to, say automotive repair or home repair. Albeit medicine is more complex but the point is it within the realm of individual choice. Government meddling in what was once a free market by imposing the false morality that healthcare is so important that choice should be removed is why we have the mess we have.
Playing “who’s the patient” is merely a distortion – a Dog (and a child for that matter) is not able to make any manner of choice involved; whether or not healthcare is needed, what options are available and in making the final decisions. Its owners are able and competent to make those choices and outcomes are nearly always in the best interests of the pets. In human healthcare, human patients and their families are no less capable.
Comment by Bladernr1001 on 16 February 2012:
Alex,
I just “love” liberal “logic”………….LOL
Comment by Michael Makovi on 16 February 2012:
Damn straight.
Cf. http://www.nytimes.com/2000/01/16/world/full-hospitals-make-canadians-wait-and-look-south.html?pagewanted=all&src=pm —>
{Quote}
But the idea that there may be room in Canada’s future for private medicine is gaining ground.
”We have no significant crises in care for our teeth or our animals, largely because dentists and veterinarians operate in the private sector,” Michael Bliss, a medical historian, wrote on Wednesday in The National Post, a conservative newspaper. ”So we have the absurdity in Canada that you can get faster care for your gum disease than your cancer, and probably more attentive care for your dog than your grandmother.”
In Ontario, Canada’s wealthiest province, the waiting list for magnetic resonance imaging tests is so long that one man recently reserved a session for himself at a private animal hospital that had a machine. He registered under the name Fido.
{End quote}
Comment by Mark B on 16 February 2012:
Alex,
I like your point and agree that it’s important to question an argument even if you agree with the point. How else will we learn how to rebut if we just drink the kool-aid?
On to the topic, the dog owner is not a third party because the payment is for a family member. If the family member is a third party, then he/she is certainly a very invested third party. I think the term “third party” has a bit of an emotional connotation that sets people off. I don’t think the insurance company or government “third party” is invested in making people (or pets) better, they are selling coverage not healthcare. The government is invested in getting votes and it sells plenty of “free” healthcare to get it.
Comment by Joe Schmoe on 17 February 2012:
Re: Alex
“No, that’s not true. The patient is the individual receiving treatment.”
And the dog is not an individual, but a mere piece of capital undergoing maintenance on the orders of the owner. In essence. The important distinction is that human beings are capable of having and articulating their preferences so presumably they would know better than a complete stranger. Given that dogs and other pets are incapable of “human action” in the praxeological sense based on their very nature as instinctual rather than rational organisms, it would be absolutely absurd to attach to an animal the same level of responsibility, and similarly infant children.
Given that dogs can’t articulate their preferences and frankly aren’t even human beings, I would hope you’d be able to catch the significant distinction. True, perhaps net wealth, if we include the opinions and desires of animals as equal to that of humans, would increase if the dog could communicate its preferences, but economists typically (and wisely) avoid discussions of animal rights and the nature of their relationship with humans, namely because dogs can’t articulate their preferences.
That’s not to say that morally I condone a parent or dog owner in doing whatever they feel like to the child or animal. In fact I believe a far greater onus is placed upon the shoulders of those with extraordinarily greater power to place the needs of the child or animal ahead of their own than would exist between two adults of equal power. Just like I think any third party ought to do. I recognize that in some cases the third party is not looking out for the needs of those they have responsibility over, and typically desire the rectification of those situations; on the other hand, in other situations when improvements are impossible, I don’t worry about it.
That’s why insurance companies as third party payers is a serious issue worth consideration and dog owners as third party payers is not.
Comment by Beth on 17 February 2012:
Alex,
It seems you are being picked on here, but it is for a reason: you made a serious flaw in your logic.
Go back and re-read the criticisms and think about them for a while and it will come to you. Many good posts were made that show your analogy to not apply.
We can agree with your sentiments about government involvement, but make sure you use better anaolgies next time. Perhaps analogies made in the name of the left are better left unsaid…
Comment by Gil on 17 February 2012:
Touché Alex. Not mentioned yet is that a pet owner is free to request that their pet be put down if deemed cheaper to do that.
Comment by Gerry on 17 February 2012:
Alex,
Interesting take. But for your logic to work, my dog would have to be making decisions without me, and I would just pay the bill. When I take my kids to the doctor, I am still the customer, though they are the patient. I am the one requesting care and deciding whether it is appropriate. And then a third party pays.
The point of the article is more about wether the customer is negotiating treatment costs. In the case of insurance and government programs, the customer is not. In the case of vet care, the customer is the one negotiating care and the relevant costs.
I remember pulling a muscle in my back. I did it shoveling snow. The doctor recommended an X-ray and liver test “just to be sure”. I declined. I said I would take treatment for the pulled muscle, and if it didn’t improve I would be back. Most patients/customers would have just gone with the doctors recommendation, no matter how unnessecary, because the would not bear the cost. That is the point made in the article.
Comment by Jason Kelly on 17 February 2012:
Gil,
That is implied in the posts pointing out the dog is property.
Alex,
To build on Bryan’s point: If I take my car to the shop, is my car the “patient”? If the dog is the patient, then so is the car. They are both property receiving “treatment” at the direction of the owner. And on the child/dog comparison, the analysis still applies. Who is paying, the customer or a third party? That is the essential question in all this.
Comment by Alex on 17 February 2012:
Beth,
Are you sure you can read?
“Many good posts were made that show your analogy to not apply.”
Which analogy? WHOSE analogy? I was the one picking on Horwtiz’s analogy, and if that is not clear to you, perhaps you should buy one of them SAT Verbal Comprehension books. Until then, please refrain from commenting on that which is clearly over your head.
“We can agree with your sentiments about government involvement”
And what sentiments would these be? I’m not sure you understood anything I was trying to say, or where I stand on any issue.
As for being picked on: the day the mindless drones who infest this site and call themselves libertarians agree with me is the day I go to the vet and ask to be put down.
Joe Schmoe,
The only thing in your post with which I disagree is the “Re: Alex” part. Why not “Re: Horwitz”? Who is the one who wrote an article saying that what’s good for dogs is good for humans?
I’m still waiting on that ebook that argues that patents harm innovation, by the way. Whenever you have time…
Comment by Joe Schmoe on 17 February 2012:
Re: Alex
Ah, sorry, I forgot about that. The book in question is “Against Intellectual Monopoly”, by Michele Boldrin and David K. Levine, which you can find here:
http://www.dklevine.com/general/intellectual/againstfinal.htm
You can read each chapter as its own pdf using that link, or you can scroll down to near the bottom of the list of chapters where you can get the entire book.
Sheldon Richman recently wrote a bit for the American Conservative summarizing the main points behind anti-IP advocates, which includes references to the book. It was thanks to this article that I remembered the name of it:
http://www.theamericanconservative.com/blog/patent-nonsense/
Comment by Beth on 17 February 2012:
Alex,
You are most definitely being quite defensive here…a little insuting to boot. It is a good thing that I do not take it personally.
Your specific analogy was that of the the owner being the third party and the dog the consumer. That was an analogy YOU made to counter Steve’s example.
Perhaps you should cool down a bit….and think some more.
Comment by Alex on 17 February 2012:
Thanks, Joe. I’ll convert it to mobi and read it on my Kindle within the next few days.
In the meantime, I must point out a fantastic joke my favorite LvMIer Kinsella planted in that Richman essay:
“Defenders tout IP’s hypothesized benefits while presuming the costs are virtually zero. Ignored are the costs… in talent diverted to protecting IP rather than producing useful goods, and so on.”
Git it? If it weren’t for IP law, all those brilliant lawyers could have finally discovered their real talents and become scientists, engineers, and mathematicians.
Honk if you were around in the good ol’ days of no-treason.com and you remember Kinsella’s performance there! Ah, those were the days…
Comment by Brittney on 19 February 2012:
“Interesting take. But for your logic to work, my dog would have to be making decisions without me, and I would just pay the bill.” Exactly, and well put. Maybe it’s Alex who needs to pick up one of those verbal comprehension books.
Comment by Greg on 26 February 2012:
“The number of MDs is controlled by the American Medical Association, which keeps the supply low and ensures monopoly profits for doctors.”
As soon as I read this provocative statemant which is COMPLETELY false, I was unable to read anymore. If SH can be so wrong where I expertise then how can I know whether he is wrong where I lack expertise expertise. Essentially everything else he states now is no longer to be trusted.
GT MD
Comment by Noggy on 27 February 2012:
Alex – Can’t you see that if fee-for-service health care works for dogs, both in socialist Canada and capitalist USA, it would work for humans too. Dogs blessed with wealthy owners can receive MRIs, be flown to distant cities to be seen by highly trained specialists – whatever is needed. Dogs owned by the middle class can be vaccinated against distemper and have their fleas and ticks treated – perhaps have their broken bones set, if they are well loved. Dogs without owners can be put up for adoption or euthanized. Why should only dogs enjoy the fruits of liberty?
Comment by howeyinthehills on 29 February 2012:
How many dog angels can sit on the head of a pin?!
Surely the case here is veterinary medicine is better and closer to a free market model than our present heavily government intruded system.
Comment by MMMark on 4 April 2012:
23:27 EDT
Alex wrote:
I would point out to the good leftist that this is NOT the way it “works for dogs.”
The owner cares about his dog; the government doesn’t care about its taxpayers (leftists’ protestations of government “compassion” notwithstanding).
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.
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The owner of the dog negotiates with the vet, not on the dog’s behalf, but on the owner’s behalf.
The government neither “negotiate(s) with the physician” nor is the interaction between government and physician “on your behalf.”
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.
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Since he’s spending his money on his dog, the dog owner seeks the most favorable (to him) price to service ratio.
The government isn’t “spending” money, nor has government had to earn this money. It is redistributing money extorted from taxpayers, to either physicians or insurance companies. Price to service ratios are secondary, if not irrelevant.
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Vet services, being a competitive market, accommodates every consumer with a wide range of price to service ratios. Motto: “The customer is king.”
Human health care, being a government monopoly, imposes on every taxpayer a single price to service ratio. Motto: “It’s our way or the highway (and we own the road monopoly, too.)”
Comment by Alex on 4 April 2012:
Poor, lonely MMMark! He misses me, he truly does.
Comment by MMMark on 4 April 2012:
23:59 EDT
That was quick.
Hope you liked my answer.