A Summing Up

This post has been updated and moved to “Favorite Posts“.

HillaryCare Returns

It’s all over the blogosphere. Glen Whitman has the best take on it because he ackn0wledges the slippery-slope, camel’s nose-in-the-tent factor.

What’s next after mandating health insurance for all? How about: the kind of health care we must have, who must deliver it, how it must be delivered, at what price, and on and on into the night. It’s a poisonous prescription for America’s still-excellent — if already somewhat socialized — health-care industry.

And there’s nowhere left to turn. Canada’s out because it already has fully socialized medicine. (Canadians in search of better medical attention are coming here, for crying out loud.) Mexico’s out because it’s a third-world country with fourth-rate health care and quacks who cater to desperate, terminally ill Americans with more money than sense. Medicine on the Moon, anyone?

P.S. A good post here.

P.P.S. More about health care in Canada here.

The Better Half or the Worse Half?

Arnold Kling, writing about a post of Robin Hanson’s, says:

My guess is that if Robin were to try to make this argument to a general audience, he would get a hostile response.

Hanson’s argument?

Cutting half of medical spending would seem to cost little in health, and yet would free up vast resources for other health and utility gains. To their shame, health experts have not said this loudly and clearly enough.

…The claim is not that there would be no harmful health effects of such a policy, but rather that harmful effects would be roughly balanced by helpful effects. And the claim is not that harmful and helpful effects would exactly balance, but rather that any net health harm will be small compared to the health gains possible by spending the savings on other health influences, and to the utility gains possible from spending the savings in other ways.

Kling continues:

However, the opposition would be almost entirely emotional, with little or no rational component….The intensity of the emotions is probably a sign that Hanson is onto something.

I don’t think it’s emotional to ask two questions:

1. Who does the cutting?

2. How does the cutter know, for each affected individual, whether the cut removes the better half or worse half of that individual’s health care?

Cato Unbound (where Hanson’s post appears) seems to be off-line. Perhaps I’ll have more to say when I’m able to read the whole post.

Okay, I’ve now read Hanson’s post. Hanson’s point about over-spending on medical care is well supported, but here’s the key passage about how to cut spending:

How should we cut medical spending? There are many possibilities, and I may prefer some possibilities to others….The obvious first place to cut would be our government and corporate subsidies for medicine, including direct payments, tax exemptions, and regulatory requirements. Socially, we should also try to give medicine far less prestige than we now do. After these one could consider taxing medicine, limiting it by law, or nationalizing the industry and using agency budgets to limit spending.

Yes, I know, these are not politically realistic proposals.

The least realistic proposals, politically, are to cut government and corporate subsidies, tax exemptions, and regulatory requirements. Such changes would be the most beneficial because they would restore income and discretion to the actual recipients and beneficiaries of medical care.

The politically realistic proposals (taxing medicine, limiting it by law, or nationalizing the industry) would be ruinous. Necessary medical care would become more expensive and harder to come by.

Does Hanson seriously endorse taxes, government-imposed rationing, and nationalization as substitutes for the the judgments of individuals who actually need medical attention? Perhaps he would prefer to live in Canada or the UK.

Socialized Medicine in the U.S.A.

Cato‘s Michael Cannon has it exactly right in “Socialized Medicine Is Already Here” (TCS Daily). Go and read it.

Insofar as medicine is concerned, we have traveled all the way down the slippery slope, following one and then another of the paths I trace in “The Slippery Slope of Constitutional Revisionism.”

Can it get worse? Yes. See:

Thomas Sowell, “No Health Care?”
These three posts at Cato-at-Liberty

Note, also, the planned presence of U.S. Senator Bernie Sanders (“Independent”-VT) at the convention of Democratic Socialists of America. Were they honest about their true political orientation, almost all Democrats in Congress and far more than a few Republicans would join Sen. Sanders at the convention.

The Case against Genetic Engineering

Slate‘s William Saletan, writing at The New York Times, reviews Michael J. Sandel’s The Case against Perfection: Ethics in the Age of Genetic Engineering. I have not read Sandel’s book, nor do I plan to read it. My case against genetic engineering, to which I will come, may bear no resemblance to Sandel’s. But there’s no way of learning what Sandel’s case is, given Saletan’s rather glib criticism of Sandel’s book.

Saletan’s glibness is evident in passages such as these:

[G]enetic engineering is too big for ethics. It changes human nature, and with it, our notions of good and bad.

When norms change, you can always find old fogeys who grouse that things aren’t the way they used to be….But eventually, the old fogeys die out, and the new norms solidify.

Once gene therapy becomes routine, the case against genetic engineering will sound as quaint as the case against running coaches [a practice apparently unknown before the 1924 Olympics].

In a world…controlled by bioengineering, we would dictate our nature as well as our practices and norms. We would gain unprecedented power to redefine the good. In so doing, we would strip perfection of its independence. Its meaning would evolve as our nature and our ideals evolved.

Saletan, in so many words, professes a tautology: The future will bring what it will bring, and whatever it brings will be the future. Saletan might as well write this: If murder is widely accepted in the future, murder will be acceptable in the future. I doubt very much that Saletan would endorse such a statement. I suspect, rather, that an effort to be clever at Sandel’s expense led Saletan down a moral blind alley of his own construction.

What is that moral blind alley? If it is not obvious to you, consider this passage from the entry for moral relativism at the Stanford Encyclopedia of Philosophy:

Metaethical Moral Relativism (MMR). The truth or falsity of moral judgments, or their justification, is not absolute or universal, but is relative to the traditions, convictions, or practices of a group of persons.

The definition of MMR* points to Saletan’s error. He treats the same (or very much the same) group of persons as being a different group because of the passage of time. In other words, the future just “happens” — as if people cannot make judgments in the present about the consequences, for them, of pending or reversible decisions.

To come at it a different way, Saletan conflates what could be with what should be. There could be a market for genetic engineering, but should there be such a market? There are, after all, markets for murder, arson, and the fruits of theft (among other such things), but I doubt that Saletan would condone such markets.

The real issue, then, is whether to allow genetic engineering, in light of its consequences. Saletan finally approaches that question when he says that “self-engineering….seizes control of humanity so radically that humanity can no longer judge it.”

But Saletan waits until the final paragraph of his review to say even that much. He then quickly closes the review with with smart-alecky observations instead of pursuing the consequences of genetic engineering. Perhaps he thinks that he has done so when, earlier in the review, he writes this:

The older half of me shares [Sandel’s] dismay that some parents feel blamed for carrying babies with Down syndrome to term. But my younger half cringes at his flight from the “burden of decision” and “explosion of responsibility” that come with our expanding genetic power. Given a choice between a world of fate and blamelessness [without genetic engineering] and a world of freedom and responsibility [with genetic engineering], I’ll take the latter. Such a world may be, as Sandel says, too daunting for the humans of today. But not for the humans of tomorrow.

There again, Saletan assumes that the future will be what it will be. More importantly, he badly mischaracterizes the world of today. Our present world, contra Saletan, is (relative to the brave new world of genetic engineering) one of freedom and responsibility. To use the example of a baby with Down syndrome (properly Down’s syndrome), parents who choose to abort such a baby (for that is what Saletan means) have every bit as much “freedom” to make that choice (under today’s abortion laws) and are just as responsible (morally) for their decision as they would be if they were to choose bioengineering instead. Genetic engineering simply introduces different “freedoms.”

Thus we come to the real issue, which is the wisdom (or not) of allowing genetic engineering in the first place. For, as we know from our experience with the regulatory-welfare state, once an undesirable practice gains the state’s approbation and encouragement it becomes the norm.

And that is the broad case against allowing genetic engineering: If it gains a government-approved foothold it will become the norm. It will result in foreseeable (and unforeseeable) changes in the human condition. It will cause most of us who are alive today to wish that it had never been allowed in the first place.

How so? Consider the specific case against genetic engineering:

  • Following upon (but not supplanting) abortion, it would enable humans to retreat further from the acceptance of responsibility for the consequences of the procreative act. The prospective acceptance of responsibility for our actions is a restraining influence upon which civil society depends. That restraining influence has been lessened enough by such elitist initiatives as the legalization of abortion, leniency in the punishment of criminals, and permissiveness in the face of disruptive speech and behavior in public schools.
  • It would reinforce the attitude — inherent in abortion — that humans are mere machines to be overhauled or junked at will. It would, in other words, take us another giant step down the slippery slope toward state-condoned (if not state-conducted) euthanasia.
  • From there it would be an easy step for the state (controlled by “liberal” elites) to dictate who may have children, how many children they may have, the gender-mix of the children, the occupations those children may pursue, etc., etc., etc.

Yes, genetic engineering could have some positive consequences (e.g., reducing the number of children born with Down’s syndrome). But the prospect of such consequences should not eclipse the broad, fundamental, negative consequences for human dignity and liberty.
__________
* The validity of MMR is a matter for another post…sometime, perhaps.

People Are Idiots

The proof is found in the lede of an AP story:

People overwhelmingly support two of the Democrats’ top goals — increasing the minimum wage and making it easier to buy prescription drugs from other countries….

Increasing the minimum wage will hurt the class of persons it is intended to help. There will be fewer jobs (or worse working conditions) for those unskilled workers who now seek employment, and even fewer jobs for succeeding generations of unskilled workers.

Making it easier to buy prescription drugs from other countries will result in (a) fraudulent sales of inferior substitutes and (b) less R&D by American drug companies. Those results will harm the consumers of drugs.

As I say, people are idiots.

About Stem-Cell Research and Vetoes

Putting aside the pro-life and humanitarian aspects of embryonic stem-cell research, I have this to say:

The federal government has no business funding research of any kind, except that which is intended to foster the common defense.

Regardless of the reasons for President Bush’s veto of a bill to provide federal funds for embryonic stem-cell research, he was right to veto it. Now that Bush has found his veto pen, perhaps he will use it more often and on measures of greater fiscal import.

The Romney Plan: Part II

I wrote a few weeks ago about the new health-care scheme in Massachusetts. It’s worse than I thought. Arnold Kling, writing at Cato-at-liberty, quotes

Betsy McCaughey [who] digs into some of the details on the effects on business of Massachusetts’ brave, new health insurance experiment:

Say, for example, you open a restaurant and don’t provide health coverage. If the chef’s spouse or child is rushed to the hospital and can’t pay because they don’t have insurance, you — the employer — are responsible for up to 100% of the cost of that medical care. There is no cap on your obligation. Once the costs reach $50,000, the state will start billing you and fine you $5,000 a week for every week you are late in filling out the paperwork on your uncovered employees (Section 44). These provisions are onerous enough to motivate the owners of small businesses to limit their full-time workforce to 10 people, or even to lay employees off.

What else is surprising about this new law? Union shops are exempt (Section 32).

The next step should be the repeal of the Massachusetts plan because it is bad medicine for the people of Massachusetts. It will cut employment and wages, while driving up the cost of health care. Most of the intended beneficiaries of the plan will suffer as a result.

Given the perverse political climate of Massachusetts, the next step probably will be the State’s seizure of health-care services. The State will disclaim responsibility for the failure of its plan. Instead, it will pin the blame on the private sector, and the gullible public will swallow the story. The State will then declare itself the single payer of health-care costs, effectively creating a State-run health-care system. Welcome to Canada.

Related posts:
Fear of the Free Market — Part I
Fear of the Free Market — Part II
Fear of the Free Market — Part III
Free-Market Healthcare
Where’s Substantive Due Process When You Need It?
The Romney Plan

The Romney Plan

Massachusetts has a new health-care panacea, which the Commonwealth’s governor, Mitt Romney, outlines and defends in a recent OpinionJournal op-ed. Cutting through all the bleeding-heart rhetoric and pseudo-economics, here’s the bottom line:

  • The already over-burdened taxpayers of Massachusetts now face a heavier burden, in the form of subsidies to persons who don’t need health insurance.
  • Persons who don’t need health insurance will be forced to carry it. And having it, they will probably try to get their “money’s worth” out of it — thus driving up the cost of health care.
  • Businesses will be taxed if they don’t contribute to employees’ health-insurance premiums. That tax will be paid by workers in the form of lower wages, and by consumers in the form of higher prices.

It is possible that the Massachusetts plan will enable insurers to offer coverage with high deductibles and low premiums. But such a reform is unlikely to last very long in Massachusetts, where politicians thrive on big-brotherhood. The Massachusetts plan is otherwise a decided step backward because:

  • It adds a heavy burden of government bureaucracy to the Commonwealth’s already burdened health-care providers.
  • It reduces individual responsibility for health care, thus making it even less likely that health-care resources will be used sensibly.

What’s the difference between Democrats and Republicans in Massachusetts? Not a dime’s worth, as someone used to say.

Recommended reading:
What’s wrong with RomneyCare (an OpinionJournal article by Brendan Minter)
The Massachusetts Delusion (a TCS Daily article by Arnold Kling)
Romney and Kling on Massachusetts Health Care (an EconLog post by Arnold Kling)

Related posts:
Fear of the Free Market — Part I
Fear of the Free Market — Part II
Fear of the Free Market — Part III
Free-Market Healthcare
Where’s Substantive Due Process When You Need It?

Risk and Regulation

Robert Higgs makes this acute observation:

Risk is an inescapable condition. However much people may prefer to live in a world of complete certainty, they simply cannot do so. Just banishing risk, whether by regulation or otherwise, is not a feasible option.

Higgs goes on to argue against the irrationality of drug-safety regulation; for example:

Whether the condition to be treated is life-threatening or simply unpleasant, the [Food and Drug Administration] requires the same rigid, elaborate, and time-consuming testing. Once again, the regulators frustrate the desires of consumers by insisting that one size (testing procedure) fits all (drugs and patients), regardless of the urgency with which consumers desire access to certain drugs. In some cases this regulatory intransigence creates the absurd situation in which the FDA denies dying patients access to a new drug because the manufacturer has not yet established beyond a reasonable doubt that the drug will not harm the users.

Rationality will get you nowhere in the face of massive ignorance. The ability of government bureaucracies to write regulations leads most Americans to believe that those regulations will “solve problems.” When a “problem” is not solved because actually solving it would be prohibitively expensive (as in reducing traffic fatalities to zero), Americans assume that “they” (corporations, for example) have simply found a “loophole” or “bought” someone. That kind of thinking leads, inexorably, to more regulation. It is beyond the ken of most Americans that regulation creates problems rather than solving them. Those unseen problems are the loss of freedom and fortune.

Other related posts:

Fear of the Free Market — Part I
Fear of the Free Market — Part II
Fear of the Free Market — Part III

The Economics of Corporate Fitness Programs

One of the many fads to sweep the corporate world in recent years is the fitness fad. The fad has two components: real costs and putative benefits. The real costs involve the installation of exercise facilities on company property, subsidies for off-site health-club memberships, a certain amount of paid time off for fitness programs, the hiring of nutritionists for company-subsidized cafeterias, and on and on. The putative benefits of the fitness fad are (1) more productive workers (healthy bodies, healthy minds, and all that); (2) workers who, in the longer run, will be less costly to insure; and (3) greater competitiveness in the labor market (i.e., being able to hire and keep employees who value fitness programs).

The fitness fad has five main proponents:

  • Executives who wish to be known as “progressive” and “interested in employee welfare”
  • Consultants who are hired by executives for the purpose of recommending the fitness programs that executives already favor
  • Vendors of fitness-related products and services
  • Those employees who already are physically fit, but who find it easier and cheaper to stay fit because of company programs
  • Other employees who want to be part of the “in” crowd or to curry favor with bosses who preach fitness.

As for the immediate benefits of company fitness programs, I have observed that the already-fit tend to stay fit, but at the company’s expense, while the less-fit give fitness a try, but it doesn’t last. If it did, Americans wouldn’t be getting fatter, would they?

What about the returns to the company in the form of lower health-insurance costs? Health-care costs rise with age. Assuming that fitness programs actually make employees more fit, which I doubt, a company is unlikely to reap long-run returns unless (a) its employees are exceptionally loyal or (b) it is able to hire equally fit replacements from other companies that have similarly effective (or ineffective) fitness programs.

And what about hiring and retention? Well, it’s like an arms race in which the objective isn’t to fight a war but to spend more than the other guy. If “everyone does it” in a certain industry, here’s what happens:

  • Workers who don’t participate in fitness programs (that is, most of them) lose because compensation has been shifted from wages and non-fitness benefits toward fitness benefits. Therefore, that industry finds it harder to hire and retain workers for whom fitness isn’t an important consideration; that is, productivity declines and costs rise.
  • If firms in the industry try to raise prices in order to cover the costs of fitness programs, consumers find substitute products or services, thus cutting into the industry’s sales and profits.
  • And so, one way or the other, shareholders take a hit in the form of lower stock prices.

Who benefits? Trendy executives and employees who’d rather work out than work.

That’s my hypothesis, and I’m sticking with it until I see hard numbers that prove it wrong.

The Obesity Epidemic

Randall Parker — a.k.a. FuturePundit and social engineer extraordinaire — opines about obesity in “Response To Obesity Epidemic Should Be Urgent Priority.” But obesity isn’t contagious and therefore can’t be an epidemic.

What’s the problem, then? According to Parker,

food is cheap. As biotechnology advances food prices will rise more slowly than inflation. So food will become cheaper still.

That’s a problem? Tell it to the poor.

Here’s my solution: Let natural selection sort it out. If fatties aren’t fit to live, they won’t live as long as non-fatties or procreate at the same rate as non-fatties. So, if fatness is gene-related, there’ll be fewer fatties in succeeding generations. Otherwise, I don’t care how fat other people get, as long as I don’t have to pay for their food addiction.

Speaking of Obesity…

FuturePundit points to a reason to avoid it:

Obesity Causes Inflammation Which Accelerates Aging

Quite a large body of research literature is building in support of the idea that chronic inflammation is a major cause of many degenerative diseases. One of the causes of chronic inflammation is obesity….

A Health Care Plan for Geniuses Only

Madame Heinz Kerry displays her deep understanding of economics (from an AP story):

Teresa Heinz Kerry says “only an idiot” would fail to support her husband’s health care plan.

But Heinz Kerry, the wife of Democratic presidential candidate John Kerry, told the (Lancaster) Intelligencer Journal that “of course, there are idiots.”

Kerry’s proposal includes health care subsidies for children, the unemployed, small companies and more; and government assistance to insurers and employers that keep premiums for workers down.

…She says, “Only an idiot wouldn’t like this.”…

Only a genius (a Paul Krugman, for instance) would believe in a free-lunch plan like Kerry’s. Who will pay for the subsidies? Is “government assistance” like manna from heaven? What happens to the incentive of workers who are forced to pay premiums for other workers through higher taxes? How will “free” or subsidized insurance help to reduce the cost of health care? And what about “moral hazard”?

The Doctor Diagnoses Another Case of Simplistic Socialism

Dr. Henry I. Miller is a physician and a fellow at the Hoover Institution and the Competitive Enterprise Institute. He was an FDA official from 1979 to 1994. And he understands economics. It’s too bad that most other medical insiders aren’t as savvy as Dr. Miller. Writing today at Tech Central Station he delivers a deadly diagnosis of Dr. Marcia Angell’s The Truth About the Drug Companies: How They Deceive Us and What to Do About, a compendium of simplistic, socialistic nostrums. Miller’s bottom line about Angell’s book:

Dr. Angell’s proposals to, in effect, nationalize the American system of drug development reflect almost inconceivable naiveté. They are reminiscent of economist Milton Friedman’s example of a flawed syllogism: Capitalism has worked everywhere it has been tried; socialism has failed everywhere it has been tried; therefore, let us try socialism.

A spirited diatribe can educate and entertain, but in The Truth About the Drug Companies, Dr. Angell does neither. Her diagnoses are wrong, and her remedies — which are reminiscent of the government controls and centralized planning of the old Soviet Union — are far worse than the disease.

Don’t bother to read the book, but do take the time to read Dr. Miller’s article, and anything else by him that pops up on the web.

Disease du Jour

Now it’s obesity. (Before that it was autism and a bunch of other things.) Radley Balko (The Agitator), writing (briefly) in an issue of Time devoted to the proposition that obesity is a public-health crisis deserving of massive government intervention, says this:

The best way to combat the public-health threat of obesity is to remove obesity from the realm of “public health.” It’s difficult to think of a matter more private and less public than what we choose to put in our bodies. Giv[ing] Americans moral, financial and personal responsibility for their own health, and obesity is no longer a public matter but a private one — with all the costs, concerns and worries of being overweight borne only by those people who are actually overweight.

Let each of us take full responsibility for our diet and lifestyle. We’re likely to make better decisions when someone else isn’t paying for the consequences.

As Balko says at the end of his post on this subject: “If you aren’t responsible for what you put into your mouth, chew and swallow, what’s left that you are you responsible for?”

Nothing, it seems. So let’s all get ripped, scarf down some super-size fries, and shoot up the neighborhood. We can always blame it on the fries.

Speaking of Health Care and Free Lunches

Tyler Cowen at Marginal Revolution points out that “Americans pay more [per capita] but get better health care in return. We die sooner because we eat too much and exercise too little, among other facts.” As he says, “National health insurance is unlikely to save on medical costs, unless it cuts back on treatment drastically.”

You get what you pay for and you are what you eat.

Fear of the Free Market — Part III

If it’s unnecessary to regulate health care — as I’ve argued in Part I (April 8) and Part II (April 11) of this series — can we take the next step and denationalize it? Can we forgo other forms of nationalization (particularly Social Security) and the regulation of other industries (e.g., telecommunications, banking, and securities)?

The prospect of deregulating health care; giving up Medicare, Medicaid, or Social Security; and leaving consumers generally “at the mercy of the market” may seem unthinkable. So let us think about it.

Regulation and nationalization (an extreme form of regulation) restrict competition and therefore reduce the supply and quality of regulated products and services. Many have argued, rather persuasively, that individuals would be far better off with the privatization of Social Security. (See, for example, my posts of March 5.) Moreover, there is ample evidence that proper deregulation leads to higher quality and lower prices. Phone service, for example, is not only cheaper (in real terms) but indisputably better, given the range of options available to consumers. Air travel, to take another example, is also cheaper (in real terms) and certainly better for the great majority of travelers who prefer more legroom to the so-called meals that airlines used to serve in coach class.

Why, despite sound arguments and concrete evidence, do most Americans tend to resist denationalization and deregulation? Their resistance arises from two things: risk aversion (both personal and paternalistic) and economic illiteracy.

Risk aversion is revealed in questions like these: Will I choose the right doctor? Will he choose the right medicine? Will that over-the-counter drug poison me? Will I save enough for retirement? What about my parents, my children, my friends, and the elderly poor? The answers are:

• Licensing of doctors doesn’t ensure your doctor’s competence or help you choose the right doctor.

• The FDA’s approval of drugs doesn’t ensure that your doctor will choose the right drug for you or a drug that’s safe for you.

• That over-the-counter drug is unlikely to poison you, especially if the one you choose has been on the market for at least a few years.

• Your parents, children, and all the rest (even you) would have plenty of money for retirement living (including private medical insurance) if the government didn’t collect taxes for Social Security, Medicare, and other welfare programs. The elderly poor would be taken care of by greater charitable donations (afforded by lower taxes) and relatively small, strictly means-tested, welfare programs.

I could go on and on about other components of our over-regulated economy, but I think you get the idea. There is little risk of coming to harm in a free-market economy, where individuals learn to look out for themselves, especially if they are backed by strict enforcement of tough laws against deception and fraud. Conversely, the rewards of a free-market economy are great: more competition, higher quality, lower prices, greater output, higher employment, and higher incomes (from which to fund minimal welfare programs for those who are truly dependent on society because no one else can meet their needs).

Economic illiteracy blinds people to the benefits that flow from a truly free-market economy. The illiterates (that’s most of us) therefore become easy prey for the real beneficiaries of nationalization and regulation, what Bruce Yandle aptly calls “Bootleggers and Baptists”:

• The “bootleggers” are market incumbents (as represented by the American Medical Association and the American Bar Association, for example) who benefit from the suppression of competition (as bootleggers did during Prohibition).

• The “Baptists” are self-appointed guardians of our health and well-being (the sum of all our risk-averse fears, you might say).

Economics can be as abstruse as the physics of special relativity. But it rests on two things that are easily remembered:

• Incentives matter.

• There’s no such thing as a free lunch.

Nationalization and regulation suppress incentives and therefore weaken the economy. The benefits of nationalization and regulation come at a high cost, but we tend to focus on our own benefits (the “free lunch”) and forget the cost (the taxes we pay for benefits that go to others).

Fear of the Free Market — Part II

In Part I of this series (second post under April 8, 2004), I pointed out that

[i]t is easier to list those markets in which the government doesn’t intervene (namely, “black markets”) than it is to list those markets in which the government does intervene. There simply isn’t a lawful business activity that isn’t affected by government regulation….[G]overnment intervention in the market for any product or service tends to reduce the supply of that product or service.

Health care, being something almost everyone needs (like electricity and phone service), has been regulated to the point of being nationalized (see Part I). Yet it is unclear that the regulation of health care does anything but restrict our access to doctors and drugs. Licensing exams have no meaningful effect on our ability to choose competent doctors (see Part I).

What about FDA approval of drugs? The FDA doesn’t test drugs, it prescribes testing procedures for drugs. The responsibility for testing falls to the maker of the drug. According to a statistics published on the FDA web site, The FDA ultimately approves about 20% of applications for new drugs. The three phases of the FDA’s prescribed testing process last at least one year and sometimes six years and longer. What does the FDA hope to accomplish through its approval process? Here’s some of what the FDA’s Ken Flieger has to say:

Most of us understand that drugs intended to treat people have to be tested in people. These tests, called clinical trials, determine if a drug is safe and effective, at what doses it works best, and what side effects it causes–information that guides health professionals and, for nonprescription drugs, consumers in the proper use of medicines.

Clinical testing isn’t the only way to discover what effects drugs have on people. Unplanned but alert observation and careful scrutiny of experience can often suggest drug effects and lead to more formal study. But such observations are usually not reliable enough to serve as the basis for important, scientifically valid conclusions. Controlled clinical trials, in which results observed in patients getting the drug are compared to the results in similar patients receiving a different treatment, are the best way science has come up with to determine what a new drug really does. That’s why controlled clinical trials are the only legal basis for FDA to conclude that a new drug has shown “substantial evidence of effectiveness.”

It boils down to safety and effectiveness. But safety and effectiveness are also your doctor’s concern. Do you suppose that your doctor would prescribe a drug that its manufacturer hadn’t thoroughly tested for safety and effectiveness? Of course, your doctor might well flub his diagnosis (something that happens a lot, despite the medical licensing exam) and prescribe the wrong medication. Or your doctor might diagnose you correctly but prescribe a medication that produces an unpleasant side effect. In summary, the safety and effectiveness of the drugs your doctor prescribes depends mainly on your doctor’s competence.

Misadventure is more likely with non-prescription (over-the-counter) drugs. As the FDA acknowledges, “Most OTC drug products have been marketed for many years, prior to the laws that require proof of safety and effectiveness before marketing.” Very interesting. As with prescription drugs, OTC drugs, used to be available without the FDA’s imprimatur. That is, individuals used to be trusted to buy and use OTC drugs wisely, but then the FDA got into the act. Why? According to the FDA:

Languishing in Congress for five years, the bill that would replace the 1906 [Food and Drugs Act] was ultimately enhanced and passed in the wake of a therapeutic disaster in 1937. A Tennessee drug company marketed a form of the new sulfa wonder drug that would appeal to pediatric patients, Elixir Sulfanilamide. However, the solvent in this untested product was a highly toxic chemical analogue of antifreeze; over 100 people died, many of whom were children. The public outcry not only reshaped the drug provisions of the new law to prevent such an event from happening again, it propelled the bill itself through Congress. This was neither the first nor the last time Congress presented a public health bill to a president only after a therapeutic disaster. FDR (pictured at left) signed the Food, Drug, and Cosmetic Act on 25 June 1938.

The new law brought cosmetics and medical devices under control, and it required that drugs be labeled with adequate directions for safe use. Moreover, it mandated pre-market approval of all new drugs, such that a manufacturer would have to prove to FDA that a drug were safe before it could be sold. It irrefutably prohibited false therapeutic claims for drugs, although a separate law granted the Federal Trade Commission jurisdiction over drug advertising. The act also corrected abuses in food packaging and quality, and it mandated legally enforceable food standards. Tolerances for certain poisonous substances were addressed. The law formally authorized factory inspections, and it added injunctions to the enforcement tools at the agency’s disposal.

And on it went:

Enforcement of the new law came swiftly. Within two months of the passage of the act, the FDA began to identify drugs such as the sulfas that simply could not be labeled for safe use directly by the patient–they would require a prescription from a physician. The ensuing debate by the FDA, industry, and health practitioners over what constituted a prescription and an over-the-counter drug was resolved in the Durham-Humphrey Amendment of 1951. From the 1940s to the 1960s, the abuse of amphetamines and barbiturates required more regulatory effort by FDA than all other drug problems combined.

Notice that the focus is always on abuses and never on successes. Here’s what The Cato Institute’s Handbook for Congress has to say about the FDA::

As an agency, the FDA has a strong incentive to delay allowing products to reach the market. After all, if a product that helps millions of individuals causes adverse reactions or even death for a few, the FDA will be subject to adverse publicity with critics asking why more tests were not conducted. Certainly, it is desirable to make all pharmaceutical products as safe as possible. But every day that the FDA delays approving a product for market, many patients who might be helped suffer or die needlessly.

For example, Dr. Louis Lasagna, director of Tufts University’s Center for the Study of Drug Development, estimates that the seven-year delay in the approval of beta-blockers as heart medication cost the lives of as many as 119,000 Americans. During the three and half years it took the FDA to approve the drug Interleukin-2, 25,000 Americans died of kidney cancer even though the drug had already been approved for use in nine other countries. Eugene Schoenfeld, a cancer survivor and president of the National Kidney Cancer Association, maintains that ‘‘IL-2 is one of the worst examples of FDA regulation known to man.’’

In the past two decades patients’ groups have become more vocal in demanding timely access to new medication. AIDS sufferers led the way. After all, if an individual is expected to live for only two more years, three more years spent testing the efficacy of a prospective treatment does that person no good. The advent of the Internet has allowed individuals suffering from specific ailments and patient groups to use websites and chat rooms to exchange information and to give them an opportunity to take more control of their own treatment. They now can track the progress of possible treatments as they are tested for safety and efficacy and are quite conscious of how FDA-imposed delays can stand in the way of their good health and even their lives….

[I]n a free society individuals should be free to take care of their physical well-being as they see fit. The advent of the Internet gives individuals even more access to information about medical products and treatments. Individuals should be allowed to choose the treatments they think best. Such liberty does not open the door for fraud or abuse any more than does a free market in other products. In fact, informed consent by patients probably will become more sophisticated as the market for information about medical treatments becomes more free and open.

Government regulation of health-care products and services makes them harder to get and more expensive than the products and services that would be delivered in the absence of regulation. Would quality suffer in a free-market health-care system? It might in some cases, but competition among producers and providers would lead to an overall increase in quality, in response to consumers’ demands for competent medical practitioners and effective drugs.

If it’s unnecessary to regulate health care, can we take the next step and de-nationalize it? What about other industries and types of economic activity? Stay tuned for Part III of this series.