Wednesday, June 20, 2007

PUBLIC HEALTH: INEFFICIENCY, FISCAL TRAP AND THE LACK OF FREEDOM

The article in Washington Post states that Japan's new public health problem is obesity which has supposedly grown with the apetite for Western food.

There is a question, however, whether obesity and smoking are the problem referring to the issue of public health? The answer is no.

The term "public health" is similary coined as "national interest" and has grown in quite a similar way as government intervention did. Previously, governments from all around the world embraced falsified Keynesian economic concept of aggregate demand as the short-run determinator of economic growth. A dummie idea turned into the mainstream of economic policy which collapsed when the agony of high inflation and unemployment spiralled the course of stagnation starting back in 1970s.

Obesity and smoking are widespread problems. But they are not public health problems. For example, if someone eats a huge Big Mac, then he/she doesn poison or threaten your health since each and everyone is credible enough to make his/her own decisions about food consumption and eating habits. Nobody accidentially ingests Big Mac and it thus doesn't make your health worse-off.

If someone decides to eat donuts several times a day, he/she should do so while your health is not put at risk in this case. Years ago, the issue of public health focused on preventing epidemics and securing health benefits such as clean water and improved sanitation.

Mr. David Boaz of Cato Institute captured the essence of taking care of public health as the security package confirmed by the so called "neighborhood effects";
"Public health officials worked to drain swamps that might breed mosquitoes and thus spread malaria. They strove to ensure that water supplies were not contaminated with cholera, typhoid, or other diseases. The U.S. Public Health Service began as the Marine Hospital Service, and one of its primary functions was ensuring that sailors didn’t expose domestic populations to new and virulent illnesses from overseas."
A widespread propaganda infused that countries need public health bureaucracies to cure habits such as smoking. But despite all the fear intangled, government intervention again proved itself as inefficient and costly. Public health bureaucrats are a typical case of the monopolist who avoid the market behavior by setting-up discretionary supply, telling others what to do and how to adjust their lifestyle to the preferences of the minority government officials.
Economically, health care service is a tradeable good, which means that its price is determined by supply and demand. However, the monopolization of health care services once again demonstrated how costly to growth rent-seeking really is.
In public health care, prices are usually administered and controlled, and an important source of cost-push inflation. All kinds of anti-smoking campaigns, anti-obesity roundtables is funded by public spending and could easily be reached in everyday free-market. Neighborhood effects of increased spending on public health care programs have never been firmly proven and thus, over time, the outlays for public health care sector grew respectively and became a rigid fiscal obstacles in breaking-down the public spending.
If I want to quit smoking, I can do it on my own without the intervention of public health bureaucracy. If I want to anchor the eating habits, I can also do it on my own. I do not need the assistance of anyone unless I'm willing to ask and pay for it. Public health care "problems" are ridiculously expressed in a way that bureaucratic services can solve them immediately, demanding collective action and pushing for greater fiscal outlays while the quality of services ends-up in the spiral of dissatisfaction.
Economically, there could hardly be a health care crisis as well as public health schemes roughly overlook the aspect of its own supply on the basis of cost/benefit decision-making so it cannot be analyzed by tools from welfare economics. The outcome of mistakenly designed public health schemes is a high degree of expressed dissatisfaction with the services conducted in a public health care system.
There is also a huge cost shock wrecking the output efficiency of spending on health care. Not surprisingly, some health-care problems are widespread but that doesn't mean that they're public. To tackle these problems, government intervention can solve them but only an individual action as the latter rationally estimates its preferences as nobody else can.

2 comments:

Marko said...

so "the public" is just another invention of the evil lefties, designed to justify their incursions into one's onw liberty and responsibility?

Rocks said...

Public health is ok as far as the neigborhood effects prevail over the costs associated with services offered by public health authorities such as protection against epidemics, floods, taking care of sanitation and clean water.

Over time, public health has become the part of political marketing simply because of the utility which voters mistakenly believe. In Slovenia, health insurance contribution roughly equals 22 percent of the monthly salary. When this slice of salary is cut off, you pay services for everyone. If your health care insurance is based on personal saving account, you can rely on it in anytime and get a service that satisfies your needs when you go to the doctor.

Leftist policymakers and their staunch supporters immensly ignore the economic analysis of health care. In modern health care, supply is created through mathematical models (timeline optimization, service theory, waiting list operations...). How can then a doctor decide how health care should be organized especially in terms of corporate governance? This is a job done by economists, business experts and mathematicians.

And it is also quite silly to listen how public health care is the foundation of solidarity and everything. That's a pure fake sadly taken for granted by many.

Enjoy the rest of the day,
Rocks