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I'm not seeing how the government was an issue in this case. The article is about how private companies use kickbacks and cartel behaviour to restrict what prod

by gamble 14y ago

I'm not seeing how the government was an issue in this case. The article is about how private companies use kickbacks and cartel behaviour to restrict what products are available to hospitals. It seems like a lack of government action is the problem here.

deleted 14y ago
[deleted]
- anigbrowl 14y ago
  Without patents, you would just get people signing even longer term exclusive contracts. The whole point of the patent system is that it's less bad than the previous situation, where either inventors were ripped off wholesale or they forced buyers into perpetually exclusive agreements. Hospitals have no choice but to bend to BD's will. Well, they could pay more in the short term and hope for innovation to undermine the monopoly over the long term, by buying cheaper and more effective products from disruptive competitors.
robomartin 14y ago
No,no. Read it again. The government setup the rules that enabled exactly that behavior. If they (government) didn't try to play entrepreneur or investor we'd be far better off. There are cases where government involvement is warranted. I'm with Ron Paul on this one: Get them off our backs, we do and did just fine when they had less hooks into us. This is particularly true with the existence of the Internet. It's pretty hard for a large company to misbehave today and not pay a serious price for it. Laws are far less powerful in this regard.
- anigbrowl 14y ago
  No, in 1986 the government removed rules (forbidding kickbacks) designed to prevent such behavior. In 1996 the government exempted medical supply companies from many antitrust regulations. The facts laid out in the article are diametrically opposed to the point your are trying to make. It's pretty hard for a large company to misbehave today and not pay a serious price for it. for example?
  - Aloisius 14y ago
    People like to pretend like all government regulation is stifling to innovation, but it is pretty clear that some regulation is necessary for a properly functioning market. The trick is, how much is too much. There needs to be a very good reason to shield any company from anti-trust regulations and I can't think of a valid one that would apply to medical supply companies.
    - Symmetry 14y ago
      I think that saying that regulation is necessary (as opposed to desirable) might be too strong. In most cases things can still function without regulation, because people know things aren't regulated and can take that into account by being cautious. Now, this is often inefficient and causes some number of people to get screwed over, but it still works. I'm sure there could exist some golden system of regulation for health care and there are even countries like Singapore seem to have found something close enough, but its not clear to me that our current system in the US actually manages to be better than no regulation at all.
      - Aloisius 14y ago
        I disagree. Regulations are absolutely necessary for a functional market. Corporate espionage, sabotage, outright lying about your products, financial fraud, tying, price fixing, collusion, bid rigging, geosplitting, ponzi schemes and dozens of other manifestations of bad corporate practices that regulations prevent (or try to) were put in place in the first place because they destroy markets. These aren't hypothetical problems either, there are many many instances of these practices happening over the last few centuries. Hell, this article effectively says that medical providers are engaged in product tying and it is destroying the market! Truly free markets are a myth. The best you get is mostly fair markets.
      - jleader 14y ago
        "Saying that regulation is necessary might be too strong"? Some regulation is always necessary. How would you expect contracts to work without contract law (i.e. regulations governing how contracts are to be interpreted, enforced, disputes about them are to be resolved, etc.)? It is very clear to me that our current system manages to be better than no regulation at all (even though it is arguably worse than the ideal quantity and quality of regulation). To my knowledge, the only places with no regulation are places like Somalia, where the guy who has the largest number of the fiercest relatives and friends with guns gets to decide what the people around them should do.
- rosser 14y ago
  The government setup the rules that enabled exactly that behavior. I see you making this argument over and over in this discussion, but you seem to be ignoring the flip-side of that fact: People exploited those government rules. Any calculus of culpability for the current state of affairs that ignores that fact, pointing fingers solely at the government, is myopic to the point of absurdity. No-one forced these medical supply cooperatives turned for-profit organizations to exploit the rules for their own advantage, establishing a system of pay-to-play kickbacks that demonstrably holds back progress and actually kills people. (Don't mind me. I'm a little pissed off about this particular subject right now; I just had an uncle die from sepsis.) The people in those organizations made conscious, rational choices to engage in that kind of behavior. If they didn't foresee the consequences of doing that, they're as dumb, blind, and undeserving of the responsibility for stewarding their corner of the world as the government bureaucrats who created the rules in the first place. Or are you actually arguing that people who exploit unintended consequences for their own benefit, regardless of the impact to the rest of the world, are somehow blameless? That only the people who made those consequences possible have any culpability? It takes two to tango, after all.
  - Tycho 14y ago
    The point is that it's entirely predictable that unscrupulous business men would swoop in and exploit a weakness in the legislation/system.
  - chernevik 14y ago
    First, I'm very sorry for your loss. Second, there is no more predictable rule of human behavior than the conscious, rational pursuit of self-interest. Adam Smith was very clear on this, businesses will seek to form cartels at every opportunity. We can legislate against explicit collusion, but these laws are very tough to enforce. It's very possible that the executives in these companies are deviating from legal standard, but enforcement of laws governing intent is even harder. As a policy matter, better / stricter law is unlikely to solve the problem. The stronger solution is discouraging barriers to entry. Competitive entry of new players is the best discipline against cartel behavior. Commenters elsewhere in this sub-thread are arguing that one bad regulation isn't an argument against regulation generally. But the problem is distinguishing the bad regulations from the good. It's very likely that at some point there was some policy argument for these stupid rules, sufficiently plausible at the distance held from all but the most expert. The formulation of such arguments to justify known-bad policy is a constant component of our governance. It's possible that the intelligence of the rules depended on some other rule or aspect long since departed. That's the beauty of markets: The players' incentives lead them to constantly monitoring and adapting to conditions. And those incentives provide discipline that forces analysis from "sounds good enough to me" to more exacting standards. Congress here has suspended a large chunk of market operation, in a medical market where many other chunks have been suspended. It is not the least bit surprising that this has lead to grotesqueries.
- ubernostrum 14y ago
  No, no. Read it again. The government did away with an oppressive, invasive, business-destroying regulation which limited the free operation of the market and the absolute and unfettered sanctity of contract. Suddenly subject to nothing more than pure market forces -- what lesser minds might call a "loophole", unless they've read the right economists -- rationally self-interested actors in the market did what rationally self-interested actors do. Welcome to Libertopia.

by gamble 14y ago

deleted 14y ago

[deleted]

anigbrowl 14y ago
Without patents, you would just get people signing even longer term exclusive contracts. The whole point of the patent system is that it's less bad than the previous situation, where either inventors were ripped off wholesale or they forced buyers into perpetually exclusive agreements. Hospitals have no choice but to bend to BD's will. Well, they could pay more in the short term and hope for innovation to undermine the monopoly over the long term, by buying cheaper and more effective products from disruptive competitors.

robomartin 14y ago

No,no. Read it again. The government setup the rules that enabled exactly that behavior. If they (government) didn't try to play entrepreneur or investor we'd be far better off. There are cases where government involvement is warranted. I'm with Ron Paul on this one: Get them off our backs, we do and did just fine when they had less hooks into us. This is particularly true with the existence of the Internet. It's pretty hard for a large company to misbehave today and not pay a serious price for it. Laws are far less powerful in this regard.

anigbrowl 14y ago
No, in 1986 the government removed rules (forbidding kickbacks) designed to prevent such behavior. In 1996 the government exempted medical supply companies from many antitrust regulations. The facts laid out in the article are diametrically opposed to the point your are trying to make. It's pretty hard for a large company to misbehave today and not pay a serious price for it. for example?
- Aloisius 14y ago
  People like to pretend like all government regulation is stifling to innovation, but it is pretty clear that some regulation is necessary for a properly functioning market. The trick is, how much is too much. There needs to be a very good reason to shield any company from anti-trust regulations and I can't think of a valid one that would apply to medical supply companies.
  - Symmetry 14y ago
    I think that saying that regulation is necessary (as opposed to desirable) might be too strong. In most cases things can still function without regulation, because people know things aren't regulated and can take that into account by being cautious. Now, this is often inefficient and causes some number of people to get screwed over, but it still works. I'm sure there could exist some golden system of regulation for health care and there are even countries like Singapore seem to have found something close enough, but its not clear to me that our current system in the US actually manages to be better than no regulation at all.
    - Aloisius 14y ago
      I disagree. Regulations are absolutely necessary for a functional market. Corporate espionage, sabotage, outright lying about your products, financial fraud, tying, price fixing, collusion, bid rigging, geosplitting, ponzi schemes and dozens of other manifestations of bad corporate practices that regulations prevent (or try to) were put in place in the first place because they destroy markets. These aren't hypothetical problems either, there are many many instances of these practices happening over the last few centuries. Hell, this article effectively says that medical providers are engaged in product tying and it is destroying the market! Truly free markets are a myth. The best you get is mostly fair markets.
    - jleader 14y ago
      "Saying that regulation is necessary might be too strong"? Some regulation is always necessary. How would you expect contracts to work without contract law (i.e. regulations governing how contracts are to be interpreted, enforced, disputes about them are to be resolved, etc.)? It is very clear to me that our current system manages to be better than no regulation at all (even though it is arguably worse than the ideal quantity and quality of regulation). To my knowledge, the only places with no regulation are places like Somalia, where the guy who has the largest number of the fiercest relatives and friends with guns gets to decide what the people around them should do.
rosser 14y ago
The government setup the rules that enabled exactly that behavior. I see you making this argument over and over in this discussion, but you seem to be ignoring the flip-side of that fact: People exploited those government rules. Any calculus of culpability for the current state of affairs that ignores that fact, pointing fingers solely at the government, is myopic to the point of absurdity. No-one forced these medical supply cooperatives turned for-profit organizations to exploit the rules for their own advantage, establishing a system of pay-to-play kickbacks that demonstrably holds back progress and actually kills people. (Don't mind me. I'm a little pissed off about this particular subject right now; I just had an uncle die from sepsis.) The people in those organizations made conscious, rational choices to engage in that kind of behavior. If they didn't foresee the consequences of doing that, they're as dumb, blind, and undeserving of the responsibility for stewarding their corner of the world as the government bureaucrats who created the rules in the first place. Or are you actually arguing that people who exploit unintended consequences for their own benefit, regardless of the impact to the rest of the world, are somehow blameless? That only the people who made those consequences possible have any culpability? It takes two to tango, after all.
- Tycho 14y ago
  The point is that it's entirely predictable that unscrupulous business men would swoop in and exploit a weakness in the legislation/system.
- chernevik 14y ago
  First, I'm very sorry for your loss. Second, there is no more predictable rule of human behavior than the conscious, rational pursuit of self-interest. Adam Smith was very clear on this, businesses will seek to form cartels at every opportunity. We can legislate against explicit collusion, but these laws are very tough to enforce. It's very possible that the executives in these companies are deviating from legal standard, but enforcement of laws governing intent is even harder. As a policy matter, better / stricter law is unlikely to solve the problem. The stronger solution is discouraging barriers to entry. Competitive entry of new players is the best discipline against cartel behavior. Commenters elsewhere in this sub-thread are arguing that one bad regulation isn't an argument against regulation generally. But the problem is distinguishing the bad regulations from the good. It's very likely that at some point there was some policy argument for these stupid rules, sufficiently plausible at the distance held from all but the most expert. The formulation of such arguments to justify known-bad policy is a constant component of our governance. It's possible that the intelligence of the rules depended on some other rule or aspect long since departed. That's the beauty of markets: The players' incentives lead them to constantly monitoring and adapting to conditions. And those incentives provide discipline that forces analysis from "sounds good enough to me" to more exacting standards. Congress here has suspended a large chunk of market operation, in a medical market where many other chunks have been suspended. It is not the least bit surprising that this has lead to grotesqueries.
ubernostrum 14y ago
No, no. Read it again. The government did away with an oppressive, invasive, business-destroying regulation which limited the free operation of the market and the absolute and unfettered sanctity of contract. Suddenly subject to nothing more than pure market forces -- what lesser minds might call a "loophole", unless they've read the right economists -- rationally self-interested actors in the market did what rationally self-interested actors do. Welcome to Libertopia.