Jun 15 2009

Killing the golden goose of research and development

Category: government,healthcareharmonicminer @ 10:26 am

The history of the cancellation of the Apollo space program due to budget considerations is nicely summarized here and here.

The short story:  President Lyndon B. Johnson’s budget for 1969 included $3.878 billion for NASA, “nearly 25 percent lower than the budget for the peak year, fiscal 1965.”   When President Nixon took office, he cut it further.  Neither presidents nor congress were in the mood to maintain NASA’s funding, resulting in cutting the last three planned Apollo missions, which would have cost only $20 million each, given the money already spent on Saturn V boosters and capsules.

No one will ever know what scientific discoveries might have been made on those missions.

No one will ever know how far we might have come by now in space capability had Congress continued to fund NASA at “moon-race levels,” but we would surely have a permanent colony on the moon by now, we would have been to Mars and back, and might have a fledgling presence there, and we’d know a lot more about the science of our solar system than we do now.

It is not well understood by the public that much of the USA’s dominance in technology came from so-called “spinoffs” from the “space race.”  There is little reason to believe that trend would have changed.  It’s likely that our national economy would have received a great boost from the spinoffs that never happened.

Congress, however, was busily moving into higher and higher levels of “great society” funding, including welfare (with its disastrous results on poor families and unwed birth rates) and medicare.

We can’t get back years of lost basic research and lost applied research, as well as discovery of unknowns in our solar system.  We can duplicate what would have been done… but that time is lost permanently.

Call the entire sorry affair penny-wise, and pound foolish.

And now, for somewhat different reasons, Congress is considering what will end up as a federal takeover of health care.  While the dynamics will be different, the result will be analogous to what happened to NASA, and space exploration.  There will be a great cutback in basic research, and decades may be lost in what could have been a “genetic therapy race” to revolutionize (and probably significantly cheapen) health care.  The “astronomically huge” medical progress of recent times is not any sort of given.  It depends on particular circumstances of economy and society that encourage investment, basic research, and risk taking.  In other words, the things that government does worst.

When your now-young children are dying of cancer in about 40 years, prematurely, how much will they thank us for having instituted a health care delivery system that killed much basic research that could have saved their lives?

Not much, I think.

11 Responses to “Killing the golden goose of research and development”

  1. dave says:

    So it appears that the lesson is this: Big government in space? Good. Big government in health care? Bad.

    Interesting…

  2. harmonicminer says:

    Dave, fell free to read my series on socialism (up to three posts now, with more coming), and “acceptable socialism/statism” vs. more extreme statist-socialism. Perhaps that will help you to look past your blinders as far as I’m concerned, and see that I’ve never taken the position that government has no role in large projects that no individual could undertake, and perhaps no single corporation either.

    I’m a big fan of the military, surely a “big government” function, and other aspects of the national security apparatus. But it would be idiotic to want to call in the 10th Mountain Division to protect my house from burglars. The right tool for the right job and all that.

    Very simply: I can provide for my own health care. I can’t explore space, or produce the technological spinoffs from that. And if I COULD launch my own rockets into space, it might make the neighbors nervous. See?

    My point: if enough people provide their own health care, instead of letting the government do it, there is enough economic incentive in the system for further medical progress to take place with reasonable expectation of profit… which has not been the case in other countries with nationalized health care, which have all piggy-backed on US research for decades. And I do mean piggy.

    Historically, I think the Panama Canal was a fabulous idea. So was the interstate highway system. I’d be thrilled if the nation undertook a Solar Power Satellite initiative, something beyond the resources of any single company.

    But I’m no more for nationalized health care than I am for nationalized car repair, or nationalized fast food chains (of course, there would soon be only one chain… McBamas).

  3. dave says:

    I can’t explore space, or produce the technological spinoffs from that.

    But private corporations can.

    Basically you are saying that only private money in health care allows for research and development. But only public money in space exploration allows for research and development.

    Of course, even more importantly, your bigger premise – that health care reform will mean a government takeover of health care is incredibly far from the truth.

  4. harmonicminer says:

    I think employers are going to dump their employees into “the government option” in droves. What motivation do they have to do otherwise? The presence of a subsidized plan makes private competition very difficult. Eventually most will be in “the government option” and that will be that.

    As usual, you deliberately miss the point: space exploration is so huge, and expensive, and requires such infrastructure, that so far only governments or very large corporate consortia can attempt it. That may change, very slowly, as technology matures… but it will be impossible to get back the years of progress that could have occurred in the meantime. We’re a long way from things like “spaceship one” being able to replace rockets, space planes, etc. The time horizon for developing large space hardware is simply too long for most private corporations to go without making some profit. If we had continued to fund at “space race” levels, we could have had solar power satellites by now, and the energy crisis would be essentially over, along with carbon footprints and the whole nine yards of problems, political and environmental, from fossil fuels as our dominant energy source. What’s funny is that the people who want huge social programs to get the money instead of space research are the political allies of the people whose agendas would be well served by the technologies developed IN that space research. Incoherence squared.

    Health and medical research, on the other hand, has been overwhelmingly driven by the profit motive in the USA… which is why the USA does 90% of it for the world. Just as the space shuttle was a giant diversion of the space program (and was itself rescued only because the military wanted it), the “government option” is going to try to suck all the profit out of health care. It will fail, of course… but the people who profit won’t be the ones who are motivated by it to do research and innovate.

    This has already been proved… simply look around the world at nationalized health care everywhere else, and see how much innovation and genuinely new research is done, how much cutting edge science makes its way into health care.

    Did you read the article I cited in a previous post, The End of Medical Miracles?

    The Hoover Dam and the Grand Coulee Dam would never, and could never, have been built by a private company… they were both “astronomically huge projects” that required governmental resources, not to mention permissions and compromises involving the various stakeholders in the regions. They have produced a lot of electricity. We don’t do these things anymore (we certainly could) because the enviropanic folks killed it just like they did nuclear power. But they are examples, like space exploration, of huge projects perfectly suited to government and which benefit everyone when they are done. Solar Power satellites would have dwarfed the dams in terms of impact on society.

    I don’t really want a huge competition of private corporations all launching rockets from the Mojave desert in my backyard.

  5. Bill Colton says:

    Harmonicminor – you are correct about employers dumping health care. There has recently been a change in how Cobra operates. Employers are now responsible to pick up 65% of the Cobra Costs and then get a “rebate” on the end of the year taxes. This means that the ex-employee (even if fired, quit, etc. will have 2/3 of the health care paid borrowed from his previous employer (interest free) and paid for by taxes. This expense can be astronomical for small business (especially seasonal businesses). My Cobra provider (I have a small business – 32 employees) has told me a large number of small businesses are just dropping health care so they don’t have to provide this cash outlay during the year. They can’t affort to loan all these people money all year long, and then pay their accountants additional funds to put together the forms to try to get the money back. If a government health plan comes into place, I will probably drop my health plans for my employees and let the govt. pick it up – otherwise, I won’t be competitive. If I am picking up these expenses and my competitors aren’t – then my cost of business becomes more expensive than my competitors. My “health care” package for 32 employees (medical and dental only) is about $ 200,000 per year.

  6. harmonicminer says:

    Yep. And people like you provide more jobs than the large corps in the USA. Someone has gotten the idea, somewhere, that you should just provide benefits out of the goodness of your heart. I think it’s a near certainty that if “the government option” becomes available, it won’t be long before many small businesses (and large ones, too), make the same calculation, and realize that they can’t compete with businesses who dump their employees into the federal system, unless they do the same.

    That will in turn gradually reduce the economies of scale of the large private insurers, reducing their ability to compete, and over time (not that MUCH time, I think), the great majority of us will be stuck in “the government option.” They will claim that it was “by choice,” of course.

    That’s the same kind of choice as whether or not to get into the lifeboat when the ship has been holed by the people who own the lifeboat, and is sinking fast.

  7. amuzikman says:

    We are faced with a government who, having created most of the problems in our current health care system. now want to control health care in order to “solve” the very problems it created.
    The rising costs in health care now are largely due to government attempts at price controls. Medicare and Medicaid set limits on what they will pay for various procedures. Doctors know they will not be paid the full amount they bill, so they over-bill in order to compensate. Medicare and Medicaid know doctors are over-billing so they continue to pay only a percentage of the amount billed. And there is no end to this spiral as long as the government sets an arbitrary value to a doctor’s work and market forces are held at bay. This also cuts down on the quality of care as doctors are forced to see more patients each day just to meet their overhead, giving the doctor less time with each individual patient.
    If there was a direct relationship between the one who bills for services and the one who pays, prices would stabilize.

  8. Bill Colton says:

    amuzikman – it gets worse than doctors paid a certain amount for a certain procedure – we live in a world of DRGs (Diagnostically Related Groups), which says – for this problem – we are willing to pay X dollars. This doesn’t take into consideration the constitution and reaction to those treatements on an individual.

  9. amuzikman says:

    Right – in fact in some cases payment for a procedure and all follow-up is summarily denied if, for example, a patient develops a secondary infection as a result of the original care. And we are also now seeing some specialties simply being removed entirely from state and federal health care coverage. This includes chiropractic, podiatric, and dental care in some cases.

    Which leads one to wonder, what exactly will Obamba-care include – or perhaps more importantly, what will it exclude?

  10. Bill Colton says:

    Amuzikman – my best friend from high school should have been dead as a teenager – he has systic fybrosis. He has been on special care ever since I have known him. He has always been brilliant – he graduated from college in 3 years with a double major – psycology and english. During his graduating year, he traveled to the UK as an exchange student for some classes. He brought over his medical regiment, medicines etc. The doctor over there informed him that what he was doing is not the procedure in England and he would be put on the prescribed treatment. Long story short – within 10 weeks, his parents flew over to get him removed from an insane asylum as the drugs counteracted with the medications he had been taking. This is what we can look forward to – procedure over education – policy over treatment.

  11. amuzikman says:

    If there was ever a time to draw a line in the sand it is now. If there was ever an issue with which we should all stand and utter a loud and long “No!” to our government, it is this one.

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