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Regulation and Vaccines: It’s much worse than you think

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Regulation and Vaccines: It’s much worse than you think


The distribution of vaccines is being held up by regulation. But I suspect that even opponents of regulation underestimate its pervasive effects. Regulation goes far beyond things like price controls and mandates regarding distribution, it extends into all aspects of our society (including the “private” sector), in ways that many people don’t even think about. Let’s start with health care:

1. We have a tax system that pushes people into gold-plated health insurance plans, and then the government regulates the way that those plans can operate. That problem was made dramatically worse by the recent decision of Congress and the President to kill the so-called “Cadillac tax”, which would have gradually eliminate the tax subsidy for health insurance.

2. We have many controls on entry into the provision of health care, which drive up costs in numerous ways.

3. Ever get a severe toothache on a Friday night, and be unable to visit a dentist for relief until Monday? I have. In 1910, I could have walked to the local drug store and bought some serious pain relief. Not today.

4.  Fear of lawsuits.  Many of the practices that make life in America both frustrating and inefficient are driven by a fear of lawsuits.  Yes, lawsuits play a valuable role in enforcing contracts, even implicit contracts.  But firms should also be able to have consumers and workers sign agreements not to sue under certain conditions.

5.  Price controls that create shortages.

I wonder if even sensible regulation skeptics like Tyler Cowen realize just how bad things are. In a recent post, he suggests we should praise the UK’s efforts in distribution the vaccine.  But the UK has done a horrendous job of distributing the vaccine; indeed Israel is doing the job 5 times faster.

Regulation and Vaccines: It’s much worse than you think 1

So why does Tyler praise the UK? Because almost every country in the world is screwing up even worse than the UK. Regulation has made things so bad that even “pretty inept” starts to look good on a comparative scale.

[And don’t say, “Israel is small”.  Israel is roughly the size of many American states (such as New Jersey), each of which is doing a horrible job.]

Here’s another example:

A hospital Covid-19 vaccination team shows up at the emergency room to inoculate employees who haven’t received their shots.

Finding just a few, the team is about to leave when an ER doctor suggests they give the remaining doses to vulnerable patients or nonhospital employees. The team refuses, saying that would violate hospital policy and state guidelines.

Incensed, the doctor works his way up the hospital chain of command until he finds an administrator who gives the OK for the team to use up the rest of the doses.

But by the time the doctor tracks down the medical team, its shift is over and, following protocol, whatever doses remained are now in the garbage.

Isolated incident? Not a chance, Dr. Ashish Jha, dean of the Brown University School of Public Health, told NBC News.

“This kind of thing is pretty rampant,” Jha said. “I have personally heard stories like this from dozens of physician friends in a variety of different states. Hundreds, if not thousands, of doses are getting tossed across the country every day. It’s unbelievable.”

People consistently underestimate the responsiveness of industries to market signals.  I’d be happy to pay $2000 to get a vaccine today, rather than have to wait a few months.  Yes, health care workers are overworked.  But if I offered a nurse $2000 to give me a jab on the way home from a grueling 12-hour shift, would he refuse?

People gave Charles Barkley a hard time for suggesting that NBA players should get priority.  But why not? They are highly productive.  I don’t recall many people criticizing President Trump for getting special treatment when he contracted Covid, and I’d say the average NBA player is more productive than Donald Trump. So why the double standard?  BTW, if the NBA shuts down then lots of average workers also lose their jobs.

I could understand the “social solidarity” argument against a free market if this were a zero sum game.  But as Israel has demonstrated, the inefficient distribution of vaccines is a negative 80% game, that is, we are vaccinating 80% smaller share of our population than Israel. Yes, eventually we’ll catch-up.  But time is of the essence.

Under a free market, most people would receive vaccines sooner than under our current system.  Thousands of lives would be saved.  Perhaps it might seem a bit less “fair”, but what is fair about needlessly killing thousands of people just to be politically correct?  The price would likely fall sharply once the first few tens of millions were vaccinated.  And if there are some people too poor to pay for vaccines, then we have public charities like Medicaid and private charities like the Bill Gates Foundation.  As the Maoist experiment in China demonstrated, egalitarian intentions are not enough—you need incentives to produce goods and services.

People seem almost hardwired to resist the idea of deregulating health care.  Whenever there is a problem, they instinctively reach for even more regulation.  The FT has a long article discussing all the ways that bureaucrats have screwed up the distribution of vaccines, which ends as follows:

But some worry it is too late for money to have much of an impact and argue that the federal government should take control of the process rather than leaving it to states.

“The federal government could send a few thousand vaccinators,” Ashish Jha, dean of the Brown University school of public health. “They have a public health workforce. They’re just not for reasons that neither I nor the states can figure out.”

So the federal government has completely screwed up “for reasons that neither I nor the states can figure out” and thus we can conclude that “the federal government should take control of the process”?  Hmmm.

Here’s another thought.  Doesn’t this quote suggest that capacity limits are not the core problem?  We have “thousands” of vaccinators who are available but for some strange reason are not being used.

This is the whole point of markets.  To connect up desperate consumers with unmotivated providers.  The price system will provide the motivation that providers need to speed up the process.  You may find free markets in health care to be distasteful, but you should find thousands of needless deaths to be even more distasteful.

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