Market Pricing for Health Care
First, allow me to ‘fess up. This piece was written in response to a debate on DemsAbroad, the Yahoo! Group list for members of Democrats Abroad. Since the issue affects us all, however….
I have been following with interest the debate over the desirability of having the market determine prices for health services. To deepen the debate a bit, allow me to introduce two thoughts.
The first is from George Soros, who in The Open Society remarks that, while the market is undoubtedly the greatest wealth-generating mechanism in human history, it is driven entirely by private greed. Thus, there is nothing in it to ensure the provision of public goods (things like justice, education, healthcare).
The second is from Robert Kuttner, who in Everything for Sale: The Virtues and Limits of Markets observes that the distinction between private and public goods is rooted in the fact that private goods offer a genuine choice, individual consumers can take them or leave them. From soft drinks in a vending machine to real estate or hedge funds, freedom of choice does, in fact, drive the competition that market fundamentalists venerate. In contrast, public goods are what are more usually called necessities.
In the case at hand, a patient has no control over what the doctor prescribes. In acute, life-threatening situations, the patient is, moreover, in no condition to make rational decisions. When life-and-death, not Coke or DeBeers, are at stake, the basic assumptions of free-market pricing collapse. Decision-making passes to others, who, if driven more by private profit than goodness and mercy may delay or prevent treatment, resulting in patient death. A case in point is that of the young woman whose parents joined the Edwards campaign after Cigna’s twice delaying her application for a kidney transfer resulted in her dying.
It is clear, moreover, that a free market in medical services results in the same distribution of services as any consumer market, e.g., automobiles, where some may never be able to afford a car or may have to make do with a second-hand lemon while others can cruise around in a Lexus or even a Bugatti. And, as incomes become increasingly polarized, the quality of service available to those at the lower end of the income scale tends to deteriorate, while those at the upper end of the scale continue to enjoy “the world’s best medical care,” as, indeed, they enjoy the world’s best of everything.
The tricky and, thus, political issue here is where to set the boundary between public and private goods. It is, thus, not surprising that critics of national healthcare systems frequently point to elective surgery as a source of dissatisfaction. If the choice is between a life-saving kidney transplant and a nose job, the difference seems clear. But what, for example, of the knee surgery my mother had done. She was in her seventies. She experienced severe and disabling pain that affected her quality of life. It was not, however, life-threatening. Should she have been pushed to the head of the line because her insurance paid for the surgery instead of, for example, the child of a poor family whose lack of treatment would hamper her education and opportunities for future employment? My mother was my mother. But for me, at least, this is still a tough call. A single-payer system that covered both my mother and the kid? I’d be happy to pay higher taxes for that.
Posted: January 9th, 2008 under Economics, Uncategorized.
Comments: 6
Comments
Comment from Groom Lake
Time: January 10, 2008, 1:29 am
A nation that once boasted the world’s best “public health” system has watched that system devolve to the point where the quality of health care delivered to “the masses” or “average americans” (as Edwards sometimes calls us) is often sub-par. The Clinton’s thought they were going to “hit the ground running” with their Ira Magaziner-led “national health care squad” but confronted with lobbies and “the marketplace” they failed miserably. Today, heath care in the US takes on the characterisitics of a corporativist enterprise. Quality and access to care and procedures are in the hands of beancounters. If one is lucky enough to find a physician’s assistant (PA) or nurse case manager or a family practice doc who is willing to do a “work around” to provide the care necessary, or the right Rx that may not be on the healh plan “formulary” …thank god. The bottom line is not really “the market” but the fact that there is a lot more money to be made in treatment than in prevention. And the management and quality of that treatment is determined by accountants and actuaries. Pneumonia is an epidemic in the US but you don’t hear about that. Coughing up blood? The urgent care staff tells you to take Robitussin or Tylenol Cold for a week and come back if the problem doesn’t go away. Then they might consider filling out the paperwork to get approved for doing a culture of your sputum and a two week course of a weak, generic broad spectrum antibiotic. Doctors in private pay health plans are rewarded for doing less, not running up the meter on tests, drugs and procedures. They too are greedy. The infrastructure is on very thin ice.
Comment from Sasha
Time: January 10, 2008, 4:46 am
I am not so fond of the notion of a “free market” to determine supply. That said, I am not quite convinced that an alternative health delivery system need be based, as most of the current proposals seem to be, on the notion of scarcity. I would be willing to pay my fair share to ensure enough medical infrastructure to both provide the kidney transplant and a timely knee transplant for your mother. In other words I would put the ’scarcity’ line between the knee transplant and the nose job (assuming that the nose job is not a repair for a returning veteran).
In this country we use scarcity as a club because we are trying to prop up the market. If we start from the premise that folks have a right to adequate health care delivery and design a system based on that notion, we might be able to make that political issue go away entirely.
Comment from Josh Hammond
Time: January 10, 2008, 9:18 am
I am pursuaded by the argument that we don’t leave education (K-12), fire, police, highway safety, national security, etc. to the free market system. All of these are “single payer” systems run by government regulation and standards, and in most cases managed by government. We only make an exception for healthcare. In my mind, advocates of a free-market health care system have the money to get the healthcare they want and don’t really give a damn about those who can’t afford healthcare. Long live the free market!?
Comment from Leftcoast
Time: January 10, 2008, 3:01 pm
According to George Halvorson, Kaiser’s CEO, we could reduce about 60% of the costs of health care by establishing preventive programs against diabetes and asthma. Just those two diseases comprise a majority of health care expenditures in the US. Astonishing.
Comment from Groom Lake
Time: January 10, 2008, 7:06 pm
The same Kaiser that makes you jump through hoops just to get generic “statin” drugs for heart health… We are a docile, poorly educated and hardly empowered health care consumer market. Those who define the rules, the procedures, are largely way beyond the consumers, the beneficiaries. There is a lot of criticism coming from the health care industry that suggests consumers (patients) are getting too much “bad” information from the internet. Who says it is “bad”… the service providers. They may have some justifiication but wasn’t it schmate plugger Sy Sims who said “an educated consumer is our best customer…”
Comment from Sasha
Time: January 10, 2008, 8:55 pm
“We are a docile, poorly educated and hardly empowered health care consumer market. ”
Well of course we are. The best union in the world, the American Medical Association, does everything they can to keep us that way.
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