Last week's debate on the floor of the Supreme Court about the constitutionality of the Affordable Care Act reignited a substantially more lively, if not bipolar, public conversation about health care in our country.
Conservatives pontificated about freedom and the sanctity of the constitution, and progressives waxed philosophical about health as a human right and the wellbeing of the poor.
Although an issue like health care certainly reflects many of the broader ideological schisms in our political debate, amiss in ideological debates like these is the technical reality -- epidemiologic and economic -- of the unique challenge posed by health care. How do we provide equitable access to high quality healthcare in a cost effective way?
That's the $2.5 trillion dollar question right now. And no one's sure exactly what the right answer is.
But here's one thing its definitely not: the free market. Here are five reasons why.
First, there's this peculiar thing about people -- if given the choice, they prefer a certain future to an uncertain one. And they're willing to pay for that certainty. Given the fact that health is, by its very nature, really uncertain, people are willing to invest money to make more certain its effects on their pocketbooks. That's why in a free market health system, people buy insurance.
Insurance is tricky. Insurance companies exist because some people get sick, but they make money because some people don't. So they want the healthiest people to buy their plans, even though the sickest people need them most.
But as you'd expect, in a completely unregulated market, healthy people don't buy plans as often as sick ones do -- after all, they're less likely to get sick and so they're less worried about the uncertainty disease can cause. That drives the cost of health insurance up as insurers try to pay for the costs of the sick they cover, further pricing out the healthy whom the insurers desperately need to keep costs down. A vicious cycle takes hold, and eventually, the whole market "unravels" because there are too few healthy, less expensive people to cover the costs of the sick, more expensive ones.
Ultimately, only a few people can afford this insurance, and the rest of us are left to deal with the uncertainty of disease as it comes -- which isn't very pleasant.
Second, there's this problem of imbalanced information. When you get sick and you go to a doctor, how do you know that the doctor really has your best interest at heart? After all, she spent 12 years training for her job and has likely forgotten more about medicine than you'll ever know. Can you be sure she's not running you for a loop? That becomes even more problematic when your health and her pocketbook are at odds. In his article in the New Yorker on the misaligned incentives of surgeons, Jerome Groopman shows how for doctors, patients' interests can often take a back seat to making a buck in a free market health care system -- and that the result can often be poor quality health care at a high cost.
Third, people are really bad at understanding and valuing the consequences of their actions -- especially when it comes to their health. This tendency, called "discounting" means that people usually want what maximizes their happiness today over what maximizes it tomorrow. That's why making decisions that promote long-term health -- like eating healthy foods or exercising -- is so difficult: It feels way better in the short-term to sit on your butt and have a second helping of ice cream than it does to forgo ice cream altogether and go for a run. What's worse, in a free market health system, providers get paid more for providing more care. That means that they have no incentive to help their patients prevent disease. Because prevention is hard, and because market health care systems don't incentivize it, it just doesn't get done in free market health systems. In the end, this raises costs and contributes to more disease, which is bad for everyone.
Fourth, there's the problem that access to care in a free market health care system is completely contingent on one's ability to pay for it. That's a problem when health care costs can hit several thousand dollars per year, even among healthy people. If we believe, as a society, that it is immoral to allow a sick person to suffer, then a free market system, which prices out society's poorest, is complicit in that immorality. What's worse, there are pages upon pages of medical studies that show that the poorest are also the sickest, independent of access to care. That means that in free market health systems, health care is denied to the people who need it most.
Fifth, and finally: Unlike most circumstances, where markets produce meaningful innovation, in health care, the government produces the most important innovations. Consider this: The U.S. is the world's leader in medical innovation. And pundits and politicians alike like to attribute this to our free market health system, as Rick Santorum suggested in a recent op-ed in USA Today. But nothing could be further from the truth. The U.S. is the world's leader in medical innovation because our government pumps tens of billions of dollars into health research each year through the National Institutes of Health. In fact, many of the drugs, medical devices, and clinical tests that ultimately get marketed and sold by private sector medical companies originated in NIH-funded labs across the country.
So, what's the best way to provide equitable access to high quality health care in a cost effective way? At least we know what it's not. And that should be a start.
A version of this essay was first published as part of a policy debate on PolicyMic
Follow Abdulrahman El-Sayed on Twitter: www.twitter.com/elabdul
Insurance companies exist because it is possible to make highly accurate predictions about groups of people who are statistically similar even though the actual outcomes for the individuals within those groups will vary widely. Given enough information about the age, weight, health history and so on of the members of each risk group, the insurance company’s actuaries can calculate the average health costs within any risk pool. Insurers take that average cost and add administrative overheads and a profit margin to get the cost for an insurance policy for members of each risk pool. This is the same way that they calculate the varying cost of a life insurance policy when a 30 year old man, his 60 year old father and his 90 year old grandfather all walk into a life insurance sales office and ask for the price of a million dollar one year term life policy. The insurance company can make an equal profit on every dollar of premium revenue regardless of whether their clients are young/old or healthy/sickly by having their premium costs reflect the varying risk levels within each risk pool. Insurance companies want everyone who can pay the appropriate price to buy their policies because they all equally profitable.
Medical malpractice: If the doctors interests are separate from the patients, you can bet your last dollar that the doctors will look out for their own interests. Which means so should the patients, in an adversarial, market based system. How? By viewing them exactly as they are, merchants.
Long term planning: I think most people want to take care of themselves as being the ultimate in self-interests. I don't think most people want to be sickly. Why the disparity? Because most people don't know how the human body works, the doctor's specialty. But no one knows his/her own body better the person him/herself. Not even the doctors. That's why they ask YOU what's going on in your body.
Access: Even with the ability to pay, a person can not get the best health care unless he/she takes control. That's why it's encouraged to get a second and third opinion.
Heath care innovation: Finally I agree wholeheartedly. The innovation comes from the government, meaning taxpayers, and then the government hands over the technology to industry, free of charge, like the human genome project.
I am for the complete removal of the market out of healthcare. It's in way, it's cumbersome and inefficient and it's ineffective.
The taxpayer pays for medical care for the uninsured.
The taxpayer subsidizes building medical centers and hospitals.
The free market shopper subsidizes insurance for manufacturers through higher prices.
The free market shopper subsidizes low cost prescription drugs through higher prices at the store.
Problem here, neither the taxpayer or the free market shopper seem capable of understanding this.
1) Single-payer at the state level with the federalism of subsidies in the ACA. The issue is not really sick people but rather the need to have the medical facilities when they are needed. There are three different business models here; rural, suburban and urban. This is the "How".
2) This best accomplished by determining "Best Medical Practices" and using IT technology to ensure it. This is the "What" as I've outlined here:
http://www.huffingtonpost.com/social/no_body/obama-affordable-care-act_b_1389760_144757327.html
3) Health care rebates for shopping around, positive living, etc. Similar to the way rebates work for car insurance or when buying a car. It would be based on the statistical normal cost of treatment for all the different therapies. It would also offer the choice of quality-of-life at the end-of-life.
4) Is already by single-payer through the government.
5) Giving away the patents paid for by the taxpayer and then not letting Medicare negotiate prices is a sin. But the workbooks I mentioned in #2 could have registered steps in them that would allow a business model like a 900 number. Therefore innovation is not limited to producing a pill but only a better outcome and could be patented.
Faulty Logic- Please Read Basic Economics By Thomas Sowell
When you want to distribute a scarce resource to everyone it is no longer a free market. Free markets work when there is no intervention involved in the billions of transactions and decisions made about the distribution of a scarce resource.
There have numerous well intended experiments to distribute scarce resources through government bureaucrats and there are equal number of examples in its futility to control a free market.
No matter how much we want to ensure everyone health care it is only through the free market we can ensure the most efficient distribution of the resource. Unfortunately, there is the sad part in this process that there will be people who do not get the care they need, but that is the realty of the world we live in. If we choose to try to intervene the more tragic reality is that more people will be harmed than if we allowed the free market to make the choice.
Warm regards,
Michael Winters
The free market model implies choice - you choose the best product in the market, or none at all if there aren't any good ones. But when it comes to health care, the "choice" is death.
A free market model wouldn't work for cell phones if consequences of not buying one was a slow painful death. American models would *still* be the size of briefcase and cost enough to bankrupt you if they only had to compete with death. Which is pretty much the "offer you can't refuse" level of quality American health insurance companies naturally maintain if the face of their actual "competition".
That's why we don't use the free market for police protection or fire departments - we need those things to literally stay alive so it would be inherently unfair to put people in a position of having to put a price on their own lives and those of their children, as they'd pay anything and we know it.
Plainly put, free market principles simply don't apply to situations of "your money or your life", and therefore have no place in our healthcare.
Reality: The free market does not WORK for EVERYBODY in the medical market only because the free market is unforgiving. In fact, the free market does work. Medical care IS expensive. Everbody cannot afford it. The best system in the world exists in the US.
Another, a sister diagnosed with spreading breast cancer, at age 30, lived to 49 and was exposed to the most innovative and cutting edge treatments in the world. The interesting part is that she never worked a day past the age of 21 and was living on welfare.
What is wrong with the system?
I believe health care is a commodity like every other product we purchase. And like every other product with innovation and time the best becomes available to the masses. I can remember when having a phone in your car was for the wealthy.....
Cassie
On the contrary, I hear many say that the ability to pay should be the determining factor in having access to health care. These are the people who insist that the free market should control our health-care system. However, they don't ever seem to be able to explain how we have a free market when hospitals are legally required to provide care to anyone who arrives at their emergency departments, regardless of whether they can pay.
Perhaps grocery stores should be required to give away broccoli to anyone who asks for it, even if they can't pay?