Why can't free markets provide healthcare?

[Union Of Canadorian Socialists Republic]

Could it be that liberals don't want to give the American way a chance before they go around making things more socialist? I sense some bias at work here.

The free market =/= The American way. It is an idea that has existed long before the United States, and its most famous literature, Adam Smith's The Wealth of Nations was published in 1776.

[Cata Larga]

If you mean it's cheap, inefficient, profit-driven magic, then yes it does.

However, it's not disputable. The free market fails at ensuring that everyone can get healthcare, so the state must intervene.

A market economy is the most efficient economy we have. It can be cheap and high end, efficient, and is more or less self regulating.

...only in markets where choice exists, of which the healthcare market is not.

[Union Of Canadorian Socialists Republic]

A market economy is the most efficient economy we have. It can be cheap and high end, efficient, and is more or less self regulating.

If being inefficient means more money, then the industry will adapt accordingly and be inefficient, as in the case of healthcare. The people that believe the in the free market fairy make the assumption that effiency = cash, when the opposite cna be quite true as well.

Regardless, a national and free healthcare service should be provided by the State. The State should also try to not be so damn dependent on something unstable and radically changing like the Private Sector.

That is only true when the demand for healthcare is surpassed by the quantity offered. In virtually all other cases, efficiency is achieved at the equilibrium between supply and demand. Under these circumstances, there is neither a surplus nor shortage of health care services.

[Pandeeria]

Could it be that liberals don't want to give the American way a chance before they go around making things more socialist? I sense some bias at work here.

The free market =/= The American way. It is an idea that has existed long before the United States, and its most famous literature, Adam Smith's The Wealth of Nations was published in 1776.

Regardless, relying on the free market, especially in soemthing important like healthcare is an awful idea.

Both Private and Public Options should exist. Forcing people to be at the greedy whims of giant, pseudo-monopolistic corporations for their basic hell being is a recipe for disaster.

[Pandeeria]

If being inefficient means more money, then the industry will adapt accordingly and be inefficient, as in the case of healthcare. The people that believe the in the free market fairy make the assumption that effiency = cash, when the opposite cna be quite true as well.

Regardless, a national and free healthcare service should be provided by the State. The State should also try to not be so damn dependent on something unstable and radically changing like the Private Sector.

That is only true when the demand for healthcare is superseded by the quantity offered. In virtually all other cases, efficiency is achieved at the equilibrium between supply and demand. Under these circumstances, there is neither a surplus nor shortage of health care services.

Not really. Providing medicine that only works in the short term, or forming up pseudo-monopolies that bypass law due to some de jure fluff, and keeping medical science not progressing all that much to keep certain things inefficient and expensive can easily make businesses more money.

Just because it's good for the business doesn't mean it's good for the consumer. Especially when the consumer is forced into a certain plan or to be with a certain company due to for fiancial limitations is awful, as said bissnuess could easily toy with the consumer for extra money.

[Death Metal]

Regardless, relying on the free market, especially in soemthing important like healthcare is an awful idea.

Both Private and Public Options should exist. Forcing people to be at the greedy whims of giant, pseudo-monopolistic corporations for their basic hell being is a recipe for disaster.

Exactly. And the crazy thing is, we know this model works, and can work in the United States... in fact this is how senior care has worked in the US for decades now. And the senior care plans, they have a legitimately strong competitive market that focuses on consumer service. Unlike what we had for non-seniors pre-AHCA, which was a non-competitive market that focuses on exploitative practices.

The problem is, Big Pharma doesn't want this because it's more profitable to be exploitative and non-competitive. So much for the asinine notion that profit motive is always doing what's best for the consumer.

[Distruzionopolis]

If you mean it's cheap, inefficient, profit-driven magic, then yes it does.

However, it's not disputable. The free market fails at ensuring that everyone can get healthcare, so the state must intervene.

Is the private healthcare market responsible for the wage earning potential of consumers now?

[Imperializt Russia]

If you mean it's cheap, inefficient, profit-driven magic, then yes it does.

However, it's not disputable. The free market fails at ensuring that everyone can get healthcare, so the state must intervene.

A market economy is the most efficient economy we have. It can be cheap and high end, efficient, and is more or less self regulating.

The free market is in no way, and has never been, self-regulating.

[Greater-London]

Free Markets can provide healthcare not just that they can do it very well. However if healthcare is your business then you are ultimately motivated by profit; here in lies the problem lots of people have with insurance style healthcare and that is the patient isn't put first. Profit first.

[Maineiacs]

A market economy is the most efficient economy we have. It can be cheap and high end, efficient, and is more or less self regulating.

Quis custodiet ipsos custodes?

[Sociobiology]

than a corporate monopoly, sure, I least I get a say in the state.

We could always make it so that, if a corporation exceeds 50% of the market share in a given field/area (including constructive ownership rules) that the corporation board is elected by general public vote instead of shareholder vote.

major problem with private healthcare is healthcare violates several of the basic assumptions of market optimization theory, so the market maximizes cost and minimizes service.

[Sociobiology]

Do you mean to ask "why can't free markets provide affordable healthcare?"

because demand is constant, so affordable healthcare is less profitable.

[Distruzionopolis]

Do you mean to ask "why can't free markets provide affordable healthcare?"

because demand is constant, so affordable healthcare is less profitable.

Indeed.

[California Prime]

Too often I hear the arguments from liberals that healthcare is somehow different than buying potatoes or an ipod, that the free market cannot work. I think these arguments are a load of rubbish.

Information asymmetry exists in all markets, you don't know where your potatoes come from or how much pollution making them costs. There are various concentrations in various industries, many of them successfully run by the free market. If you buy a parachute and you choose wrong you still die, but the free market runs the parachute industry with success. So why not free markets?

Could it be that liberals don't want to give the American way a chance before they go around making things more socialist? I sense some bias at work here.

you talk all of this "liberals think" stuff but just take a look at the facts, the more a country relies on the free market for their health care the worse their international ranking is and the opposite is true for non-market based health care systems. If you think the market can provide health care as well as the best socialized health care systems then maybe you should design one, since there are no current market based systems that work as well in real life.

[Geilinor]

Where did you get "don't want to give the American way a chance" from, OP?

[Soselo]

I feel at times that aggressive privatization and laissez faire capitalism ought to happen. A decrease in life quality for some people might be good. The ones that should be at the bottom of this market hierarchy have hurt me before. For them, I would like to have reason enough to care for their suffering.

[Imperializt Russia]

I feel at times that aggressive privatization and laissez faire capitalism ought to happen. A decrease in life quality for some people might be good. The ones that should be at the bottom of this market hierarchy have hurt me before. For them, I would like to have reason enough to care for their suffering.

The former Soviet reason is the absolute perfect model of why "aggressive privatisation" does not work.
Or, the UK's formerly nationalised industries.

The UK state railways, for example, were sold off to essentially the German state railways.

[Maineiacs]

Where did you get "don't want to give the American way a chance" from, OP?

From his own bias.

[-The Unified Earth Governments-]

Because Humans can be massive assholes to each other, thats why.

Best to regulate the shit out of healthcare then to let suit and tie Joe handle it, for the low low price of 400 smuckers...

[Kilobugya]

Because free markets are inefficient. Because they are unable to provide for the poor. Because they reduce everything to money, regardless of consequences. Because healthcare is a fundamental right, not a luxury.

[Maineiacs]

Because free markets are inefficient. Because they are unable unwilling to provide for the poor. Because they reduce everything to money, regardless of consequences. Because healthcare is a fundamental right, not a luxury.

Fixed that for you.

[Obeyistan]

Why not indeed.

[New Chalcedon]

Too often I hear the arguments from liberals that healthcare is somehow different than buying potatoes or an ipod, that the free market cannot work. I think these arguments are a load of rubbish.

Information asymmetry exists in all markets, you don't know where your potatoes come from or how much pollution making them costs. There are various concentrations in various industries, many of them successfully run by the free market. If you buy a parachute and you choose wrong you still die, but the free market runs the parachute industry with success. So why not free markets?

Information asymmetry is (a) not the whole point of why private-sector healthcare doesn't do enough; and (b) particularly bad in healthcare. To take up your (and Justice Scalia's) argument that health insurance is inherently similar to buying broccoli:



Those are just three ways that the private health insurance market routinely screws its customers over. And it's not just an information asymmetry - it's a power asymmetry as well. The absolute last person who can, as a practical matter, go shopping around for health care alternatives is someone who actually needs the care. By the time you need the care, you've got better (or at least more life-preserving) ways to spend your time and energy, and no sane insurer will take on someone who needs care right now anyway - they'll be out of pocket a lot of money on your treatments, with no guarantee you'll stick around afterward.

And if there's one thing that most "free-market enthusiasts" don't know about free market economics - it's that one key, underlying assumption behind all classic microeconomic theory is that neither party to a bargain has undue power over the other. By failing to satisfy that key condition, healthcare disqualifies itself - from the very start - from consideration as a perfect private good.

Could it be that liberals don't want to give the American way a chance before they go around making things more socialist?

It's had 200 years. To paraphrase Jim Hacker (who does at least have a wonderful turn of phrase when he wants to), "I think it may perhaps be coming to the end of its trial period, don't you think?" It's been given a chance and a long trial, and the verdict is in: the free-market healthcare system sucks. And this stacks up with the theory of healthcare economics (more on that below), so it's hardly a surprise to any honest analyst with any knowledge of practical economics.

I sense some bias at work here.

Reality often does seem to have a left-wing bias. Let's look at the facts:

(1) The US healthcare system is very, very expensive.



The US healthcare system accounts for 16% of the economy. Sixteen percent - or one-sixth - of all your economic production is spent on keeping people healthy. And not all of this spending is from the customers (consumers, etc.) of healthcare - the US Government spends more on healthcare per person on its own than total public and private spending on healthcare in most of the rest of the OECD:



"Ah, well", you might say, "We spend a lot on it, but least we get a first-class healthcare system, not like those socialist healthcare rationers in the rest of the world."

But this is....half-true. At best. You see....

(2) The US healthcare system delivers very, very poor outcomes for all that money spent.

This isn't just my personal opinion - no matter what metric you use or which body you go to for the data, the US healthcare system ranks at or near the bottom of the industrialized world in terms of overall outcomes. For instance, the Commonwealth Fund's 2014 report, "Mirror, Mirror":



Eleven first-world countries were chosen for this study, and assessed on their healthcare outcomes. Each and every one of the ten countries that placed ahead of the USA in health outcomes (i.e., every country in the study other than the USA) spent less to achieve more. Why? Because for all its shortcomings, a public healthcare system isn't greedy. And if there's one word that describes US healthcare providers, it's "greedy". It's no good to have all those fancy devices, MRIs, prototype drugs etc. available....if only the upper-crust can afford them. And between health insurance companies screwing their customers at every turn, and the obscene cost of actually delivering the treatment thanks to all the padding for CEO salaries (and bonuses), shareholder dividends, obscene IP payment rates and the like....only the upper crust can afford all the good treatments.

It's why some (rich) people go to the USA for treatment that isn't available elsewhere. They've got the money to pay all those fees and costs, and if you can afford it, the healthcare that the fortunate few at the top get really is the best in the world. But what about the other 99.5% of us? This brings me to my third point:

(3) Healthcare is inherently a communal good.

This one should be simple, but....some people seem to have trouble with it. So here it is. If we share a work environment, and I get sick....you get sick too. If I get my symptoms treated and take a sick day - you don't get sick. That's not ideology - that's germ theory at work. If we're supposed to be collaborating to make stuff (or ideas, or anything) for our employer, there's no practical way to prevent me giving you the disease.

Which is why you really, really want me to get healthcare. By providing healthcare to me, whomever did it (be it public hospital or private practice) also did you, and all the other people I may have passed that sickness on to, a favour. A rather large one. This, in economics, is called a positive externality: the idea that a deal made between two people (me and my health carer) has benefited a third party who didn't take part in that deal, nor pay any costs associated with it (you).

This simple fact - the fact that you benefit from my healthcare despite not paying for it, means that the free market will always under-provide healthcare relative to the economically optimum level. Always. Without exceptions. Because you - the inadvertent "free-rider" - cannot be charged your due share of the costs of my healthcare in a free-market system. Which means that I will under-value the benefits of it from a broader economic perspective. Which means that I'll be less inclined to seek (and pay for) health care than I would otherwise be.

***

There. Now do you understand why healthcare isn't broccoli?

[Distruzionopolis]

There. Now do you understand why healthcare isn't broccoli?

I understand that I'm hungry now. Does that count?

<-- agrees with you.

[Death Metal]

Once again, New Chalcedon debunks laissez-faire nonsense with military grade fact bombs.

One of the few reasons I keep coming back here.