Reaganiffic wrote: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?