Failure of “free market” health care

By Erik Dolson

In the last two weeks of March, nearly 10 million people lost their jobs. Of those, more than 3 million also lost their health insurance.

With the coronavirus looming over every household, think how this might feel — your father is sick? Your child? Everything you worked for is on the line when you sign those hospital forms. Feeling sick yourself? Maybe just see if it clears up, right?

That loss of health insurance affects not just you and your family, but everyone you come in contact with.

The brilliance of capitalism is the efficiency with which it allocates resources. In theory, capitalism balances costs versus quality by giving buyers a choice in a transparent market place. This is the essential mechanism.

But health care has disconnects that violate the basic rules of capitalism: consumers (patients) don’t pay the bills and don’t really make the choices. Insurance companies and government pay the bills, and consumers rarely “shop around” for the best or least expensive care.

This malfunction of the market place is seen by comparing costs of health care in the U.S. versus other countries: U.S. health care is twice as expensive, for mostly mediocre results, than any other developed country in the world. Ultimately, the burden of this falls on citizens through high insurance rates and taxes. We just don’t get to choose.

It’s legitimate to ask, where does the money go?

Drugs cost ten to twenty times more in the U.S. than elsewhere in the world because drug companies have purchased the U.S. Congress.

Private equity firms have swooped in and purchased doctor’s offices and hospitals across the country. Like insurance companies, their goal is to maximize profit, which they do by increasing fees and cutting costs. If you notice absurdly high charges and confusing write offs on a hospital bill, or long wait times and hurried doctor’s visits, this is part of the reason why.

But wait. If the payers and the providers are both interested in reducing cost, why don’t we have the least expensive health care in the developed world? Because insurers and corporations take a large share, and fighting over that share costs about 30% of every dollar spent on “health care.”

Why don’t we have the best health care in the world? Because when we talk about payer and provider, what’s missing from the “free market” equation? The receiver of the service, the patient, you. The one who is most concerned about the outcome. For a market place to work, the receiver of the product or service has to make a choice between price versus quality, and that doesn’t happen in health care.

And, as we see with the coronavirus crisis, health is not an individual concern. You choosing which car to buy doesn’t really affect me. You coughing in line behind me at the grocery store does.

Freeing the free markets

The weird thing is, I believe in the “free market.” I believe that removing consequences for bad behavior encourages that behavior. I don’t believe “inequality” per se, is a bad thing, as long as we ensure opportunity. In short, I am a conservative.

From about 1965.

Of course government is inefficient. The sky is blue. But government’s role is not to be efficient. Government needs to be the referee, mark the playing field, protect free markets and provide services under the law that we would not entrust to our neighbors without guidelines, or that need to be done to avoid loss of our humanity.

But we don’t have “free markets,” we have market manipulation by oligopolists who collude with corrupt politicians and fight transparency.

The only folks facing consequences are the poor—the leaders of Goldman Sachs, ATT, and Pfizer don’t face consequences for their greed, regardless of the damage they do to our country.

Ownership of our money by big banks has caused irreparable harm, first in the Great Depression, which was followed by bank laws, then in the Great Recession that followed repeal of those same laws. Some of those working in the largest banks hurt far more people than John Dillinger. Increase capital requirements, so they face the consequences of their failure, or break ’em up, so if they fail, it is shareholders and not farmers and teachers and gas station workers who are out of a job.

There should be vigorous price competition between cell phone networks. No, there’s not. We need to make sure that no one company or four companies can grab all of our radio spectrum, nor limit our choice of phones, nor throttle in any way our access to the Internet. The ‘Net is now too important, and every citizen should have a wide-open pipe, buying what they want, paying for what they use.

There should be vigorous market competition in the drug industry. It should be illegal for one company to pay another, in collusion, to keep generics off the market. Patent law should be changed so that new generics are available much, much more quickly. Consumers should have the right to buy their drugs from wherever they please. Drug prices, and hospital equipment prices, should be published, not hidden. The market needs information to operate efficiently.

Corporations are not people. If a corporation has broken the law, someone in that corporation did the breaking. They should do time if they did harm. It’s not just marijuana users who are a threat to society. In fact, I don’t think pot smokers are any threat at all, and we should leave them alone to face the consequences of their behavior.

But maybe that’s just me, being a conservative.