That's why I appreciated this post to my Facebook page, made by an ardent opponent to President Obama's health-care reform proposal. It is a carefully written, cogently argued statement of political philosophy from the American Enterprise Institute contending that unfettered, free-market economics is the force that should be harnessed in order to increase choice and competition in our health-care system, and therefore guarantee high-quality coverage to US citizens. I encourage everyone to read it--and then reflect carefully on its implications.
In the spirit of thoughtful deliberation, I want to respond to what I see as problematic about this perspective. The thesis of this political perspective is that the main culprit for the skyrocketing cost of health-insurance premiums over the last decade is government regulations--regulations that prevent insurance companies from dropping people when they get sick, or that require insurance companies to provide certain minimum benefits, or that prevent employers from dropping employees from plans if they get sick. To be sure, the increased regulation of the insurance industry has, objectively, made health insurance more expensive to buy. But it's important to remember why the regulations were put in place. They were put in place because, absent regulations, insurance companies will maximize profit for themselves and their shareholders. The American Enterprise essay completely omits the profit motive of the insurance industry as a source of systemic increase in health-care costs. And, of course, the layer of money that the insurance companies must make to stay in business adds a layer of cost to the system-one that is completely omitted in the American Enterprise essay.
Secondly, and more fundamentally, comes this question: Is the mechanism of a free-market economy the best one to ensure high-quality health care? One does not have to be a socialist to recognize that unfettered capitalism is not always the best tool for achieving every public policy outcome. Long after we had established excellent private universities across our nation, we had the land-grant movement--where the government supported colleges and universities that would make it their mission to educate a broader number of students in professions that promote economic prosperity and enhance the community's well being. Absent support from public sources, a university education would remain out of reach for most US citizens. Many students who hold jobs and work their way through college can still only pay the bills because public university tuition (even as it is rising) is kept much lower than tuition at private colleges and universities. Moreover, the unprecedented economic prosperity of 20th century America owes a debt not only to hard work and innovation, but also to public programs such as the GI Bill, the public school system, Pell grants, Medicare, etc. American security and prosperity has always been built on the combined investment of public and private resources.
With respect to health care, free market economics is simply not sufficient to ensure quality and access. The reason for this was eloquently explained several years ago on the Charlie Rose show by two of the most successful capitalists in history: Bill Gates and Warren Buffett. Gates and Buffett were explaining why philanthropy was needed to fill the gap in basic medical care in developing countries. Watch the full interview here http://video.google.com/videoplay?docid=515260011274566220 and see, especially, the segment between 31:39- 34:00. In that segment, Buffett explains:
"Bill and I sort of have a background mindset of a market system. And a market system works awfully well. It's worked well in this country. But a market system has not worked in terms of poor people around the world with something, with a disease [the cure for which] should be available for peanuts. The market system just fails in that case. And you have to interject yourself into that and make sure there is a system that will deliver. I'm a big believer in the market system 95% of the time, it's done pretty well for me [laughter] and the world, absolutely. But there are things where the market system is not going to solve the problem."
I am not using this quotation to claim that Warren Buffett supports Obama's health-insurance reform proposal. I am simply pointing out that even the most ardent capitalists recognize the limits of capitalist solutions to some public policy problems, and that the health-care industry, specifically, disincentivizes broad coverage of certain groups of people and certain types of illnesses. Gates and Buffett recognized this as the reason that very cheap medical solutions are not available around the globe--even when a sum of less than a dollar can literally save a life. Kudos to them for investing their considerable fortunes to help rectify that problem.
Unfortunately, we cannot rely on the generosity of private philanthropy or the industry of individual hard work when it comes to health-insurance coverage in the United States. Consumer logic fails with respect to health care because health care is not a luxury item. If I want a Lexus but can't afford it, I can settle for the bus and still get where I need to go. But if I need treatment for cancer, I can't settle for an antibiotic. The cheaper technology won't solve the problem.
In June of this year, economist Robert Reich explained why the public option is in the health and financial interests of individual Americans. The audio and full text of his argument can be found here: http://marketplace.publicradio.org/display/web/2009/06/17/pm_health_care_options/.
If the logic of the American Enterprise institute is followed to its conclusion, not only will we fail to increase access to health insurance for those who currently do not have, cannot afford, or cannot get coverage, but we would also decrease coverage by rolling back existing regulation of the health-insurance industry. And that is a risky proposition, indeed, because the private insurance market (which is your only source of coverage if your employer does not offer a plan--which many do not--or you cannot qualify for a public plan--as do the very poor, the elderly, those in military service and veterans, etc.) is becoming little more than a mirage for millions of Americans who can never access it. The following Census data is excerpted from an article that can be found in its entirety here:http://www.cbpp.org/cms/?fa=view&id=628.
"The percentage of Americans with private health insurance declined to 67.7 percent in 2005, marking a pattern of erosion for the past several years. A new research study by Jack Hadley, a health economist at the Urban Institute, found that the main reason that adults' private insurance coverage has faded in recent years is that the costs of insurance premiums have climbed, making coverage less affordable for employers and employees alike. Hadley also found that rising private insurance premiums have led to higher Medicaid enrollment of adults, as low-income workers are squeezed out of private coverage and into Medicaid. Data from the Kaiser Family Foundation show that, on average, employers are requiring employees to contribute more in cost-sharing (i.e., premiums, deductibles, and/or copayments) for their health insurance and that fewer small businesses are offering health coverage."
"The Census data also show that individually-purchased health insurance, a small component of the overall private insurance market, has been essentially stagnant. In 2005, the percentage of people covered by such policies was 9.1 percent, a figure largely unchanged over the past several years. The individual market continues to suffer from significant problems. Older individuals and people in poorer health may be unable to afford coverage in the individual market, as coverage may be offered to them at very high prices, or they may be excluded entirely, due to the use of medical "underwriting" (i.e., the use of practices by which private insurance companies charge higher premiums, or fail to offer coverage at all, to individuals who are sicker and likely to incur higher health care costs)."
The problem of insurance reform is a serious and complicated public policy issue. No solution is perfect, but neither is the current U.S. system which 1) is economically unsustainable for U.S. businesses and puts many large employers at a serious disadvantage with international competitors; 2) rations care as much as other systems but does it based on what you can afford to pay rather than what you and your doctor agree you need; and 3) covers fewer people at a much higher cost than many alternative systems.
For a range of models illustrating how capitalist democracies cover a higher percentage of their population at a lower cost than the U.S. system see the Frontline documentary Sick around the World http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/ .
Copyright 2009 K.V. Anderson. All Rights Reserved.
written by Richard Miller , October 14, 2009
The new system will fail. It will not be able to sustain itself. The new taxes on insurers and manufacturers will make coverage unaffordable. Then I will be fined for not buying that which I cannot afford. Then, the government will swoop in to save me from the mess government created.
I despise being made a ward of the state.
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