Do Market Forces Actually Work in Distributing Health Care?

What Should You Be Asking About Health Care in America?

Do market forces actually work in distributing health care?  

Is Healthcare a commodity best left to profit driven markets?

My answer:   No.  

For several reasons, some of which are discussed in a recent op-ed piece by David Brooks

(NY Times http://nyti.ms/2neIP0U )

Briefly, here are my reasons for rejecting market-based solutions to health care problems:

1) Health care is principally funded by taxpayers in the US.  We have an annual health care cost in the US of more than $3 trillion, of which about two-thirds comes from taxation.  What market starts with $2 trillion in taxes?  This makes Americans the most taxed people in the world, bar none, for health care.  Why should these world leading taxpayers be left without financial support for health care when they need it?

2) The inverse relationship between price and demand which characterizes a true market (i.e., lower pricing increases demand) does not hold for health care.  We do not buy an appendectomy because it is on sale this week.  No one really wants health care unless they are persuaded (usually by a doctor) that some intervention is needed.

3)  Higher quality does not cost more in health care, it costs less.  When health care delivery is optimally caring for patients, the overall cost of care falls.  This is very un-market-like.

4)  The buyer can not beware in health care.  The old adage “caveat emptor” or let the buyer beware is untenable in health care.  Buyers of health care are patients.  They can not shop.  80% of health care dollars are spent in urgent settings when shopping is obviously not possible.  But even if it were, patients do not have the experience and training needed to decipher what health care services and goods are needed.

5) The seller of health care goods and services should not first and foremost have its self-interest (i.e., to make the most profit) as its goal.  Rather, health care should be first, foremost, and always, about the health and comfort of patients.  The emphasis of professional ethics for medicine and nursing is to provide the best care for patients without regard to personal comforts of the health professional—this is not how markets work.

6) The transaction between buyer and seller of health care (patient and provider) is of interest to all of society.  When a patient has active tuberculosis, it is in the interest of all of society that he/she is provided with state of the art treatment, thus reducing the burden of communicable disease exposure throughout the community.  Market don’t function well when multiple parties have an interest in the outcome of a transaction.

The essential and primary mistake of American health care policy is to assume that market forces will efficiently distribute health care goods and services.  This is not the case, has never been the case, and can not be the case in the future.  Let us stop pretending that profit driven, market-oriented, business as usual in American health care is anything other than a continuing catastrophe.  Time to find a new way of thinking about health care delivery.

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Is the Federal Government In Charge of Health Policy in the United States?

Is the Federal Government In Charge of Health Policy in the United States?

It sure feels like the federal government has the reins of health policy in our country.  

Medicare, the government program financing health care for people over 65, is run entirely by the federal government and federal taxation is used to provide the funding for that program.  Medicaid and CHIP are both federal programs but with administration and partial funding coming from the individual states.  The Indian Health Service and the VA health system are both federal programs with hospitals and clinics owned and operated by the federal government.  Additionally, there are many federal health programs funding a wide variety of medical services (AIDS, tuberculosis, vaccine preventable disease, sexually transmitted disease, contraception, newborn care, primary care, etc.) which are generally administered by state or local governments.

However, the US Constitution does not specifically give authority over health policy to the federal government and the 10th amendment states that where authority is not specifically granted by the Constitution to the federal government the presumption should be that the states have primary authority.  Thus, the practice of the federal government has been to incrementally expand its authority over health policy, often by appropriating federal tax money for the myriad of health care services and then using the promise of that funding to lure the states into accepting administrative responsibility, and sometimes partial funding responsibility, for the growing number of health care programs.  But the Constitution would have the states making the principle decisions in health policy.

What to do?

I suggest that the earthquake political moment which happened this past Nov. 8 creates a time and space for substantially shifting health policy making from Washington DC to the fifty state capitols.  Mr. Trump proposes to repeal the Affordable Care Act and has apparent agreement with the Republican controlled Congress.  However, Mr. Trump has proposed no cogent replacement health policy and the Republicans in Congress seem very divided about how to go about filling the gaping hole that would be left by the ObamaCare repeal.

The Affordable Care Act, itself, contains a provision for state experimentation beginning in the present calendar year, 2017.  This is, in effect, what is being proposed by four Republican Senators, as discussed in the attached New York Times article.  However, both the provision of the ACA and the currently proposed legislation do not go far enough in allowing states leeway in the making of health policy.  Let's really open up the laboratories of democracy and allow all of the states a very free hand in determining how best to meet the health care needs of their citizens.  What works in Massachusetts (the state with the highest per capita health care costs in the nation) will likely be quite different from what works in Utah (the state with the lowest per capita health care costs in the nation).  Put all federal funding for health care, including Medicare, CHIP, Medicaid, and everything else, into play with legislation that could allow each state to fashion its own health care system, or do nothing at all.

Related article: http://nyti.ms/2qUCMOw

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