What makes health care different
As best as I can tell, the recent arguments at the Supreme Court did not touch on a critical part of the discussion about government’s role in health care: the broken market for private insurance. And I think I know why.
A key assumption underlying the arguments, questions and answers was that all uninsured people are uninsured by choice. Sure, some very ill people with preexisting conditions do not qualify. But the implication was clear: Most uninsured people either do not want to pay for insurance or cannot afford it. Justice Samuel Alito said, “You can get health insurance.” Justice Ruth Bader Ginsburg made the point that people who don’t participate are making it more expensive for others, that their “free choice” affects others. The “free rider” problem is thoroughly examined.
It was as if the court forgot that the private insurance market does not function as a normal market. If you are not employed and you want to purchase insurance in the private market, you cannot unilaterally decide to do so. An insurer has to accept you as a customer. And quite often, they don’t.
The Government Accountability Office studied this problem last year and found a range of denial rates that vary by state and by insurer. On average, 19 percent of applications nationwide are denied. One-quarter of insurers denied more than 40 percent of the applications they considered. These denials are not limited to deadly illnesses but include many minor reasons. Expect to be denied if you have asthma, if you take just about any prescription medication, if you are more than 15 percent overweight. Expect to be denied if a doctor has recommended any procedure for you, no matter how insignificant. Basically, expect to be denied.
I’m astonished that this information was not laid out in oral argument and that no questions were asked about it. I believe that lawyers on both sides of this argument, and the justices hearing the case, have always been employed and always been covered by employer-provided health insurance. Perhaps it simply does not occur to them that if they were to try to purchase insurance, they might not be able to.
The justices repeatedly asked: If the government can require you to purchase insurance, what else could it require you to do? What are the limiting conditions to this breadth of control?
The government muffed its response. To me, the answer is obvious. There are two simple limiting conditions, both of which must be present: (1) it must be a service or product that everybody must have at some point in their lives and (2) the market for that service or product does not function, meaning that sellers turn away buyers. In other words, you need something, but you may not be able to buy it.
Let’s test the examples presented to the high court: Can the government force you to eat broccoli? This proposition fails on both counts. Nobody must eat broccoli during their lives, and the market for broccoli is normal. If you want broccoli, go buy it. Nothing stops you.
The health insurance market meets both criteria. Everybody will need health services at some point. And as long as the United States doesn’t provide national health care, the only reasonable method for most people to pay for those services is through insurance. But here, the market simply does not work. Sellers of health insurance turn away purchasers, and in great numbers.
Short of government-provided health services or a government-sponsored national insurance plan, the Affordable Care Act is the next best shot at fixing this broken market.
Another question not asked: “Why are private insurance companies the only option considered an acceptable source for health care coverage?”
Capitalism has made of health care a big ol’ inefficient wasteful system that (when compared with other modern democracies) delivers less result for more money. Socialized medicine in France, for example, is cheaper and has better outcomes. And capitalism thrives on cost efficiency. So, in this case some degree of socialism would be the best capitalist solution!
Charlie Rose interviewed Bill Gates recently. Bill explained that market forces fail in two circumstances: when the cost of innovation or research is high, and when the market is poor. He said this in the context of getting drugs against prevalent diseases such as malaria. It will be very expensive to develop such a drug — so it’s unlikely that the market will lead such an effort — and the customer base for such a drug, although very large, has very limited ability to pay for it to make it profitable. The free market will not develop a malaria drug. He concluded that we need government to fund basic research and philanthropy to provide the drug innovation, the efficiency and the distribution.
Other commenters argue that it’s because America itself is such a weird country:
Nick212 sees this in laws as well as markets:
“There is little, if any, concept of responsibility for your fellow citizen in the Constitution. That was supposed to be left for your spiritual values. And indeed, 200 years ago that did seem rather a logical division.
“Under American law, you can watch a person drown without recrimination. Under English common law, that is a felony.”
MadiganT agrees that America is different:
“We’ve decided centuries ago to be a society of individual choices, and when those choices are bad, only the individuals are to blame, not the providers or the owners of those services.”
HealthcarePolicyWonk suggests a new mode of attack on the current system:
“Important to remember that most of the rest of the world controls the prices charged by physicians, hospitals, drug, and device manufacturers. Change the payment system for physicians and hospitals and you’ll get a very different (and better) result.”
And killroy71 says that socialism and capitalism can and do work side by side:
“In Great Britain, private insurance offers faster access to higher quality care than offered by the ‘basic’ national system. In other European countries, the govt relies on private systems to actually administer uniform policies — the health plans compete on service not price.”
PostScript does believe we’ve all just solved it:
“Socialism and capitalism — two great tastes that taste great together. We want a government to save our lives after we were hit by a car on a bike lane Congress provided because it saves the country money by keeping our hearts healthy. And we want to buy physical therapy rehab in a nicer facility with shorter waiting periods so we can get back on the bike sooner.”
