Most of us who bother to use the grey matter in our crania already know that a "free market" approach to health care insurance can't possibly work. The insurance model presupposes that only a certain number of people will ever require a payout of any kind, and those who never file a claim pay for that. It's spreading the risk, and it works for things like car accidents (though in New Jersey, that risk is far higher because people here will risk flaming metal death rather than get to work 30 seconds later) and trees falling on your house. It can't work for medical insurance because even if you, like me, avoid doctors because you're tired of being told to lose weight with absolutely nothing out there to help you to do it no matter how little you eat and when the hell are you supposed to exercise when you are working 80 hour weeks, sooner or later you're going to need it. Everyone will eventually file a claim. And that is why a market approach can't work.
Paul Krugman, in his blog, explains it better
There are two strongly distinctive aspects of health care. One is that you don’t know when or whether you’ll need care — but if you do, the care can be extremely expensive. The big bucks are in triple coronary bypass surgery, not routine visits to the doctor’s office; and very, very few people can afford to pay major medical costs out of pocket.
This tells you right away that health care can’t be sold like bread. It must be largely paid for by some kind of insurance. And this in turn means that someone other than the patient ends up making decisions about what to buy. Consumer choice is nonsense when it comes to health care. And you can’t just trust insurance companies either — they’re not in business for their health, or yours.
This problem is made worse by the fact that actually paying for your health care is a loss from an insurers’ point of view — they actually refer to it as “medical costs.” This means both that insurers try to deny as many claims as possible, and that they try to avoid covering people who are actually likely to need care. Both of these strategies use a lot of resources, which is why private insurance has much higher administrative costs than single-payer systems. And since there’s a widespread sense that our fellow citizens should get the care we need — not everyone agrees, but most do — this means that private insurance basically spends a lot of money on socially destructive activities.
The second thing about health care is that it’s complicated, and you can’t rely on experience or comparison shopping. (”I hear they’ve got a real deal on stents over at St. Mary’s!”) That’s why doctors are supposed to follow an ethical code, why we expect more from them than from bakers or grocery store owners.
You could rely on a health maintenance organization to make the hard choices and do the cost management, and to some extent we do. But HMOs have been highly limited in their ability to achieve cost-effectiveness because people don’t trust them — they’re profit-making institutions, and your treatment is their cost.
Between those two factors, health care just doesn’t work as a standard market story.
We expect doctors to make a profit on their work. Becoming, and remaining, a doctor requires many years of training and a great deal of expense for initial and continuing education. Doctors are being paid for their expertise. I remember back before health insurance became a topic of conversation, people used to gripe about how much money doctors made, for all that everyone wanted their daughters to marry one. But even then there was a recognition that there was a certain amount of "payback" to that. What have insurance company executives, or sales reps, or the person in the headset in the cubicle whose sole job it is to be the guardian of the company purse and make sure that if you want an expense covered, you fight good, long, and hard for it, done to earn the amount of money these companies pull in? There's no expertise required to push paper around, though I would argue that for all that we hate them, the minimum wage workers in the headsets require the most expertise, even if it's the expertise of a kind of virtual bouncer. But it isn't the kind of expertise that requires intelligence, dedication, sensitivity, and a willingness to spend one's career constantly keeping up, the way any competent doctor would and does.
The health insurance model is somewhat about spreading risk; someone who is generally healthy isn't going to use as many services as someone who isn't -- and that can be as much about the genetic luck of the draw as about one's own personal choices. We all know about the guy from Supersize Me
who eats Big Macs every day and he's skinny and his cholesterol is fine. We also know people who eat right, exercise, and still have high cholesterol. The 96-year-old woman who gets her hair done where I do who takes Celebrex, Actonel, a blood pressure pill, a water pill, and about five other drugs, uses more services than I do. The baby with spina bifida uses more services than she does. And so it goes. But the health insurance model falls apart when it becomes a for-profit business. Because once paying for health care becomes a for-profit model, it becomes not about paying for necessary services, it's about NOT paying for anything. The less there is on the "out" side of the ledger, the more of the "in" side of the ledger can go to profits -- and into the pockets of executives and stockholders.
Labels: health care