Krugman breaks it down: Why free markets can't cure health care

[Joanne98]

Paul Krugman's latest blog entry explains in clear, simple and unequivocal terms why a reliance on the free market system is NOT the answer to our country's health care problems, despite what the right-wing conservatives try to proclaim. It's a great "health care for dummies" piece to print out and hand to any of your family or friends who try to tell you that health care needs to be run like a business.

davidkc's diary :: :: Krugman points out that there are two distinctive aspects of health care that explain why it can’t be marketed like bread or TVs:

1. You don’t know when or whether you’ll need health care — but if you do, the care can be extremely expensive.

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.

There's no other good or service that has so much uncertainty over when you might need it combined with a potentially huge cost. That's why, Krugman points, insurance companies - being the profit-motivated entities that they are - spend a lot of resources trying to deny as many claims as possible and 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.

Could it be explained any simpler than that?

2. Health care is complicated and we expect much, much more from health care providers than from the provider of any other good or service, so purchasing health care is not at all like choosing a new car or buying a loaf of bread.

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.

Krugman bases much of his explanation on a paper by Kenneth Arrow, "Unertainty and the welfare economics of health care," which Krugman calls "one of the most influential economic papers of the postwar era." Written in 1963(!), Arrow's paper expands on the notion of why our expected behavior of a physician is so utterly different from the provider of any other good or service:

..the ethically understood restrictions on the activities of a physician are much more severe than on those of, say, a barber. His behavior is supposed to be governed by a concern for the customer's welfare which would not be expected of a salesman. In Talcott Parsons's terms, there is a "collectivity-orientation," which distinguishes medicine and other professions from business, where self-interest on the part of participants is the accepted norm.

My non-economist translation: When we buy a car, we expect a car salesman to try to get the highest price he can so that he can make the most profit. With our health care providers, not so much. When we go under the knife, we expect our doctor's only concern to be that we return to full health, not how she can get the highest price possible for a surgical procedure for the minimal amount of effort.

Krugman concludes:

All of this doesn’t necessarily mean that socialized medicine, or even single-payer, is the only way to go. There are a number of successful health-care systems, at least as measured by pretty good care much cheaper than here, and they are quite different from each other. There are, however, no examples of successful health care based on the principles of the free market, for one simple reason: in health care, the free market just doesn’t work. And people who say that the market is the answer are flying in the face of both theory and overwhelming evidence.

In the debate over health care reform that is often complicated and convoluted, this is one point that seems clear enough.

http://www.dailykos.com/storyonly/2009/7/26/757917/-Krugman-breaks-it-down:-Why-free-markets-cant-cure-health-care

[jwirr]

1. Do you think that if each of us made 3 copies of articles like this

and bought 3 stamped envelopes our 2 senators and 1 rep would notice that it might be important? When I interned in Ed Medvinski's office in Iowa City we considered every one call to equal 40 opinions. So today everyone from MN on DU copy this and mail it to our sen/rep. It may help.

[Enthusiast]

2. Krugman is right on!

Why can't we hear these points argued on the M$M? The media is complicit in obfuscating the truth. Fuck, is everything controlled by the insurance industry?

[glitch]

3. people who say the market is the answer fly "in the face of both theory and overwhelming evidence"

that's how they roll and they're damn proud of it. Goes with their "creating their own reality" philosophy.

[Wednesdays]

4. K&R

:kick:

[MonteLukast]

5. Don't forget number 3:

3. Health care is not the main priority to insurance companies.
Their top priority is making a profit.

Why should you entrust anything to a company where that's not their top priority?