All too often in conversation about universal health care coverage, universal access, or the rising cost of health care, many American people I talk to fall back on the trusty free market response: a free market with healthy competition produces value.
I don't dispute this, having been born and raised in a much more left-leaning UK economy that doles out social welfare money like there's no tomorrow, I'm happy and excited to be part of the US economy, I've done well for myself here and probably far better than I would have if I'd stayed at home.
My first argument is always that it's the job of any government to provide health care for it's citizens. Aneurin Bevan put it best, I won't try to rewrite it, but it seems embarrassing to me that the US government can't provide health care for all. They already pay for about 40% of all health care in the country, which puts a big dent in the knee-jerk "we don't want government choosing our health care" you hear all too often in the US, fact is, they already do for half of all health care provided in the US. However, unlike Britain's National Health Service, which employs the doctors, in the US the government is merely a payer, they pay the bills, but you have to shop around for a private provider. Military care aside, the government doesn't employ health care providers.
That leaves us with a quasi free market economy where people are free to shop and choose their provider, shop and choose their insurance company, and generally exploit free market capitalism to restrain health care costs. Value is derived from competitive choice.
So wherein lies the rub?
First and foremost, a lot of people do not have any choice. They see the doctor nearest them that is a member of their health plan. They go to the hospital where their doctor has privileges, or they go to the only hospital in their vicinity. They may only have one option for their health care insurance, if they have receive insurance from their employer. And of course, yes, they might not even have health insurance.
I was once an uninsured middle class American. When I first came to the US myself and my wife were uninsured for a good five years. My (American) wife wanted me to buy health insurance, which I could never fully understand. As a Brit I knew that Americans were often subject to huge medical bills, but as I was told it the insurance I would get would not cover major medical expenses, just the routine stuff, and as I calculated it we were spending about $500 a year on health care.
When I finally caved in and acquired health care for us through a Small Business Association (I was self-employed at the time, late 1990s) I paid about $1600 a quarter - $6400 a year - to cover $500 worth of consuming. I still don't get it.
The argument you'll get from health care economists is that us young, healthy people need to pay into the pool to balance out the cost of caring for older, sicker people.
I'm not at all averse to that, in fact I advocate for it. It's called socialised medicine and I'm 100% behind it, I'd just prefer to pay my government in the form of taxes than private HMO companies in the form of padding their CEO profits. At least that way maybe we could cover everyone for 18% of GDP instead of 60-70% for 18% of GDP.
I'd prefer it if everyone was covered for 10% of GDP, but that's not likely here. Most developed countries provide health care for all for much less than 10% of GDP, yet in the US, which is currently spending about 18% of GDP on health care, even spending double doesn't cover everyone.
Moving on, for those people who *are* covered through their job, they are basically getting $9,312 in health care coupons on top of their salary. The average cost of providing health insurance in 2008 is over $9,000. If the median income is $36,835, and it is, then that means the average person with average health care coverage makes on average a quarter of their compensation via invisible health care money.
25% of your compensation is health care Monopoly money. What you do?
I'd spend it.
So we have an expectation from American workers that they will receive health care coverage from their employer, we have an expectation from HMOs to turn a profit, and we have a bunch of people with what are, for all practical purposes, coupons for free health care with little to no accountability for what the health care consumed actually costs.
If we expect competition to drive down costs, we need to know what things cost. Competition in the footwear industry would not be possible if we did not know how much shoes cost. We know what cars cost, we know what cheese costs, we know what haircuts cost, and we make decisions based, in varying degrees, on cost.
FREE MARKET COMPETITION CANNOT EXIST WITHOUT TRANSPARENT PRICING.
Why do we even have to use the word transparent? We don't call supermarkets transparent. Of course they put their prices on their products, how else could we stimulate competition? Houses have prices. Vacations have prices. Colleges have prices.
Enough already. Either we have universal coverage through taxation (please do not mandate me to buy health care from a private, shareholder corporation) or we have a free market. The US system is no less paternalistic than anything in Europe, the only real difference is there are people profiting from the money as it flows uphill.
We cannot have a free market without price conscious shoppers.
You tell me what you think.
Friday, July 25, 2008
Disclosures and Disclaimers
My employer is compensated through funding to provide analytical research, technology solutions, and Web-based public and private health care performance reports by the State of New York, the State of Illinois, the Centers for Medicare & Medicaid Services, the Agency for Healthcare Research and Quality, the Commonwealth Fund and Bridges to Excellence. I am not being compensated by any of these organisations to create articles for or make edits to this Web site or any other medium; and all posts authored by me are as an individual and do not represent my employer or the agencies I work for.