Archive for the ‘Healthcare Policy’ category

A Short Post on Capitalism and Healthcare

August 16, 2009

I’d posted this as a comment on Mike the Mad Biologists blog a couple of days ago, and someone mentioned that it would be nice to have this in linkable form.

Someone over there said this about insurance companies:

Insurance companies do nothing wrong. They are FOR-PROFIT publicly traded companies whose obligations are to their shareholders. It’s actually illegal to some degree for them not to make as much profit as they can. They don’t make money by paying out. They make it by NOT paying out. It’s capitalism, folks

Whether health care is something that should be (out)sourced to the private sector is one question, and reasonable people can probably disagree. But expecting the private sector to act like the public? That’s just crazy.

I found that comment ridiculous on a number of levels. Most striking is the knee jerk “It’s capitalism.” So often people tell me that, without actually knowing what capitalism is. At any rate, below is my response in full, I hope that it clears up a couple of the deceptive or ignorant things people say about health care and “the market.”

Insurance companies do nothing wrong.

Idiotic statement.

They are FOR-PROFIT publicly traded companies whose obligations are to their shareholders. It’s actually illegal to some degree for them not to make as much profit as they can.

To be clear, wrong is a moral judgement, not a legal judgement. There could be a law FORCING insurance companies to shoot sick people in the head for profit, and it would still be morally wrong. There is no such law.

To argue that insurance companies are doing things that are legal, that’s a different kettle of fish.

Recission is legal. That’s why insurance companies do it. When questioned on the subject by congress, the insurance company representatives uniformly said that would NOT stop practicing rescission because rescission is legal. There is no question that recission is morally wrong. So insurance companies can do wrong, and do so regularly.

They don’t make money by paying out. They make it by NOT paying out. It’s capitalism, folks

I hate the “It’s capitalism.” argument. It’s not capitalism. That’s not the definition of capitalism. I encourage you to open an economics textbook. Capitalism is an economic system in which the means of production are privately owned, and labor/goods/capital are traded on a to-varying-degrees free market. Capitalism says NOTHING about insurance companies “paying out.”

Infact, in a large way insurance companies as-they-are-now are anti-capitalist, or at least anti-freemarket. “Free markets” only work when certain assumptions are met including:

-Markets need to be open: They generally aren’t in healthcare, you can only choose from options your employer has.

-Information is abundant: Not true in the insurance markets. Even the insurance reps don’t understand what they’re selling most of the time. I promise you most of my patients don’t know head or tails of what the options in front of them mean.

-People act rationally: Also not true in healthcare. People don’t understand their own “self interest” when it comes to healthcare. That’s the entire point of doctors – you’re paying for our expertise to give you an idea of what’s in your best interest. And there are no good markers to determine how to rationally choose a “good doctor,” which feeds the information problem above.

-No externalities: That is, the freemarket assumes every benefit or cost in the system is contained within the prices given. That’s 100% not true for healthcare. Your health is the definition of an externality. You can’t reasonably put a price on it, and if you could, you could not rationally divide up that price. That is, even if you said “X dollars is the cost of a life,” you couldn’t reasonably say “and Y percentage of X is the value of keeping my blood pressure under control.”

There are others, but those are the ones that come to mind. Clearly, it’s not just “that’s capitalism,” and saying so betrays a huge misunderstanding of the basic concepts we’re talking about.

 

Whether health care is something that should be (out)sourced to the private sector is one question, and reasonable people can probably disagree. But expecting the private sector to act like the public? That’s just crazy.

 

The question was never having the private sector act like the public sector. The question was “can the private sector blatantly deceive it’s customers about what it’s selling forever with impunity.”

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Gawande Article About Healthcare

May 27, 2009

I’ve mentioned before my disdain for mainstream science and health reporting. One of the reasons I started blogging to help fill the gap myself is the writings of Atul Gawande. He’s a surgeon who has written two excellent books about medicine: Complications, and Better. Today I noticed an excellent article by Dr Gawande in the New Yorker about healthcare, cost, and the soul of medicine.

Discussion below the fold.

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