The free market has not fared well in recent years. Adam Smith’s “invisible hand” has had its thumb on the scales for a very long time. In the last 75 years U.S. markets have been free only in the sense that businesses are free to seek as much government protection as they believe necessary.
Agricultural markets are a typical example. Prices of corn and wheat have been heavily subsidized by the federal government for generations. Taxpayer monies prop up these sectors. Without government support prices would plummet to their natural levels.
The financial sector is a glaring testament to the infinite ways in which greed and corruption can distort the workings of a presumably free market. If finance was forced to return to “free” practices the big players would lose all their “free” money. Paradoxically, heavy regulation of the financial sector is now necessary to restore the mechanisms of a free market.
Similarly, the health care market as we know it is not “free”. Supply and demand factors are not applicable to health care. Supply of services is necessarily limited – these resources are not infinitely available. Demand is always 100% – demand is not able to fluctuate. A consumer may put off purchasing a new car for many reasons. But she cannot delay a life-saving medical service.
An obvious example of the severe distortions in the health care market is the vast numbers of people who currently postpone needed medical services. Another example is the fact that premiums rise annually at a rate of 10% or more. This could not occur in a supply-and-demand market.
So, the health care market never was free. Health care is a right and delivery of health care services needs government regulation. For-profit medicine is a non sequitur. Current markets cannot be “encouraged” to change. Medicare Part D provides an example of the extreme failure of such attempts at encouragement. Following institution of Medicare Part D, senior citizens found themselves paying significantly more for medications.
The New York Times recently reported on the acute run-up of prices for medications. Pharma – true to its rapacious raison d’etre – has increased prices at a rate not seen since 1992 – the last time health care reform was seriously considered. The interest of pharma is to earn profits. The business of pharmaceutical companies involves health care products. Their business is not health care itself. Likewise health insurance companies – their business is to earn profits. Government attempts to provide incentive and rewards will only result in the creation of end-arounds by these entities. We’ve experienced the end-stages of such hidden practices in the current severe recession.
Government incentives and rewards create market distortions in the majority of cases. The health care “market” has failed. As health care is not a free market, government regulation of health care delivery is required.
The optimal form of government regulation involves establishing universal health care. The United Kingdom, Australia, Canada, the Netherlands, France, and Switzerland have successfully implemented various forms of national health care. The U.S. does not need to reinvent the wheel. We can adopt any of these or utilize a suite of components. It is possible for the private sector to continue to offer health insurance, as is the case in the Netherlands.
There is no good reason for the U.S. private health insurance industry to exist. Medicare is widely acknowledged to be a successful system, warts and all. Extending Medicare coverage to all Americans is one possible solution to meeting our nation’s the health care needs.
It’s important to acknowledge that Medicare expenditures continue to rise at an inflationary rate. Many improvements are necessary to begin to control costs. One method would involve sophisticated statistical analysis of utilization patterns and attempt to remediate the treatment patterns of the outliers. Another is to significantly reduce utilization of the most costly diagnostic procedures and interventions. Recent reports on the effectiveness of mammography and cervical cancer screening are germane to these considerations.
The most important revision to our current non-system is to graduate many more primary care physicians. The federal government can provide inducements in the form of tuition relief as well as financial enhancements to establish practices in underserved rural locations and inner cities. Studies consistently demonstrate that increased numbers of family physicians directly correlates to reduced health care expenditures.
Current legislation before Congress is not the final solution. It represents a very good beginning and deserves our support.
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