In Effect earlier this week did a good job pointing out how the MJS's chief business guru, John Torinus, pooh-poohs public solutions to the burgeoning health care crisis while sidestepping the arguments for comprehensive reform.
Keep it private, Torinus insists -- it's working so well now!
The Brawler is a connoisseur of market fundamentalism, the belief that markets are somehow divine and could solve all our problems if only we would let them work their wondrous magic. (Why don't we all have jetpacks right now? Public employee unions, that's why!) And Torinus' column is a particularly fine specimen of that church.
The Brawler is particularly amused, though also saddened, when market fundamentalists start reciting the wonders of the free market when it comes to health care. "Deregulation worked wonders for airlines! For telephone service! For the savings & loan industry! (Just kidding, they don't mention that little bump.)"
Failing to see of course that health care is fundamentally different from other industries and no amount of increased consumer power can change that.
Back in 2000 Robert Kuttner wrote a piece in the American Prospect that has stuck with the Brawler for it clearly nails the crux of the problem. And any way forward -- any real way forward here in Wisconsin or nationally -- has to be honest about the limits of the "free market" in the ongoing health care debate.
From the Feb. 15, 2000 issue of the American Prospect:
Greater reliance on market forces cannot be the solution because marketization is the main problem. In a free market, prices are efficiently set by private supply and demand, consumers are adequately informed and have plenty of choices, and there are no significant social benefits or costs external to the transaction.
But health care is not, and cannot be, a free market. For one thing, we subsidize demand because we don't let people die if they can't pay the doctor. We necessarily subsidize and regulate supply (of doctors and hospitals). Recognizing that health care has significant externalities, we invest socially in sanitation and health, even for the indigent, to prevent epidemics. The health market has significant, structural failures of information and free choice. Sick people lack the knowledge, and often lack the right, to "shop around" for health plans, doctors, and hospitals. We further complicate the whole affair with insurance, which is a cross-subsidy from well to sick and from young to old.
By marketizing something that cannot be an efficient market, our system has created crazy inefficiencies. An ordinary industry maximizes profits by attracting and keeping satisfied customers. But the "customers" of health insurance are often sources of loss, not profit, because they have the effrontery to get sick. Profitmaximizing health plans, therefore, seek to market their products to consumers with above-average health, to minimize the costs of treatment, and to drive away people with expensive or chronic conditions. These outlays on risk selection, marketing, and second-guessing of doctors drain tens of billions of dollars that could otherwise be spent on care. They fragment insurance pools. The cost of claims processing wastes tens of billions more. Additional billions are squandered in a cops-and-robbers game between nimble health entrepreneurs and fraudand-abuse inspectors.
So the crisis of health care is not really one of budget escalation and underinsurance, but of a perverse system. Managed care itself has become a complete perversion of what was originally intended by the radicals who invented prepaid group health insurance half a century ago.
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