Why there can be no free market in health care

Paul Krugman argues that those who believe the competition of the marketplace will be able to provide the best possible health care are fantasizing because there is no free market in the normal sense. That basic point should be where any serious discussion of health care reform starts. Yet it has been excluded from the one-sided debate going on in Washington. That's because most of the politicians and their corporate buddies don't intend to allow actual health care reform. Instead they're proposing to tweak the for-profit health insurance industry, though nearly all agree it's a large part of the problem.

Krugman highlights two things that differentiate health care from that archetypal marketplace where buyers and sellers can craft mutually beneficial arrangements.

There are two strongly distinctive aspects of health care. One is that you don’t know when or whether you’ll need care — but if you do, the care can be extremely expensive.

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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.

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The second thing about health care is that it’s complicated, and you can’t rely on experience or comparison shopping.

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Between those two factors, health care just doesn’t work as a standard market story.

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There are [around the world] ... 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.

To summarize Krugman's argument, the buyer can't really make fully rational choices about what and how much health care insurance to buy based upon either supply or need.

There's a third and even more fundamental point that needs to be stressed, though Krugman passes it by. It's this: Unlike TVs or bread or blue jeans, health care is not something the 'consumer' can take or leave, or find a substitute for. When you need it, you need it. It's not about possessing things, it's about pain or retaining the ability to function or life itself. Ultimately it's about freedom.

It's about the third of Roosevelt's four freedoms: Freedom from want.

In the future days, which we seek to make secure, we look forward to a world founded upon four essential human freedoms.

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The third is freedom from want, which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants -- everywhere in the world.

Indeed as FDR remarked very simply in that famous address to Congress in 1941:

We should widen the opportunities for adequate medical care.

There is no legitimate marketplace anywhere in the world for human liberty. In most parts of the modern world, adequate health care is considered to be not a marketable commodity but a human right. So it ought to be considered in the US as well...not merely for those who already qualify for Medicaid or Medicare, but for all of us.

Instead, what the politicians in DC are debating is how to bolster the failed for-profit model of American health insurance by application of just the smallest possible public remedy. The issue, in their minds, has become 'How little can we do?' rather than 'What needs to be done?'.

Bob Somerby has perfectly distilled how far President Obama has climbed down from actually trying to fix what is essentially wrong with the health care fiasco in the US. Now the administration's goal, evidently, is to prune back perhaps 30-50% of the health-care spending that is wasted under the American for-profit model. Because permitting considerable waste, evidently, is a good thing as long as it keeps the politically powerful health-insurance industry at least somewhat fat and happy. Here is Obama at his Wednesday press conference:

Right now, premiums for families that have health insurance have doubled over the last 10 years. They've gone up three times faster than wages. So what we know is that, if the current trends continue, more and more families are going to lose health care, more and more families are going to be in a position where they keep their health care but it takes a bigger bite out of their budget.

Employers are going to put more and more costs on employees or they're just going to stop providing health care altogether.

We also know that health care inflation on the curve that it's on, we're guaranteed to see Medicare and Medicaid basically break the federal budget. And we know that we're spending _ on average we, here in the United States, are spending about $6,000 more than other advanced countries where they're just as healthy.

And I've said this before, if you found out that your neighbor had gotten the same car for $6,000 less, you'd want to figure out how to get that deal. And that's what reform is all about. How can we make sure that we are getting the best bang for our health care dollar.

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And that's why I say, if we can - even if we don't reduce our health care costs by the $6,000 that we're paying more than any other country on Earth, if we just reduced it by $2,000 or $3,000, that would mean money in people's pockets, and that's possible do.

Talk about setting your sights low. It seems that the entire exercise of pushing through this legislation is directed toward retaining the massively inefficient, incoherent, and harmful American health-insurance industry we've grown to hate, but trimming back some small part of its wastefulness...so that our fellow citizens will be gouged somewhat less in the future than they would otherwise be.

That's not true reform, but rather an inoculation against real reform at the very time that the public is demanding action. All the health-care 'reform' legislation coming out of congressional committees this summer is to a greater or lesser degree inadequate to addressing the actual crisis we face. At best, it might produce barely perceptible results beginning perhaps a decade from now by acting as a very modest check against some of the run-away costs. It's main effect will be to blunt the movement to reform health care in the US, however, by bringing it into utter disrepute.

crossposted at unbossed.com