I am a family doc who has been practicing medicine in San Diego for over twenty five years. Democrats, progressives and independents must recognize that the increasingly catastrophic circumstances of our medical system are but one result of the false public policy ideology which has sold the nation on the ineffectiveness and inefficiency of government action and the primacy of the free market in determining the provision, manufacture, and distribution of just about everything. The financialization and commercialization of our culture has produced successive attempts at deregulation and privatization of formerly public functions, i.e. schools, prisons, utilities, hospitals, sanitation, even military and disaster relief functions. At least until the elections of 2006, a goodly majority of ordinary Americans bought into this frame of reference. The cummulative disasters in the public arena under the current Republican admistration have set the stage for a correction in these attitudes and beliefs. In such a context it is important to look at recent proposals for change in the health care sector from an economic and public policy perspective.
The public policy and political action around changing the system as proposed by legislation first passed in Massachusetts and now proposed in California proposes universal coverage by governmentally mandated and somewhat subsidized buy in to the private health insurance system. Such proposals revolve around two rather important fallacies, i.e. (1) That health care is most efficiently distributed by a free market mechanism and (2) That medical services are an ordinary commodity. I would argue - on the basis of looking at European successes and our Country's failures in solving the provision of medical services over the past 40 years - that the "free market" model is a failing economic and public administration ideology used to rationalize and justify corporate control of the health care system to profit from the enterprise. This pervasive perspective has obscured the successes and potential efficiencies possible and actual in governmental management of health services.
Medical services are not an ordinary commodity but more like a "public good" which should be distributed using a regulated public utility model. Getting medical care is not like getting a haircut or buying a refrigerator. Free market, caveat emptor, functions ineffectively and inefficiently for the following reasons: (1) Inherently when a person gets sick he or she functions poorly as a consumer. Often there is no opportunity or it is impossible to investigate or shop around for quality care, never mind price. (2) A seriously ill person has no price sensitivity - care is needed now and many patients will face even bankruptcy to get needed care in spite of looming bills. (3) As a practicing physician let me tell you that even the most intelligent and computer literate sick patients are often seriously deficient in relevant knowledge both of disease states and who is well qualified to treat them. (4) Price transparency is non-existent in medical services. In getting my own medical care I have found it is totally impossible to have any sense of the ultimate charges for any significant package of medical services so it is impossible to price shop even when there is time. (5) Under our insurance system, in important situations, the patient is rarely the consumer. Most purchasing decisions are made by the doctor or other health provider acting as the patient’s surrogate. In surveying my colleagues I can tell you that they treat with little or no knowledge of the patient's actual purchasing power, with or without insurance. (6)Finally, and most importantly, we all know that there is virtually no opportunity for service or product substitution. You had best get the right care the first time. If your care is inadequate you may be dead or disabled or in any case set back and it is heroic to seize the opportunity to identify and 'consume' alternative services. For all these not so subtle reasons, health care services do not belong in the commercial marketplace or the market must be significantly modified by non-market norms (values) and institutions (government or other public interest entities.)
In evaluating health care reform it is important also to understand the concept of "public goods." A "public good" is a product or service which benefits everyone in the community. Having a healthy citizenry reflects the success of a nation. Public goods are characterized by: (1) value that has benefit to the community as a whole beyond any purchase price paid, (2) often requiring large initial investment costs that are generally too expensive for any individual or private corporation to afford and earn a reasonable return, (3) requiring a higher level of administration than any individual or company can arrange and (4) having value that accrues over time and is difficult to price properly. Public goods are characterized by "externalities," that is, value that accrues to people who benefit by other’s consumption of them without paying for it themselves. Technically these people are called "free riders." (It should be noted that in the 2005 "Economic Report of the President" medical services were actually criticized as being economically inefficient because they allowed 'free riders'.) By definition "public goods" are not well distributed by market mechanisms. Americans are very accepting of some public goods, i.e. police and fire departments, national military forces, light houses and their modern equivalent the GPS system, water distribution and sewage treatment plants, telephone, radio, video frequencies and the internet. Looked at from an economic and a public policy perspective, health services are the epitome of a "public good." This is what is meant by the slogan "Health Care is A Human Right!" Not for profit hospitals, emergency rooms, 911 ambulance systems, water sanitation, mosquito control, TB control, restaurant inspections, and vaccines are all good examples that we know. The so called free market economic model obscures and distorts the economic and policy significance of public goods. The reigning public policy ideology has, in fact, made huge efforts over the past 40 years to privatize other services which should best be left in the public sector.
Now we can intelligently say that the current "crisis" in medical care results in part from years of economic and public policy neglect, obfuscation, and denial of the factors discussed above. This has produced the current crisis in our health care system: it's monstrous inefficiency ($300 billion or 31% in overhead AND 45 million uninsured), and the unfettered market exploitation of the sick and injured for profit (just look at Medicare Part D as a brazen example of how my comments are fact, not rhetoric), while contributing at least 45% to medical price inflation. Thus we can say that those proposed solutions for "Universal Care" which mandate (subsidized) buying into the fragmented, profit oriented insurance based system are likely to be intolerably expensive, economically inefficient, and, in the end, not solutions to the problem. In fact, currently 10 commercial insurance corporations control medical services for over 50 per cent of all Americans under the age of 65. As a physician I can tell you that on a day to day basis these insurance companies divert considerable time and energy away from patient care and provide more barriers to care for my patients than any government bureaucracy could ever design. Currently insurance companies are the main problem in our dysfunctional system. So called moderate or practical reforms which call for subsidized buying into the health insurance market are misdirected. True reform must entail bringing responsibility for health care into the public sector and taking on the lobbying clout of the insurance industry to undertake its elimination. After all, what the insurance companies fundamentally do is take money from some pockets and distribute it to other pockets. Medicare does this with a 5% overhead - quite a contrast from the estimated 30% in the private insurance sector. Transfering this part of the premium dollar from administration and profit to the provision of services will totally pay for medical care for all the uninsured in our Country and have some funds left over. The California State Legislature (both houses) last year passed SB 840 Kuehl (See www.healthcareforall.org or www.onecarenow.org), a universal care, state wide, single payer, public utility type modeled system which faced up to the failure of the free market, the inefficiencies and waste of the current system, the loss of insurance premium dollars to overhead and profit, the chaos in the organization of services, and the existence of 6.5 million uninsured folks in our State. The was, in my opinion, the most successful and far reaching legislation ever considered by any legislative body in the United States ever and the sole approach which has a real chance of working. Governor Schwartznegger vetoed it of course. Nonetheless it remains alive and its concepts should inform every Democrat's approach to the now necessary and lively public debate about how to structure the provision of medical services.