My old health care posts are suddenly relevant again. Seven years ago, on March 21, 2010, the House passed Obamacare. I had a post on the subject which reflected a number of my thoughts following the more or less year long debate that led up to the passage of that legislation. As I said at the time, I didn’t think Obamacare was well designed but I didn’t think a well-designed system could pass Congress. And the status quo was awful and getting worse.
We’ve, once again, been hearing about how everything would be cool with the health care system if only the free market was unshackled. Here is why I’m all but certain that won’t work:
To date, nobody has been able to direct my attention to an example of a successful market-based system of health care; leading me to be skeptical of whether such a thing can exist. One country that sometimes comes up in this context is Singapore. However, while its system makes use of private insurance, it also ensures affordability largely through compulsory savings and price controls.
Singapore’s system uses a combination of compulsory savings from payroll deductions (funded by both employers and workers) a nationalized catastrophic health insurance plan, and government subsidies, as well as “actively regulating the supply and prices of healthcare services in the country” to keep costs in check[.]
Markets are very good at allocating resources. However, to function properly, it seems to me that buyers need to have good information and the ability to walk away from a transaction. That’s a problem in health care negotiations. Health care decisions involve analysis of medical information that’s generally beyond the understanding of most people. And, even if you can rely on your doctor or otherwise master the medical end of the decision making process, medical pricing is often ridiculously opaque. Try calling up half a dozen hospitals and trying to get the actual price of a hip replacement. Even if they’re willing to tell you, there are likely to be an array of prices depending on who’s asking. And those will be qualified prices because any number of contingencies can affect the price, even in the middle of the surgery. Then you have the problem of getting an insurer to be clear, up front, about the terms of the insuring contract and then honoring those terms after the fact. The insurer operates from a position of strength, collecting premiums for years when there are no significant health issues, then being able to withhold a determination of whether it’s going to pay for a procedure until after the procedure is complete. Finally, any negotiating options you have in the ordinary situation pretty much go out the window once you’re in an emergency situation. It’s like negotiating with a gun to your head.
At the time, we were spending We were spending 16% of our considerable GDP on health care already. We were spending twice as much per person on health care as other countries. We were already paying for something like 45% of those costs from public funds. And costs were increasing. (And no, despite what you may have heard, medical malpractice lawsuits weren’t the prime or even substantial cause of these increases.) Despite spending half as much, those other countries had health care results that are comparable or, in some cases, superior to the U.S.
Can we do better? Sure, almost every other industrialized country is. But, for ideological and venal reasons, Congress is not looking to copy systems that are already working better than ours was in 2010 or in 2017.