Guaranteed Healthcare

I would like to respond to two points in your response to mine.

1. Allowing the market to regulate health care

If you want to talk about the immutable laws of supply and demand, then you must be aware of Adam Smith’s treatise on the Market, “The Wealth of Nations.” He argued for the law of the market to regulate price, supply, and demand. He said that there is an “invisible hand” that moves upon the market to bring everything into equilibrium.

However, just having private, for-profit businesses is not sufficient to bring this “invisible hand” into operation. There are a number of other conditions that must be met, most of which do not exist in our economy today. But one of them does exist, in the health care model, and that is “many small buyers.” Adam Smith explains that there must be many buyers, none of which can influence the market alone. If this rule were in place, as it is, then your hypothetical patient could not “shop around” for a cheaper price. Let us assume, for the sake of argument, that $750 was the market price for this sort of surgery. Individual doctors would be able to perform all the surgeries they wanted for $750, and not one would have any economic reason to do the surgery for $500 for someone who walks into his (or her) office asking for a lower price.

This situation is more easily understood with something like apples. Lets assume that all apples are $1.50 a pound, and that markets can sell all their stock for $1.50 per pound. If you walked into the store and demanded to pay $1.25 per pound, they would turn you down, because they would have no economic reason to sell you apples for $1.25, when they know they will sell them for $1.50

Now, suppose something happens, and the price of apples rises to $5.00 a pound everywhere. Some people would still buy apples, some would buy less, and some would buy none at all, but might switch to pears. No one customer could demand a lower price. However, the store manager at some point would notice that most of his apples were not selling, and would lower the price. That is how the “invisible,” and I might add, “silent” hand works. Not by individuals complaining or negotiating, but simply by deciding to buy or not buy.

If the price of $5.00 a pound was really too high, it would come down to a reasonable price. If, however, the conditions under which apples were grown and marketed had changed so much that $5.00 was the only reasonable price for making a profit, then less efficient growers would stop growing apples, the price would stay at $5.00, the amount offered would be less, and the market would be at a new equilibrium.

This model doesn’t work with health care, however, because of the concept of “price elasticity.” That is a fancy term for saying a way of measuring how much the demand will go down when the price goes up. If a good or service is “highly elastic,” then a slight increase in price will cause the demand to drop drastically. For example, and I’m making this up, most lettuce sells for about the same price. If red leaf lettuce went up by $0.30 per head, people might just switch to romaine or green leaf lettuce, or butter lettuce. If the price of red leaf lettuce dropped by $0.30, many people might switch to it from the other lettuces.

But if a good or service is “highly inelastic,” then a change in price will have almost no effect on the number of units sold. Health care is very “price inelastic.” If a man needs heart surgery, he will have it, whether it costs him a $10 co-pay, or he has to mortgage his house for it. If a woman needs chemotherapy for cancer, she will get it, whether her insurance pays for it all, or she has to borrow $75,000 from credit cards at 21% interest. The only people who will drop out of the market, thereby reducing the demand, (though not the price), will be those so poor that they will actually die because they cannot afford it.

The market therefore cannot be depended up to regulate health care.

Prices have been brought down, but this has been down by forces that are counter to the market: price negotiations, whether by insurance companies or by governments. These negotiations break the market model, because there are no longer “many small buyers” who cannot affect the price of the market. With a government, or large health insurance companies, the “many small buyers” become a small number of large buyers who can put pressure on doctors to lower their price. If the price they demand is still reasonable and profitable for doctors, then the price goes down. If it is not a reasonable price, then many doctors will “opt out”of the negotiations, either by not accepting that particular insurance, or, in the extreme, by giving up their medical practice.

“Market forces” are not in effect right now. The health insurance companies have broken those forces. We understand that we may want someone to negotiate prices. The only question is: who? Private businesses or the government? Most countries have universal, single-payer insurance, and the doctors and government have learned to live together. The government has learned what is a fair price to pay doctors, and they do not have a problem with health care professionals leaving the field, as we do in this country under the health insurance companies, not just because of the prices they receive, but because of the restriction put on what patients they can treat, and how.

The health insurance companies are not interested in anything but their own profit. This profit motive has not brought about some ideal equilibrium in the market. Rather, it has driven up the price of insurance premiums so high that they are an unreasonable burden to individuals and business who pay them. At the same time, they have lowered the amount they are willing to pay to doctors and nurses. And, to make it worse, they often refuse to pay at all for health care that is needed by people. In many cases, the only reason that anyone gets health care at all is because of the altruistic motives of doctors and nurses, who work for free or reduced rates – the altruistic motive that you sneer at, but which saves lives.

2 Your contention that single-payer, universal health care is using “the government to forcibily attain that by stealing it from those who have earned for themselves, and giving it to those who cannot obtain it for themselves.”

There are some goods and services that need only be available to those who can afford them. If a woman only makes $35,000 a year teaching school, that person need not be given a Jaguar to drive. Let her settle for a Honda. If she can’t afford a three-month cruise to the Mediterranean, let her spend the summer gardening or reading books. If she can’t afford designer clothes on Rodeo Drive, let her shop at the Goodwill store. Society doesn’t suffer.

But we learned long ago that society benefits from making some goods and services available to all. For example: the fire department. At one time, at least in San Francisco, fire departments were for-profit enterprises, and homeowners paid premiums to them. If their house caught on fire, the fire department would come and put out the fire. But what about people who didn’t pay the premium, and whose house was right next to yours? The fire company would stand and watch their house burn down, and not do anything for you until yours started to burn. Would you not have been better off if there was a single, public fire department that would stop your neighbor’s fire before it harmed your house? Yes, indeed. Which is why public fire departments, funded by taxes became the norm. It is the same with police.

The same with public schools. Why should someone who can afford to put his children through expensive private schools – or for that matter, someone who has not children at all – be required to pay taxes to support public schools. The answer is very simple. We all benefit from an educated population. Persons with a high school degree are better workers and far less likely to commit crimes. Compare the cost of keeping someone in public school for a year to the cost of keeping him in prison, and you will see what a good deal it is for everyone.

Health care is the same. We all benefit from a healthy general population. Even if someone can afford to pay for private doctors for herself and her family from birth until death, it is in her interest to contribute to universal health care for everyone. Do we really want sick people to go untreated, particularly those with communicable diseases? Do we want them picking our lettuce, washing our restaurant dishes, sitting next to us on public transportation or in the movies? Do we want our children to run into sick children at the playground or amusement park? Do we really think that if an epidemic of tuberculosis or hepatitis breaks out among the poor or uninsured, that we will never be infected? For our own health, we need to provide health care for everyone, just as we need to provide fire fighters for everyone, police, and schools.

There are ways to keep the cost of health care low, and most of them are preventative care. Help prevent obesity, and start them exercising. Help people stop smoking. Stop putting cancer-causing poisons on our food, and grow it organically. Encourage businesses to give people more time off, to reduce stress. Anyone can add to this list.

But when someone is sick that person should receive good health care, whether it is antibiotics for the flue or chemotherapy for cancer, whether that person is rich or poor. It is the decent thing to do. It is the compassionate thing to do. And if decency and compassion don’t move you – it is very often the thing to do to keep you healthy.