In the few days since I published my post about the inevitability of a single-payer healthcare system, I’ve gotten a few caustic comments from some of my more conservative friends, and the hairy eyeball from some others, all of whom seem to think that I’ve fallen off the liberal deep end. I haven’t, at least I don’t think so.
I love free markets. I think that much of what the government gets involved in is none of the government’s business. I think that despite good intentions, regulations often do more harm than good. And I think government debt is the biggest drag on the economy.
The issue here is different. Neither healthcare nor health insurance is actually a market. So expecting them to act like markets is fool’s errand.
A true market for health care would exist only if we left everyone to to pay for it on their own, allowing each of us to buy as much healthcare and insurance as we want and can afford. That would result in a large number of people going untreated, which is an outcome that we are highly unlikely to accept. As soon as we decide to subsidize care for anyone, we’re on the steep, slippery slope of taxation and redistribution, regardless of what we choose to call it. Fully in the grip of gravity, we will wind up at the bottom of that slope.
I’m not saying I like this, just that I think it’s the reality. If that’s where we’re going to end up, we should, as my friend Steve Smolinsky says, “Get on with it.”
Just how “non-market” is healthcare? Here’s another example. My insurance company denied the claim for my appendectomy, ostensibly because they didn’t know if I had any other insurance (I don’t). With a single check box, they could have obtained that information during enrollment. Failing that, they could have called me. Instead, they pushed the problem back on the hospital, which tracked me down, got me to call the insurance company and verify that I don’t have any other insurance, so that the hospital could resubmit the claim, which the insurance company says it will take another 3-4 weeks to pay.
The sole benefit of this exercise is to generate a month or more of float. That may be a nominal savings for the insurance company, but it is a net cost to the system. This is a routine practice (shades of “The Rainmaker”). A little quick math suggests that it adds perhaps $1 billion in cost system-wide. This cost is borne by doctors and hospitals, who build it into prices, which ultimately results in larger bills being submitted to. . .insurance companies.
Over the past 20 years or so, every industry has driven time and unproductive cost out of its processes. This is the only case I can think of where an industry has actually added time and cost, and has been able to get away with it.
In true markets, buyers and sellers get to decide who they want to do business with. This drives them to efficiency and equilibrium. In this case, the hospital had no choice. I showed up on their doorstep, the little guy had to come out, they had to do it, and they had to accept my insurance.
If you are a seller of services and you do not have the ability to say no, precisely what kind of market are you in?