Princeton economist Uwe Reinhardt is well known as one of the bluntest—and wittiest—critics of U.S. Healthcare. Last week, we both spoke at a conference organized by Princeton’s Policy Research Institute on “Access to Universal Health Care: New Jersey, the Nation and the Globe. As usual, I learned something from Professor Reinhardt.
Earlier this year, New Jersey Governor Jon Corzine received a somewhat startling letter from Princeton economist Uwe Reinhardt. The missive was appended to a report from the “New Jersey Commission on Rationalizing Health Care Resources,” a Commission that Corzine had asked Reinhardt to chair.In the letter, Reinhardt expresses “some personal observations on the inconsistent expectations Americans have of their health system,” describing “these inconsistencies” as “a form of cognitive dissonance.” Reinhardt goes on to explain that, in his view, these inconsistencies reflect “certain deeply ingrained traits in American culture that stand in the way of a rational health care system.”He concludes: “In short, Governor Corzine, in my professional view, the extraordinarily expensive, often excellent just as often dysfunctional, confused and confusing American health system is a faithful reflection of the minds and souls making up America’s body politic.”After reading the letter, Governor Corzine had one question: “You’re not going to publish this in the report, are you?”
In fact, the letter did appear at the front of the report. And last week, at a conference on “Access to Universal Health Care: New Jersey, the Nation and the Globe” sponsored by Princeton’s Policy Research Institute, Reinhardt circulated said letter. It served as a good companion to Reinhardt’s speech, which compared what we euphemistically call our health care “system” to systems in other parts of the world.
Reinhardt began his talk by considering the fact that, in the U.S. insurance is often tied to one’s job. “No one –in his wildest dreams—Drunk!!—would design a health care system based on employment,” Reinhardt declared, barely containing his outrage at such a truly bone-headed idea. After all, the unintended–but inevitable– consequence of an employer-based system is this: if you lose your job, you also lose your health insurance—at exactly the worst possible time.
In his letter to Corzine, the Princeton economist elaborates: “the reluctance of Americans to countenance government financing of health care outright…has led them instead to prefer inherently temporary private health insurance tied to a particular job with a particular company (and then to look helplessly for rescue by federal or state governments, when, in their 50s and early 60s, they may find themselves structured out of their jobs and the health insurance that came with it and unable to afford coverage in the private insurance market for individuals). When,” he asks, “will it dawn on the American voter that, in an age of fierce global competition and ever novel disruptive technology, any individual American corporation is a fragile institution and, at best, a highly unreliable source of health insurance…?” This is especially true for those forced into early retirement.
Reinhardt is right. A great many Americans do not want “Big Government” interfering with their health care. Unless they lose their insurance and then they expect “their government” to bail them out.
In theory, our government will come to your rescue if you’re poor enough, offering Medicaid and SCHIP to millions of families and children who simply do not have the money to purchase their own health insurance. We take care of our poor—or at least that is what we like to tell ourselves.
In fact, Reinhardt points out, a 2008 brief by the National Institute for Health Care Management Foundation reveals that 12 million Americans who are uninsured are eligible for public programs—but are not enrolled. Of these, more than half are children.
Why aren’t they enrolled? In many cases, the application process is filled with roadblocks which can include 14-page application forms.
“And this is deliberate,” Reinhardt added, quoting a Harvard economist who has suggested that “the way to manage entitlement programs is to harass people.”
The problem, Reinhardt explains in his letter to Corzine, is that we are of two minds about providing care for the poor. While “many Americans do believe that health care is a social good that should be available to all socio-economic classes on roughly equal terms…just as many other Americans believe that health care is essentially a private consumer good—like clothes, food and shelter—whose procurement and financing is primarily the individual’s responsibility, and they routinely (and quite incorrectly) deride the former school of thought as ‘socialists.’”
The way we pay health care providers who take Medicaid patients illustrates just how conflicted we are. Doctors who treat these patients are paid much less then they would be if they were treading Medicare patients. In other words “Americans tell providers that the value of their work is lower when applied to uninsured patients or to patients insured by Medicaid.” Reinhardt observes. As a result, Medicaid patients often have difficulty finding a provider. A 2007 study published by the Commonwealth Fund reports that when Community Health Centers (CHCs) try to refer Medicaid patients to a specialist for “high tech services,” 16 percent of those patients “never” or “rarely” are able to obtain access. When it comes to Medicaid patients referred by CHCs for hospital admission, nearly 12 percent find the door blocked.
This is the legacy of racism. As Henry J. Aaron and Jeanne M. Lambrew point out in Reforming Medicare: Options, Tradeoffs and Opportunities, Southern Congressmen refused to vote for the 1965 legislation that created both Medicare and Medicaid if physicians and hospitals were going to be paid as much to treat the poor as they were paid when treating the elderly. These Congressmen wanted to preserve medical apartheid. (Most Southerners over the age of 65 were white: a combination of poverty and a lack of healthcare ensured that few African-Americans lived that long.) Ultimately President Johnson had no choice but to cave to the legislators’ demands. What is both shameful and startling is that forty-three years later, this wrong still has not been righted.
But, as Reinhardt notes in his letter, our feelings are confused on this issue. Thus, even while signally to providers that we don’t value their work as highly when they are treating the poor, we don’t want to make the distinction explicit.
“A ‘rational’ health system responsive to this powerful economic signal [of lower pay for Medicaid providers] would be openly two-tiered,” Reinhardt writes in his letter to Corzine, “with bare-boned facilities devoted strictly to Medicaid patients and the uninsured…and much more luxurious, better equipped and better staffed facilities for commercially insured patients whose insurers are willing to pay higher fees.”
But in the U.S. a “citizenry which signals its preference for a class-based health system through the payment mechanism, soothes its conscience by holding physicians and hospitals to strictly egalitarian standards when it comes to the treatment of patients of all socio-economic classes.”
Since this is an unfunded mandate, many doctors reject all Medicaid patients; others take only a few. Hospitals, too, have found ways to avoid charity cases, “stabilizing the patient” who stumbles into the ER, as the law demands, but refusing to admit him as an outpatient so that he can receive the services the ER doctor recommends.
In other countries, where there is widespread agreement that equal healthcare for all is a right, our sharply tiered system is viewed as unacceptable. “If you want to kill a health care proposal, whether in Taiwan or Germany” Reinhardt told his audience last week, “all you need to say is, ‘if you do this, you’ll wind up with the U.S. system.’ It’s amazing,” he mused, “how they manage to avoid adopting ‘the best health care system in the world.’”
Why don’t we just raise fees for Medicaid providers? “We would have to pay higher taxes,” says Reinhardt. “We can’t have the Chinese temporarily pay for it” (the way China and other countries fund so much of our deficit spending by buying our bonds.)
When we try to think about health care markets and regulation, we also experience “cognitive dissonance.” For many Americans, Reinhardt notes, “it is an article of faith that private commercial markets are inherently more efficient than government will ever be. At the same time…the same Americans seem troubled and unwilling to accept for health care—and now even for mortgages—the harsh verdicts of the ‘free markets’ among which are:
(1) That a market allocates resources not to individual most in need of them, but to those who have the most money to bid high prices for them.
(2) That individuals or institutions, including hospitals, unable to fend for themselves in the competitive market’s free-for-all—among them hospitals in low-income neighborhoods—should be allowed to wither away; and
(3) That in the free-for-all of the marketplace, not only the quick-witted and better-informed, but also the morally more flexible participants often will take advantage of less quick-witted and less well-informed market participants who are naive enough to trust the morally flexible.”
Free market enthusiasts often speak as if “the market” is a benign intelligence, hovering over the marketplace to ensure that gains and losses are fairly distributed. In fact, the market is not fair—nor is it unfair. It is amoral, totally indifferent to whether individuals are getting their just desserts. The most virtuous man may lose the roll of the dice by investing too early, or too late. Often he is duped by those Reinhardt describes as “morally flexible,” truly believing that his mortgage broker has his best interests at heart. When it comes to healthcare, a seven-year-old who needs a $100,000 cancer drug may not get it; if an 89-year-old has the cash, the drug is his.
Because most Americans are unwilling to accept what Reinhardt rightly describes as “the harsh verdicts of the market,” they believe that the government should protect the weak. On the other hand, they don’t want the government to disrupt free markets which, they insist, are “efficient.” The result, says Reinhardt, is “a bewildering system of half-hearted competition and half-hearted regulation” of health care.
When it comes to health insurance, Reinhardt writes, once again “confusion reigns.” On the one hand, “many Americans decry as outright un-American the idea of mandating the individual to procure adequate health insurance coverage for at least catastrophically expensive care.” Those same youthful libertarians, however, would “bristle at the idea that…a hospital should have the right to withhold from them for want of ability to pay, costly life-saving medical interventions, should [they] be seriously injured or become critically ill…These unfunded mandates on hospitals effectively ask hospitals to provide uninsured individuals with the catastrophic health insurance they are free not to procure, at the expense of insured patients…”
“Just as inconsistently,” Reinhardt notes, many Americans believe that insurers have no right to refuse to sell insurance to individuals suffering from “pre-existing conditions.” Everyone has a right to buy insurance, they say. But many of these Americans also believe that the government has no right to insist that everyone purchase insurance. We should be able to wait until we are sick, and then buy insurance when we need it.
Of course if everyone followed this rule, only the sick would purchase insurance and it would become exorbitantly expensive. This is precisely what happened in New Jersey when, as part of the “New Jersey Individual Health Coverage Program,” the state passed legislation requiring that insurers sell policies to everyone in a given community at the same price. After the law was passed in 1993, more and more healthy individuals decided to forego insurance. They would buy it when they became ill, secure in the knowledge that insurers would have to sell it to them. As a result, Reinhardt observes, enrollment inNew Jersey’s Individual Health Coverage Program plummeted. In 1995 186,130 New Jersey citizens had been enrolled in the program; nine years later 84,968 were covered—and since so many were sick, premiums had spiraled two to three-fold.
New Jersey’s experience illustrates why we cannot insist that insurers sell policies to everyone, young or old, sick or healthy at a reasonable price—unless we also insist that everyone must join the pool by purchasing a policy. Only then will insurance be affordable.
In other words, markets need rules. But before we can draw up regulations, we have to agree on our goals. If we, as a nation, believe that health care is not a right, but a consumer good, then a multi-tier system makes sense. But we should be honest about this and say the poor deserve only so much care—and no more.
Alternatively, if we agree with the Supreme Court of Taiwan, which has ruled that healthcare is a “right”—a pure social good, to be available to all on equal term—then we all must contribute, based on our ability to pay, to a insurance pool that provide equal protection for all citizens.
Until we do this, true health care reform will remain a figment of our collective but deeply divided American imagination.
Maggie Mahar is an award winning journalist and author. A frequent contributor to THCB, her work has appeared in the New York Times, Barron’s and Institutional Investor. She is the author of “Money-Driven Medicine: The Real Reason Why Healthcare Costs So Much,” an examination of the economic forces driving the health care system. A fellow at the Century Foundation, Maggie is also the author the increasingly influential HealthBeat blog, one of our favorite health care reads, where this piece first appeared.
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Hi,
I live in Australia. Our medical system is a universal health care system whereby everyone is levied 1% of their income per annum. This gives every Australian access to healthcare. Everyone is insured. If an individual chooses to go private, they may pay an insurance company’s fees instead of being levied. With this system everyone is covered, and those who wish to increase their level of care to private or who earn too much to justify 1% levy for cover may do so. This gives the socialists an equitable medical system to be proud of and gives the fascists (republicans) the ability to look down on the unwashed masses from their lofty private hospital rooms. We also have a similar system with motor insurance. registering your vehicle is expensive but gives every Australian third party insurance through the Transport Accident Commission.
America needs an overhaul to their geriatric systems. Stop fighting it.
I am watching the US healthcare ‘debate’ from London with increasing disbelief.
I had an ulcer problem some two years ago and called my doctor. Within ten minutes, I had a home visit (try that in the US!), the ambulance arrived ten minutes after that, and within half an hour of feeling poorly, I was in emergency. Everything proceeded swiftly, efficiently and it cost me nothing.
Yes, the NHS is sometimes slow when a condition causes inconvenience but not danger, but no one in this country would want to be without it. The scale of invented facts and false reporting on US newschannels really does astonish the people of the UK.
Deron,
Even though I am not Peter, let me try to answer you penultimate post because I think it’s an interesting question.
I do think that the bottom socioeconomic groups (I say groups because they tend to be divided by ethnicity) have ingrained attitudes that are counterproductive (both to the individual and society). I have little doubt that a subculture in which drug dealing and teen pregnancies are common promotes exactly these types of behavior. I think it will not only take Bill Cosby’s encouragement to break up the patterns of a dysfunctional subculture. (And no, I do not think that dysfunctional attitudes are confined to one race, but it is most obvious in inner city AA neighborhoods, probably fostered by segregation.)
So, in my opinion, it would take a lot of effort to make these underpriviliged subcultures effectively use available ressources. However, we are spending about huge ressources on imprisonning vast numbers. I do think we (as a society) are failing these people.
Peter – So I guess you’re going to choose not to answer my question. How Democratic of you.
Ah yes Deron, the old bootstraps argument. We’ve discussed it here beofore. It happens but can’t be applied as an economic policy, except as a reason to do nothing. This one’s a favorite of Republicans whose father or grandfather may have pulled himself up by the bootstraps, but they’ve reaped the benefits of the accumulated wealth and connections. It takes a lot of money and effort to change the life attitude a child is born into. Why else would the children of Republicans also be Republicans, no other explaination since the ideology in practice as we’ve seen does not work. You can get a book by Greg LeRoy called, “The Great American Jobs Scam”, which gives you an idea of how destructive local and state tax give-aways to corporations rob the communtiy of local funds for education and other programs. One chapter is titled, “Property Tax Abatements and your Local School”. Why does Louisiana have one of the worst school programs in the country? This impacts the poor the most and they are the ones to benefit the least if there is any benefit. But this country has chosen to spend money on police and prisons not social workers. I guess social workers don’t give enough to political campaigns and aren’t visible enough in the community, or even may be those dreaded “liberals” that will destroy this country.
Peter – Are we failing to educate the poor or are they failing to take advantage of the educational resources available to them?
Outstanding point about role models. I don’t think anyone can disagree that we need more of them.
” I have a problem with poor people having 4 babies they can’t afford which creates a vicious cycle that is very difficult to break.”
I have a problem with people buying houses they can’t afford and investment bankers buying the bad loans they can’t expect to get repaid on, then expecting the government to bail them out.
Anyway that goes with the line, “If you think education is expensive, try ignorance.” as in, if we fail to educate the poor they will just assume there is no way out. No hope = same destructive habits. Much of life is about role models, that’s why kids usually do what daddy did. It works better if daddy pays for it. If we don’t want poor people having babies they can’t afford -who decides what income level? We could give them access to free birth control(just try to get that past the religious zealots), even pay them not to have babies and stay in school. But right now that wouldn’t solve the cost issue of healthcare because even middle income people with good education and one or two kids can’t afford it unless their employer provides it, and even that is getting harder for employers.
rbar – I am very intrigued by the comparison of the U.S. system to that of France and Germany. I think it would be very helpful to see a side by side comparison of the three systems using some key indicators of performance, such as preventive care rates, obesity rates, and chronic care rates.
There’s no doubt that the per capita cost is much higher in the U.S., but I think we need to dig deeper to find out why. We have to be careful not to automatically assume that it’s all because of structural issues of the system, because there could be societal differences contributing to the cost difference too.
If anyone knows of a good side by side comparison, please let me know.
Deron,
let me get back to you on diagnostic skills and compensation comparisons snice I have first hand knowledge.
It is true that US physicians are better compensated than the rest of the world, although the degree varies dep. on country and specialty. (One should not forget either that you cannot simply compare incomes – for instance, I don’t know of any European doctors who think they have to save for their kids’ college education.) I moved to the US for family reasons and curiosity, not for money. I can tell you that most bright physicians from the EU don’t consider the US and elect to do academic careers in Europe … some highly qualified physicians come later on, though.
I am with you that a lot of test ordering is secondary to defensive medicine. There is no incentive for a physician not to order a test, but a permanent threat of litigation.
Re. healthy lifestyles and government intervention: It looks like only the government could do it (and maybe some larger US companies who try to reduce health related costs, that remains to be seen). Insurance companies have little interest in long term health outcomes since there is too much fluctuation of the insured. If there was universal healthcare, you could give incentives for healthy lifestyles (normal weight or weight reduction, no smoking, compliance with chronic disease management such as BP, DM), I alot of physicians incl. myself would favor that.
If you think that SS increased poverty among the elderly, you have it upside down. These people would not have saved enough even without SS and starving by now.
Peter – Great stuff! It’s coming across loud and clear that you’re not happy with our current administration. I lean to the right on a lot of issues, but I am definitely not in the running to be President of the George W. Fan Club.
I think you would have a lot of problems finding support for your point about U.S. physicians having poor diagnosis skills. We’ve attracted some of the best physicians in the world thanks to the much higher income potential for physicians in the U.S. (2-3 times that of physicians in Canada, Germany and France) If your argument is that dollar for dollar they have weaker diagnosis skills, that’s something I could more easily buy into.
Regarding Medicaid births, I don’t have a problem with poor people having babies. I have a problem with poor people having 4 babies they can’t afford which creates a vicious cycle that is very difficult to break. I thought Medicaid was set up to help people who have fallen on hard times??
Great solutions to the rising obesity rate. They’re simple and they hit the problem head on. Now we just need someone with a backbone to make it happen.
Your point about using taxpayer money to bail out dishonest corporations is a good one, but I’m not sure that’s limited to a Republican issue. I don’t think we should create a backstop for the greedy. However, just as important, I don’t think we should get the government more involved in our healthcare system because the more government gets involved in anything, the less responsibility the citizens take for their own lives. I’ve run across a lot of people in my travels that thought social security was going to keep them secure in retirement, which provided them with less incentive to save along the way. Now they’re faced with a drastically reduced standard of living and a hell of a lot of extra stress.
Thanks for the reponses to my questions. That’s exactly the kind of dialogue that is needed right now.
Deron S.,
“How do we reduce physicians’ fear so we can cut back on defensive medicine?”
I’m nut sure how much “fear” is involved over just plain poor diagnosis skills or pumping the system for docs in hospitals. When an individual’s healthcare costs are covered by a single-pay system then at least that takes that reason to sue off the table. As for out of control lawyers, you’ll have to take that up with the lawyers guild. Barry Carol has proposed health courts.
“How do we address the fact that 40% of all births in the U.S. are financed by Medicaid?”
Not sure what you mean by that? Poor people shouldn’t have babies? Not that I think that’s a bad thought, but other countries pay for all births. And having babies has never been about affordability for anyone, it’s been about having someone to look after you in your old age. It would not be such a large problem if this country didn’t have a policy of class warfare where the lower classes get screwed.
“How do we cut down on our teen pregnancy rate which is the highest in the world (by far)?”
Get the Religious Right kooks out of the schools and out of our personal healthcare decisions – I guess you’ll have to get Republicans in on the cure for this.
“How do we address the rapidly rising obesity rate?”
Return pyhisical education back to school? How about a tax on fast food. I’ve put this forward before. Stop subsidizing calories and subsidize quality.
“Should P4P provide incentives to patients instead of providers?”
That’s a hard one. I guess Canada has it right, choke access and triage need. Having a health budget forces people to prioritize for scarce resources. People won’t do what they don’t have to do. Once you tax fast food you can use the money to pay for healthy incentives.
“Who’s going to lead the discussion that brings the players (physicians, payers, patients, gov’t) together to divise solutions that benefit the system first, and the individual players as a result.”
Certainly not this type of government – the one that holds hands with corporate lobbyists to stay in power and get their family members jobs. Your key word is “lead”, not something in abundant supply in Washington. Sorry I can’t solve everything – except throwing every Republican out of office would send a message, then we can stop using taxpayers money to bail out dishonest corporations. Anyone got a spare Trillion or two?
Encouraged by Deron’s post, I will keep it simple.
Among major industrialized nations, the US health care “system” is clearly the one being most capitalistic.
I know from my own working experience that the US system can deliver good to excellent peek performances, but overall performs rather poorly, with lots of undersupply and very little bang for the buck. And this is reconfirmed by multiple studies/rankings.
I have gained first hand health care experience in Germany and France. These symptoms easily outperform the US system, depending on most people’s expectations (see below). Both systems are heavily government regulated, although health care providers are, to some extent, in free market competition.
Of course one can always claim that a completely unregulated market system would do wonders (as ray does). But there is no evidence to that. That cosmetic dermatology and eye care might be doing well has to do with the limited scope of these services (standardizable and free of life threatening complications).
We do know that almost all systems in industrialized nations outperform the US system and work well. Yes, France, Sweden, Germany, they all have to fight rising medical costs, but they at least have mechanisms dealing with this problem which is inherent in medical progress. The US currently has not. Medicare and private insurance are soon to become completely unaffordable.
In previous posts, I stressed some ethical considerations that should be made prior to discussing health care systems. If your goal is confined to having peak performances available to the very well off (e.g. you and your family, provided that you are wealthy), you may very well keep the current system or deregulate it completely. If your goal is to have reasonable care for everyone, and to rather have dermatologists taking out a janitor’s possible melanoma instead of doing part of an extreme makeover for millionaire XY, than you need some smart steerage (that does not necessarily imply a tax/government funded system). Not that I am completely against millionaire XY’s plastic surgery … but I do think that this should happen in a society where at least a reasonable bottom line of medical care is guaranteed to everyone. The very well off will always be able not only to afford plastic surgery, but also to have special attention by the healthcare system. That is a fact of life.
Well Ray, the fastest way to government run single-pay is for everyone to pay directly – as our esteemed leader who brought us this mess said; “Bring it on.”
There won’t be any innovation in lower cost solutions until there is enforced health budgets – brought to you by – the government. But until government is not simply an extension of Corporate America we won’t get any solution for consumers.
But this is all moot now since as taxpayers we will have to bail out dishonest rich guys who created fraudulent mortgage paper, and instead of our money going to healthcare, it’ll go to protect corporate greed and CEO compensation while our money it taken from our future and our childrens future. Welcome to America.
Ray/Peter/rbar:
You are all clearly very intelligent, but your conversation, like most healthcare blog conversations, is heavy on theory and ideology and light on practicality. I would love to see tremendous resources like the three of you working to hammer out real, workable solutions.
How do we reduce physicians’ fear so we can cut back on defensive medicine?
How do we address the fact that 40% of all births in the U.S. are financed by Medicaid?
How do we cut down on our teen pregnancy rate which is the highest in the world (by far)?
How do we address the rapidly rising obesity rate?
Should P4P provide incentives to patients instead of providers?
Who’s going to lead the discussion that brings the players (physicians, payers, patients, gov’t) together to divise solutions that benefit the system first, and the individual players as a result.
Conversations about theory and ideology are endless, and therefore a waste of resources. Conversations that serve to answer specific questions with a goal of devising workable, system-wide solutions are far more productive and will get us out of this mess much faster.
Peter, thanks for the article.
There is competition in healthcare, but competition isn’t a good in and of itself. What drives innovation is the right kind of competition, at the right place and over the right kind of services. Competition has to be aimed at the consumer…but that doesn’t happen unless the consumer shops around, and pays with his own money. So long as we have medicare, medicaid, and employer based health insurance, we will have the wrong kind of competition.
And the real motivating force in markets is entrepreneurship, not competition. There are excessive barriers to medical entrepreneurship in the US (beginning with medical licensing laws).
Rbar, It’s true that 911 is not funded privately, but that doesn’t have to be the case. There would likely be an equivalent service in a free market society. And part of the reason that I would call 911 is that it’s easy. It doesn’t take 40% of the money I earn in a year. If I did see unconscious people every day, then I would not call 911 for each of them. I have to focus on living my own life, not living for the sake of others.
Unless money was stolen, then it must have been earned somehow. Even if money is inherited, then the person it is inherited from had to earn it. So I don’t see your point about that.
I don’t think it’s fair to call my belief in markets “magical” or “unrealistic”. No free market in healthcare has been tried anywhere. The fields that come close to free markets – ophthalmology and plastic surgery — work very well. I think you have a faith in the magic of government. Health care is so complex, with so much innovation, that I don’t see how a single institution (gov’t) can centrally manage all of it. At least in a free market, there is distribution of power among many different stakeholders.
Ray, don’t you think there’s competition now in healthcare? My local hosptials are always running ads and PR promotions trying to attract sick people. Their expanding services and building new facilities. Insurance companies have to compete for your business as well. Doctors, clinics, device makers, hospital supply companies, all compete now. So why isn’t that working? Here’s a link you should read:
http://content.healthaffairs.org/cgi/reprint/22/3/89.pdf
You didn’t tell us how you’re getting your healthcare paid for.
Ray, I am happy to learn that your care confined to your family and friends is not tribalism, but enlightened self interest.
How do you think 911 and the people responding to your call are financed? Moreover, you may not find unconscious people on the street every day, but there are enough people suddenly facing a health problem that may exceed their financial means. If you don’t happen to be a multimillionaire, it could happen to you as well.
I knew that the term plutocracy (as well as meritocracy) is somewhat incorrect here since I was not talking about forms of government. However, the distribution of health care has to do with allocation of ressources and exercise of power. Anyway, this should not obscure my main point: what you (and most other fundamentalist capitalists) don’t know or just omit is the fact that most personal wealth is not “earned” (and, as a side note, usually generated with the help of society) but inherited. What you make sound like a system of merits is in fact a system where power comes from money, be it inherited or earned.
Your belief in efficiency making healthcare affordable for everyone (in your response to Peter) is widespread among free market advocates, but not realistic. Healthcare is highly complex and individualized and became even more so with the recent decades of astounding progress, and this very likely will continue for the foreseeable future. You could equally claim: increased efficiency will make good legal representation in a complex jury trial “affordable for everyone” … or making your own movie with professional actors. This is just wishful thinking, derived from the doctrine of the magical power of the free market.
Peter, you raise a number of good questions.
We live in a society in which healthcare is extremely expensive, but that does not have to be the case. It is expensive partly due to technology and innovation, but also partly due to government regulation. Regulation of health insurance, medical licensing, the employer tax breaks, and other laws raise the cost of healthcare to such levels that it seems that no one can afford it.
But if we went to a free market system, one based on entrepreneurship, most people would be able to afford their own care. If doctors and hospitals had to market themselves to patients, and couldn’t depend on special government treatment, they wouldn’t be able to make much money unless they were affordable. They would have every incentive to streamline their processes, and healthcare would become less and less expensive every year. In time it would be readily available to almost everyone.
Of course there will always be innovation, and extremely costly care, that not everyone can afford. But even in Europe and Canada, people are denied care due to the high cost… the government just simply decides that LVADs or certain drugs are too expensive. At least in a free market, we can hope that they will eventually become cheap enough that everyone can afford them. In the government-run systems, there is no such hope.
And there will always be poor people who can’t afford basic services. Anyone who cares enough about them is welcome to start a charity for them or to offer free care. But do it with voluntary contributions, not by using the government to steal peoples’ money.
There’s too much to reply to in one post. This post is a reply to rbar’s post, the next will be to Peter’s.
In terms of my comments on your responsibility to friends and family, I didn’t mean it in a tribal sense, but in an individualistic sense. You primarily have responsibility to yourself only. But since you choose your friends, and since sometimes members of your family can be close to you and can offer you help, you may have a responsibility to them as well….but only if you personally care about them. So this isn’t kin-selective altruism, because you don’t have to adhere to a group that you didn’t choose. It is enlightened self-interest, in the model of Adam Smith.
In terms of dealing with someone found unconscious on the street, it usually doesn’t take much effort to call 911, so you should generally do that. If it’s a friend or your parent, you can put in more effort and actually go to the hospital with him/her. But that is an emergency and an unusual situation. I don’t run into unconscious people on the street every day. You can’t extend that principle to me having to give up my money in taxes every week of my life to pay for other people’s problems.
And I disagree with you that this would be a plutocracy. Although it’s a common area of confusion, capitalism and plutocracy are completely different. In a plutocracy, the wealthy get to control the government, and get government favors (like the current bailouts). In laissez-faire capitalism, on the other hand, even the super wealthy can’t get any special favors. They only get what they earn.
Ray, I’ll bypass the need definition as I think we can agree everyone needs healthcare. If fact everyone needs the SAME healthcare for similar afflictions – overuse/abuse of the system aside.
So let’s discuss merit. You say merit depends on how much you make and therefore determines how much you can afford to buy. That only applies with goods and services in the society where consumers have real choice about what they can afford. Buy or rent a home that’s within your budget, buy a car that’s within your budget, pick your holiday budget – lots of choices for people with all levels of income that enable most people to participate in the economy at their level. that’s a good system. But healthcare comes with one price – the high one, especially if you need a hospital to fix your problem. If we follow your logic you say that the waitress/waiter who serves you food can’t afford healthcare is perfectly ok because her income level does not give her (or her kids) enough “savings” to afford healthcare. If she gets too sick to afford (needed) healthcare then she should just die because her income does not allow her an alternative. Of course she doesn’t have political friends that will spend over 1/2 a $$ trillion ++ tax dollars to bail her out. But she doesn’t really want to be bailed out, she wants her health back so she can go back to work and pay her taxes and spend money in the economy and raise her kids. You see Ray, she didn’t choose the get sick, she didn’t get to choose what disease she would get. I’m interested Ray, how do you pay for your healthcare? How will you pay for healthcare when (if you’re not now) you retire?
And of course I want to join everyone else in praise of MM’s great original post.
Ray, I discovered after some research that you were operating with a different meaning of tribalism (which I think is the less commonly used, but nevertheless correct). You thought of communal tribal social structures that were classified by some as primitive forms of communism. I, on the other hand, was talking about tribalism as adherence to one’s own tribe, and that is basically what you are advocating by stating that there may be responsibility towards family (kin-selective altruism) and friends, but not towards people outside of that group (your tribe). I personally think that this is the least developed form of ethics, but hey, at least you are sticking with a concept that appears to be proven effective by time and evolution.
Since your individualism appears to be sincere: how should society (or you personally, for that matter) deal with a person found unconscious on the street? Does it depend on how that person is dressed, or whether this person carries credit cards? Does nationality or skin color play a role? If you discover that it is a friend of a friend (but not a friend or relative), would you consider getting involved to a reduced degree? Would you want to be taken to a hospital by a stranger if you were found unconscious?
Moreover, are you aware that what you try to make sound like a meritocratic distribution of healthcare (“When you produce things for others, you get their value in money. Then you get to demand exactly that amount from other people. The total savings you have is the amount you deserve in healthcare”), are you aware that this is, as long as you also favor the right to keep the money within your kinship, in effect just a plutocratic system?
My last post forgot one very important thing. Thanks for the great post Maggie! That was one of the more thought-provoking healthcare posts I’ve read in quite some time!
There is a bigger picture to this that many fail to see. Look throughout the course of modern history at how much more responsibility for the lives of it’s citizens the U.S. government has assumed. There is a very simple answer to why that is the case: It is far easier to get elected an/or stay in office by offering programs that reduce the personal responsbility of the citizens. Whether anyone wants to admit it or not, social security has given a lot of people a lot of false hope that their retirement will be secure. Medicare has given a lot of people comfort that they will have healthcare in old age.
These things certainly do not encourage personal achievement. When Johnny goes to school, he doesn’t have near as much pressure to get get good grades because he knows that he will be “taken care of” regardless of what he achieves in life.
Why does anyone think that the views of our healthcare system would be any different? With all of that being said, let’s get the players to the system together and have an actual CONVERSATION about how we’re going to get ourselves out of this mess. I don’t want the market to do it, and I don’t want government to do it. I want the people who actually understand the system to be at the table, but not before they are injected with a heavy dose of social responsibility.
SteveH, point well taken. Taxpayers should not be buying out the bad investments of banks. So if the government is capable of making such a bad decision, and misuse so much of the American peoples’ money, why do you trust the government with the entire healthcare system? Even if we get a Canadian style single payer system passed, one day it will be run by republicans.
It’s quite a day to point out the dichotomy in American thinking. The gov’t proposes to buy up the bad investments of banks and investment companies at the cost of hundreds of billions of dollars. But use public money to cover health care for the citizens of our country? Can’t be bothered.
Think of the billions in supposed profits made over the last years that were the basis for rich payouts to those who run the financial sector (who often paid taxes at lower rates than the little people), and who insisted that the gov’t stay out of their business. Will there be a refund of the payments to those responsible for the meltdown of AIG, Lehman, Bear Stearns, etc? Not on your life. Privatize gain and socialize loss. Taxes to pay for health care? But that would be wrong!
Peter, sorry, I think my definition of need was circular. Need is the amount of healthcare required to get you to a healthy state. (We would have to determine how healthy is healthy of course, but it’s clear that someone with an infection, or a broken bone, or a heart attack, is not healthy)
Peter, here is my definition:
Need is the amount of medical care you need. A need-based system is one in which the more you need the more you get, regardless of cost. From each according to his ability to each according to his need.
Merit is the amount you produce for other people your life. When you produce things for others, you get their value in money. Then you get to demand exactly that amount from other people. The total savings you have is the amount you deserve in healthcare or cars or whatever else, because that is what you produced for other people.
Rbar, I am not the one defending tribalist thinking…everyone else on this blog is. Tribalism (or collectivism) is the idea that groups of people…ie, “society” is responsible for solving problems. Everyone who says health care is a “public health” or “societal” problem is a tribalist. I, on the other hand, am an individualist. I believe individuals are responsible for solving problems, and achieving their own happiness. You are more than welcome to defend your views to me, but use the correct labels when you do so.
I think the healthcare crisis is an indication of how our myths about ourselves are unraveling. The notion of American exceptionalism is an old and pernicious one. It makes us unwilling to study and learn from how other nations are dealing with this issue. It encourages us to think of ourselves as hardy individualists who don’t need anyone else. Or, if we do, that represents some sort of failure on our part. I think basic medical care is a public health matter, like clean air and clean water. We can and should argue over what that basic care entails, but eventually, like most of the rest of the developed world, we will come to regard it as a right of citizenship.
I wonder whether you are a person with a bizarrely entertaining, far off mainstream opinion, or just a troll. Or maybe a nihilist from “The Big Lebowski”.
Your challenge (“reason why “society” or taxpayers, or anyone else should pay for the ill”) is met quite easily: basic human decency. You – somewhat eloquently – try to defend tribal thinking.
Ray, define “merit amd need” in terms of healthcare.
Rbar, I don’t think anyone deserves help from “society”. It’s not an issue of sick or healthy. Some people may deserve help from friends/family/etc. But no one has a responsibility to strangers. And I challenge you or anyone else to give me a reason why “society” or taxpayers, or anyone else should pay for the ill, no matter what race, sex, or SES.
No I won’t use the “ER” excuse. I agree with you that the ER can never be sufficient healthcare.
America is founded on the principle of individual rights, which means the right to live your life in the pursuit of your own happiness. So no one has a right to demand unearned help from others.
Why, Ray, you think that someone who is gravely ill does not deserve help from society, even if he/she has difficulty paying the bill, which you know can easily go into the 10- if not 100Ks of Dollars?
If you reply: well, that gravely ill person can go to the ER and cash in on an unfunded mandate for stabilization of a critical condition … then you are either very poorly informed or you in fact just want to have the nonwealthy sick die, maybe not on the street, but in the privacy of their own home/trailer. I am sorry for the harsh wording, but I would expect and easily handle a post like this on slate or national review online, but not here.
This is an excellent post.
Professor Reinhardt is right, people in America do have inconsistent beliefs. They are unwilling to be consistent, either about free markets, or about government financing of healthcare.
But I don’t think the conclusion is to forget the market, and accept government regulation. An alternative is to be more consistently free market, and accept that not everyone deserves the same quality of care. I can’t see any reason to believe that healthcare is a right, or that resources should be distributed on the basis of need rather than merit…all of that is based on a particular value judgment and on faith.
I think I have written it here more than once, but it may be worthwhile writing it again: I moved to the US from Europe (for family reasons) … and I was surprised that a majority in the US does not only hold strong religious beliefs, but also strong faith in the benign power of the free market. Most people in Europe also appreciate free markets, but feel that they must be regulated for the good not only of the weak, but of society as a whole. We probably have a similar cognitive dissonance here with regards to the banking system – if you poll A “financial markets should work on their own, without the government interfering”, and B “in light of the recent developments, financial markets need more oversight”, you might get a majority for both A and B. I believe that the blind faith in the free market produces this dissonance to the (in my eyes) reasonable position that favors tighter oversight.
Talk about a failure of the government! We will look back at this someday (if not now) as the dark ages of US history in terms of healthcare. Since the failures of the system are often experienced as a personal issue, it is difficult to get a cohesive group to march on Washington and demand an end to this injustice. Talk about needing a revolution. Oh, yeah, I forgot the current theory is to let “market forces” bring a solution. That worked really well to end slavery and bring the vote to women.
Jane –
Thanks for sharing such a thoughtful, qualitative analysis of Uwe’s points and clarifiying them in your usual no-nonsense style.
As you, Kevin MD, and many others have pointed out, our schizophrenic capitalistic, me-too, grass-is-greener society is struggling to determine whether healthcare is a right or a privilege. And if it’s a right – which services? Available for whom? In what circumstances?
I’ve taken a poor excuse for a stab at doing that here…http://healthmgmtrx.blogspot.com/2008/08/back-of-napkin-healthcare-reform-hmrx.html.
I’d like to challenge each healthcare blogger to come up with a quantitative plan that posits potential answers to the three questions above.
What I’d like to see us all doing is taking a stab at some quantitative suggestions. We’ll most likely be wrong, or suggest plans that can’t possibly work, but then at least some of the best analysts in healthcare are putting brainpower towards saying exactly why such a plan can’t work – it’s in the critique that we perhaps can suggest some things that just might.
Fantastic post…It frustrates me to no end when people complain that on the one hand, they want “the best care available” which to them means being able to walk into Harvard’s private clinics and get the state of the art care that Saudi princes come to the US to get, but on the other hand complain that “I pay too much for it” or that “my taxes are too high”…you have to pick one, please!
“the reluctance of Americans to countenance government financing of health care outright…has led them instead to prefer inherently temporary private health insurance tied to a particular job with a particular company (and then to look helplessly for rescue by federal or state governments, when, in their 50s and early 60s, they may find themselves structured out of their jobs and the health insurance that came with it and unable to afford coverage in the private insurance market for individuals).”
This attitude is because Americans can’t see any further down the road than next week and just want low taxes, low government during THEIR working life, but want tax support when they need it later. This is the result when this country has NO sense of community and no sense of the future. Of course, until the financial system seems close to collapse, then they want the Federal government to spend future generations tax money to bail them out.