A little more on the free market, and health care...

I just realized that I'd forgotten a few things about why free market theories don't really apply to health. I mentioned the flat demand curve, and relatively static supply, but there are two other equally, if not more, important points that I forgot.

FIRST...

For a free market to really work, I need to KNOW what something costs and be able to compare, or shop around. Now in SOME CASES you might be able to do this, but consider this: You've cut yourself. You're bleeding. You need stitches. There's a hospital a block away, so you go there. Do you know it's going to cost? At best, you might know what % your insurance is supposed to cover, but % of what?! Chances are, none of the doctors you see will even be able to give you an estimate of the cost. And even if they did, that doesn't mean they know what price the hospital negotiated with the insurance company. Bottom line: You have NO IDEA what a trip to the hospital will cost until you get the bill. You. Have. No. Idea.

And if you did, what would you do? SHOP around?! Do you have time for that? Would you drive and hour to save $100? You might if you were buying a sofa, but YOU'RE BLEEDING! (Or having a stroke, heart attack, seizure, etc...) And even if you could shop around, do you have any objective way of determining quality? Not really. Anecdotal evidence, if you're lucky. (Or go online.) And that's about it. Is Dr. Smith better than Dr. Jones? There is basically no way to find that out! None!

So you can't compare quality and you have no idea what it costs. Some efficient market that will make!

SECOND...

A free and efficient market CAN be a beautiful thing. But we don't have one when it comes to health care, and we really never had. Putting aside that many of us have our choice of doctor narrowed down by our insurance company or HMO, most people DO NOT CHOOSE their insurance company. THEIR EMPLOYER DOES! To get a better plan, you have to change jobs.

And that's not the same as saying, "Get a better job." If I want a Mercedes, I very well might need a better job - one that pays MORE. But to get a given health care plan, it's not a function of the money I make, because I'M NOT BUYING IT! I can't buy it! Employers pick up about 80% of the cost of premiums, so THEY are the ones that choose the plan. To get a given plan, I might have to go to a worse job that pays LESS, just because that company might be the only one that offers the plan I want!

There is no other 'market' that operates that way. None. So it's NOT a market. Not for individuals anyway. And getting back to the idea of risk pooling, the only way to get the best care for the lowest price is to get as many people as possible into one plan. That's why even if I could afford what some other company pays for their employees' coverage, I won't be able to get the same price. Insuring one person is extremely expensive. But insuring a whole bunch of people is cheap, at least on a per person basis. So there's no benefit to everyone going around and negotiating their own plan. Risk pooling will always, automatically get you a lower cost than you'll ever be able to find (or negotiate) for yourself. Better coverage too. So a market just won't work, and really doesn't exsist anyway.

If you're still not convinced, I offer this: The micro economic factors that I've already mentioned here and in previous posts worked to make health care so expensive in the first place that being sick became something that we need to insure against. Market forces made that insurance so expensive that the only way to sell it way with employers paying for most of it. NOW insurance is so expensive that HUGE, BILLION DOLLAR corporations can no longer afford it. (GM? Chrysler? Yeah, pretty much killed by health care costs.) And it is not despite market forces, but precisely BECAUSE OF THEM that we have the situation that we do. And this trend is thirty years in teh making. I little deregulation isn't going to reverse it.

The 'free market' just won't work in this case. There are many areas where it will (almost all, in fact) but Health Care is one of the rare exceptions.

Oh yeah...

I also want to deal with a common talking point: That since medicare is going broke, that means that gov't health care 'doesn't work.' Here's the thing: Everyone's health care costs are going up. There's no denying that. Private companies just raised their rates. And yours went up too, I guarantee it! But what are you going top do? It's not like you had a choice, remember? But for MediCare's budget to go it means MORE TAXES. So while there costs have gone up, they haven't been able to increase their revenue the way insurance companies can. And THAT'S why it's failing. But with my plan, costs can fluctuate. And if, in future, the taxes you pay for gov't health care go up, this is in lieu of your premiums going up: so your still no worse off!

As for the whole government efficiency remember: Insurance companies run it; like contractors. But they won't have the same dysfunctional profit motives that they have now. They can still make money, but it won't be like before. No more huge salaries for CEO's, not generated by health care premiums anyway! They'll want as many new babies as they can get, since that lowers their average cost, and increases their revenue, so they won't risk losing those to their competition by over bidding.

FINALLY...

I want to, once and all, eviscerate the idea that Senator McCain (R) proposed on the 2008 campaign trail that we could benefit by eliminating state boundaries. Now... this COULD work, in the short term. I live in Michigan. I have two autistic sons. At the moment, speech theraphy is not covered for Autistics in Michigan. So I could, say, buy from Florida, where it IS covered. Sounds great right? Two problems.

First of all: I'M NOT BUYING IT! It's still going to be up to my employer to buy it. And THEY are likely to choose the cheapest plan, which is likely in the state with the leats regulation and least mandated coverage. So there goes my coverage! What's more, in the long term, if anyone can buy form any state, then the insirance companies will all move their plans to the one state with the least regulations. (So Autism reform, for example, won't happen for ANYONE unless ALL FIFTY states pass it! And when was the last time Alabama and Massachusetts agreed to do anything together?!)

So, Mr McCain, all your plan will do is make it IMPOSSIBLE for a given State to regulate it's insurance industry. And here I thought Republican's were all about states rights. Ha!