Gault's Gulch

December 26, 2009

Health Care Reform and Ideological Purity

Filed under: Politics — John Gault @ 2:26 pm
Tags: , , , , ,

Is health care like an army or an ascot?  I say, whichever we want it to be.

Whether you believe yourself to be a staunch capitalist or a dedicated socialist, there is hardly one among us that can look at today’s system of health care and deny that it is woefully ineffective.  The right would have you believe that reforms of the currently debated flavor will lead to “death councils” and advisory boards of moustache-twisting bureaucrats deciding whether or not your grandmother should be “put down”.  The left would similarly have you believe that if the current reforms aren’t passed (and in a hurry, mind you) that you will personally be responsible for cute little babies being launched from hospitals and into the streets for their inability to pay.  Obviously, neither of these scenarios are true.  Furthermore, I propose that the current reforms are, at best, useless, and, at worst, dangerous.  The problem is that the currently debated reforms make the same fatal mistake as the system we currently employ.  They fail to make the American public choose which they want healthcare to resemble–an army or an ascot.  That is, should health care be a public good or a private one.  We can have either one, but to try and have both will create a broken system which can not and will not meet the goals of anyone.  In short, its time for a little ideological purity.

Briefly, for those who actually enjoyed the time they spent in college instead of spending it reading economics textbooks, let’s recap public versus private goods.  Private goods are bought and sold by private individuals or companies.  Cars, computers, crayons, and cabbage are private goods.  You decide how much you need.  You seek out those who are willing to sell to you (or they seek you out), terms are negotiated, and payment is exchanged.  Easy-peasy.  Public goods are a little more complicated.  Public goods are those goods which everyone gets to use, so everyone has to pay for.  Everyone reaps the benefits of our military.  They fight for our rights at home and abroad and even in times of peace, their mere presence serves as a deterrent to those who might attack us in their absence.  Since everyone reaps the benefits of their existence, then everyone has to pay for them.  That’s why our taxes go to fund national defense.  There is no opting out. 

Generally speaking, there are some fundamental differences between public and private goods.  Private goods tend to be higher in quality but shorter in supply.  Public goods are the opposite, they tend to be high in supply but lower in quality.  Use our educational systems as an example.  Our university system (even the public universities) are a private good because you choose if you want to attend and then choose to pay tuition.  Our university system is renowned the world over for its quality.  The problem is that not everyone can afford to go or can qualify for requirements of admission.  Our public school system, on the other hand, is open to all.  It is also paid for by all.  Every tax-paying American pays for the public schools regardless of whether or not they choose to use them.  Unfortunately, this lack of competition and guarantee of funding creates an environment that fosters sub-par quality–to the point that American public schools are ranked at the bottom of the industrial world’s educational systems.  The question is which one of these models we want our health care system to look like–mediocre health care for everyone, or cutting-edge healthcare for those who can afford it and none for those who can’t.  Any attempt to “ride the fence” between these two ideological poles will result in a system that doesn’t work–like the one we have now.

Let’s start with public health care.  The current reforms do not provide public health care.  If private insurance companies are involved, then no mandates or public options will disguise the fact that it is not truly public health care.  Many countries have decided that public health care is a right and have implemented “single-pay” systems that provide all citizens with equal access to health care.  In all honesty, I don’t have a huge problem with this idea.  I do think that quality will suffer.  I do think that research and development will suffer.  I do think that America will  no longer hold the vanguard position in the ongoing race to cure disease and treat illness.  These are inherent problems with any public good.  I do think, however, that the majority of medical care is mundane, not exotic, and if millions of people with severed fingers or the flue can get care that they might not have gotten otherwise, then it’s probably worth it that we won’t find a cure for Parkinson’s or AIDS or even cancer.  The good of the many does, indeed, sometimes outweigh the good of the few.  The problem is that the leftists who argue for this system of health care rarely admit this inevitable fact.  They want you to believe that we can all have the absolute best care in the world.  Nonsense–intellectually dishonest nonsense.

Now the private option…I can already hear the peanut gallery:

“But John, we already have private health care and it obviously doesn’t work!  A pox upon you and your Adam Smith-loving obsession with capitalism!” 

I know that the current system sucks.  The problem, however, is not with the functioning of the free market.  Capitalism is like gravity–it is a force of nature that cares not about you or your understanding of it.  It simply functions according to natural law and you have the responsiblity to understand how it works.  The current system of buying and selling health insurance works exactly how one would expect it to if one fully understands the parameters of the system we have chosen to use.  The problem is that we have introduced an unnecessary party to the negotiation of private insurance–the employer.  The vast majority of Americans who have health insurance have it through their employer.  This means that insurance companies sell a service and employers buy it.  The provider/customer relationship that fuels free market economics has excluded the ultimate user of the product–you.  Here’s how it works…Blue cross sells insurance.  They want to attract more customers.  If their primary business model was to sell to individuals, then they would attract customers by offering the absolute best combination of low prices and high-quality service that they could.  The problem is that individuals are not their customers–employers are.  Employers, however, do not care about the quality of health care they provide their employees–only the cost.  Therefore, Blue Cross (or any other major insurer) is incentivized to offer low-price/low-quality insurance in order to entice as many employers as possible into signing up for their group plans.  They are further free to deny services and abuse the users of their product (you) since the employers are not likely to leave and go to another provider when they do so.  If the employer was eliminated from the equation, then the insurance companies would be forced–by the mandates of the free market–to change how they do business.  Competition would increase, prices would fall, quality would rise.  Sure, there would always be those who couldn’t afford the services provided, but quality would remain high and the lowering of prices would mean that many americans who don’t currently have health care would suddenly be able to afford it.  If the government really wanted to “save” health care through legislation, they could do so by simply passing a law that prohibits employers from providing health insurance benefits to their employees.  By restoring the provider/customer relationship that exists in everything from retail electronics to private education, the ills of the current system could be easily cured.

Armies are a public good.  Ascots are a private good.  Both have their pros and their cons.  Health care can be one but never the other at the same time.  We, as a people, have a responsibility to understand the differences between these two models and demand that our representatives “man-up” and commit to an ideological path on the subject.  This constant hand-wringing and milk-water dedication to a “middle-ground” is costing America billions in failed policies and medical tragedies.  We then have the final responsibility of living with the consequences of our choice.  Like most things in life, we can have our cake or we can eat it–and anyone who tells you that you can have both is a damned liar.



1 Comment »

  1. Ah, clarity is a wonderful thing. Thanks, John.

    Incidentally, I blogged a multi-part series on Obamacare back when the House was still working on their bill, and I included a look at the whole “death council” thing.


    Comment by sirrahc — January 12, 2010 @ 5:47 pm | Reply

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