Sometime in the early 1980s, it became en vogue for Republicans to shout “free market” whenever they didn’t like something. Public schools? “Let the free market forces decide which kids succeed and which ones don’t!” But don't provide community services to those kids who are fundamentally disadvantaged. The banking industry? “Let those honest bankers be governed by the principles of the free market!” That didn’t work too well either, apparently.
It’s not to say the free market isn’t a good thing, when in context: where the goals of the free market are in line with the interest of the very people that make up that market, free enterprise is a beautiful thing. Companies compete with one another to create the best, highest quality products at the lowest possible price to the consumer. Everyone wins. Output quality is high, and the cost of goods is driven down by good old-fashioned competition. In the end, the incentives are all in their proper places.
But the problem is that not every aspect of life functions on a pure market model. Take health care. Republicans are insisting that the best fix for the current health model is, of course, the free market. They argue that if we give mega-insurance companies incentives to bring down costs to consumers, everyone will be happy.
But the underlying fact is that the fee-for-service model- in which a patient pays for each service (an X-ray, a check-up, a surgical procedure, etc.) he or she receives- runs diametrically antithetical to high-quality health care. Doctors make money when more services are provided, leading to things like unnecessary surgeries, which a Congressional investigation all the way back in 1975 concluded accounted for more than 2 million procedures performed in that year in the Medicare and Medicaid systems alone (at a cost of $4 billion). Since then, surgical procedures have grown at more than twice the rate of the population. For the doctor, the incentive is not to keep you healthy, it’s to treat the condition with procedures as they arise.
That leads to the insurer, who only makes money if it doesn’t have to pay for the expensive surgeries. So insurers take painstaking steps to deny coverage, whether because of “preexisting conditions” or procedures deemed “experimental” or unlikely to result in correction by some guy sitting in an office hundreds of miles away.
What’s even more interesting is that the insurer will also deny preventative care that it deems costly. After all, they might be able to get out of it by just denying the expensive claim down the road anyway.
Free market principles tell the doctor to provide extra care. Those same free market principles tell the insurer not to pay for the extra care. So the doctor- who needs to get paid to keep his practice open and feed his family- goes after the consumer (who probably thought his insurance was good enough). When the consumer can’t pay the medical bills, he declares bankruptcy, and the doctor or hospital eats the cost. The premiums for all the other consumers go up. The foreclosure rate goes up. Everyone loses.
Free market principles are for business, not for health care.
Now let’s take a look at a slightly better model. The closest we have to a solid private healthcare system is Kaiser Permanente (and no, we’re not getting paid to say this). Kaiser is both an insurer and a provider. If a Kaiser doctor decides you need a procedure, the insurance wing of that same company isn’t going to second-guess the doctor and deny the claim. Plus, there’s a premium on preventative medicine. If Kaiser can prevent you from having a heart attack in 10 years by bringing you in for yearly physicals or putting you on a heart monitor, that’s an ER visit that they’re not going to have to cover down the road.
Of course, Kaiser isn’t perfect. They can still deny coverage based on things like preexisting conditions. But so far, it’s the only thing out there.
The public option, however, would be fundamentally different. Fee-for-service is largely removed. Insurance is never taken away for any reason other than non-payment of premium. That way, an insured patient never gets a surprise bill in the mail that tells them they were never really insured at all.
Homework time: if EOO readers are interested in learning more about the healthcare debate at this crucial juncture, check out Michael Moore’s documentary, SiCKO, and Howard Dean’s new book, “Dr. Dean’s Prescription for Real Healthcare Reform.” Both will give you incredible insight into why this debate is so important.