TUESDAY, OCTOBER 21, 2014 - This Day In History
Free Market Principles Make For Bad Health Care
Posted By jwilkes - Saturday, July 25th, 2009 at 3:32 AM
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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.

 



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Discussion:
LEAD, FOLLOW, OR GET OUT OF THE WAY. (Thomas Paine)

We have the 37th worst quality of healthcare in the developed world. Conservative estimates are that over 120,000 of you dies each year in America from treatable illness that people in other developed countries don’t die from. Rich, middle class, and poor a like. Insured and uninsured. Men, women, children, and babies. This is what being 37th in quality of healthcare means.

I know that many of you are angry and frustrated that REPUBLICANS! In congress are dragging their feet and trying to block TRUE healthcare reform. What republicans want is just a taxpayer bailout of the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT health insurance industry, and the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT healthcare industry. An insurance bailout is all you really get without a robust government-run public option available on day one.

These industries have been slaughtering you and your loved ones like cattle for decades for profit. Including members of congress and their families. These REPUBLICANS are FOOLS!

Republicans and their traitorous allies have been trying to make it look like it's President Obama's fault for the delays, and foot dragging. But I think you all know better than that. President Obama inherited one of the worst government catastrophes in American history from these REPUBLICANS! And President Obama has done a brilliant job of turning things around, and working his heart out for all of us.

But Republicans think you are just a bunch of stupid, idiot, cash cows with short memories. Just like they did under the Bush administration when they helped Bush and Cheney rape America and the rest of the World.

But you don't have to put up with that. And this is what you can do. The Republicans below will be up for reelection on November 2, 2010. Just a little over 13 months from now. And many of you will be able to vote early. So pick some names and tell their voters that their representatives (by name) are obstructing TRUE healthcare reform. And are sellouts to the insurance and medical lobbyist.

Ask them to contact their representatives and tell them that they are going to work to throw them out of office on November 2, 2010, if not before by impeachment, or recall elections. Doing this will give you something more to do to make things better in America. And it will help you feel better too.

There are many resources on the internet that can help you find people to call and contact. For example, many social networking sites can be searched by state, city, or University. Be inventive and creative. I can think of many ways to do this. But be nice. These are your neighbors. And most will want to help.

I know there are a few democrats that have been trying to obstruct TRUE healthcare reform too. But the main problem is the Bush Republicans. Removing them is the best thing tactically to do. On the other hand. If you can easily replace a democrat obstructionist with a supportive democrat, DO IT!

You have been AMAZING!!! my people. Don't loose heart. You knew it wasn't going to be easy saving the World. :-)

God Bless You

jacksmith — Working Class

Republican Senators up for re-election in 2010.

* Richard Shelby of Alabama
* Lisa Murkowski of Alaska
* John McCain of Arizona
* Mel Martinez of Florida
* Johnny Isakson of Georgia
* Mike Crapo of Idaho
* Chuck Grassley of Iowa
* Sam Brownback of Kansas
* Jim Bunning of Kentucky
* David Vitter of Louisiana
* Kit Bond of Missouri
* Judd Gregg of New Hampshire
* Richard Burr of North Carolina
* George Voinovich of Ohio
* Tom Coburn of Oklahoma
* Jim DeMint of South Carolina
* John Thune of South Dakota
* Kay Bailey Hutchison of Texas
* Bob Bennett of Utah
[ Posted at 2:49 PM on 7/25/09 | Reply ]
There was a fantastic article published from a researcher that broke down how the health care system in the US broke down starting with the conservative takeover in 1980. http://www.newscientist.com/article/dn17512-the-scientific-arguments-for-us-healthcare-reform.html?DCMP=OTC-rss&nsref=online-news

This all ties into the premise of the article, that the focus of our nations medical care should be on *health*, not profit.
[ Posted at 4:55 AM on 7/26/09 | Reply ]
[-] I'm pro capitalism where it works. - Guest-Actuary4Change731
For health care, I'd prefer single payer, but I'll take a strong public option with lots of govt regulation for the private side.
[ Posted at 3:12 PM on 7/28/09 | Reply ]
[-] I'd like to start a new meme that will - Guest-GreasyGrant448
spread like wildfire. A key portion of your diary is as follows:

" ...When the consumer can’t pay the medical bills, he declares bankruptcy... "

A huge chunk of personal bankruptcies are the result of medical expenses. A huge chunk of the recession we are in now is because banks will not extend credit to consumers and small businesses. What if the way health care was paid for was reformed so that nobody had to be bankrupted by paying for medical services? Everyone had coverage with nominal co-pays and that could not be taken away even if they lost their job or changed jobs. The medical judgement of doctors was respected and not second-guessed by beancounters at insurance companies. Without the risk of this type of personal bankruptcy, I'm predicting that banks would feel more confident in lending to consumers and small businesses, and economic growth would result, helping us out of this, or the next, recession.
[ Posted at 3:45 PM on 7/28/09 | Reply ]
[-] Huge Misconception - Guest-PrinceNekhlyudov
It is a huge misconception that America's strange and dysfunctional system for financing health care is the product of the "free market." In fact, it is largely the product of governmental interference. During WWII, one way of circumventing wage controls was for employers to offer health insurance to employees. The system of providing health insurance through employment was bolstered by tax laws making health insurance deductible for employers and non-taxable for employees.

If you really had a "free market" system, then everyone would essentially be on his or her own in meeting individual health care needs. Of course, in a capitalist system, this inevitably will leave a lot of people in the cold. Social democratic governments in Europe and Canada compensated for the shortcomings of the free market either by establishing government-run healthcare systems such as the NHS in the UK, or single-payer health insurance as in Canada and France. However, the US did not really have a true free-market system, but instead evolved this bastardized system in which private health insurance is provided as a term of employment, underwritten by tax breaks. As a result, we now have hugely powerful and profitable private health insurance companies wielding enormous influence in Washington, who have been able to stop any serious attempt to change the system by raising a hue and cry about "socialized medicine", scaring average Americans into believing that the evil Democrats want to deprive them of "choice."

Not this time.
[ Posted at 4:25 PM on 7/28/09 | Reply ]
[-] Republicans Don't Really Want Free Markets - Guest-PrinceNekhlyudov90
What they want is government giveaways to private interests. Not the same thing at all.

My favorite example is the Federal Crop Insurance program. This program was established in the New Deal to provide crop insurance to poor farmers wiped out by the dustbowls of the Depression. This government-run insurance program went along at modest cost for the federal government until 1994, when Gingrich launched his "contract on America."

If Gingrich & Co. had truly been free marketeers, they would have abolished the crop insurance program altogether. They would have said that agriculture is a risky business, and if a farmer doesn't have sufficient capital to insure against the risk of crop failure, then that's just too damned bad - find another line of work.

But that's not what Gingrich & Co. did. Instead, proclaiming a belief in "free markets", they privatized the Federal Crop Insurance program. In other words, they continued to have a crop insurance program subsidized by government tax dollars, but instead of being run by an agency of the government, the program was handed over to private insurance companies. The result: the number of crop insurance policies being written increased geometrically and the cost of the program ballooned out of control. And, because the whole thing was underwritten by tax dollars, the private insurers had no incentive to police against fraud and abuse, which also became rampant. Meanwhile, the private insurance companies became highly profitable and dependable contributors to Congressional candidates. Good luck at changing the system.

Moral of the story: Republicans claiming to believe in "free markets" are full of shit.
[ Posted at 11:08 PM on 7/28/09 | Reply ]

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