An Ethical Musings' reader asked for my opinion on the following question: Of which healthcare system might Jesus approve, the US for profit or Canada's socialized?
My answer to that question has two parts. In this, the first, I answer the reader's question, concluding that it is the wrong question to ask. In my next post, I'll ask the right question, offer an answer, and conclude with some thoughts on Jesus' priorities.
First, Jesus' concern would be that everybody – regardless of a person's wealth, social position, race, religion, or other demographic factors – have equal access to quality healthcare. Scripture consistently portrays Jesus as a healer who cared equally for all people.
Second, no healthcare system is – or ever will be – perfect. Healthcare systems are devised and operated by humans. Choosing a healthcare system inevitably requires choosing between sets of tradeoffs. In other words, healthcare debates will generally involve differences of opinion that result from assigning different weights to various values and from different projections about the probability of future outcomes.
Third, the choice between a free market (what my reader termed capitalist and I rephrased as for profit) and socialist approach to healthcare is in many respects an economic decision. As I have previously argued at Ethical Musings, capitalism often has significant advantages compared to other economic systems. However, healthcare poses seemingly insurmountable obstacles on both the demand and supply sides of the market to devising a satisfactory free market healthcare system:
- On the demand side, sometimes when a person wants (the more accurate verb is needs) healthcare, timing is critical, e.g., in the aftermath of a life-threatening injury or acute medical crisis such as a heart attack. In such a moment, the person requires immediate care and does not have the time, and often not the ability, to choose a supplier. Yet informed consumers are a prerequisite for free markets to function properly. In sum, a free market healthcare system is incompatible with the provision of emergency care. Many communities have recognized this fact, establishing a monopolistic first-responder system and limiting the number of emergency rooms.
- Also on the demand side, for free markets to function effectively and efficiently consumers must make informed choices about treatment options and suppliers (also known as vendors and healthcare providers). The more complicated a medical issue is, the more costly treatment is likely to be. However, the more complicated a medical issue is, the less likely a consumer will have the time, education, and perhaps intellectual ability to make a rational choice between her/his options. Furthermore, consumers generally have little incentive to acquire the knowledge and skill to make good healthcare choices about complex medical issues because most consumers will not need to make any of these choices for themselves until they near the end of life, when thinking abilities are often degraded. Acquiring such knowledge early is usually pointless: the range of possible medical issues is too huge (which is why physicians specialize) and knowledge about those issues and preferred treatment protocols often change (which is why continuing education is important for physicians). Meanwhile, complicated insurance policies, uncertainty about the future, and consumer optimism about the future (I won't get sick, I'll somehow get by, etc.) discourage individuals from researching insurance options before they buy.
- Also on the demand side, consumers and their families understandably and generally want the best available care, regardless of price. Healthcare markets, in other words, tend to be inefficient because they are highly inelastic (insensitive to price), which allows suppliers to maximize profits.
- On the supply side, free markets require multiple suppliers to compete with one another. Yet much of the US healthcare system is currently an oligopoly (few suppliers) or monopoly (one supplier) and not a free market system with many suppliers. Competition does exist between physicians in many places. However, in most markets only a few (three or less, usually) hospitals compete with one another. Population density will often support only one hospital; proximity, as much as anything, will often appropriately dictate which hospital treats a person, meaning that competition is more illusory than real. Similarly, healthcare insurers have succeeded in minimizing competition in many places, sometimes through legislative intervention and sometimes by ruthless competition in a badly regulated market. Regardless, the consumer loses.
- Also on the supply side, healthcare providers have worked to establish high barriers to entry that effectively limit competition. If the US had twice or three times as many physicians as it does today, those doctors would start to compete on price. Drug patents promote research in the hope that sales of a blockbuster drug will generate massive profits, but do so at the cost of discouraging head-to-head competition between drug companies. This dynamic is especially evident in the resistance of drug companies to consumers buying generic drugs, medicinally the same as the original but manufactured and sold at a far lower price. The pharmaceutical industry has often succeeded in colluding with physicians and pharmacists to minimize use of generics.
- Also on the supply side, healthcare providers adamantly refuse to provide consumers with price information. When I moved to Raleigh, I wanted to choose a primary care physician based on which doctor would bill my healthcare insurance the least (my copay in all cases would be the same). None of the physicians who accepted my healthcare insurance would tell me the amount that they would bill my insurance. In other words, price competition was impossible. I found the same refusal to provide pricing information when I contacted the three area hospitals about their services. In fact, the people with whom I spoke were first surprised that anybody would ask about price (after all, insurance would pay) and then were offended that I would choose a provider based on price (none of the physicians had had any complaints filed publicly and the hospitals all have great national reputations).
- Also on the supply side, very profitable private healthcare insurers (think large insurance companies) and the administrative burden associated with funding US healthcare this way represents a de facto surcharge of about 25% to consumers and taxpayers. This extra cost adds little if any value to actual healthcare.
- Also on the supply side, extensive government regulation (e.g., controls on the number of hospital beds, emergency rooms, costly equipment such as MRI machines, etc.) already recognize that parts of our healthcare are really a monopoly or oligopoly, not a free market.
In other words, significant structural barriers on both the demand and supply sides mean that a free market approach to healthcare will never really exist. The existing US approach is more accurately described as dysfunctional oligopoly than as free market capitalism.