Talk to Me Like I'm 4: Why Our Health Care System Failed Us and How We Can Fix It

By J. Goodrich, AlterNet. Posted February 12, 2009.

If you could meet a genie in a bottle, free it and receive three wishes about the American health care system as your reward, what would those wishes be?

For most experts, they would be high quality, low costs and universal access: The best medical care possible with the least amount of money to the largest number of people. That, indeed, would be lovely.

Alas, genies from bottles have so far refused to help us reach all those important goals at the same time. Instead, we are stuck with all-too-human plans for fixing the ailing U.S. health care delivery system.

Those plans can be summarized as mostly pro-market or mostly pro-government: Either encourage more competition in the health care markets or supervise and regulate those markets more stringently. It helps to think of such plans as falling somewhere along a straight line where one end-point denotes perfectly unregulated ("free") markets with an almost Wild West flavor, and the other end-point denotes a system of government-owned-and-controlled ("socialized") health care provision. Where should the U.S. system place itself on such a line?

The Obama administration has a chance to make its own recommendations on that placement, although recent rumors hint at nothing much happening during 2009. Obama's campaign Web site tells us, though, that his administration has both pro-market and pro-government plans for fixing the health care system.

Given the new fashion for bipartisanship in politics, and Obama's willingness to compromise with his political opponents, I fear that the conservatives will manage to nibble away at these plans until only the market-based, competition-driven bits remain. This would be a grave mistake, because increasing competition alone will not help us out of our present dilemma of escalating costs and growing numbers of people with no health care coverage.

The reason for that lies in the very nature of health care competition. It is a very different-looking animal from the competition that proponents of "free markets" have in mind when they extol the benefits of markets: variety, innovation, high quality and low prices.

Indeed, competition in health care markets may result in higher prices and unnecessary duplication of expensive facilities. It may also consist of refusing customers who have high health care needs.

On Tomatoes and Stomach Pains

To see where the "free marketeers" go wrong in their pro-competition arguments, let us imagine the kind of market that indeed functions very well: A small farmers market, meeting every Saturday near a large city, a place where growers bring their produce for consumers to buy. It is easy at such a market to compare prices and quality, the consumers know what they plan to buy for that night's dinner, and testing the products can be arranged if desired by simple taste tests.

To check prices, all a buyer needs to do is walk around. Prices of, say, tomatoes will quickly be equalized in such a market to the lowest level at which the growers still make enough money to attend the market and the quality of tomatoes will mostly be quite good.

Now compare a visit to buy tomatoes to a medical visit, one that is caused by some unidentified stomach pain. Few of us will shop providers before deciding to use the services of one -- services that begin with an identification of the symptoms and then continue with recommendations for further action. It is as if we asked a tomato grower to tell us if we really need to eat tomatoes and how many of them to buy, often from the same grower, while all the time not truly knowing if that grower's tomatoes are any good or what we need to buy.

The potential conflict of interest this can create is obvious when translated into tomato terms. It is also the reason for the strict training and regulation of health care providers, for malpractice suits and for the self-regulation carried out by professional medical organizations. But even more importantly, it is the reason for expecting that health care providers operate in the best interest of their patients, as the patients' agents.

This, however, is a problem for your average market model, because sellers who work both as sellers and as the buyers' advisors and agents muddy up the clear rules that the two sides of the markets traditionally have.

The above parable is about lack of information: Health care consumers have a lot less of the necessary information than tomato consumers, and some of that missing information is purchased together with the recommended products.

But if some patients have trouble with such fundamental information as their own need for particular treatments, how can they judge quality information in the markets accurately? And if quality is misinterpreted by enough consumers, what do the quoted prices for various services mean? Can such a market result in lower costs and higher quality?

On Free Ice Cream, Bad Apples and Cherry-Picking

Sure, you might mutter. After all, insurance companies and employers who pay for health care have an interest in such outcomes and more time and information than your average consumer to study the medical statistics and to find the best deals for their money.

See more stories tagged with: health, obama, health care, single-payer, free markets, health care competition

J. Goodrich is an economist. Her writing has been published in the American Prospect, Ms. Magazine and on various political Web sites. She also blogs at Echidne of the Snakes.

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