On Competition in a Free Market
RE: Concluding Healthcare cost debate; comments on competition in the healthcare industry
However we would find segments within 1% of the economy where the free market has been a failure, no matter how free market fundamentalists attempt to spin the facts. There are services and goods that private enterprise just cannot deliver at this time* at an affordable price. Several cases come to mind: the national park system, road management and medical care for seniors. Oh sure, you can use some private contractors to do some of the work on these projects/areas, but the whole planning, funding and development of it has to be done by the government, because no private group will take these projects on! (Incidentally, this was the impetus for the creation of Medicare in 1965 -- private insurers just did not want the risk spread that elderly folks brought to bear on them).
Segue on free market fundamentalists: Narrow-minded ivory tower economists like to pontificate about how, on paper, all industries work best when the "market" is left free of any regulations or laws or defining boundaries. Paradoxically, the existence of an economy is guaranteed by the action of government, and the operations of the market and the government are part of a one-sided symbiotic relationship -- while government can exist without a relatively free market (e.g. Stalinism), free markets cannot exist without a government to protect and promote them.
(who else will enforce contract law? bankruptcies, fraud, currency, bank security --> all guaranteed by a strong government presence. The countries that do not have these elements are third-world "libertarian" societies that the IMF and the World Bank effectively "run"... That's how free markets look without solid government to support and define them.)
So here we have, on the opposite end of the political spectrum, economists who keep looking at their calculations and theories on paper while reality has caught up and then passed them by -- sound familiar? This was the complaint always levelled at the erroneous supporters of Soviet Communism, and it was wholly correct. Except that now our utopian economists miss what is right under their noses, just as the Soviet apologists did during the Cold War: our devotion as a country to free market economics in every industry has left us with several industries which are non-competitive precisely because they are left on their own to develop "freely."
How this relates to healthcare: This is the case with healthcare. More competition looks like it could fix everything on paper, but in fact it is almost impossible to "generate" this competition. Healthcare is mostly oligopolistic and monopolistic corporations operating on a moderate level of regulation (there are industries that are profitable with far more regulation, as an aside). It will probably never be as "efficient" as most market theorists argue, because you can never get rid of the distorting effects of monopolistic and oligopolistic pricing, let alone collusion and cartels.
Since an unrestrained free market would take us back to the 1920s when even fewer people had healthcare coverage, and the elderly were not easily covered by any kind of plan, we would presumably see our health indicators as a nation plummet. But wait -- we are already behind most of Western and Nothern Europe, Japan, and Australia for many health indicators:
The point is not to demonize our current system beyond what is already obvious, nor to promote a Canadian, German, or Swedish system as a panacea for our nation's health care problems. The point is that the federal government is in the best position of power to make compelling changes to our healthcare system, whether in the form of an expansion of Medicare, a comprehensive voucher system for the unemployed, or matching funds for Health Savings Accounts. There is no other corporation or industry group flexible enough, accountable enough to the people, or with as much sway as the federal government, no matter what the ultimate solution ends up being.
*Footnote 1: In a Star Trek-like future, ironically, it may be possible for a ridiculous number of things to be done more efficiently by private enterprise than by government, due to technological and scientific improvements. However, as of right now, there are many things in this world that just do not fare well as private ventures.
"Healthy competition's is [sic] one of the backbones of this economy."I think you would find that, if we sat around and discussed hundreds of industries, sectors, and areas of the economy, we would be mostly in agreement that in the majority of cases, free market economics works pretty well to deliver goods and services in a dynamic way -- especially in the case of luxury goods (non-necessities). Which is clearly something the Soviets and other Warsaw Pact countries learned after 1989, when they realized that automobiles and color television were not luxuries in the West, but were in fact "light luxuries" that even poor people could easily afford to possess.
However we would find segments within 1% of the economy where the free market has been a failure, no matter how free market fundamentalists attempt to spin the facts. There are services and goods that private enterprise just cannot deliver at this time* at an affordable price. Several cases come to mind: the national park system, road management and medical care for seniors. Oh sure, you can use some private contractors to do some of the work on these projects/areas, but the whole planning, funding and development of it has to be done by the government, because no private group will take these projects on! (Incidentally, this was the impetus for the creation of Medicare in 1965 -- private insurers just did not want the risk spread that elderly folks brought to bear on them).
Segue on free market fundamentalists: Narrow-minded ivory tower economists like to pontificate about how, on paper, all industries work best when the "market" is left free of any regulations or laws or defining boundaries. Paradoxically, the existence of an economy is guaranteed by the action of government, and the operations of the market and the government are part of a one-sided symbiotic relationship -- while government can exist without a relatively free market (e.g. Stalinism), free markets cannot exist without a government to protect and promote them.
(who else will enforce contract law? bankruptcies, fraud, currency, bank security --> all guaranteed by a strong government presence. The countries that do not have these elements are third-world "libertarian" societies that the IMF and the World Bank effectively "run"... That's how free markets look without solid government to support and define them.)
So here we have, on the opposite end of the political spectrum, economists who keep looking at their calculations and theories on paper while reality has caught up and then passed them by -- sound familiar? This was the complaint always levelled at the erroneous supporters of Soviet Communism, and it was wholly correct. Except that now our utopian economists miss what is right under their noses, just as the Soviet apologists did during the Cold War: our devotion as a country to free market economics in every industry has left us with several industries which are non-competitive precisely because they are left on their own to develop "freely."
How this relates to healthcare: This is the case with healthcare. More competition looks like it could fix everything on paper, but in fact it is almost impossible to "generate" this competition. Healthcare is mostly oligopolistic and monopolistic corporations operating on a moderate level of regulation (there are industries that are profitable with far more regulation, as an aside). It will probably never be as "efficient" as most market theorists argue, because you can never get rid of the distorting effects of monopolistic and oligopolistic pricing, let alone collusion and cartels.
Since an unrestrained free market would take us back to the 1920s when even fewer people had healthcare coverage, and the elderly were not easily covered by any kind of plan, we would presumably see our health indicators as a nation plummet. But wait -- we are already behind most of Western and Nothern Europe, Japan, and Australia for many health indicators:
- higher mortality rates at almost any age group from infants to seniors
- in particular, infant mortality, where we rank lower than any comparative country
- life expectancy (either gender), where we rank below all of these countries
- Adult AIDS prevalence rate, higher than any of these countries
And yet, we are ahead of all these countries by a landslide in one category: spending/insured-citizen on healthcare.
The point is not to demonize our current system beyond what is already obvious, nor to promote a Canadian, German, or Swedish system as a panacea for our nation's health care problems. The point is that the federal government is in the best position of power to make compelling changes to our healthcare system, whether in the form of an expansion of Medicare, a comprehensive voucher system for the unemployed, or matching funds for Health Savings Accounts. There is no other corporation or industry group flexible enough, accountable enough to the people, or with as much sway as the federal government, no matter what the ultimate solution ends up being.
*Footnote 1: In a Star Trek-like future, ironically, it may be possible for a ridiculous number of things to be done more efficiently by private enterprise than by government, due to technological and scientific improvements. However, as of right now, there are many things in this world that just do not fare well as private ventures.
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