December 27, 2003

"Many are sick, and have no insurance. Can the free market give it to them, Frodo?"

Dr. Chris Rangel and I (among others) have been going back and forth about single-payer national health insurance.

Dr. Rangel's latest post, while failing to quote any characters from The Lord of the Rings, nevertheless deserves a response. Especially because among its many accurate and perceptive observations are scattered misleading and conclusory statements purporting to locate the solution to our health-insurance woes in the free market.

I believe the free market is inherently incapable of achieving a goal which virtually everyone agrees is a worthy one: covering every American citizen.

Let's start with a treatment that ought to be near and dear to our fatty-plaque plagued hearts: automatic implantable defibrillators.

"Despite what Carey claims, you don't have to be "rich" to get one of these devices."

What counts as "rich" is in the eye of the beholder. From the perspective of the typical Wal Mart-esque service industry employee (an increasingly common perspective among American citizens), having adequate health insurance is, like owning a yacht, increasingly an exclusive privilege of those much wealthier than themselves.

"You just have to have insurance. This is not the same as rationing. And his analogy comparing defibrillators to organ transplants typifies the scary mindset of most liberals when it comes to their approach to rationing in health care. Even if we take into account the extreme expense of transplantation the real reason that these are rationed is because there are simply not enough organs to go around! The last time I checked we didn't have any problems with manufacturing defibrillators nor any lack of physicians to implant them."

To the contrary, this is rationing of the worst kind. Unlike the case of organ transplantation, however, where we ration organs because of their limited availability, in the case of implanted defibrillators we ration them because of the limited opportunities to profit from their implantation.

Because Dr. Rangel is right that there is no shortage of defibrillators nor any lack of physicians to implant them, their differential availability based on the profit potential of implantation in this patient versus that patient is scandalous.

"Why the difference in the coverage of defibrillator indications between private insurance and Medicare? Private insurance companies have just as much incentive as Medicare to cut costs (to maximize profits) but unlike Medicare (or any government program) they have incentives to increase the amounts and kinds of care they will cover in order to make their product more attractive to consumers in a competitive market"

Again, Dr. Rangel misses the point. Only people who can afford insurance are "consumers" in the healthcare market. Private insurance firms have no incentive whatsoever to provide any care at all to "non-consumers," i.e., people who work low-wage jobs and can't afford private insurance. Medicare, in contrast, is directed to provide cost-efficient care to all qualifying American citizens, regardless of whether or not they've got the money to act as "consumers."

If Medicare chief Tom Scully made a mistake when he limited eligibility for implanted defibrillators, as Dr. Rangel suggests, it is only because he failed to consider that this treatment is medically effective and cost-efficient. Dr. Rangel is right that anyone could make this mistake, especially if he or she is under pressure to cut costs.

But this pressure to cut costs will not, contrary to Dr. Rangel's assertions, necessarily increase under a single-payer system. If everyone is covered, there will be greater pressure on the program to make medically-sound decisions as well as economically-sound ones, since everyone is medically as well as economically affected by the consequences of every coverage decision. Under our current system, every taxpayer is economically affected, but not everyone is medically affected. The rich opt out of the common system, and lobby only for reduction of costs, not for improvement of care.

"Because in a socialized single payer system the first treatments to get the ax are the newer, advanced, and expensive ones and it only goes downhill from there."

This isn't true, as Dr. Rangel's own source shows. According to that source, Medicare approved higher payments for drug-eluting stents before these devices received FDA approval. On the contrary, the first treatments to go under an effective single-payer system will be the overpriced ones with dubious or unproven medical benefits. Why? Because the whole nation will have a stake in what's covered, instead of only few special-interest groups and medical device manufacturers.

"You just have to have insurance."

"You just have to have insurance" to get an implanted defibrillator. That's true, and it sounds so simple until we remember that because of our current predilection for reflexively deferring to the private market, many people can't afford to just go out and get private insurance.

Now, profit is a good thing, like water is a good thing. But just like water, it's not good in every place, every time, or every quantity. Relying on profitability as a yardstick for making medical decisions makes about as much sense as relying on water in our gas tank to take us to Grandma's house for the holidays. Water is a great liquid, but it's just not the right liquid for every situation.

Anyone who pays any attention at all to the health-insurance debate knows about the incentives for private insurers to "cherry pick" the healthy and wealthy while avoiding the sick and the poor. The demands of profitability and the free market compel this behavior. And this compulsion only grows stronger when the competitive pressures in the market increase, as Dr. Rangel advocates.

Now, there's nothing intrinsically wrong with markets, and competition, and profit. Despite Dr. Rangel's frequent and wholly unwarranted intimations that supporters of a single-payer system are socialists or communists, most of us realize that a market system is indispensable for preserving our economic and personal freedoms. I like freedom and choice as much as Chris Rangel does.

But I don't like intellectual crutches, which is what the reflexive appeal to the free market as the magic bullet that will solve all of our problems has become. We need to realize that the capitalist traditions of America aren't as fragile as some right-wingers seem to think they are. We're not going to become a communist nation if we realize that, just as in the case of voting, there are some things that shouldn't be up for sale to the highest bidder, and out of reach for everyone else.

"A wise man once said, "Don't put all your eggs in one basket"!

That sounds right. I think, then, that I won't put all my eggs in the free-market basket, crossing my fingers that everything will magically work out in the end. Instead, I'll take a critical look at what the market can do well, and what it can't. Likewise, I'll take a close look at what the government can do well, and what it can't.

When it comes to basic healthcare, the past twenty years have shown that the free-market isn't going to solve our health insurance problems. If we want to extend basic healthcare to all citizens, which is a goal Dr. Rangel and I share, and which is laudable not only from the point of view of justice, but also from the point of view of public health, we'll need to try something else.

I believe that a single-payer system is the best solution. But it has to be done right. It cannot limit the ability of wealthy patients to order excessive MRIs for themselves if they want to, provided that their indulgence doesn't deprive others who need it of timely scans. It cannot merely subsidize drug companies, as the recent Medicare reforms do, without holding them accountable for the benefits of the publicly-funded research that covers the riskiest phases of new drug development.

There are potential alternatives to single-payer. But all of these, such as mandatory community rating for health insurers, also require the government to proactively ensure that everyone receives basic medical care, regardless of whether or not there's any profit in it.

As for Dr. Rangel's discussion of ED overcrowding, I'm fascinated, and I thank him for pointing out these studies. I'm persuaded that I ought to refer to the impact of the lack of health insurance on ED overuse. This assessment (pdf file) of ED utilization rates should be interesting for all of us, as it documents the increased reliance by the uninsured on the ED for their primary care needs.

Posted by Carey at December 27, 2003 07:35 PM
Comments