A Bad Idea WhoÕs Time Has Come?
By
How are we going to pay for
it? This is the enduring question
for proponents of anything new that the government may undertake. And of course, this is especially true
of proposals for universal health care.
We are told by a 2004 Census Bureau press release that as many as
45,800,000 Americans do not have health insurance. Do these persons think that they donÕt need it, and
therefore do without it, or is it that they cannot afford it? During a two year period in my life
spent in the financial services industry, devoted to selling life insurance,
annuities, and health insurance, I had some success in selling the first two,
but during that two years, I did not sell a single health insurance policy. There was one reason for that—the
unaffordable costs. There
were many inquiries about health insurance, but upon reviewing the monthly
premiums, most families with a need for it could not find the resources to make
a purchase. Sometimes a monthly
premium for a family of four would rival a mortgage payment. If one were to use the data of the
World Health Organization, the annual cost per person for health care in the
United States is $3724, and the monthly cost per person computes to $310. For a family of four the cost
would be a whopping $1241. How
many family members need to be employed at the all too common figure of $8.00
per hour to pay that amount as a family health insurance premium? These figures are the actual cost and
do not include any profit for an insurance company.
Are these costs ÒlowÓ because of
the wonderful efficiencies of the private marketplace? Or, are they high for some other
reason? I submit that they are
high, and it is for some other reason.
There is in economics a concept called market failure. This occurs in instances where the
marketplace for whatever reason does not work in a ÒnormalÓ way. In instances of market failure one of
the things that may occur is that demand (as in the law of supply and demand)
becomes inelastic. The price of a good or service does not seem to
respond to the law of supply and demand. Inelasticity of demand means, in other words, that the
demand for that good or service does not change upward or downward as a result
of the price of the commodity. For
example, if the price of beef goes to sixteen dollars per pound, fewer people
will eat beef, and accordingly, because demand has fallen from previous price
levels, demand is said to be elastic. But sometimes the price of a good or service can go up and
the demand does not fall. This is
often illustrated with the demand for insulin. Diabetics must have insulin to stay alive. If the price of insulin goes up, demand
for insulin may remain constant, because the diabetic needs his insulin shot no
matter what the price. Failure to
use insulin for the diabetic threatens life itself. When this happens, demand is said to be inelastic. So it is with health care generally, I
would argue. When one is ill, one heads for the emergency room. The plain fact is that health care is
ill suited to a distribution system that depends upon the market place for the
pricing of its services, and accordingly, it should not remain in the private
sector. To get health care costs
under control, America will have to adopt a single payer health care system.
Removal of health care from the
private sector is the only way to place a cap, or at least slow the rate of
increase, on the cost of health care.
It is an area where science converges with capitalism, and unfortunately
the science of medicine is overwhelmed by capitalism.
Medical doctors are among the best
paid of the professions in America.
Newly minted MDs with less than one year of experience have a median
salary of $118,883 per year. With
twenty years or more experience, the median salary is $172,851 per year. Median income for an anesthesiologist
is $248,296 per year. These
figures are current as of February 8, 2008, from Pay Scale. By
comparison, household income was only $44,473 based upon a three-year
average in 2004, according to the US Census. That would put per capita income at $11,118 per year, by
comparison. Economic factors also
have begun to drive the medical choices through pharmaceutical industry power.
The drug industry makes some good products, but recognizing that they have a
gun pointed at the head of the patient, they take full advantage of it. Byetta, used for diabetes, can cost
$250 for a thirty-day supply as one example. Also the insurance industry has begun to inject itself into
medical decision making with the practice of dictating which medicine it is
willing to pay for. Because of
Òsweetheart dealsÓ between insurance companies and drug manufacturers, an
insurance company may be willing to pay for Lipator or Simvastatin, but not
Pravachol, even if the doctor prescribes Pravachol. These drugs are all used to
reduce high cholesterol, and are effective, but may differ in potency and the
number and severity of side affects. Drug choice should not be an insurance
company decision.
You may have a concern that quality
of health care will decline as a result of a single payer system. Although we may think we have the best
health care in the world, and this may be true for the rich and famous, but the
United States ranks only 37th in the World Health OrganizationÕs
ranking of the most effective health systems in 2000. France is number one. The French! DonÕt you hate it? Although our science is pretty good, it
is the delivery system that is poor. One solution would be to simply extend
Medicare to everybody. Its per
capita costs should be lower than at present, since the elderly now served by
Medicare represent a higher risk, higher consuming part of the population. By
the way, we often hear arguments
that the UK or Canada does not have good health care with their socialized
medicine, and we surely would not want to emulate their system. Well, they rank 18th and 30th
respectively, both ahead of the United States. If one needs a heart transplant, come to the United States,
but if one only needs routine health care, the average person is better off in
Britain or Canada, or any one of the thirty-six countries ahead of the United
States. I remember during my teaching years at Western Illinois University
having conservative Canadian students who brought to my office copies of the
conservative Canadian MacleanÕs magazine, in order to persuade me of
their view on some political question. In spite of their conservatism, these
students marveled at the attitude in Òthe statesÓ that the Canadian health care
system was not desirable or effective.
To the contrary, they asserted that they would not swap their system for
the one Òin the states even up.Ó
As the expression tells us, maybe if we achieve universal health care
through a single payer system, it is Òa bad idea whoÕs time has comeÓ-- and in
fact, it may turn out not to be so ÒbadÓ after all.
2/14/08