Health and the Market

Well, I see that the Congressional GOP is threatening to shut down the government in October if the Democrats block repeal of the Affordable Care Act, aka Obamacare, and the partisan rhetoric is predictably flying.

A Democratic friend sent me an email listing the multiple sins of the Bush Administration, from wars of choice to decimation of the economy to the massive increase in the national debt; the message was something like “You didn’t get mad about any of these things, but now a black guy wants to provide healthcare to Americans who don’t have it, and that makes you mad!?” A Republican friend sent me a similarly incendiary message insisting that Obama is a “socialist” who hates capitalism and wants to destroy the market “that made American health care the best in the world.”

Let’s stipulate that not everyone who opposes Obamacare is a racist, and that American healthcare before the ACA was not only not the best in the world, but actually ranks around 37th. Other than that, my purpose is not to engage these arguments, but to point to a perfect example of the way “the market” works in areas like healthcare, where buyers and sellers are not on equal footing, and do not possess the sort of equivalent information that is necessary for markets to work.

I have previously referred to a book written my cousin, Morton Tavel, in which he takes on the “snake oil” aspects of the healthcare industry. He has now created a blog devoted to the subject, and his first post is a perfect example of “the market” in medicine–a discussion of all the ads about “low T”–testosterone deficiency. I encourage you to click through and read the whole post, but the bottom line is that  “low T” is extremely rare. The numbers the manufacturers are hyping are misleading at best and fraudulent at worst, and the “remedy” they are promoting is expensive, unnecessary and unlikely to restore the virility of the aging men who miss their morning erections.

Markets are wonderful where they work. And they work more often than they don’t. But in those areas where they don’t work, they enable the snake oil salesmen who prey on the unwary and drive up costs for everyone.

As with so many policy debates, this isn’t an “either-or” debate between all market all the time and socializing every aspect of the economy. We “socialize” functions that markets cannot efficiently provide–police and fire protection, infrastructure provision, national defense, public education. We leave to the market those economic areas where markets have proven their effectiveness.

The decision whether to leave an activity to the market or provide it through government should be based on evidence, not ideology. And as every other western industrialized country has long recognized, the evidence for government’s role in healthcare is overwhelming, just as the evidence for the market in consumer goods and manufacturing is overwhelming.

The evidence also tells us a lot about elected representatives who–having lost the argument–are willing to shut down the American government in order to protect the profits of health insurers and drug companies.


  1. America has the “Best” Country & Western music in the world. If you C & W, then this is the place to live.

  2. Good piece. I think it worth noting that when it comes to Snake Oil, the Mormons and
    Utah are at the top of the heap. They fought long and hard to keep your “RIGHT” to buy
    snake oil alive and well. Orin Hatch from Utah lead the charge to protect your rights to be
    ripped off buying bogus health products. That is because the Mormons make billions
    selling this crap….much of it in multilevel marketing schemes screwing those who do the
    selling as well as the customers. That is also where a lot of the PRO Romney and ANTI
    Gay money comes from. Lovely folks. And so many Americans think one of them would
    make a dandy president, as long as he is not that scary black guy. Yikes.

  3. Obviously Obamacare has become nothing more than a proxy battle between the two sides in the run up to the election.

    It amazes me how often partisan people completely miss the boat on this one (no offense), but there are really intelligent, reasoned people on both sides of this argument. There are going to be solutions and there are going to be problems no matter which model we ultimately go with, or even if we stay in the middle with this highly regulated, government sponsored free-market healthcare system.

    A good example I was given by a trusted friend in the medical world is that under Obamacare, a 26-year-old, single, chain-smoking crackhead who’s never taken care of themselves a day in their life would be more likely to receive care than a 46-year-old married father of two in peak physical condition. If you’re cool with that, I understand your logic, I do. But just because people disagree with you that doesn’t mean they’re wrong.

    As far as bagging on Mormons for selling, what, bogus medical products? Eh? I don’t know, but in politics I take the devil I don’t know over the one I do. Having read many of Mitt’s promises, I don’t THINK he’ll be keeping very many of them. However, I KNOW Obama hasn’t kept his. That’s the difference.

  4. Marco: Not sure where you got your “example” of the evils we face under the ACA, but it sounds implausible — as a 43-yr old father of two (albeit not in “peak” physical condition), I still sleep soundly knowing the ACA is constitutional. Of course, the 26 year old in your example currently gets medical; the difference is that under the ACA, he’s going to have to start paying for it. Like many complex pieces of legislation, it gives rise to lots of unsubstantiated speculation. Here’s a great article about 5 myths curretly making the rounds on Obamacare.

  5. David,

    I haven’t read the thing (assuming you have), but the unofficial polling of Docs that I’ve been seeing suggests caretakers are opposed and administrators are in favor. The example I cited is from a Doc friend. To be fair, many of them are opposed because as the government gets more and more involved with health care, Doctors turn into nothing more than iPad operators, plugging in numbers and being told what to think. My understanding, not my opinion but what I’ve been told, is that healthcare involves too many variable factors to be administered in such a manner, elsewise we’d (literally) have had drive-thru health care by now. The government has been steadily reducing medicare and medicaid reimbursements for years, even Obama, and putting more and more hoops in place. Caretakers don’t deal with billing so they’re purely concerned with patient care. I think that explains why administrators are in favor of it, because they recognize the unsustainability of people NOT paying, which I’ll get to in a second. I didn’t expect costs to go down, which they haven’t, as it seemed like so much common sense as the quality of care available continues to improve dramatically.

    What confuses me is that anybody getting health care now is already SUPPOSED to pay for it. The idea that people who previously refused to sign up for insurance (many of the uninsured either can afford/have access to private plans or they’re eligible for government aid and refuse to sign up) will suddenly jump on the bandwagon lacks evidence. How are you going to make people pay for it? With the tax/penalty? Considering almost half the country doesn’t pay anything in income taxes as it is, how are we going to do that? If the poverty rate is skyrocketing as the Obama campaign has suggested, exactly how many homeless/vagabond types do people think file a return at the end of the year?

    My work involves a lot of interaction between the indigent and homeless population, as well as the underground economy. As a society, we think of things like taxes/penalties, judgements against someone’s credit, etc. as a sort of societal carrot and stick to prod people into doing the right thing. It’s no different than a trade embargo or sanctions, it hurts everybody else but doesn’t do anything to the policymaking class. You can’t get blood, or plasma, from a turnip. True, you will catch responsible people with jobs but you will get twice that amount who don’t even file tax returns and it will do nothing to stop the massive influx of people who have no intention of paying into emergency rooms, which will continue to hemorrhage 8 or 9 figures a year. From my personal experience that’s what we’ll see.

    Due respect, citing a Times op-ed piece isn’t exactly objective coverage.

  6. One choice in November is to believe our best economic shot at global survival is in better handling of the inherent corruption and moral lines drawn within free enterprise capitalism. The other is to deal with not dissimilar corruption concerns, differing moral dilemmas, and the discouragement of entrepreneurship coinciding with needing greater collective productivity within abject socialism.

    Truth be told, I think most countries probably function under a semi-oligarchy, with another label pasted over the top of it to draw less attention to the few industries or unofficial persons that pull lots of the strings. No big surprise there.

    I also don’t think either capitalism or socialism are bad words, and obviously neither precisely capturing the method of present or desired governance. But, I’d like to think I know the one better suited to lurch (like some old mule) our floundering leviathan bureaucracy in the direction of better global competition and therefore survival, for our old age and our children.

    I think nearly everyone who reads this forum have made their choices. Good luck to all, particulary to those who have not.

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