Thursday, December 17, 2009

More proof health care reform is needed

An econ blog entry from the New York Times makes a good argument for why some form of health care reform is needed.

I hear a lot of people on the right say America has the best health care system in the world. I think what they mean is America has the best health technology. Although a bad reform plan would destroy further innovations in health technology, the focus is on the way we distribute that technology. That's what the issue is about today - changing our health care insurance laws.

The current system is heavily regulated and filled with flaws. It is not, as some on the left assume, a market-based system. While our current system does encourage some technological innovations, it could still be better and the GOP is currently backed in a corner where they have to fight a nationalized health industry.

Unfortunatly, this fight, while important, takes the form of preserving our current system - and our current system of health care distribution is flawed.

Thanks to Brad Delong for the link.


  1. While I agree that the current health care system is in need of reform, I am not sure I agree with your statement that it is not a market-based system. Both doctors as well as insurance companies are in it mostly just for the profit, I believe.

    The following quotes are from:

    "The more tests doctors run, the more they get paid for, whether or not a patient really needs them."

    "First, doctors are paid by insurance companies and Medicare for every patient they see according to why they see the patient and what procedures they perform for her.

    Because insurance companies and Medicare limit the amount of money a doctor can be reimbursed for any given diagnosis, and knowing that the real goal is always to stay in business and make money, doctors will often order a variety of tests -- anything they think will be reimbursed for a patient."

    And who can deny the fact that most insurance companies are in it merely for the profit, and nothing else? After all, the business of businesses is solely to make a profit.

  2. I think you misunderstand what I meant by a market-based system. I meant a system where the individual players choose the terms of the transaction with minimal restriction from a third party. Our current system is heavily regulated with a lot of government control, such as forcing insurance companies to cover chiropractors.

    The link seems a bit paranoid - that doctors are motivated to take as much money from the patient as they can. I think most doctors are moral individuals who follow the Hippocratic Oath.

  3. I took the term "market-based" to mean a market that is capitalistic, rather than a market that is fairly unregulated by the government. Thank you for the clarification. But as far as doctors being motivated by money more than caring about their patients goes, I do still think the majority are. Why shouldn’t they be? Isn’t that what our whole capitalist market is based on—making a profit? Caring about people doesn’t factor into the capitalist equation, unless it somehow generates revenue. All that matters is keeping the cut-throat, survival of the fittest (read: let the weak suffer and perish) system of profit-as-king as the primary motivation for people’s actions.

  4. Maybe you've been reading a little too much Marx. Yes, capitalism is about "rational self interest," also known as greed. But the players are also human beings that don't use every opportunity to take. People still have their own moral limits to make.

    What's more, you're forgetting to factor in reputation and our culture. An auto mechanic can build up a bad reputation by being a cutthroat - as can a doctor. The old business rule of letting things slide with a customer because it costs 10 times as much to win over a new one than to keep an established one works.

    Scottish Econimist John Kay responded to arguments like yours by saying; What would such a society look like? Russia is a good example of the type of capitalism you imagine, where businesses aren't afraid to use force. America is not. Americans wouldn't buy from a car dealer that broke the windows of a competitor, for example.