Posted by
Andrews on Wednesday, June 03, 2009 3:04:09 AM
I was reading
an article on Obama's plan to possibly tax health benefits (about which I will comment later), when I read a comment characteristic of the health care debate.
How
much more medical treatment would be available to the American people
if insurance companies weren't obsessed with profit? Our police
departments, fire departments, district attorneys etc... are
not-for-profit. We know better than to allow the institutions that
protect us and rescue us to be corrupted by greed and profiteering. Why
would we allow something like the provision of healthcare to be
disincentivized by market forces and corporate self interest?
This is an objection I have heard many, many times. Even in some forms from supposed conservatives*. Yet it is completely wrong. Sadly, though, when confronted with this argument, most conservatives fail to respond properly, pointing to the failure of government enterprises, yet unable to explain why profits are not "waste" and do not "increase costs".
The truth is, despite the claims of the poster, that police and district attorneys are not run on a profit basis, as there is no way to make self-defense a profitable enterprise. As a function which must be performed by government, they need to be run bureaucratically**.It is not that they "protect us", but that there is no way to run these agencies in a profit driven manner.
Let us look at the thesis and ask, "what doe sit mean to protect us"? Do doctors "protect us" in the same sense as policemen? Of course not! So this "protection" is a common feature in only a metaphorical sense. And in that sense, couldn't we say farmers "protect us" form starvation? So why not socialize food as well? And don't automakers "protect us" from a lack of transportation? Again, socialize car manufacture! That is the problem with this argument. The metaphorical comparison of doctors to police and soldiers could be extended to almost anything, as metaphors allow of no limits, and so we could use similar metaphorical arguments to justify just about anything, limited only by the credulity of the audience.
But let us look at the rest of the argument. Does the profit taken by insurers, or by providers, make health care more expensive?
Well, in a strict sense, yes. If they took no profit, it would be cheaper to visit doctors, but only in the very short run.You see, the possibility of profit is what draws capital to the medical fields, it is what draws people into the profession, and the possibility of increasing those profits is what spurs innovations and cost cutting. In addition, because volume is a better source of profits, the desire to make more also encourages, paradoxically, price reductions, as providers hope to make more on volume.
So, yes, if you forbid profits, on that day, and maybe for a few weeks, you would see cheaper health care. But in a very short time, the lack of new capital, the lack of new doctors, and the lack of any incentive to cut costs, innovate, and otherwise improve the system would begin to show and we would see more expensive, and lower quality care than we would were profits allowed.
We often hear the same argument from true blue communists about the "waste" of advertising, or other evils of capitalism. And, yes, from the point of view of a command economy, advertising is "waste". But without the competitive framework, including advertising, we would not have the improvements, innovations, cost cutting, and the rest that competition brings. So the "waste" of advertising is really just part of the overhead which makes possible all the improvements capitalism brings. So, yes, capitalism necessitates "wasting" money on ads, but it provides benefits which more than compensate for that "waste".
Unfortunately, most never offer this argument. And while it is true that pointing to the problems with government run enterprises implicitly makes the same argument, I do wish a few more conservatives truly understood two things. First, the way a free market works and the benefits that come from a completely unfettered free market, and, second, the idea that government exists ONLY to protect rights. Too often I hear supposed conservatives talk about government enforcing "accountability" or "fairness". Unfortunately, as I wrote in "Inescapable Logic", "Smaller Government , Fair Weather Friends and Special Cases" and elsewhere, once you take government beyond protecting rights, you have given away the game. Once we have the government enforcing "accountability", we might as well just join the left. Because really, what is the difference between the two positions except a matter of degree?
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* For example, in the same comments, a supposed conservative wrote:
Making
health care services more accessible, transparent and open through
standardized insurance claims forms and equal tax breaks for
individuals and companies will control costs by helping consumers and
businesses compare "apples to apples" across the health care spectrum.
I would argue that true conservatives are for none of these things. Forcing companies all to sue the same forms, reports and so on it far more a liberal issue than a conservative one. Conservatives believe in leaving companies alone to do as they see fit, and let customers judge the results. Forcing the same forms on everyone is an authoritarian, liberal position. (And one often promoted as a way to cut costs. But, were that true, would not for-profit enterprises have adopted it already? Wouldn't profit seeking encourage cost cutting more than government fiat?)
** Fire departments are not necessarily government enterprises. In the past many were for-profit enterprises, and functioned fine as such. Volunteer departments were a response to this, engineered and run by private citizens. Government run and funded fire departments are the newcomers. And there really is no logical necessity for the government to be involved. This is one area where I differ with doctrinaire libertarians, as I have no objection to government run fire departments, but I disagree with the poster, as running fire departments for profit is not inherently problematic.