Healthcare: are we helpless or empowered?

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We live in a world where mega hospital systems buy out competition, children don’t get surgery because their parents cannot afford insurance and seniors have to choose between food or medication. Health care is a booming, for profit business which benefits medical device and pharmaceutical companies, hospitals and insurance companies alike.

The debate around the role of private capital and the market economy in health care rages on. We are reminded of shocking cases like that of Dr. Farid Fata who administered powerful chemo medication to people who didn’t have cancer, resulting in misery for his victims, all in order to collect hefty sums on their insurance.

Some will say that the free market and scramble for profit drives improvements and developments in health. However, we have to consider then that poor countries can and sometimes do have better health than rich countries.

Consider also that there are innovative breakthroughs in health care that come from state-funded research laboratories as well as medical schools.

In a free market where legal recourse and medical malpractice lawyers are (to many) never too far away, we have to ask ourselves, how empowered are we really? 

You- Insurance- Health care

The health care industry is unique among other industries in that, even with ability of technology to lower costs, consumers can (in essence) be made to pay anything because they don’t want to ‘compromise on their health’. It is the kind of industry with customers that do not necessarily want to settle for the cheaper option or risk their lives to save a few bucks.

In Kenneth Arrow’s influential 1963 paper, the Nobel Prize-winning economist proposes that health care is different from other products like dress shirts or chocolate bars.

Health care is hugely based on uncertainty (you do not know when you are going to need it) and you usually do not have the expertise to diagnose yourself.

When you are incapacitated by ill health or lying unconscious after an accident, you are not in any position to shop for the best provider of ambulance services at the most reasonable price.

As an industry, it serves people who have been rendered incapable of representing their own interests in the transaction.

The solution that has been touted is insurance where you agree to the transaction for coverage while you are healthy in order to provide for your needs when you are not.

However, the insurer-model creates a three-party managed market in which at your most critical moment, you are at the mercy of an entity which is at its core, designed to make more money.

What happens if your insurance company collapses and cannot pay for your medical care when you need it?

In addition, with the insurance model, the transaction between you and your health care provider disappears, to be replaced with a gamble wherein you are incapacitated and your insurance company has every (commercial) incentive to find whatever means necessary to cheat you or not fulfill their end of the bargain.

The insurance industry also has a tariff of payouts for various health losses and injuries and to top it all off, there is also recision, where insurance companies hire people to figure out how to deny you coverage.

In the U.S, doctors often have to (either personally or using staff members), call insurance companies repeatedly to get them to pay for the patient’s treatments and drugs.

It is not uncommon for the average hospital in the United States to have whole buildings of clerks whose jobs are to call insurance companies over and over again to get approvals which have been clearly specified in health insurance contracts.

Can the free market control prices and spur innovation?

Proponents of a health care industry rooted in the free market as opposed to a state controlled one have also made their voices heard.

These proponents hold that the free market can lead to innovation and even control prices, citing LASIK surgery as a procedure that has been driven by the free market, starting off incredibly expensive ($2,800 per eye in the 1990s) and then falling to $200 per eye.

Author of the book ’Where Does It Hurt?’, CEO and co-founder of the $4.2 billion health-technology company athenahealth writes that “this industry will grow and innovate by figuring out what we need and want, and selling it to us at prices we’re willing and able to pay.”

When patients have access to options and can choose, it will drive better care and innovation.

Researchers from the Stanford University School of Medicine and the National Bureau of Economic Research have found that creating more competition in the marketplace and getting rid of consolidation of physician services can make health care more affordable.

Consolidation of health care into larger organizations is something that crept up on us and replaced the competition that used to exist between individual physicians.

Consolidated organizations of healthcare providers have the ability to raise costs because they know that there is nobody in the area to compete with them and year after year they continue to raise prices because patients have fewer options.

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