People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.—Adam Smith, The Wealth of Nations
Medical costs are the tapeworm of American economic competitiveness,—Warren Buffet
Nitroglycerin, used to treat heart problems, isn’t exactly a breakthrough drug. It’s been around for nearly 150 years. I’ve been on and off it for twenty years. Those tiny pills that you stick under your tongue when your angina acts up used to have a tiny price: pennies a piece. Today, they’re going for a buck a piece. Thanks to our faith in the sacred free market there’s nothing to stop them from soaring to a hundred bucks apiece. After all, what’s more important, people averting heart attacks or investors getting richer?
It was assumed that doctors, hospitals and drug companies would compete with each other on price, keeping costs low. It was an appropriate assumption in a country dedicated to free markets and the maximization of profit. Only it didn’t work.
The problem, right from the start, was the free market itself. On the demand side it meant just about everyone will spend every cent they have and fall hopelessly into debt to keep themselves and their loved ones alive and healthy. On the supply side it meant that those who provide the means for keeping us fit and above ground had no reason to compete on price. The strength of demand demanded instead that they charge whatever the traffic would bear. What’s more, the business law of maximization of profit demanded that they continually raise prices and/or lower costs to make more money in the next quarter than they did in the last one.
The result has been the ever faster and ever greater growth of the health part of our economy. Today, it’s running at 17 percent, or up to double that of other capitalist countries. Consider that total manufacturing in the U.S. accounts for just 12 percent. Unfortunately, health grows bigger but but much better. The rest of the world also leads us in outcomes
Economists used to classify health care as a maintenance cost of society. It fell into the same category as getting your car serviced. The less you paid for it the more money you had in your pocket to buy products and services in the broader consumer economy. Now health care has become an industry like any other that expects to constantly grow in size and profitability. That’s great for its investors but terrible for people who get sick.
As noted above, all of those other capitalist countries have long since bypassed this outcome by providing health care as a public service. They don’t expect their fire departments to get richer every year, so why should they expect that of their hospitals?
The sad part here is that we’re already part way to running health care like those other countries do. It’s called Medicare. If our leaders had any brains or integrity they would solve the health care dilemma by extending Medicare coverage to everyone. But to do that would obviate the need for the most needless part of our health system: private insurance companies. Their administrative costs and profits consume about a third of our spending on health. That’s money that has nothing to do with making people healthier and everything to do with making investors wealthier.
There has seldom been a better time to move to a Medicare for all system. Obamacare is unsustainable and the Republican solutions are the opposite of health care. What we need is what the rest of the world already has: Medicare for all, otherwise known as single payer.