Thursday, August 6, 2009

The Invisible Hand

Some of the resistance to a national public health option that I've seen goes like this: free competition naturally makes services cheaper and more effective, and government interference ends incentives to excel (because nobody has to compete to succeed -- they just line up for free government money). This, I think, is true for transistor radios, furniture, cars, etc. But what about health care?

Unmoderated, unrestrained free-market competition is the last thing we want for health care. Can you imagine what would happen if one corporation gained a majority share in all the nation's hospitals? What would it be like if there was only one company (something like Microsoft in its heyday) that you had to deal with every time you needed an MRI or an X-ray? Compared to furniture, medical treatment is not a luxury -- when one of your feet goes numb and stays that way, it's likely that you'll pay whatever you have to.

We allow this kind of competition -- i.e. we allow insurance companies to grow until they have an unacceptable level of power over us and our lives -- right now. The AMA released an analysis (here) that says that two insurance companies -- WellPoint and United -- control 36% of the national market for health insurance. With mergers taking place faster than ever before, this amount could easily increase.

That's the national scene, though -- it gets worse in the cities. 16% of American metropolitan areas are dominated by an insurance company with a market share over 90% -- so if you want to get insurance in Texarkana, TX, or Battle Creek, MI you can pretty much only deal with Blue Cross/ Blue Shield. And if they don't want you? Tough!

Republicans and Democrats alike love to talk about the free market and free competition as if it is a basic American belief. It's not. Our innovations and our competition -- from cars to computers -- are built on a system of government-maintained roads and railways, protected by a government-run military, and managed by laws that we all agree upon. For some parts of our economy, this is the best choice -- to have government intervention. Health care is one of those parts!

But the insurance companies, greedy as all hell, hang outside our window -- don't you want free trade, they say? Don't you believe in the invisible hand?

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