The High Costs of Healthcare in the Free Market

The jury is still out on Obamacare. Opinions vary.

If somehow it were shut down or largely gutted, what would be done to curb the spiraling costs associated with healthcare in America’s free market economy? If the Affordable Care Act goes forward untouched, will it be able to address the problem based on “market incentives” rather than by “government decree,” as one columnist noted?

What’s the solution to making quality healthcare affordable? I believe we all want quality, affordable healthcare. What we differ on includes consideration of responsibility. Who is responsible for making healthcare affordable? The individual? Businesses? The government? The medical community? The insurance industry? Pharmaceutical companies? The religious community? Nobody? If nobody, who will pay? If individuals, since according to some, individuals are all there really are, who will advocate on their behalf, especially those without sufficient money or mental prowess to advocate for themselves and who aren’t eligible for Medicaid or Medicare?

With the latter point in mind, should healthcare be regulated like utilities? This calls to mind a New York Times article on healthcare’s high costs:

A major factor behind the high costs is that the United States, unique among industrialized nations, does not generally regulate or intervene in medical pricing, aside from setting payment rates for Medicare and Medicaid, the government programs for older people and the poor. Many other countries deliver health care on a private fee-for-service basis, as does much of the American health care system, but they set rates as if health care were a public utility or negotiate fees with providers and insurers nationwide, for example.

“In the U.S., we like to consider health care a free market,” said Dr. David Blumenthal, president of the Commonwealth Fund and a former adviser to President Obama. ”But it is a very weird market, riddled with market failures.”

Consider this:

Consumers, the patients, do not see prices until after a service is provided, if they see them at all. And there is little quality data on hospitals and doctors to help determine good value, aside from surveys conducted by popular Web sites and magazines. Patients with insurance pay a tiny fraction of the bill, providing scant disincentive for spending.

Even doctors often do not know the costs of the tests and procedures they prescribe. When Dr. Michael Collins, an internist in East Hartford, Conn., called the hospital that he is affiliated with to price lab tests and a colonoscopy, he could not get an answer. “It’s impossible for me to think about cost,” he said. “If you go to the supermarket and there are no prices, how can you make intelligent decisions?”

Instead, payments are often determined in countless negotiations between a doctor, hospital or pharmacy, and an insurer, with the result often depending on their relative negotiating power. Insurers have limited incentive to bargain forcefully, since they can raise premiums to cover costs.

“It all comes down to market share, and very rarely is anyone looking out for the patient,” said Dr. Jeffrey Rice, the chief executive of Healthcare Blue Book, which tracks commercial insurance payments. “People think it’s like other purchases: that if you pay more you get a better car. But in medicine, it’s not like that.”

Who will look out for the patient?

Ron Paul maintains that the solution to providing quality, affordable healthcare for everyone is to make it possible for individuals to look out completely for themselves. He argues that Obamacare is not “socialized medicine,” as some of the program’s opponents claim, but “corporatized medicine. ” Paul writes that critics of nationalized healthcare must go all out and “advocate for a complete free market in health care,” adding, “Some will say it is unrealistic to advocate replacing Obamacare with a pure free-market system, but in fact it is unrealistic to expect anything less than a true free-market to provide quality health care for Americans at all income levels. Continuing on the ‘middle of the road’ in health care by mixing free-markets with government spending and regulations will only continue to take us on the road to socialized health care.”

Can a society of individuals go it alone? What do you think? Can we get there together, or like businesses that falter in a free market economy, will some individuals’ health inevitably falter and fail by falling through the cracks? Is socialized or corporatized medicine the best solution? Or will they only lead to higher costs, where quality, affordable healthcare is never reached? What do you think?

Join me at The Institute for the Theology of Culture: New Wine, New Wineskins’ conference on Healthcare this Saturday, October 19 to further engage these issues.

This piece is cross-posted at The Institute for the Theology of Culture: New Wine, New Wineskins and at The Christian Post.