Tag Archives: markets

Health and the Market

Well, I see that the Congressional GOP is threatening to shut down the government in October if the Democrats block repeal of the Affordable Care Act, aka Obamacare, and the partisan rhetoric is predictably flying.

A Democratic friend sent me an email listing the multiple sins of the Bush Administration, from wars of choice to decimation of the economy to the massive increase in the national debt; the message was something like “You didn’t get mad about any of these things, but now a black guy wants to provide healthcare to Americans who don’t have it, and that makes you mad!?” A Republican friend sent me a similarly incendiary message insisting that Obama is a “socialist” who hates capitalism and wants to destroy the market “that made American health care the best in the world.”

Let’s stipulate that not everyone who opposes Obamacare is a racist, and that American healthcare before the ACA was not only not the best in the world, but actually ranks around 37th. Other than that, my purpose is not to engage these arguments, but to point to a perfect example of the way “the market” works in areas like healthcare, where buyers and sellers are not on equal footing, and do not possess the sort of equivalent information that is necessary for markets to work.

I have previously referred to a book written my cousin, Morton Tavel, in which he takes on the “snake oil” aspects of the healthcare industry. He has now created a blog devoted to the subject, and his first post is a perfect example of “the market” in medicine–a discussion of all the ads about “low T”–testosterone deficiency. I encourage you to click through and read the whole post, but the bottom line is that  “low T” is extremely rare. The numbers the manufacturers are hyping are misleading at best and fraudulent at worst, and the “remedy” they are promoting is expensive, unnecessary and unlikely to restore the virility of the aging men who miss their morning erections.

Markets are wonderful where they work. And they work more often than they don’t. But in those areas where they don’t work, they enable the snake oil salesmen who prey on the unwary and drive up costs for everyone.

As with so many policy debates, this isn’t an “either-or” debate between all market all the time and socializing every aspect of the economy. We “socialize” functions that markets cannot efficiently provide–police and fire protection, infrastructure provision, national defense, public education. We leave to the market those economic areas where markets have proven their effectiveness.

The decision whether to leave an activity to the market or provide it through government should be based on evidence, not ideology. And as every other western industrialized country has long recognized, the evidence for government’s role in healthcare is overwhelming, just as the evidence for the market in consumer goods and manufacturing is overwhelming.

The evidence also tells us a lot about elected representatives who–having lost the argument–are willing to shut down the American government in order to protect the profits of health insurers and drug companies.