Jeffrey Robin: Why Can’t the Market Fix Health Care?

The nation would benefit from a market-driven approach to reform

By Jeffrey Robin | Published on 11.20.2009

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For many months now — and most likely for a couple more still — Congress has been debating the most important issue of Barack Obama’s presidency: health-care reform.

It’s a debate that has been ongoing for the past century, and if Congress passes anything, even if it isn’t the most perfect system, it will undoubtedly be a huge accomplishment. But that’s the question, isn’t it? Are they devising the correct kind of overhaul, and will it work?

Despite rhetoric to the otherwise, the public-option-centered plan that emerged from the “debate” over health care is far from what we were promised: a deficit-neutral, bipartisan plan to cover most if not all of the 40 million to 50 million uninsured individuals in the country. Besides the theoretical consideration that the plan will severely restrict individual liberty, it’s likely to have unintended and serious consequences on future generations — beginning with our own.

First, the plan before Congress has stipulations providing for the compulsory obtainment of insurance. This not only greatly restricts individual liberty by depriving people of the choice not to have insurance without being punished monetarily, but it may and will have several severe side effects, including but not limited to the indirect elimination of health savings funds.

Further, compulsory coverage combined with the health-bill’s provision for price controls in the form of “community ratings” for insurance will have a direct and negative impact on the young. While premiums for those most likely to be sick — the elderly — will go down through price controls, premiums for those least likely to be sick — the young — will go up proportionally. This is nothing less than the expansion of direct social welfare already present in Medicare.

Finally, no part of the plan is more certain than its unlimited ability to come in well above cost. The government’s ability to properly project the cost of social programs has never been stellar (think Medicare and Medicaid), and this health-care plan is no exception.

The nonpartisan Congressional Budget Office’s own report fails to take into account several important factors, such as: 1) how businesses will change their behaviors to remain profitable and protect themselves from taxes, 2) the behavior of future politicians, who most likely will increase subsidies as they have with Medicare to please constituents, and 3) the increases in spending every year that will only be made more painful by the effects of economic contraction resulting from proposed tax increases, causing a precipitous decrease in expected revenue.

Don’t get me wrong. Just because I think the 1,990-page, $1.2 trillion health bill passed by the House is a monstrosity doesn’t mean I favor the three-page, $61 billion Republican alternative. Frankly, it’s naïve to believe you’re helping anyone in the long run with either plan. However, hardly anyone has asked a very simple and fundamental question: Why can’t the market fix it?

So often, harnessing the power of the market has greatly benefited the nation. This was true following the Reagan administration, when the nation experienced the longest stretch of uninterrupted prosperity. Why not now?

Expand the market by offering Medicare recipients vouchers to obtain health care of their choosing, reform taxes on health services to create huge health savings accounts, break state monopolies on regulating health insurance and allow people to buy insurance plans from other states. Add all of that, and what do you have? A formula to reduce the size of government while giving individuals more freedom and choice — not to mention a potentially huge tax break of $9.7 trillion for workers — give more people the ability to obtain quality health care, and promote economic growth.

To all progressives, I issue this challenge: You say meaningful reform using the market is a pipe dream. Why? Why is it impossible to trust individuals in the marketplace over the state? Why is it better to expand the state and eliminate freedom, rather than achieve the same goals and more by limiting government and giving people more freedom?

To those who are unsure on health-care reform, I ask: Which option would you rather have? The government’s, or yours?

— Jeffrey Robin is a student at UCSB.

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» Are you serious? on 11.20.09 @ 04:24 PM

Why Can’t the Market Fix Health Care? Because the government would not be able to pry into and meddle into your personal affairs and hold you at their mercy. This isn’t about “Universal affordable quality healthcare for all”, silly, it’s the first step and foot in the door to endless government control, meddling and taxation.
Seriously though, great article - you have a lot of common sense that seems to be missing in Congress today. It’s refreshing to hear this from a UCSB student obviously with his eyes wide open. There is hope after all.


» Why? on 11.20.09 @ 05:12 PM

Because this is about health not money. As long as the companies providing health coverage are doing so in order to make money the best interests of the sick will never take presidence. And your contention that doing the things in your plan will “reduce the size of government” is ridiculous and naive.

My questions for you are: 1) Why hasn’t the market fixed health care already? and 2) How is your plan to have the government manipulate the market that has already proven itself inept at providing coverage to the people who need it most any better than just having government provide the coverage? 

And I am not even close the being a “progressive”.


» 800 lb gorrila on 11.21.09 @ 09:33 AM

It seems much of the debate centers around the millions of uninsured. What no one is saying is who are these people. Peek into any local Emergency Room and the answer is obvious. It is the millions of uninsured undocumented workers and their kids. (it’s not PC to say illegal allien I guess)
Until the Federal Govt gets their arms around this invasion and entitlement explosion, our and our children’s taxes will continue to put us all on the road to poverty.


» SBres on 11.21.09 @ 11:06 AM

The 800 lbs gorilla is more like a 2 ounce stuffed animal that politicians use as a wedge.


» Paulina Conn on 11.21.09 @ 12:16 PM

The reason the market place does not work is:
1. The infrastructure - doctors, nurses, hospitals, ambulances, etc. all are on standby and get paid only when used.
2. You do not know what disease or accident you will have or when or where.
3. I assume you want that doctor or hospital to be there when you need it.

Society has to pay for the infrastructure to be there in adequate supply. The competitive private sector can not do it without discriminatory practices since the object is profit not service for all.

If we all want care when we need it, we all have to help pay. Our pooled money goes the farthest at the lowest cost if it goes directly to pay for health care services and we are in a single risk pool that covers all medical needs, especially prevention and chronic condition monitoring. A single comprehensive plan with a single administration lowers administrative costs for doctors and hospitals by over 20% and the overall administrative costs by close to 30%. The fairest way for all of us to get equal high quality care (Hippocratic Oath requirement for all M.D.s is that M.D.s must do the best of their ability for everyone)is for us to pay into the system by our ability to pay. So, yes, the wealthy and the healthy subsidize the poor and the ill and injured. The ill and injured can be anyone of us at any time. With the health care providers staying in the private sector. competition occures when patients have free choice of any willing doctor and doctors make the medical decisions with their patients (Hippocratic Oath requires patient autonomy) without government or private health insurance company meddling.
In order to stop discrimination and to give everyone the equal chance to the right to life (Declaration of Independence) with equal security (Constitution) all the medical expenses have to be paid out of the single risk pool. This is called a single-payer system.

Patients and doctors have the most power in a well designed single-payer system as they are in the driver’s seat having the greatest numbers of people vying for the best in medical care for all and ensuring that there is adequate but not excessive financing.

Many Republicans, Democrats, Independents, doctors, nurses, health policy experts, the Lewin Group, Thorpe Consulting, the CBO, GAO, and others know that competition has to come amongst doctors and hospitals vying for patients by quality of care and that costs can be sustainable only when the private, for profit, competitive health insurance companies are no longer in the mix thwarting proper payment for services and rationing care for patients, employers, and taxpayers while walking off with taxpayer and private individual and employer premium money in multi-milliion dollar annual executive salaries, profits, stockholder dividends, and elected official bribery (campaign contributions) and lobbying funds.


» bob on 11.21.09 @ 01:08 PM

Jeffrey..

for most things, I’m a free market advocate—given there is some regulatory supervision so it’s at least harder to bilk the public. 

but when you ask “Why is it impossible to trust individuals in the marketplace over the state?” my answer is that because the “individuals in the marketplace” are actually CEO’s of health companies that are held accountable to stockholders every 90 days.  so their allegiance—as stock companies should be—to their shareholders, NOT the public/patients.

I assume there is agreement that SOME activites should be the government’s responsibility—like firefighting and police.  since so many are unable to afford medical insurance under the current market-driven structure, I would say that the government belongs in that activity, too.  Do I think they’ll make it terribly efficient?  of course not.  But I’ve consulted with large service corporations all my life; they are NOT efficient.  probably no more than the government. 

so I think the tradeoff is profits for insurance companies or medical insurance for all?  I would choose medical insurance for all.  though, frankly, seeing the quality of the “debate”—both in public and in congress—generally makes me sick.


» Another government tax on 11.21.09 @ 06:45 PM

This country taxes are out of control..Thanks to the dim witted liberals.

Government workers are not the sharpest tools in the shed—thats why you need so many—LAZY-

Now health care—They can’t run even a mini market—The gov worker is the bottom of the barrel worker, who could not make it in the real world???


» sbnative on 11.21.09 @ 09:16 PM

Why? Because the government, under the Obama administration, wants to control YOUR BODY (or more to the point your MONEY—like it does the banking and automobile industries now.)

But let’s hear from a Doctor, not a Politician…(novel thought, I know…)

“As the dean of Harvard Medical School I am frequently asked to comment on the health-reform debate. I’d give it a failing grade.

“Instead of forthrightly dealing with the fundamental problems, discussion is dominated by rival factions struggling to enact or defeat President Barack Obama’s agenda. The rhetoric on both sides is exaggerated and often deceptive. Those of us for whom the central issue is health—not politics—have been left in the lurch. We should not be making public policy in such a crucial area by keeping the electorate ignorant of the actual road ahead.”—Dr. Flier, dean of the Harvard Medical School.
http://online.wsj.com/article/SB10001424052748704431804574539581994054014.html?mod=rss_Today’s_Most_Popular


» sbnative on 11.21.09 @ 09:19 PM

PS - to SBres: you really do need to go to an ER sometime, especially at night. Take a good look. The third world is in the waiting room, and God forbid
1) they are legal,
2) they are going to PAY anything.

I HAVE BEEN THERE… GET OFF YOUR DUFF AND GO SEE FOR YOURSELF. Get over your stupid “statistics.” YES, this is an 800-lb. gorilla.

And WE are being squashed…


» No more illegal alien care on 11.22.09 @ 08:43 AM

The mexicans are killing the system—no more illegals aliens getting free health care, welfare -food stamps-housing-on our dime—enough liberals—They would not give it to us in any other country—We are attracting too many peasants—send them home, and take the jobs back they have been stealing for years.

They say Americans are Lazy, and wont work hard jobs anymore—I.M talking about our liberals who run the country..say that?


» Robert Bernstein on 11.22.09 @ 11:18 AM

The market works for matters of discretionary spending. Though, in cases like houses or energy the price can deviate far from the “true cost” for years at a time.

Matters of infrastructure lie outside the market because they are the bedrock that the market depends upon. The justice system, for example, is part of the infrastructure of a market system. It is not itself part of a market.

Matters of public health and safety also lie outside of the market. There is no way for a market to pay for national security, law enforcement, fire fighting or epidemic control. If you pay for fire fighting and your neighbors do not, how does that work for you or for them?

Health care is a matter of infrastructure and of public health and safety.

The world is a laboratory with many experiments in health care systems. We know the result in terms of cost and outcomes in those various systems.

I think if you look at those results it will answer your question.

Here http://ucatlas.ucsc.edu/spend.php is a source from the University of California study.


» ktaylor on 11.22.09 @ 05:22 PM

Paulina, you have hit the nail squarely (btw it’s not surprising no one else noticed, because you don’t just spit sound bites). Other posters here also have excellent answers to the question. I would only add that the Robin’s question is basically admitting that the market cannot fix the problem, or it already would have. It would be hard to imagine a sane health-care system with less controls on it than ours, and they have proven themselves to be unable to work in the public’s interest.


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