Sunday, July 26, 2009
Why the free market is bad for your health.
Dr Krugman has posted a teachable moment on his NYT blog about the economics of health care and why the free market is particularly unsuited to deliver adequate health insurance. One point that stands out.
This problem is made worse by the fact that actually paying for your health care is a loss from an insurers’ point of view — they actually refer to it as “medical costs.” This means both that insurers try to deny as many claims as possible, and that they try to avoid covering people who are actually likely to need care. Both of these strategies use a lot of resources, which is why private insurance has much higher administrative costs than single-payer systems. And since there’s a widespread sense that our fellow citizens should get the care we need — not everyone agrees, but most do — this means that private insurance basically spends a lot of money on socially destructive activities.There is more, read it carefully, but in the end one thing should be remembered.
There are, however, no examples of successful health care based on the principles of the free market, for one simple reason: in health care, the free market just doesn’t work.
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