Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

Inefficient Health Care as a Social Good

by rdf Tue Sep 2nd, 2008 at 06:35:56 PM EST

People like me often rail against the inefficient and corrupt US health care system. I'll remind you of some of the worst problems.

  1. About 47 million or 16% of the population has no health insurance.
  2. Drug companies promote me-too and lifestyle drugs rather than doing basic research on life saving treatments.
  3. Drug companies use the patent system to charge monopolist prices for life and death drugs.
  4. Private insurance companies siphon off 30% of the money they get in premiums.
  5. Specialist doctors charge what they wish, drawing doctors away from family medicine where payments are limited by insurance contracts.
  6. Too many hi-tech medical procedures are pushed when cheaper alternatives are available.
  7. Too much money is spent on useless end-of-life care and too little on preventive care.

As a result of these and other factors, US health care costs twice as much as in other developed countries. In addition several key measures like life expectancy and infant mortality are worse.

Similar discussions have taken place over military spending and one of the arguments used by congress is that such spending provides a Keynesian stimulus to the economy. It keeps people employed and pumps money in the the districts where such spending takes place. So let's use the same argument for health care.

By this logic there is nothing wrong with having an "inefficient" health care system. All that money goes somewhere. Since US manufacturing is in decline, and people keep promoting the rise of the service economy, then this should be seen as part of the transition. Health care is very labor intensive and adding in layers of middlemen provides work for a vast number of white collar employees as well.

This can be seen as deliberate inefficiency. It transfers money from one part of the economy to another, and unlike some other activities, most of the money circulates internally. In addition health care provides a positive benefit to society and individuals, unlike building F16's which just sit there and rust after they are built or fly around in circles on "training missions".

If we are going to be serious about using health care as a Keynesian stimulus then we have to do it right. This means providing care to those who currently lack it. It also means encouraging drug firms and researchers to work on areas where the health needs are most pressing, like cancer or AIDS. The returns on a successful drug already amount to billions per year so there is little need to alter the monopoly structure of rewards. Encouragement can come in the form of expanded grants for R&D.

Some slight adjustments in incentives for doctors (and nurses) can also alleviate shortages in preventive and family care as well as in rural areas. Forgiving education costs is a simple way to do this as it leaves in place the lucrative student loan and tuition streams which are appreciated by the higher education community.

Economic "inefficiency" only matters if the money saved is going to be used for a better purpose elsewhere. But what better purpose can there be than improving the health of the nation? It is not the inefficiency that is the problem, it is the lack of universality. Those opposing expanding health care claim to be capitalists and in favor of free enterprise, yet they work against bringing more people into the system as customers. Walmart didn't get where it is by turning away customers, why do politicians want to do this?

Of course there is a discussion about where the extra money is going to come from to cover these people, and since we are assuming Keynesian stimulation, the answer is the government. If building bombs is a worthwhile use of government funds than why not building healthier bodies?

Furthermore healthier people earn more, pay more in taxes and spend more on consumer items, that's the whole point. When looked at this way I don't see why anyone is objecting. In addition it does not matter how much health care grows as a percentage of the GDP, stimulus is stimulus.

Once this is understood the only task remaining is to decide how the additional expenses are to be met. Should there be tax rebates, subsidies, or government provided health insurance or even government run services? All these are already in use in various parts of the health field, it is just a case of expanding on the existing ideas.

What are we waiting for?


Go to: [ European Tribune Homepage : Top of page : Top of comments ]