Question

Should government continue to take an aggressive role in reshaping the health care system or should economy be allowed to continue exerting market-driven reforms

Answer 1

i belive goverment should continue to take aagressive role in reshaping the health care system rather than depending on market driven reforms.This has become more evident in this time of pandemic.

A country as rich as ours, that leads the world in technology and can successfully land spacecraft on planets millions of miles away can surely provide healthcare for its citizens.

For those old enough to remember, this whole ‘Socialized Medicine equals Communism’ attitude came during the “Red Scare” when McCarthy was beating the bushes for communists. Anything that contained the word “socialism” was feared. The American Medical Association had been against socialized medicine since 1939, with the AMA President, Dr. Morris Fishbein, stating, “...all forms of security, compulsory security, even against old age and unemployment, represent a beginning invasion by the state into the personal life of the individual, represent a taking away of individual responsibility, a weakening of national caliber, a definite step toward either communism or totalitarianism”. The AMA also began Operation Coffee Cup to argue against the Democrats move to enhance Social Security by increasing medical services.

But the Socialized, Universal, or now, Medicare For All plans can be cut and pasted from proven, successful models that most of the free, industrialized nations have had for decades.

There is no reason to deny healthcare to anyone in this country, or to allow a person to be totally bankrupt and put out on the street because s/he cannot afford insurance, or that the insurance was denied because of a preexisting condition.

We all know that despite being in the best of health, there is a possibility that any one of us could have a serious accident or have a mutation in our genes resulting in cancer. Medical science knows how to treat these rare diseases but the treatments are very expensive and can lead to catastrophic levels of expenditures for families. The mechanism of health insurance offers an obvious market-based solution. In some cases, a health insurance agency might also play a role to fill the knowledge gap between the provider and the patient.

The purist view is that since such a solution is available and individuals are free to purchase it, no intervention by the government is necessary. However, because as human beings we characteristically undervalue insurance when we are healthy, there is an inadequate demand for such voluntary insurance. And, even if people demanded it, the market worked against them because insurers worked hard to exclude those who needed insurance the most.

A view, therefore, began to gain currency that the government needed to intervene either to require that everybody buy such insurance or to use some of its tax resources to do this for the poor instead of handing over the amount to them as direct cash benefit transfers. However, while this does address some of the problems, it does not by itself result in a good health system design without the benefit of several other complementary interventions which change the manner in which healthcare is purchased and how providers are paid. And, don’t forget, the invisible hand works only in so far as price serves as the signal to direct resource allocation. For that to happen, the price has to be set at or near the cost of production.

Unfortunately, asymmetry of information between providers and patients give providers significant monopoly power, if left unregulated, to set prices way above cost. Further, providers have the ability to influence patient preferences by recommending them more quantity and more intensive treatment than clinically justified (supplier induced demand), leading to waste and inefficiency, and ultimately, they are paid for by the patients. Governments have every role and responsibility to set the right price for both providers and consumers in these situations.

Given all of these features of healthcare, it is now clear to all countries, including almost entirely free-market based economies such as the US, that policymaking based on a simplistic understanding of the role of the government and that of the functioning of markets is likely to lead countries seriously astray and result in equilibria that are neither efficient nor welfare maximizing.

However, it is not the case that the only alternatives to market fundamentalism are full financing of the healthcare system from general tax revenues or the full provision of all healthcare by the government. Each country and, for large countries like India and China, each region within a country, would have to carefully think through its unique situation and find answers to these complex questions in a manner that best suits its environment, culture and resources. It is gratifying to observe that countries as different as the Philippines, Ghana, Thailand, Indonesia, Kenya and Kazakhstan have started down this journey and are in the process of putting in place the pillars of a sound health system, which combine the role of the government and the free market in a thoughtful way.