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Feb-10-2010 13:01printcomments

Health Care Rationing: Free Market vs. Public

People pass away. Nothing will ever change this. There will always be people who are happy to take advantage of desperation and false hope in order to make a quick buck.
Courtesy: Tommy Christopher's Daily Dose

(EUGENE, Ore.) - “Death Panel”

It has a nice ring to it. The phrase conjures up images of faceless bureaucratic overlords sitting in darkened rooms, making life and death decisions purely on the basis of institutional prerogatives, with no regard to the health and well being of patients.

The utilization of the “Death Panel” image in political rhetoric opposed to the creation of a public health care system implies that in a free market health care system there is no rationing of care. Every single person in the free market system gets equal access to an unlimited supply of health care services, solely on the basis of need.

Could that possibly be the case? Do we live in a world of limitless resources where one must never concern themselves with the problem of making informed decisions about the costs and benefits of medical treatments?

If so, then it should be no problem to simply open the doors of every doctor’s office and hospital, and offer patients care with no concern about pricing whatsoever.

That is not the world we live in though, is it? Resources are not limitless. Medical care does have costs. Someone must make decisions about what treatments offer benefits that justify their costs. That is rationing, or in the words of the politicians, “Death Panels.”

How do free market “Death Panels” differ from the “Death Panels” of a public health care system?

In the free market, the “Death Panel” trying your case is the dollar. No money, no care. It is a very simple system.

Of course, there are other “Death Panels” in the free market system. Insurance companies set premiums, co-pays, and compensation limits, and prepare the tables of procedures and pharmaceuticals that will be covered under their insurance policies.

The distinguishing characteristic of free market “Death Panels” is that decisions within them are made entirely on the basis of profit. Medical efficacy of treatments is a secondary consideration. That medical efficacy is considered at all is only a function of the countervailing force of consumer lawsuits.

Free market “Death Panels” can only be forced to provide medical care by petitioning them with a monetary justification to provide care, in the form of a lawsuit. The free market health care system creates and necessitates a massive industry of lawyers. The lawsuit is the only tool that consumers have to demand care when it is refused to them by a free market “Death Panel.”

What is the problem with having “Death Panels” where decisions are made on the basis of profitability?

The answer to this question must look into the fundamental purpose of providing health care. Is the purpose of health care to make money, or is the purpose of health care to provide the highest levels of health, well being, and longevity possible given the cost constraints that are always present?

If the purpose of providing health care is only to make money, then the health care system crafted toward this goal will be very different than a health care system crafted to optimize the quality of health care outcomes.

The ideal free market health care system will provide very expensive health care with a low level of benefits, in terms of health care outcomes, for dollars spent.

Why is this the case?

The more expensive health care is, the more profit there is to be made. That is basic. Efficacy is a non issue. The only thing that matters is the willingness of consumers to pay.

People who are sick and dying, and their families, have a natural tendency to spend whatever they have in pursuit of a cure. If your child is dying, you are not going to think twice about taking out a second mortgage, running up your credit cards, or selling a car. Money can be replaced, a family member cannot.

It can be observed that in the case of health care there is no such thing as a rational and informed consumer.

Health care treatment decisions require expert knowledge that the average consumer can never possess, and the conditions in which health care is consumed leave consumers in a situation where market “rationality” plays little or no role in their decisions.

Rational and informed consumers are assumed to be a fundamental necessity for a functioning market in economic theory. Since there are no rational and informed consumers of health care, there is no way to have a functioning free market health care system, at least according to orthodox economic theory.

Even the hardest core true believer in free markets would have to acknowledge that a free market cannot yield optimal outcomes for health care services, because the fundamental assumptions of their free market theory require rational and informed market participants.

A friend once told me a story about how peasants in Italy addressed their health care problems. When someone was dying, and all else had failed, all of peasants in the village would collect their valuables and take them to the local priest. Presenting the priest with a gift of all their gold and other valuables, they would ask the priest to make a special intercession with God on behalf of their dying friend. The priest would happily comply, and send them on their way, telling them that it was now in God’s hands.

This “health care” system may appear somewhat ridiculous in retrospect, but it demonstrates a quality of human nature that is ever present.

People pass away. Nothing will ever change this. There will always be people who are happy to take advantage of desperation and false hope in order to make a quick buck.

Health care has always been an industry where quackery, fraud, and extortionate billing practices have played a role. From the witch doctor, to the priest, to the seller of amulets to ward off disease, and the appliers of leeches, the history of fraud in health care is a rich one.

Modern health care bases its legitimacy on the demonstrable efficacy of its treatments. Following this course has resulted in dramatic advances in health care outcomes. However, for every treatment with demonstrable efficacy you can still find others that are clearly exploitative and little more than fraud.

A free market health care system, where efficacy is not a concern, allows fraud and quackery to run wild, devaluing the quality of all health care, and tearing down the confidence of consumers in the health care industry.

A public health care system would replace free market “Death Panels,” where decisions are made entirely on the basis of profit, with health care rationing made purely on the basis of the benefits of care based on demonstrable outcomes, taking into account the availability of resources to cover the costs of care.

In essence, a public health care system would replace an irrational system that has only a secondary concern with actual health care outcomes with a rational system that focuses solely on outcomes.

Who opposes this? The priests of our age, who would prefer to have the peasants bringing them their gold in exchange for false hopes and empty promises.

Health care will be rationed no matter what. Under the current system, health care is rationed on the basis of profit by individuals with no accountability, making decisions in secret, and hiding behind armies of lawyers. In a public health care system, decisions would be made in public, by individuals accountable to the elected representatives of the people, on the basis of providing the best possible health care.

Those are the two types of “Death Panels” that are available as options. Which of these “Death Panels” would you prefer to have deciding the case of you and your family? Business/Economy Reporter Ersun Warncke is a native Oregonian. He has a degree in Economics from Portland State University and studied Law at University of Oregon. At a young age, his career spans a wide variety of fields, from fast food, to union labor, to computer programming. He has published works concerning economics, business, government, and media on blogs for several years. He currently works as an independent software designer specializing in web based applications, open source software, and peer-to-peer (P2P) applications.

Ersun describes his writing as being "in the language of the boardroom from the perspective of the shop floor." He adds that "he has no education in journalism other than reading Hunter S. Thompson." But along with life comes the real experience that indeed creates quality writers. Right now, every detail that can help the general public get ahead in life financially, is of paramount importance.

You can write to Ersun at:

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Jeff Kaye~ February 11, 2010 10:10 am (Pacific time)

As usual, Ersun delivers a spot-on assessment of the situation. Ersun for President, 2012! Just kidding, Ersun, I wouldn't wish that on a BUSH. Especially NOT a Bush! I just wish our government could come to a consensus and give us some sort of public OPTION. Hello, right-wingers? It's OPTIONAL. But not if you have any say in the matter, huh? Balls to you all. I guess we need to do this on a state by state basis, to have any progress, just like with MMJ. Put it to a popular vote, and that's the law. No fair changing it, Colorado "conservative" politicians! Democrats, no less. For the love of God, whoever S/he is... ;-} I'll never vote for a politician of either party who hasn't the health and well-being of his/her constituents at heart.

Hank Ruark February 11, 2010 8:09 am (Pacific time)

Ersun et al You wrote in detail about the absurdity of promoting healthcare as free market "system". Some motivated by "magic of market" (Reaganism) will still maintain any manipulation they can manage for the lavish and fully legal dollar gains still to be gotten. Fact just reported is that healthcare industry mounted most massive profits ever in this past year of 2009. Will excerpt report later (with link !) as time here permits. Mentioning here now since that fact is clearly relevant to what's driving major action by Supreme Court to insure all further probabilities by fully unleashing dollar-power for potent continuing corporate propaganda for overwhelmed public caugh in confusion and complacency. Fear for future fantastic takes is force now fully underway in much more than healthcare, as continuing very radical obstructionism now demonstrated by one side in D.C. That action not unexpected from those long known to be in pocket(s) of the corporate combine(s) collating the collapse of democracy here as their sure way to supersize seizure of both"profits" and then governance controlling the economy under the rule of corporatism.

Hank Ruark February 10, 2010 7:36 pm (Pacific time)

Friend Jerry: See Tim's Afghan story for my note 'way back then referring to tape by noted Boston psychiatrist. Think I can locate it for you, as helpful to your here-display symptomatic behavior. SO DO send mail address, not only for brochure re Healthcare Costs but for tape copy I'll make for charge, just wannasee if it might help as badly needed.

Ersun Warncke February 10, 2010 7:27 pm (Pacific time)

stftndoc, most certainly not. There are many physicians who do an excellent job under difficult circumstances to provide the best possible care to their patients. I give enormous credit to Dr. John Kitzhaber, who through his Archimedes Movement has put out excellent research and proposals that reach a similar conclusion to my own, though presented in more PC terminology. I will be looking forward to his proposals for how he plans to implement the goals of the Archimedes Movement as Governor. My reference to priests is mostly aimed at the "free market" proponents representing big industries that profit at the expense of negative impacts on health care. Any real economist will tell you point blank that a free market for health care services is nonsense, so anyone promoting that idea is a fraud. That assessment is very black and white, but it is a good rule of thumb.

Hank Ruark February 10, 2010 6:51 pm (Pacific time)

Happens we did one of first national-association programs on costs of healthcare, in 1970, for Hospital Financial Management Association,titled: Healthcare Costs:CRUCIAL PROBLEM. As one result of research for that program, the group changed name to HEALTHCARE Financial Management Association ! --Program sold to over 1,000 U.S. hospitals. Have followed issue ever since, and can endorse Ersun's take precisely, as accurate, comprehensive, and completely on the mark. Re Jerry's stuff,have found his remarks remarkably close to what Ersun writes re them, and join in awarding him the "mindless bs" medal. P.S. to Jerry - send me mail address and I'll send you one of brochures from ' suspend under your new medal.

stftndoc February 10, 2010 5:59 pm (Pacific time)

I hope that the priests you speak of aren't, in your mind, only physicians (I am one). Many of us docs think the present system is too profit centered.

Ersun Warncke February 10, 2010 4:30 pm (Pacific time)

Jerry, unfortunately your repetition of manufactured obfuscations flies in the face of the actual facts. On life expectancy the U.S. ranks 38th (UN) or 50th (CIA) ( For infant mortality the U.S. is 33rd (UN) or 46th (CIA) ( The differences in rankings are due to different entities being considered as countries. Not a very good outcome for spending the largest amount on health care overall and spending the most per capita. It is easy to understand how countries like Sweden and Switzerland have better healthcare than the U.S., but when you spend more than any other country in the world, you should expect better outcomes than countries like Singapore, Cuba, and the Czech Republic. We are working with slightly more resources here. The U.S. also has a massively unequal health care system. States like Florida, Louisiana, and Mississippi have infant mortality rates that are truly "3rd world." The "3rd World" in the U.S. is largely a function of poverty and especially rural poverty, which happens to be concentrated in some States. The same health care outcomes apply in general to the poor and rural poor throughout the U.S. although the impact is hidden by the aggregation of numbers. Refusing health care to a person on the basis of capacity to pay IS a POLITICAL DECISION. The political decision to kill people who are unprofitable is already being made. Yes, people with out insurance can go to the emergency room, where if they don't have insurance, they will be politely handed a band aid, some pills, and a nice warm cup of STFU. Try getting surgery without insurance. If the ER is in LA, they may just dump you in the street in order to get rid of you. Another nice trick is paramedics that refuse to pick up people who don't look like paying customers. Jerry, you have no facts, and everything you have written sounds like a Republican talking point. Don't waste the readers' time with your mindless b.s.

Jerry February 10, 2010 3:30 pm (Pacific time)

Ersun you wrote "In a public health care system, decisions would be made in public, by individuals accountable to the elected representatives of the people, on the basis of providing the best possible health care." So how is that working out in other countries? Have you seen the mortality rates for certain diseases in England and Canada compared to ours? Did you know that recently the Premier of New Foundland came to the states for specialized heart surgery he could not get in Canada? So those up there who do not have the funds, well what do they do? They die Ersun. Canada has public panels similar to what they have in England, deciding on what procedures and drugs to fund? Sure, just like what private insurers do. Do you think that these decisions could be politically motivated on who receives treatments? Bottom line we have good plans for health care reforms that are being ignored, so more people are going to die because the current leadership wants a major takeover which the majority do not want. Obama ran as a centrist, but he is governing as an extreme radical and that is what gave rise to not only the Tea Party movement but the recent major demo election losses. Just the same our survival rate is superior to countries like Canada and England. So what's worse, bankrupt or dead? If your alive, at least you have some options. Hell give yourself a life estate, or get your assets diverted. People who have no real assets can always go to the emergency rooms, and their treatment on average will be far superior than what Canada has. There are some communities up there so short on doctors they have lotteries to get primary care, but they all pay the same high taxes. There system is decaying.

DJ: If you knew what you were talking about Jerry, you'd make sense. Unless Danny Williams needs the rarest of treatments, everything available in the US is available in Canada. We have 100% coverage of citizens compared to what you say are 85% there which translates into about 45 million Americans with no healthcare at all Are you serious in suggesting that the US healthcare system (which is more costly overall for less coverage) is somehow superior to Canada's? I reiterate: Get a life, Jerry.

Hank Ruark February 10, 2010 1:42 pm (Pacific time)

For me, my choice is the democratic one depending on decent, caring, concerned, compassionate other citizens, carefully co-opted by our mutual colleagues in the whole community for this vital task touching, first and finally, on every one's life, from arrival to departure. Dollar-drive can never do this task, demanded as a duty to each since each of us has only one life and we need all the help we can give each other to make sure it is well and safely lived.

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