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The big flaw in Bush's health care plan

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In politics, you always have to be on the lookout for euphemisms that are crafted to hide corrupt politicians' true motives. As I point out in my upcoming book Hostile Takeover, some of these euphemisms are everywhere. The word "reform," for instance, is a big red flag. More often than not, when you hear that word from a politician, take cover - something bad is coming. Now today, on the eve of the State of the Union, we see another euphemism being trotted out by the White House to hide its ulterior agenda: "consumer-driven" health care.

The storyline goes something like this: the President believes in "consumer-driven" health care whereby people save their own money in special accounts that they can use to pay for health care. The theory is that if citizens are actually encouraged to pay for their own health care costs directly - instead of through a third party insurance company - they will make more rational decisions about which procedures/tests/exams to have, and which not to have. We are led to believe that adding that supposedly "free market" force to the health care system will result in major cost savings for the entire system.

Sounds like the theory of "consumer-driven" health care is on solid ground - until you realize one key flaw: creating a "consumer-driven" system requires consumers to be able to make informed choices about what they are buying. And the problem is that not everyone is a physician. How can a citizen be expected to know what health care services to buy and what not to buy if they don't have a medical degree? Consumers may want to save costs, but how are they expected to know to get this test, and not that test, this treatment and not that treatment, this surgery but not that surgery?

Look, there are a lot of areas where "consumer-driven" forces have played a terrific role. Take car insurance and mortgage rates - the Internet has allowed people to compare different rates and plans, creating more competition, and some downward pressure on prices. But that has only worked because insurance and mortgage rates/plans are fairly standard and can be understood by the average consumer with a little research.

The same, obviously, cannot be said about medical decisions. A consumer cannot possibly be expected to know what services to buy and not buy. There's a reason, after all, that doctors have to go to school for years and years and years before they are liscensed to treat people and make medical decisions for patients.

Thus, it is very likely that the end result of Bush's drive to expand Health Savings Accounts instead of expanding health insurance coverage will be worse medical coverage for millions of ordinary citizens, and no end to the private health care industry profiteering that has ravaged our system. Strapped for cash already because of stagnating wages, many will try to skimp on their own health care expenditures, unable to know whether they are making a bad medical decision that will affect them over the long haul.


To be sure, that skimping may save money in the short term, and may actually be the "consumer-driven" behavior Bush is trumpeting. But it will also further move the American health care system away from more cost-effective preventive care whereby people spend smaller amounts up front to prevent more expensive care for bigger problems down the road. Think about it - there will be an urge in this "consumer-driven" scheme to, for instance, not spend the money to go see your physician for a checkup. That will save some cash over the years, until you find yourself in an emergency room with some major problem that could have been prevented. And, as is well known, emergency room and critical care is the most expensive form of health care, thus wiping out any earlier savings.

The bottom line is simple: free market orthodoxy does not work in markets that can't be free. And health care can't be a free market, because one of the key characteristics of a free market is that consumers have a minimum level of substantive information to make informed choices. And unless President Bush is proposing sending every American to medical school, his health care proposals will only make the health care crisis worse.

Originally published at Sirotablog

 


David Sirota is a full-time political journalist, best-selling author and
nationally syndicated newspaper columnist living in Denver, Colorado. He blogs for Working Assets and the Denver Post's PoliticsWest website. He is a Senior Editor at In These Times magazine, which in 2006 received the Utne Independent Press Award for political coverage. His 2006 book, Hostile Takeover, was a New York Times bestseller, and is now out in paperback. He has been a guest on, among others, CNN, (more...)
 
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Here is what you didn't say about consumer-driven ... by David Clymer on Monday, Jan 30, 2006 at 2:13:08 PM
free market orthodoxy does not work in markets tha... by Richard Boettner on Thursday, Jul 19, 2007 at 3:14:02 PM