Capitalism and healthcare

Posted: 9 January 2013 in Uncategorized
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Health Insurance Profits 2012

By now, we all know that the United States spends much more on healthcare than other rich nations, and achieves much lower outcomes.

The key question is, what’s the problem? And Eduardo Porter provides the answer: profits.

Hospitals run for profit are also less likely than nonprofit and government-run institutions to offer services like home health care and psychiatric emergency care, which are not as profitable as open-heart surgery.

A shareholder might even applaud the creativity with which profit-seeking institutions go about seeking profit. But the consequences of this pursuit might not be so great for other stakeholders in the system — patients, for instance. One study found that patients’ mortality rates spiked when nonprofit hospitals switched to become profit-making, and their staff levels declined.

These profit-maximizing tactics point to a troubling conflict of interest that goes beyond the private delivery of health care. They raise a broader, more important question: How much should we rely on the private sector to satisfy broad social needs?

And to his credit, Porter understands the issue of profits extends beyond healthcare.

Today, again, entitlements are at the center of the national debate. Our elected officials are consumed by slashing a budget deficit that is expected to balloon over coming decades. With both Democrats and Republicans unwilling to raise taxes on the middle class, the discussion is quickly boiling down to how deeply entitlements must be cut.

We may want to broaden the debate. The relevant question is how best we can serve our social needs at the lowest possible cost. One answer is that we have a lot of room to do better. Improving the delivery of social services like health care and pensions may be possible without increasing the burden on American families, simply by removing the profit motive from the equation.

Yes, we do need to broaden the debate—to conduct an honest analysis of the role profit-making plays both in providing and financing inadequate healthcare and in squeezing the benefits hard-working Americans have a right to in terms of decent healthcare and adequate pensions. And then to take the next step, actually “removing the profit motive from the equation.”

  1. Lafayette says:

    If the high cost were only worth the money spent.

    But that is clearly not the case. When measuring healthcare costs against life-expectancy (one would think the former should impact the latter outcome) then results are highly disappointing for Americans.

    See the info-graphic here:

    Note how Life Expectancy at 78 for a per capita cost of $7500 per man, woman and child compares to that of, say, Sweden where Life Expectancy is 3 years more than the US, and per capita cost is about half that of the US.

    Of course, Sweden has, like most of Europe, a National Health System, where physician fees for services are established by the Swedish government – which is why costs are so much lower.

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