Single payer versus free market for health care reform

POINT: Should Pulmonary/ICU Physicians Support Single-payer Health-care Reform? Yes

By Adam W. Gaffney, MD, Philip A. Verhoef, MD, PhD, Jesse B. Hall, MD, FCCP
Chest, July 2016

As pulmonary and critical care physicians, we aim to utilize the highest quality evidence, in conjunction with our understanding of the pathophysiologic and social determinants of health, to provide the best care for patients. By taking such an evidence-based approach
to the realm of policy, we conclude that only a single-payer system can address the problem of rising health-care costs, while simultaneously ending the grave inequalities that continue to plague our critically ill health-care system.

From the Division of Pulmonary and Critical Care Medicine (Dr Gaffney), Massachusetts General Hospital; and the Section of Pulmonary and Critical Care Medicine (Drs Verhoef and Hall), University of Chicago.

COUNTERPOINT: Should Pulmonary/ICU Physicians Support Single-payer Health-care Reform? No

By Gilbert G. Berdine, MD

Health-care providers compete with each other for the patronage of health-care consumers. Providers can compete by increasing quality or convenience or by decreasing price. Over time, ceteris paribus (all other things being equal), a competitive health-care market will see increases in quality or convenience at lower prices. The term “single-payer” is a euphemism for monopoly. A monopoly requires legal barriers against new competition entering the market. Monopolies have no reason to improve quality or convenience and have no reason to lower price as customers have nowhere else to go for a needed good or service. Over time, ceteris paribus, a monopoly will offer a declining quality of product or service at less convenience to customers at ever-increasing prices. There are no exceptions to these rules.

The best solution to the health care problem is to let people make choices without interference by the government. This approach is known as the free market.

The market always leaves the participants better off, in their own view, than government intervention; there are no exceptions.

From the Departments of Internal Medicine and Medical Education, Texas Tech University Health Sciences Center, and Free Market Institute (Dr. Berdine).

REBUTTAL:

From Drs. Gaffney, Verhoef, and Hall

Dr Berdine argues that in an unhindered competitive health-care marketplace, the market will clear at a price and quantity of goods/services that, as if by definition, leaves all parties maximally satisfied. This argument is little more than a tautology that would, if possible, result in a health-care dystopia that society would not accept.

A free market for health care is not only undesirable: it is, as economists have noted for decades, a fantasy. Fundamentally, the degree of information asymmetry between the buyer (the patient) and the seller (the provider) prevents health care from conforming to the theoretical tenets of free-market economics. Kenneth Arrow famously contended that the uncertainty intrinsic to health care makes it unique from other goods and services. The health economist Bob Evans has argued that not only has there never been a pure free market in health care but that “inherent characteristics of health and health care make it impossible that there ever could be.” On the contrary, he argues, attempts to inject market mechanisms into health care are fundamentally about redistribution. As health-care costs are shifted from public to out-of-pocket sources, those with higher incomes invariably benefit.

As others have noted, the savings made possible through a single-payer system would allow extension of health care as a social right to the entire nation. In contradistinction with a fantastical health-care free market, such a program is both attainable and desirable.

REBUTTAL:

From Dr. Berdine

“Health insurance” is no longer pooled risk in America. The first step to making health care affordable is to separate catastrophic and insurable costs from routine health maintenance. It is impossible to subsidize an entire nation.

http://www.sciencedirect.com/science/article/pii/S0012369216416028

Until August 26, 2016, the POINT article will be available for free at the following link; then it will be behind a paywall, as are the COUNTERPOINT article and the two REBUTTALS:

http://authors.elsevier.com/a/1TKr62p-km2aS

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Comment:

By Don McCanne, M.D.

The POINT article by Drs. Gaffney, Verhoef and Hall explains why physicians (and everyone else) should support single payer reform, with special emphasis for pulmonary/ICU physicians. (Chest is a publication of the American College of Chest Physicians.) The article is accessible for free until August 26, 2016.

The rationale for single payer reform presented in this article is based on PNHP’s Physicians’ Proposal for Single-Payer Health Care Reform.

Although a tremendous amount of data has been generated explaining why the advances of the Affordable Care Act are grossly inadequate and why we need a single payer system, this Point/Counterpoint is useful because the counter argument is presented by an advocate of free markets. Dr. Berdine uses standard college economic textbook principles to explain why only a competitive free market will bring us higher quality at lower prices, with “no exceptions.”

In their Rebuttal, Drs. Gaffney, Verhoef and Hall explain how a free market in health care is a fantasy. It is important that we put the free market nonsense to rest and move forward with enacting and implementing a program that really will work - a single payer national health program, aka an Improved Medicare for All.