Monday, October 29, 2012
Planned versus Market Economy
The great Socialist experiment of the twentieth century
assumed that a planned economy was a practical alternative to commercial
markets. It believed that people could
sit in a central location and decide how much wheat should be raised, how many
cars of what type should be built, how many men’s shirts of what size and color
should be produced each year and so on, and the result would be plenty for
everyone, fairly distributed.
By the end of the century, that idea had pretty much been
abandoned everywhere, with a singular exception. Health care.
States with Certificate of Need laws still make central decisions about
how many hospital beds, MRI machines, open heart surgery programs, etc. are
“needed” and prevent any more from being developed. The Massachusetts
legislature declares that providers should be reimbursed by means of global
payments (i.e., capitation) rather than by fee-for-service. Federal authorities use “meaningful use”
definitions to tell providers how they should employ computers. The intellectual community is fixated on
single payer; i.e., national health insurance and gives no attention whatsoever
to the study of market forces in health care.
The cost of health care is rising to levels considered
unsustainable and quality is not what it should be, but we cling to the planned
economy model. The Republicans talk
about making use of market forces, but they refer mainly to moving Medicare
beneficiaries into private insurance, which already operates in a competitive
market place.
The cost and quality problems
don’t lie with insurance companies. They
lie with providers. But not even the
most conservative politicians are ready to say that yet.
Small wonder that the problems in health care seem so
intractable.