Will Somebody Please Control Healthcare?!

Harvey Mansfield, professor of government at Harvard, has an op-ed in the Weekly Standard that is either so ignorant or so disingenuous that it left me sputtering. Here is the kernel of the op-ed:

Obama acts and speaks as if there were no question of principle, but of course there is one, and it is perfectly obvious to the public: Should the government take over health care or should it be left to the private sphere?

which leaves the impression that there is a choice between a government-controlled healthcare system and the status quo, a healthcare system controlled by the “private sphere”.

That is manifestly untrue. The present system is emphatically not controlled by the market or otherwise controlled by the private sector in any way, shape, or form. I remain unconvinced that many people would want it to be. Our current healthcare system is an emergent phenomenon that arises from the competing influences of the federal government, state and local governments, the physicians’ guild, individual healthcare providers, insurance companies, employers, and patients.

Government in all forms provides via tax dollars for something over 60% of healthcare spending. The federal government finances healthcare expenses through Medicare, Medicaid, the Veterans Administration, the Indian Health Service, and its funding of the healthcare of federal employees. It subsidizes the education of every single medical resident in the United States to the tune of something like $80,000 per year through the Medicare system. What drugs and medical procedures may legally be sold or performed is regulated by the Food and Drug Administration and the schedules of pharmaceuticals established by the FDA confers a gatekeeper status on medical doctors.

State and local governments pay for healthcare through their Medicaid spending, the funding of healthcare for their employees, and other mechanisms. For example, here in Cook County there is a county hospital that receives funding from the county and is a major component of Cook County’s out-of-control budget. They license physicians and impose regulations on them. They limit how many hospitals and clinics can exist and where they can operate. And they regulate healthcare insurance companies with a maze of regulations, the net effect of which is either to grant local or regional monopoly status to single large insurers or to create an oligopoly of large insurance companies. Germany, a country a fraction the size of the United States, has more health insurance companies than the United States does.

In the context of the above claiming or believing that we presently have a healthcare system controlled by the private sector is as fatuous as the “get government’s hands off my Medicare” trope.

They various physicians’ guilds, the largest of which is the American Medical Association, control entry into the medical profession via the educational accreditation process. They are also among the most lavish lobbiers of federal legislators.

As noted above, insurance companies do not operate in a market environment.

In general the real customers of healthcare insurance companies are not patients but employers. Many employers are themselves functioning as insurers while an insurance company adminsters their programs. This is called “self-insurance”.

In principle physicians, as members of a profession, are responsible for policing its membership and regulating the services they provide. Physicians should say “No”. In practice that rarely happens. The number of physicians removed from the practice by the practice itself is always extremely small. Over the years the practice of medicine has oscillated among the old-fashioned paternalistic approach, a more consultative approach, and a straightforward “give the lady what she wants” retail approach to medicine. I cannot tell you how many physicians (in the context of my business) have told me that, if they didn’t give the patients what they wanted, the patients would go elsewhere and get whatever it might be from someone else.

BTW, Physicians are ethically required to provide their services at low or no cost to the poor. Increasingly, physicians being affiliated with institutions that take Medicaid has come to be interpreted as meeting this personal ethical obligation.

Patients are insulated from the information necessary to make an informed decision about the healthcare they authorize by a reluctance to publish pricing regardless of the notional urging of the AMA in that regard and a reluctance to ask for pricing. They are further protected from the consequences of their economic choices by multiple layers of insurance companies and, frequently, their employers. Their exposure to economic discipline is limited to small deductibles that don’t represent actual costs or prices.

Who controls healthcare in the United States? Nobody does. Not the government. Not the insurance companies. Not the medical profession either individually or corporately. Not patients. Emphatically not the private sector.

That’s why we’re in the mess that we’re in now.

3 comments… add one
  • Mansfield is a political theorist and, as such, isn’t the best prepared to wade into matters of public policy.

    There may be other things to glean from the piece, and I tried to read it earlier this morning but he bored me about half way through.

  • He needs to get out of the Ivory Tower and experience the real world. I’d suggest a 5 years suspension from his current position and finding a job in the “private sphere”.

  • s Link

    At work so no time to read his whole article, BUT, if what he meant is that we should commit to either a government controlled or should it all be private, I believe he is correct. A big part of our problem is the fragmentation of our system. We are the only ones who really do this. Using your example of Germany, everyone is in the same system of private insurance (highly regulated IIRC ). This lets the Medicare folks get played against everyone else.


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