Financial columnist Megan McArdle recently wrote a column entitled "Healthcare Is a Business, Not a Right." She was responding to a tweet from financial writer Helaine Olen:
25. The health of Americans should not be a profit center. Health care is a right. Full stop.
— Helaine Olen (@helaineolen) August 17, 2016
Health care is a business, says McArdle, but most of us aren't tough-minded enough to admit it. Even if you ask a conservative, she writes, "there is a good chance you'll get a rant about greedy insurers nickel-and-diming hardworking consumers when they're sick."
"Almost everybody feels that there is something fundamentally wrong about making money off someone else's illness," McArdle laments.
It's a straw-man argument. Nobody I know thinks there's something "fundamentally wrong" with doctors or nurses earning a living, or pharmacies turning a profit. Doctors, nurses and corner pharmacists are iconic figures in American folklore.
McArdle misrepresents her adversary. Olen's tweet begins with the number "25," which McArdle omits, meaning it's the 25th in a series of tweets. The full series makes it clear that Olen is talking specifically about health insurance. Olen's "full stop," which McArdle mocks, seems intended to signal the end of her twitter essay.
But then, you can't make a straw man without breaking some straws.
"No, don't sputter and tell me that it's obvious, that people need health care," McArdle writes. "People need a lot of things. You'll die without food long before you'll die without healthcare, and yet few people say we need to 'take the profit motive out of farming' ..."
Nobody's sputtering, but the farming analogy is poorly chosen. Food production and health care delivery occur in very different economies. The need for food is consistent, stable, and predictable. The need for health care varies dramatically over time. Insurance, whether public and private, spreads risk among larger groups and levels out its potentially devastating cost spikes.
But, while farmers provide food, insurers don't provide health care. They're intermediaries. When they're profit-driven, their economic incentives can become socially destructive. Other for-profit health intermediaries include pharmaceutical companies and third-party investors like Bain Capital, who invest in medical providers and then press them to maximize profits. (See "Sick Money.")
The result is a broken economy that works for profiteers but not for "consumers."
Intermediaries make people angry when they exploit the system without adding value. People are outraged over the EpiPen scandal because they know that its manufacturer jacked up prices excessively, which it can do thanks to government-granted patent privileges. Patients are likely to die as a result.
Similarly, people are outraged over UnitedHealth's profits because they know that UnitedHealth has never cured a sick child or mended a broken arm. But it has denied patients potentially lifesaving treatments (yielding only when faced with bad publicity).
For-profit health financing has failed this nation. Here's a thought experiment:
Imagine an America where food costs twice as much as it does in most other developed countries.
Imagine an America where most Americans under the age of 65 get their food from a "food intermediary" chosen by their employer.
Imagine an America where the "food intermediary" can deny people access to lifesaving nourishment.
Imagine an America where corporate food distributors are granted special privileges by the government, then grossly overcharge customers who must either pay up or die.
Imagine an America where the out-of-pocket cost of food is rising much faster than inflation.
Imagine an America where a minimum of 45,000 people die each year because of inefficiencies in our food economy.
Would people across the political spectrum be saying that food is a right that's being corrupted by profit? Absolutely. And they'd be right.
Rights and commerce aren't diametrically opposed. Want to enjoy the national parks that are every American's birthright? You'll probably take a for-profit airline to get there, and stay in a for-profit hotel once you arrive. Want to exercise your right of free speech? You may take out a full-page ad in a for-profit newspaper. (There is a problem with media consolidation and free speech, but that's a topic for another day.)
Rights and commerce can coexist in a democratic society, as long as commerce doesn't threaten rights. But when they clash, commerce must give way. Since commerce has failed to provide affordable and accessible health care, it must yield to rights.
Here's a cold, quantifiable truth some people would rather not accept: Government does some things better than the private sector. Health care financing happens to be one of them. That's why every other developed nation on earth provides better care to more of its people at lower cost than we do.
McArdle snipes at Great Britain's health system because its guidelines sometimes limit treatment. She doesn't mention that our system does, too. But our guidelines are set by highly paid executives who aren't accountable to the public, and whose economic self-interest lies in restricting care.
McArdle quotes economist Robin Hanson's theory that we finance health care through insurance because we're attracted to "reciprocal altruism." If so, wouldn't we be more likely to have a public health insurance system, like every other developed nation on earth? I doubt anyone thinks health insurance corporations are "altruistic."
The real reason our system is structured this way is more prosaic. Wages were fixed during World War II, but the agency that administered them exempted fringe benefits. So employers began offering health insurance to attract workers, and our hodgepodge system grew up around this historical anomaly.
That system is a financial and moral failure. The employee portion of employer-based health premiums is skyrocketing, rising 83 percent between 2005 and 2015. The average American family with "good" employer coverage now pays $10,473 per year for health care. One-third of all Americans, including 40 percent of women, have an unmet health care need because of cost - even if they have insurance.
The U.S. paid more than twice as much per capita on health care as the average for developed countries, paying nearly twice as much as a share of the economy (despite its many uninsured and underinsured) - with poorer outcomes than comparable countries on standard measurements like life expectancy.
By any objective measure, the U.S. insurance industry has failed to manage either the cost or the quality of health care. Health care is a human right, and private insurers have failed to safeguard it. They had their shot, and they blew it.
McArdle gradually morphs from a defense of "greedy insurers" to the argument that health care cannot be a right because "it has to stop before we run out of wallet." (That distastefully buzzwordy phrase presumably means, "before we run out of money.")
That's another straw man, since virtually no one argues otherwise. Every right is limited by outside constraints. That's why the right to free speech doesn't allow you to shout "Fire!" in a crowded theater.
We all agree that hard choices must be made when resources are limited. Let's see, where do we begin? Profit-taking is driving up health care costs at all levels. UnitedHealth's operating earnings were $11 billion last year. Aetna's were $2.7 billion. Big Pharma? Don't even ask.
I'm sure most Americans would agree: If we're going to talk about pulling the plug on Grandma, which is where McArdle is headed, then we sure can't afford these guys. Maybe when they show up for their next big payday, we'll have to explain that we've "run out of wallet" to pay them.
Government's first obligation is to protect rights, not profits. When the Declaration of Independence proclaimed our "unalienable rights" to "life, liberty, and the pursuit of happiness," it even put "life" first.
Health care is a right, not a business.