John Stossel’s Vision of Health Care for Few

John Stossel suffers from a couple of common fallacies on the right about economics and health care. He believes that if the free market is superior to government in most activities it must be superior in all. Secondly he assumes that the only plausible alternatives are either government run health care or a totally free market system. This fallacies have been seen in reviews of his previous writings on health care and are again evident in his discussion of the World Health Organization’s ranking of nations on the health care delivered.

Stossel admits there are problems with our health care system but attributes them to the United States now having a pure free market system:

First let’s acknowledge that the U.S. medical system has serious problems. But the problems stem from departures from free-market principles. The system is riddled with tax manipulation, costly insurance mandates and bureaucratic interference. Most important, six out of seven health-care dollars are spent by third parties, which means that most consumers exercise no cost-consciousness. As Milton Friedman always pointed out, no one spends other people’s money as carefully as he spends his own.

The problem with a pure free market system where everyone is responsible for their health care costs has already been discussed in multiple posts. This includes this response to a previous column by Stossel, the previous posts which I linked to in that post responding to similar proposals from Rudy Giuliani, as well as other health care posts on this site.

The other problem with this argument is that the countries leading in the survey have greater government involvement in health care than the United States. If our degree of government involvement makes our system inefficient, it is hard to imagine how the health care systems in other industrialized nations would be able to function at all if we accept Stossel’s logic. If the problem here is having health care covered by insurance as opposed to spending our own money, our system which includes growing deductibles and copays should be far better than those systems where people only pay a nominal amount or nothing at all.

Stossel also tries the usual misdirection we see from conservatives when he argues, “Even with all that, it strains credulity to hear that the U.S. ranks far from the top. Sick people come to the United States for treatment.”

The problem here is that Stossel is trying to substitute a single measure of health care for that used in the survey and concentrate solely on the strong points of our system. It is widely agreed, including by most critics of our health care system, that the United States leads the world in tertiary and subspecialty care. Our system does an excellent job of treating the sickest and most complex patients provided that they have access to the system. Rather than moving to a totally free market system as Stossel recommends, or to a government controlled system as few actually advocate, we need reforms which will preserve the strengths of our system while improving access to care for all Americans.

The problems in the United States are that far too many people do not have access to health care and that there are too many barriers to receiving preventative care. While we do an excellent job of treating people who require coronary artery bypass surgery, the system does a poor job of providing treatment of diabetes and hypertension which would reduce the need for such expensive procedures. Plans which would make routine health care coverage more affordable benefit both patients and the employers who frequently pay the cost of health care coverage.

Stossel complains that the WHO’s ranking is based on life expectancy. There is some validity to his argument, but this does not support his overall argument for change to a free market system. There are many variables beyond health care which do influence health care in the United States. I recall a study from about a year ago, I believe in the Journal of the American Medical Association, which showed that the health of Americans is worse than that of Europeans even when corrected for socioeconomic status. (It remains unclear why the Europeans are more successful in responding to other problems which impact life expectancy considering the overall affluence of our country.)

There is also no doubt that data on health care could be used to develop a quite different ranking system where the United States would do better if the rankings concentrated on subspecialty care. What is important about this ranking is not the exact spot where the United States falls but the revelation that many countries do far better than the United States in some areas of health care.

Stossel’s response to this data is to pretend the WHO ranking doesn’t matter because the American system is superior in some areas. The more sensible response is to question why, if our system can excel in many areas, it cannot excel in all.

Stossel tries to write off the results by arguing that the survey is biased towards socialized systems which provide care to all. If our system was really superior, we should be able to show the same degree of success in most measures of health care delivery. Stossel uses the lack of health care coverage by many Americans as an excuse for the poor rankings. In reality, the lack of affordable coverage for many Americans is a major failing of our system.

Stossel repeats the usual conservative arguments to attempt to dispute the findings that there are 45 million uninsured. While many do make $50.000 per year, Stossel ignores the difficulty in obtaining affordable coverage once people get older or develop a chronic medical condition. Health care coverage which provides adequate care for such populations can cost well over $1000 per month, straining the budgets of even those making $50,000 per year. The count of 45 million uninsured also underestimates the problem because many more are underinsured. They have coverage which is inadequate to cover their health care needs. This results in inadequate preventative care and treatment of chronic diseases. Such underinsured people frequently risk bankruptcy when they do develop a serious medical condition, with medical expenses being a major source of bankruptcy even among those with insurance. Among those who declare bankruptcy due to medical expenses, over 75% had insurance at the time of onset of the illness.

The type of free market health care system Stossel and Republicans such as Rudy Giuliani envision would result in higher barriers to care, with only the wealthy receiving the type of care that Americans fortunate enough to have adequate coverage now enjoy. Perhaps the wealthy would continue to enjoy the benefits of our high quality system under his plan, but my bet is that without the large number of average Americans with coverage keeping the system operating the entire infrastructure of our health care system will deteriorate and we will no longer lead the world in high tech care and innovation. These aspects of our health care system which Stossel finds valuable exist because of the money coming into the health care system from average Americans with a combination of private insurance and government plans. At best, Stossel’s plans would limit health care to the wealthy. More likely his ideas would reduce the existence quality care for all.

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11 Comments

  1. 1
    Liberal Journal says:

    Stossel is an uber-liberarian hack. His invisible hand is giving us the finger.

    The fundamental problem with Stossel’s way of thinking is that, speaking in purely economic terms, health care costs to consumers are highly inelastic. In other words, if you’re sick with cancer, you’ll pay whatever the price necessary for care. Most families will be faced with some kind of debilitating or life threatening illness at some point. Or a child with autism, etc. What do they do then? Sell their homes? Take out $50,000 or more in credit? What’s your alternative–to die?

    This is why medication costs so much–because they can get away with it. And currently many elderly cut back on food and other essentials to pay for the drugs they need to survive.

    When you couple this with our unfettered free trade agreements, you have a recipe for disaster for the middle class. Bargaining for healthcare through employers becomes that much harder. Only a few segments of society are exempt, those that work in highly professional fields which can’t be outsourced–yet, at least.

    Yes, it’s wonderful and grand that a few receive the best healthcare. Neither do I want a patrician government that will be telling me what I can or can’t eat. But you can keep the best of our system as it exists and help the majority of folks at the same time.

  2. 2
    Ron Chusid says:

    Liberal Journal,

    We have the problem that health care expenses are inelastic, and that it would be expensive no matter system is used.

    When the HMO system was first instituted we had a brief cut in costs and some waste was removed from the system, but within a few years heatlh care costs started going up again.

    As long as we want the latest technology costs will be expensive. Health care also requires a large number of employees, and if they are to be paid (and provided with their own health care coverage) it is also going to be expensive. There still may be ways to save money in certain areas, but not enough to make health care cheap enough where the average person can afford it with their own money.

  3. 3
    Doctor Biobrain says:

    Sorry, but 9/11 changed everything. Ipso facto, Stossel is correct. Better luck next time.

    Just joking, of course. I liked Stossel’s answer on life expectancies:
    When you adjust for these “fatal injury” rates, U.S. life expectancy is actually higher than in nearly every other industrialized nation.

    Would it have killed him to give us this actual number, or even a source for this claim; assuming he didn’t just pull it out of his ass? I guess it was so fact-ish that he didn’t need to actually establish what the fact was. I have no doubts that many of his readers took that statement to heart and are likely to quote it at least once. If only our healthcare professionals could cure idiocy…

  4. 4
    Liberal Journal says:

    Ron and Dr. Biobrain,

    We hear a lot about these select few individuals who come to America to use our wonderful healthcare system. I think you’ll appreciate the NBC Nightly News report about Americans traveling to Mexico for dental care. (Go to MSNBC.com, then select “Videos”, “Nightly News,” then “Crossing the border for dental care).

  5. 5
    Ron Chusid says:

    I suspect that this is due to cost as opposed to quality issues.

    The arguments about quality of health care are generally correct. The problem is cost and lack of access for many people. We need a system which preerves quality but where there is affordable coverage.

    To counter conservative arguments on health care, perhaps an even better example would be Americans going to India for bypass surgery as it is less expensive.

  6. 6
    b-psycho says:

    LJ: actually medication costs so much because of the government monopoly grants given to drug companies that mostly exploit tax funded research. You may know them as “patents”.

  7. 7
    Liberal Journal says:

    Ron,

    Costs were the angle I was taking not quality.

    I think Mexico is a better example, actually, because Mexico is more accessible than India, and routine care is more of a widespread problem.

    BP,

    Patents last 20 years from the start of trials, and end up lasting between 7 and 12 years after the drug hits the market. You might want to cut it down a couple more years. But I don’t support getting rid of patents altogether as it would remove the incentive for pharmaceuticals to create new drugs.

  8. 8
    Ron Chusid says:

    When you look at costs you really aren’t contradicting the argument about the high quality of care in the United States, but you do open the other important issue of cost and access.

    I thought the example of going to India for bypass surgery has the advantage that we are talking about same types of treatment. When people speak of patients coming to the US for care, it is typically for high tech procedures–such as bypass surgery. Seeing people from the US now go to India for bypass surgery totally turns that around. In contarst, dental care is not typically seen as being the same as health care, even though it is largely an arbitrary division.

  9. 9
    demsaredopes says:

    John Stossel’s show answered many healthcare questions logically and informatively. I thought the interview of the grotesquely overweight sicko Michael Moore showed us the stupidity and hypocracy in Moore’s position.

    Moore doesn’t care about fixing the American healthcare system or increasing the health of Americans. He just likes to make movies that are controversial that will keep him in the limelite. He’s a pig.

    As I see the posts on this site that condemn Stossel for his excellent points I can only believe that liberals have an innate desire to breastfeed from the government teat from womb to tomb. Don’t any of you believe in taking care of yourselves? You really want a Big Brother to coddle you through your entire life? That’s socialism you fools!

  10. 10
    Ron Chusid says:

    Stossel has multiple misconceptions about health care and his solutions are unrealistic.
    “Don’t any of you believe in taking care of yourselves? You really want a Big Brother to coddle you through your entire life? That’s socialism you fools!”

    You are oversimplifying. There are options other than the unrealistic ideas promoted by Stossel and the socialistic ideas promoted by Moore. Keep in mind that Michael Moore has said that none of the Democratic proposals (even those from Kucinich) go as far as he wants.

    To also put things in perspective, the US is the only industrialized democracy without universal health care. Government involvement in certain necessary areas does not mean socialism. By that logic, universal police protection, universal fire protection, and a universal military would also mean socialism.

  11. 11
    steve dunkley says:

    john stosselhas no vision of health care this man seems to want to destroy whatever healths sytem there is in the united states. he seems to see the free market as a cure all for every thing. leaving the average consumer to the brutality of the free market will leave many more millons uninsured as many readers have said if you have a chronic illness such as cancer your bargening power is limited and your costs are high does stossel acount for these poor souls? no. The irony is that stossels approach will require that the government bail out the collapsing health system. so maybe stossel is an unwitting advacote for goverment health care.

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