The Republican Party is bent upon abolishing the Affordable Care Act — to fulfill both blind ideological dogmatism and gain political capital based on their so-called “free market” policies. Similarly, in India, the Finance Ministry has continued to slash healthcare spending by massive amounts in the name of abstract principles of “fiscal responsibility,” and “free markets.”
All of them are wrong. They’re wrong because free market healthcare doesn’t work — that is objectively the case. The government needs to regulate the health insurance and pharmaceutical industries. So, in this post, I’m going to do two things. First, I’m going to present the simple, common sense logic behind this claim of mine. Second, I’m going to justify this claim with empirical evidence.
The simple logic I’m presenting is the idea that the market has no incentive to offer better access or lower cost to healthcare if there’s no profit to be gained from it. The conservative argument, typically, is that “competition reduces prices.” But it doesn’t change a few facts.
First, insurance companies in countries like the U.S. charge at exorbitantly high rates. So, how much ever the competition, the cost won’t reduce beyond a certain point without government regulation. In fact, the only means to end this is to work toward the nationalization of the pharmaceutical industry — which is bound to be a slow process because (1) we need to maintain the quality of the healthcare system, (2) such rapid nationalization isn’t fiscally tenable, and (3) we need to maintain the jobs created by the pharmaceutical industry. But that does mean government regulation needs to exist.
Second, cost isn’t the only dimension to healthcare access. Insurance companies will continue to discriminate against people who have underlying conditions and, therefore, need healthcare more. They’ll discriminate against people based on financial status since payment isn’t guaranteed. And that’s what they did before the Affordable Care Act in the U.S., and what they continue to do in countries like India. Regardless, conservatives and right-libertarians pretend that Obamacare didn’t change anything — or that it made conditions worse. They also pretend that the abstract “free market” can solve everything like the wave of a magic wand. Only, it can’t.
And this isn’t just my opinion. It’s the opinion of noted economists such as Amartya Sen, Thomas Piketty, and Paul Krugman. All of them agree with this logic: that the private sector is grossly insufficient to fulfill the healthcare needs of the common people.
But even if you don’t buy the plain logic, here’s some empirical evidence. In a previous post, I already outlined that Obamacare was responsible for lower inflation rates of insurance costs, and that it increased access to health insurance. Furthermore, in countries with systems of nationalized healthcare, overall insurance costs a falling sharply — take the case of Canada. In addition, greater percentage of the population is insured in countries that have greater government intervention in healthcare.
The harsh reality is that the fetishization of the free market will get both developed and developing countries nowhere, at least when it comes to healthcare. Government intervention in healthcare is required to ensure that the needs of the people are met.