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Markkula Center for Applied Ethics

Failures of a Market Approach to Healthcare

Ryan Benavente '22

Ryan Benavente ’22 is a junior majoring in biology and neuroscience and a 2020-21 health care ethics intern at the Markkula Center for Applied Ethics. Views are his own.

Despite its name, the US Health Care (USHCS) system is designed to make profit. To the average American, this seems like an innocuous statement at first glance.  However, when you break down what this means, the implications become a lot more ominous. To place a value on health services is to place a value on a person’s life. When profit is given precedence over care, the person becomes a commodity, able to be disregarded if they don’t measure to the monetary standard. The patient’s well-being is no longer paramount; rather it is influenced by their buying power. Thus, even in an institution meant to heal the sick and fix the broken, the person has become a means to an end: expendable. Feeling “healthy” is something to be afforded, conditional to adequate payment. Needless to say, health care providers, administrative personnel, and employees should be justly and adequately compensated for their time, work, and materials. This is not the issue. The problem does not lie in the action of compensation, but in the rules of play where this occurs. The very system that has promised the American people opportunity and wealth, has failed them.

The myth of the American Dream is that everyone has an equal chance and opportunity to succeed. All one has to do is work hard. However, pure capitalism is a flawed and predatory system that leaves incredible disparity in its wake. Disclaimer, I recognize the values of capitalism and its contributions towards the foundations of the modern world. It has significantly increased the standard of living for millions and encourages cooperation, innovation, and altruism. That being said, capitalism is still fundamentally flawed, because it creates economic winners and losers. In the game of life, the repercussions of losing are fatal. The winners will thrive, while the losers will live in poverty, have higher rates of preventable disease, lower access to essential services, feel the first-hand effects of environmental devastation, and be subject to social stereotypes and stigmas. Furthermore, these consequences will be transmitted generation after generation, as the rich accumulate more wealth and the children of the poor find themselves unable to cross the wealth chasm.  Few start the race with the necessary resources to thrive. When you are at such a detriment, how can one reasonably expect to excel? The truth is, a system governed by the laws of competition will leave the impoverished majority starved and lacking. If we are to follow principles of equity and justice in our modern institutions, the antiquated capitalist approach will not work. If we care at all about the citizens in our society, then we have to recognize that pure capitalism creates systemic inequity in places where inequity should not exist, limiting the opportunities of those affected. The USHCS is illustrative of this fact. 

Typical market systems are facilitated through supply and demand laws. When demand increases, price will increase accordingly. This makes sense for the sale of a T-shirt or laptop. However, the market for health care is price inelastic. Essentially (pertaining to emergency services and hospital care), demand will stay the same for the most part, despite price fluctuations. This is an understated problem. Unlike a T-shirt or a cup of coffee, an individual can’t just forfeit vital health care services, without dire repercussions. Yet, many will forfeit this right for fear of paying too much, and many more will take the financial fall. This is easily exploitable. One famous example is Epipen, which is an essential anti-allergic reaction medication. Due to its high demand, it was subject to several price hikes in a short period, reaching $670.00 in 2020, limiting access. These tactics are present in other subliminal, but significant ways. Overprescription, defensive medicine (unnecessary diagnostics to prevent an expensive malpractice litigation suit), inefficiency in administration (billing and insurance personnel), and rising prices despite no changes in quality of care, are all contributing factors in why healthcare is so expensive. Despite having similar levels of care to other developed nations, US spending per capita is the highest in the world ($10, 999) and nearly double the comparable average ($5,697). Furthermore, the USHCS cannot even be considered a “true” market system. Market systems run with the assumption that the consumer understands what they are paying for exactly. However, hospital price transparency is notoriously low. The knowledge between the provider and the patient is often lopsided, with pricing information often hidden up until the patient receives the bill weeks later (although this has begun to change effective January 1st 2021).  This is a well-known practice commonly referred to as surprise billing. This is a blow not only to the patient’s finances but to their perspective of medicine and hospitals as well. This informal deception often leads to mistrust in the system and eventual avoidance of a necessary service.

All of these factors add up to a system where those unfortunate enough to be both financially deprived and ill are taken advantage of. Sadly, 530,000 Americans declare bankruptcy due to medical bills. To avoid these monetary pitfalls, many Americans refuse to seek care or refuse to pay the premiums associated with health insurance. As of 2019, an estimated 28.9 million non-elderly people were uninsured in the United States due to high costs (source: KFF).  That number is approximately 10% of the American population who are less likely to receive necessary preventable medicine, and more likely to develop conditions and diseases that may have otherwise been detected and properly managed.  Even more worrisome is that over 4 million children are uninsured, through no fault of their own. For a “proud,” “free,” and “cultured” nation concerned and invested in the good of its citizens, we do not seem to mind the rampant poor health outcomes and disease burden thrust upon our fellow Americans.

Society and the government have an ethical duty to address these issues and provide for their citizens. These tenets are embedded in the preamble of the Constitution, which states that the government has the responsibility to “promote the general welfare” which extends to fire and police services, roads, water, electricity, streetlights, education and of course the provision of universal healthcare. These shouldn’t be considered an overreach of government power, rather an extension of their responsibilities. This is not a “handout” or the encouragement of “laziness,” that many conservative voices decry (to the contrary, more than 50% of the uninsured work full or part-time). Rather, it is the continued promise of the founding fathers: the preservation of life, liberty, and the pursuit of happiness which are the natural rights guaranteed to every individual at birth. Poor health can be a major deterrent to achieving any of those three things. People are susceptible to factors outside of their control: genetic diseases, disabilities, chronic illness, increased risk of cancer and hypertension, etc. Universal health care is the alleviation of this uncontrollable burden and a protection of personal freedom, financial security, and autonomy not restricted by the fear of having to pay for a fundamental need. By making health care a societal concern rather than an individual one, we place the lives of our citizens first. Furthermore, we progress as a society by encouraging equity and invoking a “fair-equality-of-opportunity” principle, which ideally, creates a world where characteristics of birth or current situation cease to be obstacles in living one’s life to the fullest potential. 

This seems like a daunting task. However, the American people will continue to suffer if we do not adopt a model of universal health care. We should look to other nations, whose newly adopted health care models have benefitted their citizens. One standout example is Taiwan, which since adopting its new National Health Insurance system, has increased its coverage rate to 99%, has reduced administrative costs to 2%, has reduced inappropriate procedures, has shortened waiting times, and has increased accessibility towards all citizens. Universal health care is more cost-efficient, accessible, and standardized (due to government monitoring of practice and outcomes). Most importantly, this promotes a message of beneficence and justice to each of its citizens. You are worthy of life and  you have the right to be healthy, no matter your circumstances or the cards dealt at your birth. You will be taken care of. That is the society I want to live in; one where all men and women are truly created equal and are not held back due to factors outside their locus of control. Let’s bring America to that standard.

This is a simplified version of a complex issue. Feel free to comment below to continue the discussion.

Feb 4, 2021
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