When you tell a business what sort of products it can offer and in fact what sort of product its customers 'shall' buy, it fails to be a free market system.
Then there has never been a free market system in the history of any nation no this great Earth. By your definition, telling a pharmaceutical manufacturer they can't sell methamphetamine is a restriction on the "free market." As is making people buy car insurance so they can drive a car. As is *any* form of taxation -- after all, mandatory payment into the Social Security fund is just forcing people to purchase a form of "retirement insurance", isn't it? (I reckon you're probably in favor of privatizing that, too.)
Look, I agree that markets are very good for many things, but
health-care isn't one of them.
There are two strongly distinctive aspects of health care. One is that you don’t know when or whether you’ll need care — but if you do, the care can be extremely expensive. The big bucks are in triple coronary bypass surgery, not routine visits to the doctor’s office; and very, very few people can afford to pay major medical costs out of pocket.
This tells you right away that health care can’t be sold like bread. It must be largely paid for by some kind of insurance. And this in turn means that someone other than the patient ends up making decisions about what to buy. Consumer choice is nonsense when it comes to health care. And you can’t just trust insurance companies either — they’re not in business for their health, or yours.
This problem is made worse by the fact that actually paying for your health care is a loss from an insurers’ point of view — they actually refer to it as “medical costs.” This means both that insurers try to deny as many claims as possible, and that they try to avoid covering people who are actually likely to need care. Both of these strategies use a lot of resources, which is why private insurance has much higher administrative costs than single-payer systems. And since there’s a widespread sense that our fellow citizens should get the care we need — not everyone agrees, but most do — this means that private insurance basically spends a lot of money on socially destructive activities.
The second thing about health care is that it’s complicated, and you can’t rely on experience or comparison shopping. (“I hear they’ve got a real deal on stents over at St. Mary’s!”) That’s why doctors are supposed to follow an ethical code, why we expect more from them than from bakers or grocery store owners.
You could rely on a health maintenance organization to make the hard choices and do the cost management, and to some extent we do. But HMOs have been highly limited in their ability to achieve cost-effectiveness because people don’t trust them — they’re profit-making institutions, and your treatment is their cost.
Between those two factors, health care just doesn’t work as a standard market story.
How do you explain away these problems, keeping in mind that costs have exploded during a time when the insurers faced very little regulation?
I suppose you believe the insurance companies have exclusions and limits simply because they are greedy inhumane assholes with no concern for human life. The problem is, they are businesses whose purpose is to make money; they owe this to their stockholders/owners.
And that's exactly the problem with using for-profit institutions to insure the the health and well-being of our citizens. I would not *expect* a corporation to have my health as its primary concern when there are profits to be had. As Krugman alludes to above, it's not as simple as "if an insurer screws over its customers to make money, people will go find another insurer." We have very few choices from our employers, and even on the individual market, one or two players dominate each region, and they're all just about as stingy when it comes to paying claims. I recognize those exclusions and limits are there to ensure they make money -- I just don't think that should be my primary concern when I have just had an expensive life-saving medical procedure and then they deny my claims because I didn't "shop around."
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