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Posted by on Jan 9, 2013 in Health, Politics, Society | 12 comments

Health Care and Private Enterprise

Interesting read from the New York Times on America’s health care system:

Patients entering church-affiliated nonprofit homes were prescribed drugs roughly as often as those entering profit-making “proprietary” institutions. But patients in proprietary homes received, on average, more than four times the dose of patients at nonprofits.

Writing about his colleagues’ research in his 1988 book “The Nonprofit Economy,” the economist Burton Weisbrod provided a straightforward explanation: “differences in the pursuit of profit.” Sedatives are cheap, Mr. Weisbrod noted. “Less expensive than, say, giving special attention to more active patients who need to be kept busy.”

What just about everyone seems to have forgotten — or doesn’t know — is that the “invisible hand” of Adam Smith that is the underpinning of America’s worship of profit-maximizing enterprises works only when there is no monopoly power or market concentration. Smith abhorred market concentration. America’s economy is characterized by extreme concentration: oligopoly and oligopsony (concentration on both the selling and buying sides of the equation).

We pay a lot for health care but what we get doesn’t match the expense:

Businesses devote almost 6 percent of the nation’s economic output to pay for health insurance for their employees. This amounts to nine times similar private spending on health benefits across the Organization for Economic Cooperation and Development, on average.


We spend nearly 18 percent of the nation’s economic output on health care and still manage to leave tens of millions of Americans without adequate access to care.

Britain gets universal coverage for 10 percent of gross domestic product. Germany and France for 12 percent. What’s more, our free market for health services produces no better health than the public health care systems in other advanced nations. On some measures — infant mortality, for instance — it does much worse.

Be sure to read the comments.

Oh, and for the record: I’m one of a handful (relatively speaking) of Americans who have had major health issues while abroad. I was in France when I had a life-threatening infection. The quality and type of care I received there versus here: no comparison on cost (nominal) or quality of care (which included at-home visits for a week after my 10 days in the hospital).

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