Friday, March 23, 2012

Market v. Community

The second anniversary of the health care act, which is today, started me some days ago looking at data. Today I dug out the global rankings of health care outcomes produced a while back (1997) by the World Health Organization. It’s rather a complicated index built around the achievement of five health goals. One among them is that the national system’s costs should be fairly distributed, thus the degree to which everyone  contributes should be as equal as possible. I had to dig a little to discover how WHO visualizes fairness. Here is the process WHO suggests.

Measure first the total amount of each household’s contributions to healthcare—in whatever form. Next, calculate the household’s income net of the portion spent on subsistence—thus presumably food, clothing, shelter, and perhaps necessary work-related transportation. Now take the money contributed to healthcare and divide it by the net income figure. You’ll get a percentage. WHO’s idea of fairness is that all households should have the same percent.

Before I comment, one or two bits more. The total contribution above includes out-of-pocket expenditures, insurance premiums and co-pays, and that portion of taxes, paid by the household, directly earmarked for health care or later allocated to health care by government. WHO’s idea of fairness also stipulates provisions in the system that protect households from catastrophic expenses.

An equal contribution using percent of income naturally translates into actual total household contributions which will be zero for those who barely earn their subsistence, small for  relatively low earners, and high, indeed very high, for the rich. If one household’s residual income after necessities is $10,000, another’s $100,000, and the percent of health care contribution is uniformly 15 percent, one pays $1,500 the other $15,000. The pool, however, is distributed back to the contributors based on need.

The agency obviously sees health care as a communal system—not as a market. WHO is trying to find an equitable way to pay for it. From every household according to its ability to pay, to every household according to its needs. This, of course is the community model. Every sort of entitlement is best handled this way.

In this country two models are always at war. One is based on nature, the other on nurture. Health care providers like to speak of demand, of consumption—because they must compete to provide services and are thus forced to masquerade as merchants. Those who love the market join them in seeing health care as just another commodity. They think that the market will soon sort it if we just put the scalpel in its hidden hand. Those who are left out—and the market always leaves somebody out—are grudgingly given a dole. It is for this reason that some people abhor all programs that counter the hit-and-miss outcomes of markets. They have the means and want to keep them. They echo one of my daughters’ famous words when, still a little girl and urged to share her toys she announced: “I want to share by myself.” And therefore we have the equivalent of a feeling that all entitlements are theft—even when we paid throughout our working lives to collect ours in old age.


  1. I think that many people who object to nurture miss the fact that our current system has both. Many hospitals were founded as charities and are obligated to provide emergency room care to those who need it, even though this is not an especially efficient system for providing medical care. Joyce and I noticed an article in the Lansing State Journal several days ago about people who receive emergency dental care from hospitals, but only after developing terrible infections. An ounce of prevention...

    1. Good point, Dan. When I think back--and in my case that's lots of years and places in America--almost every hospital I've known well had religious foundations, be these Catholic, Protestant, or Jewish. And the few that did not were also founded by communities working together to improve services to their citizens.


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