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Friday Rant: Is there a problem with profit?
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One of the more disturbing lines of argument I see when health care is discussed is the one that implies “profit” essentially equals poor care and high prices.
A perfect example of that comes from an ad the liberal advocacy group MoveOn.Org in which it says:
“President Obama and 70 percent of voters support healthcare reform that includes a public health insurance option to contain costs, increase competition and guarantee coverage,” the narrator in the ad states.
“The insurance industry says with new rules they can do it alone, but they’ll find a way to put profits first. We need a health insurance choice not run by the insurance companies to keep costs down and ensure access to quality, affordable care.”
The unanswered question, of course, is why is it assumed a “for profit” operation cannot “keep costs down and ensure access to quality affordable care?” The obvious answer is, it can. We see it all the time among competitive companies in various industries. The reason 40” Sony HD TVs aren’t priced at $6,000 dollars is because Samsung and LG make them too. And you can trust that everyone of them is making a profit.
Our problem in health care is not insurance company profit. It is the structure of the system (employer based) and the lack of competitiveness in the insurance market. As economist Arnold Kling once declared, we don’t have health insurance, we have health insulation. Compared to any other insurance product, health insurance is a definite outlier. We’d laugh if someone said car insurance should cover oil changes. That’s because we understand that car insurance is there to cover expensive and catastrophic events, not routine maintenance. We understand that to do that, we’d have to pay much more in car insurance than we now do. Yet we expect health insurance to cover that routine maintenance when it comes to our health.
Those insurance companies who sell car insurance make a profit while competing in a nationwide pool of drivers. Car insurance remains something in which people have access to a quality, affordable product that is still profitable for its seller.
It isn’t profit which is the problem in health care. It is the distorted market (Medicare and Medicaid and government mandates), the structure of the market (employer based) and the expectations of the public for health insurance that it holds for no other insurance product it buys.
Until those problems are addressed, no matter who runs health care or insures it, no progress will be made toward providing access to “quality, affordable care”. And without profit, there’s no incentive to provide it either.
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