The Impossibility of Privatized Health Care

I've been meaning to write a post about why health care and the concept of a "free market" just don't mix. My economic expertise is, admittedly, limited (having taken all of one economic course, and that on environmental economics). But even with the level of understanding I do have, the situation seems pretty obvious to me. What I didn't understand is why nobody was discussing the issue in these terms.

Then I did a Google search on "free market assumptions" to make sure I was getting my story straight, and discovered at least one other person thinking along these lines. Since they've already said most of what I was going to say, I'll just add a few comments.

Re: "Perfect information." I would argue that, especially with respect to health care insurance, the producers often do as much as they can to obscure information as possible. They have discovered that they can make more money by confusing consumers and just getting them to agree to whatever is put in front of them, especially during times of crisis. They have turned exploiting this discovery into an art form.

Re: "Consumers create demand" and "Willing buyers, willing sellers." These concepts are tied in with the idea that the price point for a service settles at what the consumer is "willing to pay." In order for that to happen, said consumer must have a choice to not consume the service if the price is set above what they are "willing to pay." In the case of health care, that isn't usually an option. Or at least it shouldn't be in most cases.

Re: "Justice." The other thing that the economic concept of efficiency doesn't deal with is distribution. An economic system can be considered perfectly efficient if one guy ends up with all the benefit, so long as that is the maximum benefit available under the system. Efficiency says nothing about who realizes the benefits from the system. In the case of health care, I would hope we would consider just distribution an important part of the equation.

Finally, the referenced blog concludes that insurance is the logical solution to this problem. I don't think that goes far enough. The health care insurance industry suffers just as much from failing to meet the assumptions for a free market as the health care industry itself does. My conclusion from all of this is that health care should be considered a public good. (Call me a pinko commie if you will, but note that my reasoning is based on capitalist economic principles.)