Private markets result in excess levels of relatively low-quality care which are not necessarily medically beneficial and only a marginally contributory determinant of medical outcomes. The market system of healthcare is an impediment to providing appropriate levels and quality of care. Private markets are an inferior mechanism for delivering healthcare. They are inferior to public sector delivery of healthcare.
Conclusion: Private markets result in excess levels of relatively low-quality care which are not necessarily medically beneficial and only a marginally contributory determinant of medical outcomes. The market system of healthcare is an impediment to providing appropriate levels and quality of care. Private markets are an inferior mechanism for delivering healthcare. They are inferior to public sector delivery of healthcare.
Argument:
Explicit Axiom: The goal of any rational healthcare system is to ensure all and only medically beneficial treatments are provided to patients who present for care.
Key Premises:
1. Supply sensitivity leads to over usage of health care and thus supply of healthcare remains persistently above the socially optimum quantity without regulation.
2. Where there exists incentive to provide more care in some situation and insufficient evidence that more treatment is medically beneficial overtreatment could lead to excess use of resources, by definition inefficient, or even the potential for iatrogenic complications.
3. Medical care itself is only a marginally contributory determinant of health outcomes.
4. The property of fragmentation which the American private medical system exhibits leads to inefficiency and Part 2: the most complete way to reduce fragmentation is with a comprehensive national healthcare system.
5. Markets create financial penalties for improving quality of care and insufficiently incentivize quality improvements.
Discussion: The nature of healthcare markets is such that they cannot operate efficiently, that is they cannot allocate resources efficiently. Say’s Law is a classic economic axiom that supply creates its own demand. Instantiating this in healthcare markets, Roemer’s Law stands for the proposition that if there exists a marginal increase in the production of healthcare then there will exist at least an equivalent increase in demand for healthcare. Roemer demonstrated this by experiment, show the relationship between bed capacity and bed utilization in a hospital to be direct. This property of healthcare markets is known as “supply sensitivity”. Key Premise 1: This supply sensitivity leads to over usage of health care and thus supply of healthcare remains persistently above the socially optimum quantity without regulation. But this only proves that regulation is needed in health markets in order to maintain economic efficiency. Additional factors are important in proving the inferiority of private markets.
Key Premise 2: Where there exists incentive to provide more care in some situation and insufficient evidence that more treatment is medically beneficial overtreatment could lead to excess use of resources, by definition inefficient, or even the potential for iatrogenic complications. Healthcare is a complex market. In a fee-for-service system, providers are rewarded for providing more treatment (and the higher providers can push the CPT code the more they can bill). However, there exists insufficient evidence-based guidance on appropriate levels of care for some given clinical picture or pattern of symptomatology. Therefore, Key Premise 2 is true. Where there exists incentive to provide more care in some situation and insufficient evidence that more treatment is medically beneficial overtreatment could lead to excess use of resources, by definition inefficient, or even the potential for iatrogenic complications.
Key Premise 3: Medical care itself is only a marginally contributory determinant of health outcomes. Epidemiologists demonstrated in a peer-reviewed journal article that Key Premise 3 is true showing the plausible estimate that only 50% of the gains in life expectancy since 1950 are attributable to medical care, which equates to roughly 3.75 years of life.
Key Premise 4: Part 1: The property of fragmentation which the American private medical system exhibits leads to inefficiency and Part 2: the most complete way to reduce fragmentation is with a comprehensive national healthcare system. Part 1 of Key Premise 4 was demonstrated to be true in an essay by a Harvard healthcare economist. Part 2 of Key Premise 4 Part 2 follows logically from the facts that the most comprehensive national health system is by definition at the level of the nation, and a single private provider of services would be a monopoly which would be less efficient than a single public provider (Note: healthcare is not a natural monopoly because it is not a club good in that consumers are rival in consumption and it could not provide healthcare at a lower cost than government unless heavily regulated).
Key Premise 5: Markets create financial penalties for improving quality of care and insufficiently incentivize quality improvements. This was demonstrated in a peer-reviewed journal in a leading medical sciences journal.
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