An MBA Candidate Looks at Health Care

While the health care debate in the US ebbs a bit, I've been finishing up Amity Shlaes' The Forgotten Man, an account of the Depression that goes into the contemporary politics of the time. I understand it's considered at least slightly revisionist, critical of missteps by the Roosevelt administration, as well as a bit more forgiving of the Coolidge and Hoover administrations, though in my opinion she doesn't outright condemn or condone either. In any case, what I find most intriguing is how much the debate over power utilities during the Depression matches the debate over health care in the current period.

The most similar argument is that a government option will put private providers out of business, or at least make the fields so unprofitable as to be not worth pursuing. Roosevelt built the Tennessee Valley Authority and similar public power works; Obama's much-debated and ill-defined public option arguably will provide the same.

I don't believe I know enough about either arrangement to make a cogent argument for or against. What I do believe, however, is that while the free market may be the most efficient provider of services, this is not always true, and there are certainly gaps that the market does not address. In the case of electrical power (and telecommunications, I might add), the market does not have the incentive to develop service in areas that are not profitable, such as rural homes and smaller municipalities. Similarly, the market has no incentive to provide health care coverage to those who are unemployed, underemployed, self-employed (except at a steep premium than corporate policies) or simply not profitable such as consumers whose premiums no longer cover the cost of care.

Creating an incentive mechanism to cover these gaps is just one of the many problems in health care reform. The more I learn about health care as an industry, the more clearly I can see why health care reform is and always has been so difficult.

There's the method in which doctors are paid. There is the complex relationship between government and hospitals, as well as the distinction between public and private service. There's preventive medicine, catastrophic care, end of life and long-term disability, pharmaceuticals, advanced imaging, prosthetics, and research.

Oh, and we still can't cure the common cold, Airborne notwithstanding.

Add politics to the financial complexity of health care, and you'll get an entanglement of cables, doused in molasses, encased in ice.

Ask most Americans about health care reform, and they'll agree it is needed. Where to start? If they have any idea at all, it usually comes from personal experience. If someone tries to stand up and offer a specific idea, all their opponents need to do is convinced the uninformed that that person is wrong.

It's frustrating to watch.