Tuesday, February 08, 2005
Governor Sebelius reveals distrust of the free market
[Governor Kathleen Sebelius, "Critical Issues for States," National Health Policy Conference 2005, 2 February 2005.]
Governor Kathleen Sebelius made a number of very revealing comments as the keynote speaker at this year's National Health Policy Conference. Speaking about Medicaid, she apparently takes the view that the program works, and it is society that needs fixing: "its very success is why the costs are increasing."
In addition, while she apparently appreciates free-market rhetoric, she holds practical application of the ideas in low regard:
I think while the rhetoric is important, we need to be cautious about embracing the so-called market-based approach, particularly in the Medicaid situation. I fully understand the benefits of efficient markets, but healthcare, frankly, isn’t a market in many cases, and it certainly isn’t a very efficient market. A central premise behind insurance is it’s a voluntary social compact. While we enter into an agreement to spread the risk by spreading the potential liability to a broad base, and individuals enter that compact to shield themselves from their direct liability, the fact that we have some insured overusing the system is a problem but the way to solve that, I think, is not to unravel the system that has been in place and worked very well for a number of years.
A second problem with market forces is that the perfect market requires perfect information. I hope you have a number of other speakers who echo this, but there isn’t any profession, any system, any segment of our economy that’s as information deprived as healthcare. What are the true costs? How do consumers inform themselves about quality? What constitutes healthcare in the long run, and how can consumers arm themselves with enough information to make those choices? What’s the relative worth of various treatments? Useful information for consumers is at a short supply at best, and for all the attempts to provide information on the availability and quality of healthcare, the healthcare industry operates with remarkable lack of transparency. The intersection between transparency and confidentiality makes it even more unlikely that consumers anytime soon will have high quality, easily available information without a huge push and huge investments.
The problem with health care is that for too long it has not been viewed, or treated, as a market despite the incredible failures of this approach. Continuing to deny this reality will only worsen the situation. As well, Governor Sebelius or anyone else would be hard-pressed to find an economist that can point to a perfect market. The issue is not that we need a perfect market, but that even imperfect information in an imperfect market yields far better results than any attempt to develop an artificial construct in place of the free market.
[Matthew Hisrich, "Additional Medicaid Spending is Irresponsible," The Flint Hills Center, 22 July 2004.]
[Governor Kathleen Sebelius, "Critical Issues for States," National Health Policy Conference 2005, 2 February 2005.]
Governor Kathleen Sebelius made a number of very revealing comments as the keynote speaker at this year's National Health Policy Conference. Speaking about Medicaid, she apparently takes the view that the program works, and it is society that needs fixing: "its very success is why the costs are increasing."
In addition, while she apparently appreciates free-market rhetoric, she holds practical application of the ideas in low regard:
I think while the rhetoric is important, we need to be cautious about embracing the so-called market-based approach, particularly in the Medicaid situation. I fully understand the benefits of efficient markets, but healthcare, frankly, isn’t a market in many cases, and it certainly isn’t a very efficient market. A central premise behind insurance is it’s a voluntary social compact. While we enter into an agreement to spread the risk by spreading the potential liability to a broad base, and individuals enter that compact to shield themselves from their direct liability, the fact that we have some insured overusing the system is a problem but the way to solve that, I think, is not to unravel the system that has been in place and worked very well for a number of years.
A second problem with market forces is that the perfect market requires perfect information. I hope you have a number of other speakers who echo this, but there isn’t any profession, any system, any segment of our economy that’s as information deprived as healthcare. What are the true costs? How do consumers inform themselves about quality? What constitutes healthcare in the long run, and how can consumers arm themselves with enough information to make those choices? What’s the relative worth of various treatments? Useful information for consumers is at a short supply at best, and for all the attempts to provide information on the availability and quality of healthcare, the healthcare industry operates with remarkable lack of transparency. The intersection between transparency and confidentiality makes it even more unlikely that consumers anytime soon will have high quality, easily available information without a huge push and huge investments.
The problem with health care is that for too long it has not been viewed, or treated, as a market despite the incredible failures of this approach. Continuing to deny this reality will only worsen the situation. As well, Governor Sebelius or anyone else would be hard-pressed to find an economist that can point to a perfect market. The issue is not that we need a perfect market, but that even imperfect information in an imperfect market yields far better results than any attempt to develop an artificial construct in place of the free market.
[Matthew Hisrich, "Additional Medicaid Spending is Irresponsible," The Flint Hills Center, 22 July 2004.]
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