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Home Publications Blogs Beat the Press Are Profits Making Us Sick? The Case of the Health Care Industry

Are Profits Making Us Sick? The Case of the Health Care Industry

Thursday, 10 January 2013 05:01

Good questions raised in this column by Eduardo Porter. We're number one by a large margin, but unfortunately it's in the category of costs. We're nowhere close in terms of outcomes.

Comments (3)Add Comment
Health Care Should be Considered an Inferior, not Positive Income Good
written by Last Mover, January 10, 2013 9:58
Yet another article listing of one market failure after another of privatized health care.

One fundamental problem is to treat health care as a luxury, or positive income good rather than a normal or inferior good, where health care spending as a portion of ones budget (including subsidies) increases with income. This encourages price gouging and excess spending in the absence of competition, designed to extract as much as possible from those with higher budgets for health care.

Yet the natural incentive of consumers is to avoid sickness, so when it is encountered, health care treatment itself is not desirable for consumption as an end unto itself, but rather as a cure or preventative measure.

In this context, successful health care that minimizes its total cost over long intervals should result in explicit purchased health care per se, as an inferior good as a smaller portion of ones budget, by virtue of choosing not to consume it at all if possible.

Privatized health care as driven heavily by the waste and exploitation of supply push incentives directly contradicts this principle, forcing all health care into the status of a luxury good that takes up an increasing share of ones budget.
written by watermelonpunch, January 10, 2013 1:22
One fundamental problem is to treat health care as a luxury

The problem isn't that we Americans treat medical services as a luxury good. It's that many of we Americans think that's the way it should be.
I think that's systemic to our culture, and should always be considered while making arguments for health care reform.

I found this an interesting question:
How much should we rely on the private sector to satisfy broad social needs?

I would assume the answer is -- NOT AT ALL.

There are a lot of needs, and indeed desires, of society, that are not profitable at all!!!
And simply can't be profitable by their very nature.

And the proof of this is that a lot of so-called privatized ventures making profit, do so at the expense of government/taxpayer money.

Like for profit schools, for profit space services, for profit Medicaid & Medicare plans, for profit military companies, for profit prisons... all make most or all of their money (& profits) from the governments/taxpayers who pay them for these services!!!

These are not private industries at all.

It's simply businesses that capitalize on system that allows it to be possible to make private profits off taxpayers' broad social needs & desires.

Those broad social needs are not profitable within themselves.

It's depressing to me that Eduardo Porter never even pointedly hints at this fundamental truth.
We should not assume that non-profit hospitals are philanthropic.
written by Rachel, January 10, 2013 11:11

A local alternative paper mentioned recently how very little charity care many large non-profit hospitals in California provide in return for their tax exempt status. And of course, though these hospitals are technically non-profits, the executives, MDs and RNs are very well compensated.

In the meantime, the reporter (C. Idelson) notes that cities and counties (all in trouble) lose many millions a year as a result of the tax exemption.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.