Jul. 13th, 2007


Jul. 13th, 2007 09:00 am
lurkitty: (Default)
In 1966, Robert Heinlein coined the term "TANSTAAFL" in his book The Moon is a Harsh Mistress". It's an acronym that stands for a very sound economic principle: "There ain't no such thing as a free lunch". The theory is that no matter what assurances are given, there is always an expectation behind something given away. It implies that there is really no true altruism in society.

In the raging healthcare debate, I sometimes want to scream "TANSTAAFM!" There ain't no such thing as a free market.

A free market is predicated on the notion that exchange of goods and services between two parties are not coerced. In theory, this seems to apply to individuals seeking health care. Because the market is free, an individual can freely choose a health care plan that meets her needs. If she wants the highest level of coverage, she has to pay more.

In practice, this is not true. An individual seeking health care in most cases is coerced by medical necessity. Whether they are seeking to reduce the pain of a broken arm, or are in need of life-saving treatment due to a heart attack, the individual may have no health care options beyond getting to the nearest hospital. Her choice may be further limited by her health insurance plan.

She may have no choice regarding that health plan. An individual is often limited in choice of health plan by their employer. If not employed, she is limited by pre-existing conditions. Even location limits choice: many people in rural areas are outside the service areas of the least expensive heath insurers.

Health insurance companies are averse to true choice in the market. Consider how vehemently they lobbied against Medicare programs having the option of buying drugs from Canada. Companies make deals with certain pharmacies for lower cost drugs, and may not fully cover drugs bought elsewhere. Any notion of a free market for prescription drugs goes out the window as the consumer's choice deteriorates. Small pharmacies are driven out of business by inability to compete with corporations like Walgreens for lower prices on prescriptions. This, too, limits consumer choice.

I cringe every time I hear a health industry spokesman use the term "free market". There ain't no such thing. It's time to give up the myth and search for a better option.


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