Jan 27, 2006

equitable equity

So, last night I found myself absorbed in an economics book in response to a heated discussion surrounding when a market economy is appropriate to drive excellence in service and when it is simply inappropriate to utilize. The argument, it seems, would be found in what the definition of “quality”, “excellence” or “success” of the product. More to the point, or at least, in my opinion, the difference lies in luxury vs. necessity. And sure, the line can be grey, in that argument, but in areas in which access, efficiency, equity and cost-containment are implicit facets of measuring quality, capitalist competition can be direct contrast to the intended outcome.
Which is not say competition can’t be utilized in both arenas. But what is invested, and how it’s invested, as well as intended outcome, or return on investment needs to be scrutinized.
It’s equity and equity, or rather, profit and equal distribution
I mean, if we are talking a luxury, and the goal is to increase personal wealth, then quality will go up to the point in which the greatest amount of return is allowed. Period.
But if we are talking about a necessity, then it tends to be presumed that part of quality delivery is access and equity. I mean a quality road system reaches far and wide and is only as good as its’ roughest patch. And in order to spread the wealth efficiently, competition, and the stratification of wealth is in direct contrast to the goal of the product itself.
Too obvious?
Too convoluted?
Look, here is what I am trying to say: we aren’t a feudalist society. And while, here in America, we also aren’t a socialist society, we have found ourselves with a taxation system that promotes equitable access to certain things we believe to be a right, not a privilege. Roads, school systems, and to a certain extent, healthcare and defense.
SO we clearly don’t believe everything is a product or luxury to be competed for.
And it makes sense. Not just from a humanistic standpoint, but from a pragmatic standpoint. You wouldn’t want individuals to dictate everything based on their personal economic desires and maximizing their own equity. You wouldn’t want our roadways governed by competitive market with each section bought and sold in an uncoordinated manner, each person or family responsible for buying and selling their own section. Otherwise there would be a traffic jam every day while we tried to circumvent the big hole in the road left by your shut in neighbor who decided he’s rather have an entertainment system than his street portion paved.
Get my point?
And I tend to look at healthcare this way. You don’t covet healthcare the way you covet a pony. Infact, you don’t tend to cover healthcare at all. You require it when you have slipped below a functional point to get back to the status quo, or need it to stay at a functional level.
And furthermore, the health of those around you is substantial in a maintaining a functional society. Everything from contagions to health maintenance for a vital workforce plays into this. And more to the point: the desire or need for healthcare does not tend to go away when it isn’t obtained. Unless we are counting death in the equation.
And so having a basic level of healthcare available to everyone seems essential, seems like something with would consider a community service, a right, not a privilege or luxury.
And if we are all thinking it should be available, we are probably thinking it should be affordable, because we are all gonna pay, one way or another. So a successful health system would be efficient, it should be coordinated and it should employ cost containment strategies to maximize output, but not maximize profit. Because that would raise the price, not the value.
And finally, there is market fluctuation. Market demand and so forth is often determined by experienced fluctuations while suppliers determine demand and threshold for maximum efficiency. DO you really want your healthcare handled that way. DO you want to wait for antibiotics and wait for the price to come down like last years model of an MP3 player? DO you want to travel to another county to get an appointment as you would when all the local business ran out of cabbage patch toys? And the excesses: Are 500 empty hospital beds the equivalent to the pet rock cemetery?


Anonymous said...

moral hazard

I agree with you. I find it appalling that our current healthcare system is based on an idea economists term "moral hazard", which means that access to healthcare causes people to take less preventatve care of their health. This idea is pretty absurd--if I had insurance that covered heart surgery, I doubt I would be more likely to gorge on cheeseburgers every day. However, politicians use this moral hazard idea to justify treating health as a "normal good" and making people as responsible as possible for paying their own healthcare costs. This is the idea behind the new, complicated drug copay plans.

Dave said...

On the merits of equity, your argument is, of course, sound. The problem comes when you get further along into the execution.

Let's take this example: a person gets a fungal infection on her foot. Now if we're in a very poor country, she has no access to healthcare so any intervention is 100% desirable. Access to a necessity implies 100% desirability.

Okay, so let's take the situation I faced after a long canoe trip - same foot infection but three options: coal tar lotion (old cure, cheap), antifungal cream (works a lot better, also pretty cheap), oral antifingal ($5 a pill for two weeks, but a certain cure). Let's ask the doctor. He says: "Well, the cream will probably cure it, but if it doesn't you'll need the pills. The pills will definitely work but they are really expensive."

Well, first off, next time I'm sticking with the old Tevas instead of the fancy wet shoes. But as a first world consumer, I'm at the tipping point between two cures. But what if I'm a health minister for a third-world, tropical country where fungal infections of the feet are a common problem? On the face of it you'd say "cheap cures for everybody." But what if you could borrow the money and invest in a laboratory/factory that makes oral antifungals? Patient compliance is better, the problem does not become chronic and by investing in the admittedly more expensive technology, you ultimately bring the cost down.

When you are looking at a problem from the point of view of social good, you can't make the same mistake capitalists do. They look at the profit next year (or next quarter) but socially-minded can also be shortsighted, focusing on stop-gap measures in the face of immediate need.

The real question is how we all produce a better world for each other ten years from now. Economics is said to be about "distribution" of things, but that's nonsense. It's about production - human effort - the effort to produce a better world. Neither short-term profit nor immediate need should dictate our economic strategies. So the challenge is turning a market system that is aimed at producing the most profit into a system that selects the best ideas to produce the most benefit. Still, there has to be selection and that selection process will inevitably look *something* like a market.

Why? Because although economics is really more about production than distribution, choices do have to be made and you have to compare guns to butter, apples to oranges, ointment to pills and all of them to each other because everything we produce takes at least one common resource: labor.

daff0dil said...

absolutely and 100% agreed...great argument

this is the problem of why healthcare in general can not be analyzed by purely market/economic standards

and unfortunately, the line between necessity and luxury can be very blurry for some, especially in this arena