24 Sep 2014 Health Care IS A Commodity

Rashi Fein, one of the most important people in the development of Medicare and Medicaid, passed away two weeks ago Monday.

Via his obituary, I discovered that he had written the following in the New England Journal of Medicine back in 1982:

A new language is infecting the culture of American medicine. It is the language of the marketplace, of the tradesman, and of the cost accountant. It is a language that depersonalizes both patients and physicians and describes medical care as just another commodity. It is a language that is dangerous.

Unfortunately, Fein’s view has infected much of health care policy in the last 30-plus years.  That type of wrongheaded thinking leads to removing health care from the discipline of market processes and into the control of government.

But the fact is, health care is a commodity.  Health care, like all commodities, is a marketable item produced to satisfy wants or needs.

Given that, the only question is in what type of system will a commodity be produced and consumed?  Do we want health care to be bought and sold via markets or via government?

Fein also urged physicians to “be more vigorous spokesmen for the human values in medicine.”  Medical care, he claimed, wasn’t measured just by the number of treatments administered “but also by the amount of comfort, concern, and compassion provided.”

It’s hard to see how treating health care like a commodity is inhumane.  Subjecting health care to markets is what will reduce its cost while improving its quality.  Making health care more affordable and better for everyone is indeed a very humane result.

Finally, Fein complained that physicians had adopted the language of “a narrow economics the emphasizes efficiency more than equity,” and encouraged them to “speak the language that addresses the unfinished agenda of equity and decency in the distribution of health care.”

Clearly Fein favored equity over efficiency.

But to crib a little from Milton Friedman (at 28:09), a system that emphasizes equity over efficiency will end up with neither, while a system that emphasizes efficiency over equity will end up with a good deal of both.

Are there examples of this?  Yes, but that will be tomorrow’s blog post.