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ECONOMICS

The flawed ideology of healthcare as business

  • 28 May 2020
The shortcomings of the American health sector, surely the biggest exercise in predatory profiteering in the world, have been exposed in the COVID-19 crisis. It is a graphic illustration of why health should not be turned into a business. America had to radically reconfigure the way it provided health care just to provide a basic level of protection against the virus. Initially just getting tested for the virus cost about $US2000, for example. One person, who reported for testing, had his temperature and pulse taken and then was sent home. The bill? $US1000.

The US health sector accounts for approximately 16 per cent of the nation’s GDP. In Australia and Britain, the health sector is about half that: eight per cent of GDP (Canada’s is a bit higher).

If we take that eight per cent as a base line for providing a universal basic health care system — bearing in mind that America’s health care system is far from universal — then that leaves $US1.6 trillion as just the profiteering element, undertaken by insurance companies, pharmaceutical companies, hospital conglomerates, lawyers, ‘consultants’ and a range of other predators.

That $US1.6 trillion is bigger than the entire Australian company and is approaching two per cent of the world economy. There really is no bigger scam in the world; it even dwarfs America’s military outlays.

Calling healthcare a business was always logically flawed. Money is involved, but it is unlike any consumer product businesses. For one thing, the ‘customer’ in health does not decide what represents value, the provider (the doctor or equivalent) does. Patients may have a say, but usually only on the margin. Health enterprises do not attempt to ‘serve the customer’, they dictate to them, hopefully in the patient’s interests.

Health is also very different when it comes to pricing. One might decide, for example, not to buy a car because you cannot afford it. But who says: ‘I cannot afford my life-or-death treatment because I do not have the money at this time, so I will wait until I am dead and then we will see?'

 

'Predatory health practices, whereby "doing the most good" has been replaced with "making the most money", are not just confined to America. The effects are everywhere, especially with treatments and vaccines, whose development and marketing is global.'  

Health provision is consequently not subject to the usual interplay between supply and demand mediated by the pricing mechanism. In a public system
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