What Would a Moral Healthcare Market Look Like? Statism vs. Free Markets

Introduction

Healthcare researcher, Sara Boslaugh, compared global healthcare systems and measured them with ten different criteria: 1) Emergency Health Services; 2) Costs of Hospitalization; 3) Costs of Drugs; 4) Major Health Issues; 5) Government Role in Health Care; 6) Insurance; 7) Access to Health Care; 8) Health Care Facilities; 9) Health Care Personnel (doctor level of training, etc.); and 10) Public Health Programs, (Boslaugh, 2013). Missing from this perspective of Boslaugh’s systems research are ethical perspectives to include levels of political and social corruption in correlation with healthcare systems in the country as informed by Medical Legal and Ethics Expert Myrtle Flight (Flight, 2004). Given the broad diversity of cultures and people around the world, Flight’s approach to the social norm of morals, healthcare systems around the world remain inherent with dilemmas (Marcus, 1998) due to the diversity of perspectives found in cultural relativism (Rachels, 1998). These perspectives include those which address controlling interests of the system like access, distribution, and cost. The role of the state in relation to the healthcare system thus becomes a focal point of ethical discussion. Rothbard cast this light upon the discussion, “The State provides a legal, orderly, a systematic channel for the predation of private property; it renders certain, secure, and relatively ‘peaceful’ the lifeline of the parasitic caste in society. Since production must always precede predation, the free market is anterior to the State,” (Rothbard, 1974). In this light we can explore the idea of what a moral healthcare system would look like.

Capitalism. Economic views that support microeconomic decisions of the individual instead of their self-sacrifice toward a coercive common good are often defined as capitalistic. Tim G. Palmer breaks down Capitalism’s virtues into three categories which include: 1) The Dignity of Capitalism, 2) The Virtue of Voluntary Interaction, and 3) Human Miracles Stem From Economic Freedom (Palmer, 2011).

The dignity of capitalism comes from the market’s ability to meet the needs of the greatest number of individuals. Markets allow entrepreneurs to make moral decisions that allow the needs of people in the marketplace a mechanism to find a producer of that good or service and if it is not available in a capitalistic society the means to produce that product or service by volition of the sovereign person. McClosky et. al found the Bourgeois or Middle-Classes from the agricultural and industrial revolutions to present day uplifted the poorest members of their societies through embraced capitalistic virtues from daily wages of $3 to $100 (McCloskey, Clark, Ridley, & Feinstein, 2010). This explosion has split over into every aspect of the human raced despite its imperfections.

The importance of voluntary action is critical to our happiness and well-being as human beings (Vrabi, 2014). Capitalists view voluntary action as a high virtue and the market viewed through the lens of the Trader Principle adds the highest value among men. Without coercion by the state or other external entity in the market, humans trade equal value for equal value (Rand, 2012). Rand views this difference in honoring products and services in social contracts are different from those of the state which erupt from violence or revolution. The Moral Trader is a principle where humans find an equal value between each other in the exchange of those goods and services.

One can hardly imagine an Apple iPod or Amazon Kindle stemming out of the imagination of tyranny and the miracle of capitalism stems from the ability of individuals to meet the needs of the market as entrepreneurs without coercion by the state or some other entity. When the state sanctions something its cost must be acquired from a productive preexisting entity in the society. Chris and Ted Stewart surmise that less than 5% of people who have ever lived have enjoyed a free society and thus attribute the emergence of free societies to seven great “tipping points” in history (Stewart & Stewart, 2011).

Socialism and Communism. Various economic views of anticapitalist thought inform capitalism from a genesis in greed, materialism, and selfishness. The heart of many Western Virtues comes from Jewish and Christian scriptural traditions and warn against the ills of greed, materialism and selfishness. Collectivist economic philosophers Marx and Engels view communism as a revolutionary outcome of the inequalities of capitalistic social class. Economic punditry and bloggers further explain the ills of the market. The essentiality and importance of the state remains informed by Douglas Amy who critiques the market by stating, “People are not obligated to take into account moral considerations, such as what is best for society or what is the right thing to do,” (Amy, 2007). Amy further asserts that the connection of human beings through mechanisms of the state allow for a greater good to occur (p. 75).

Some perspectives of the Judeo-Christian ethic found in the book of Amos alluded to wickedness of people who have false balances and sell out the poor for shoes (Amos, 2001). In the Christian gospel of Matthew, Jesus alluded to the difficulty of a rich man entering the kingdom of heaven (Matthew, 2001).

Marx and Engels believed that capitalism would impoverish the working class and create social conditions for revolution (“The Marxist Critique of Capitalism,” 2015). Marx and Engels saw the world as a class struggle of Bourgeois and Proletarians with the existence of capitalism dividing these classes into revolution (Engels & Marx, 1848). Engels and Marx noted, “Let the ruling classes tremble at a Communistic revolution. The proletarians have nothing to lose but their chains. They have a world to win,” (Marx & Engels, 1848).

Some bloggers take to these same echoes citing the evils of capitalism. Joyus Crynoid remaining informed a violation of the Golden Rule when they claimed, “Our present predicament is a consequence of free market capitalism, an economic system motivated by acquisitive activities of some individuals that, by virtue of the laws of thermodynamics, predictably (and hence knowingly) increase the suffering of others,” (Crynoid, 2013). The National Review On-line alleged Catholic antagonism towards capitalism when it noted, “The implicit economic hypothesis here is that producing a certain amount of goods more efficiently — in this case, with less labor — makes the world worse off.” (Williamson, 2014). A more neutral tone is expressed by the Jesuit Social Research Institution, where critique of both socialism and capitalism are made but also citing Leo XIII’s Rerum Novarum’s antagonism toward capitalism (Kammer, 2012).

Comparative Study. Zikmund noted that professional development research, informed either an expansion of knowledge or study of a subject to answer a question of a business problem (Zikmund, 2003). Folland, Goodman and Stano, informed the importance of health-care economic research as: (1) the healthcare sector contributed significantly to the overall economy and continued to grow, (2) Americans remained concerned about healthcare policy and economic problems in maintaining their health, and (3) many health issues have substantial economic elements (Folland, Goodman, & Stano, 2010). O’Sullivan, Sheffrin, and Perez note that the heart of an economic issue often remained focused normative analysis—often considering what could be– although economic positivism remained a dominant approach to understanding an economic problem (O’Sullivan, Sheffrin, & Perez, 2010). Economic ethics author Sen expanded on this perspective:

The methodology of so-called ‘positive economics’ has not only shunned normative analysis in economics, it has also had the effect of ignoring a variety of complex ethical considerations which affect actual human behavior and which, from the point of view of the economists studying such behavior, are primarily matters of fact rather than of normative judgment, (Sen, 1991).

The ethical underpinnings of two basic economic philosophies of healthcare emerge in a review of these three studies. A null hypothesis claimed, a market-based healthcare system can provide the greatest economic benefit to the greatest number of persons in a society and this can be viewed as a moral imperative of the market. An alternate hypothesis to this perspective is that a state-controlled economy can provide a better alternative toward ensuring society benefits the most from a managed healthcare system. The purpose of this research is to determine if a market is moral and that poses a question, Can markets be moral agents?

Analysis and Findings

Methodology and Variables. This paper will contrast ethical perspectives of a socialistic and free market healthcare system utilizing a Paradigm for Comparative Study (Lester & Jr., 20052). Several aspects of healthcare economics will be looked at through the perspectives of ethics and morality: Regulation, Insurance, and Academics and Licensure.

Issue 1: Finding Morality in Regulation.

Statists. The Statists see their function in regulating markets through the lens of protectionism. When business and other elements in society take advantage of the worker the state uses its power to limit those collective interests on behalf of the indefensible and this is viewed by the statist as moral. The advantage of using the supremacy of the state is that its benevolence and protection are viewed as helpful in healthcare markets like drugs where regulation keeps unsafe drugs from coming onto the market and hurting the consumer. Additionally, the powers of the state can compel healthcare providers and their companies to provide care to those who cannot afford it. The state imposes nurses to patient ratios in many types of care and provides some metric of safety for the patient in places where medium and long term nursing care is required in the marketplace such rehabilitative wards.

Free Market Advocates. Those advocating a free-market see that the individual is best to make his or her choices concerning regulation. Companies that produce unhealthy products are required more by the market than any government coercion to fix their problems. In the 1980’s when Tylenol became tampered with and people stopped buying their products, their profits immediately fell and they were in jeopardy of losing it all. Their reaction to the market was tamper-resistant packaging despite the concerns of the regulators whose predisposition to the market failed to prevent the circumstance from happening. When the state imposes a regulation it is likely this minimum standard isn’t imposing best practices. In fact the fallacy of the broken window is present. When economists view a broken window as economic stimulus, the fallacy of this broken window is what else it could pay for. In market regulation, the cost of ensuring compliance limits care and opportunities in other ways in a healthcare institution that could improve quality and innovation by a scare resource within a healthcare institution. That could be put into research, another nursing salary or other mechanism of improved care that instead must be placed into an insurance of compliance with codified practice that may not even be representative of the best practice– such as patient education and training.

Issue 2: Finding Morality in Insurance

Statists. The recent developments of the Affordable Health Care Act have created new minimum guidelines for all insurance companies that raise the minimum services for insurance in the US marketplace. The result has been canceled policies and increased premiums. The morality found in this perspective is that the state is performing a function of elevating the minimum requirements provided by insurers so that customers aren’t bankrupt with a million dollar medical bills because of inadequate insurance. The state has mandated that all citizens pay for insurance and thus contribute to the marketplace. As the baby boomers age and incur more healthcare costs this will allow younger and healthier workers in the system to keep it from going bankrupt.

On the side of liability, the state requires doctors and hospitals to maintain massive insurance policies that insulate their ranks against the litigation incurred by malpractice. In some states, sums for malpractice can bankrupt a doctor’s practice. While this insurance is mandated by the state there is no correlation or causation evidence that its presence reduced medical mistakes.

Free Market Advocates. Market-hawks prefer personal payment accounts known in most markets as medical savings accounts in regards to being able to pool resources to compensate for healthcare issues that incur massive amounts of cost. While these products are also regulated by insurance commissioners, the purpose of them allows individuals to make choices about their day-to-day healthcare and then have members covered for very large medical bills. Furthermore, instead of turning this money over to a health insurance company, it can be individually invested and used tax free for healthcare. This added benefit allows capitalization to occur in the marketplace and drive competition, innovation and other market factors that improve quality and often reduce cost for those funds kept in waiting. They earn dividends and compound interest so that at the time when healthcare is needed most, i.e., later in life, there is a sizable healthcare nest egg saved up.

For those concerned about liabilities of practice through litigation, torte reform has provided the trail lawyers with ceilings for their compensatory damages that fall under pain and suffering. This limit has reduced the costs of insurance for providers and healthcare institutions, where that cost is past on as savings to the customer.

Issue 3. Finding Morality in Academics and Licensure.

Statists. The state requires doctors, nurses and many other healthcare professionals to seek a license with the state to provide some framework of qualification. This qualification and certification process allows some standardization between states and agencies depending on their laws associated with reciprocity, boards, and degree requirements. The state sees this Licensure as protecting healthcare benefactors from malpractice by ensuring minimum standards for education and qualifications to practice in the state.

Free Market Advocates. In the 1930’s the American Medical Association decided to close down medical schools around the country effectively limiting the ability of medical schools to adequately meet the market demands of healthcare. This in turn has kept costs up by limiting the amount of doctors that can be trained in the country. This protectionism is a form of monopolization and has been possible with the collusion of the state rather than allowing doctors to meet these needs. As a result, there are shortages in rural markets where quality of care despite these licensing requirements is reduced and medical errors are high due to insufficient doctors. In a free market favored economy, the academic institutions would be free to increase their programs and support the needs of the market with an appropriate amount of doctorates of medicine that would meet these needs.

Conclusions

When the morality of the state is discussed in the context of regulation there remains a consistent assumption about the morality of the government. Crapitalism, a perverted form of Capitalism, which allow political favors toward friends of politicians, become a consideration in market factors, investment, and regulation. Evidence of this cronyism can be found in the halls of Congress where lobbyists earn large of sums of money to wield political influence and favorable market conditions befall corporate entities who solicited the influence. This is called pork spending. Austrian economist Ludwig von Mises claimed monopolies could not exist without the benefit of the state (Mises, 2010). The benevolence of these governments is also often assumed as though the people in government are somehow better than the rest of society. Their humanity and susceptibility to the problems of men fail to escape political organizations and thus the nature of the state is no better than the very businessmen they are being championed as protectors of. Furthermore, when considering issues of morality and regulation, the regulation doesn’t stop bad drugs from entering the marketplace or from doctors making medical mistakes. Self-regulation that could occur could exceed standards consistent with best practices despite any regulation present in the market and often does in places that are renowned for the highest quality of care– it is not because some government bureaucrat says so. This is the position of all innovators in the marketplace.

Free market advocates note that despite the mandated insurance practices in the United States the 12 million illegal and undocumented laborers in the United States access the healthcare system and are not required to have insurance. The regulation and intentions of the state are unable to address the use of America’s emergency rooms for routine and acute care issues. This is an economic burden that fails to utilize other resources and laws the state has at its disposal and thus by enforcing only certain laws, it creates an inequality amongst the people’s it portends to govern– furthering the critique of cronyism.

There are challenges with the market advocates who use the state to limit the powers of the legal experts who seek compensation for pain and suffering for damages on behalf of their clients resulting from medical malpractice in the United States. While free-market advocates like Dr. Walter Block advocate for the morality of blackmail and complete deregulation, this seems to be a minority position in the marketplace where the Constitutionalist and Minarchist roles of the state can regulate these market anomalies.

For those advocating a limit on licenses and academic credentials another problem exists in the United States with many foreign-born workers gaining their degrees in the United States and then leaving the country and not working the US healthcare system but another country. While this virtue may serve humanity, the US economy and infrastructure which provided the educational service does not see the return on investment and an US citizen did not take the place of that limited pipeline. Many of these doctors take out huge loans that they do not repay either and leave the US with the state not having an ability to recover the investment in the education or the interest. A solution to this would be to merely increase the amount of medical schools and drive down the price of medical school– reducing the debt exposure and/or also the number of doctors who would rather stay in the US market to practice. Capacity would decrease the debt ratios of doctors entering practice and then money invested would be spent less on academic interest and more on investment– which would have additional impacts on the community.

By looking at three variables within the marketplace and then validating those principles through a qualitative approach free market advocates make a strong case for reduced intervention instead of the statist approach to control. In all three aspects of the state, the broken window fallacy applies noting that if the state was not in a position to require service, the market could provide further investment and resources that would otherwise be allocated towards compliance. Further invention from the marketplace would meet those needs and this is an unrealized aspect of the state attempting to solve many problems it consistently creates or makes worse. It is in this place that we can look toward reform.

To answer the question on the morality of a market run by the state or by free-enterprise becomes a bit more nuanced. The statists are busy proclaiming their market is moral because it helps the poor and seeks to empower those members of society that are underprivileged by taking from those that have in the society and redistributing those resources to those that have not. This Robin-hooded statism rarely solves a problem because those who would have have capital in the marketplace have less and cannot employ or empower those who would benefit from the creation of wealth through by there mere possession of wealth.

The marketplace, having been minimalized as an amoral object of neither good or bad remains characteristically informed by an entrepreneurial class that recognize the need to provide a service or goods at price points the market will bare. Many view this as value and value can be equated in many regards as just and moral. This isn’t usually triumphed as a virtue but in this instance both walk away from the transaction with something of value from this social contract. It is an equitable and voluntary exchange where the alternatives of the state confiscate and redistribute usually less efficiently than the entrepreneurial class. The statists also remain different in their morality because their choices are at the end of a gun. You will pay your taxes or we’ll compel you to goto jail and take your money anyway.

Looking at these two perspectives, the market driven health care system can provide a greater amount of good over the long haul by now requiring as many people to remain unproductive in the society. This too is a great place to start.

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