“Economics, when you strip away the guff and mathematical sophistry, is largely about incentives.”

-John Cassidy

Regulatory capture makes the free market in healthcare a fantasy.  There I said it.  Last month, I wrote of how there are many out there who insist the free market is the cure to all that ails us.  The philosophy states that the free market is the solution to rising costs, stop corruption, and might even cure the common cold. 

Deregulation of the market leads to disaster. Many economists cite the stagflation of the 1970s and the Chicago School of economics desire to do away with the financial regulations of the New Deal, as a chance to exact long-awaited revenge on FDR and the so-called “socialists,” that led to large amount of financial deregulation. They also agree that this same unquenchable thirst for the Hayek and Friedman “free market capitalism” is what led to the 2008 economic downturn, leading to the market crash of the same year.  It was a global financial crisis that essentially stemmed from irresponsible hedge fund trading, banks wanting more mortgage money, and ultimately led to subprime lending and the ensuant crisis.  https://www.thebalancemoney.com/what-caused-2008-global-financial-crisis-3306176#:~:text=Deregulation%20in%20the%20financial%20industry%20was%20the%20primary%20cause%20of,even%20those%20with%20questionable%20creditworthiness.

Those people that took subprime loans are also to blame in part, for overestimating their ability to pay back a mortgage they could not afford.  A classic argument is portraying the lack of oversight as the path to economic fulfillment is in sharp contrast to the reality of derivatives in 2008.  On a global scale, the big banks played Russian roulette that affected not just one property, but hundreds of thousands of families, and have yet to face accountability.  The world economy tanked, not just the United States.

We have seen what lack of regulation and the true believers lead to.  Many look at the robber barons of John D. Rockefeller and Cornelius Vanderbilt who accumulated vast sums of money with questionable and ruthless business practices.  It led to a tremendous concentration of wealth in a few hands and allowed a tremendous amount of influence to be wielded.  Some historians say they brought order out of chaos in a Darwinian sense.  I would ask them to ask the small businesses owners they sacked and absorbed in their collective ascension. 

The centralization and concentration of wealth led to political influence with the decision of Citizens United, where corporation were treated like people.  Citizens United led corporations being able to donate unlimited funds to political campaigns.  From the Brennan Center: “A 5–4 majority of the Supreme Court sided with Citizens United, ruling that corporations and other outside groups can spend unlimited money on elections.”  (https://www.brennancenter.org/our-work/research-reports/citizens-united-explained)

Historically, deregulation called for by the free-market proponents has functioned as merely a tool for concentration of wealthy against a false specter of socialism or even communism. The red scare of 1950, led to blacklisting, the intersection of antisemitism and fear of socialism.  This had dire social consequences.  https://www.smithsonianmag.com/history/senator-mccarthys-nazi-problem-180975174/

In healthcare, we physicians don’t want Medicare for All in its purest form.  We all have seen the widespread vertical integration.  Many argue that this was the point of the ACA (https://www.heritage.org/health-care-reform/report/how-the-affordable-care-act-fuels-health-care-market-consolidation) in the first place.  To those of us in practice for a time, this is not a shocker, but when said explicitly it is still infuriating.  According to a RAND analysis: “Competition is threatened when a single organization acquires disproportionate bargaining power.” (https://www.rand.org/health-care/centers/health-system-performance/what-have-we-learned/vertical-integration.html).

So, the vertical integration led to many corporations now standing in for the robber barons born out of deregulation.  Only this time, it was the attempt to regulate the wrong people is what led to this monstrosity.  Unregulated – we get J Paul Getty, regulated we get United Healthcare.  The insatiable appetite for corporate profits and government-led corporate welfare no matter who is in charge has been the only constant.

What we have seen is that the “free-market” led to the very regulated state of being we find ourselves in with again the rich lording over everyone else.  Over 70% of physicians employed, healthcare costs are through the roof.  The out-of-control free market of insurance and hospital costs led to a ham-fisted attempt at controlling costs with the advent of the ACA.  Many have advocated simply unwinding the ACA will solve all of our problems.  They argue that the free-market is what allows my practice to survive.  They insist that the “free market” will save me from the ghost of Medicare for All. 

The icon of neoliberalism, Friedrich von Hayek, presented the first false dichotomy of the free market and the other side of the coin being “serfdom.”  Many have used this as a cudgel as the unregulated market “or else it gets the hose” argument.

“Hayek’s liberalism should not be defended since by implying that the government should be concerned only with the rules and not the outcomes of economic transactions, it ignores the problem of exploitation that the working class faces on an everyday basis”

“(O)ne must have the actual means and beings to make use of the fact that one is not subject to the will of another. So, it might be true that the peasant is not directly subject to the whims of a prince, like the courtier, but they are subject to the need to pay their bills and satisfy a whole host of external needs. Economic scarcity, or worse deprivation, makes the apparent freedom they have much more circumscribed. “

“Hayek’s rule of law liberalism is an important aspect of any free society. However, its reliance on pure proceduralism, rather than being sensitive to unfair differential outcomes, suggests that it alone cannot be the theoretical underpinning of contemporary democratic societies”

https://compassjournal.org/critique-of-hayeks-liberalism-and-the-rule-of-law/

And we have seen what happens when the pendulum swings back over to the Wild West.

Saving healthcare is not just a blame game, nor demonizing Universal Coverage, which to me seems pretty much what should have been the policy rather than the morass we are currently in.  We cannot go back and have to realize three things: 1) realizing there is no such thing as a free market in healthcare; 2) adherence to neoliberal policies only exacerbates the concentration of wealth and inequality driving consolidation and that is what is killing private practice; 3) Defending insurance companies and hospitals’ unfair practices and blaming one and not the other is counterproductive and damaging to physicians’ autonomy

Under discussion right now is the idea of collective bargaining for physicians. In many ways, it is a way for physicians to break up the hegemony of these corporate leviathans of the “payers” (and I call them that facetiously), big Pharma, and the hospital conglomerates.  Collective bargaining groups benefit all demographic groups. By encouraging egalitarian wage practices, unions serve to reduce race and gender wage gaps. And modern organizations have broad representation across race and gender. In 2021, Black men had a particularly high union representation rate at 13 percent, as compared to the population average of 10 percent. The diverse demographics of modern union membership mean that the benefits of any policy that strengthens today’s unions would be felt across the population.

In addition to supporting the middle class, collective bargaining contributes to more robust general economic growth and resilience. They do so, in part, by reducing overall inequality. Income inequality often feeds back into inequality of opportunity, which impedes growth if disadvantaged people cannot access the resources necessary to acquire job skills or start businesses. And unions can spur overall economic productivity by improving working environments and giving experienced workers more of an input into decisions that design better and more cost-effective workplace procedures. (https://home.treasury.gov/system/files/136/Labor-Unions-And-The-Middle-Class.pdf)

Some look at various measures of national happiness.  Work is salient to economic stability and vertical mobility in most Western societies.  The Economic Freedom Index (Heritage Foundation) (https://www.heritage.org/index/pages/all-country-scores) uses various indices to rank countries.  In 2019, the United States is #12.  In 2024, the top ten scoring countries are not the United States, which is #25. The ranking of such a nebulous thing such as “freedom” (or liberty) is also measured by yet another think tank.  The Human Freedoms Index (Cato Institute) https://www.cato.org/search/category/human-freedom-index.  In 2019 the United States was #15, and in 2023 the United States #17.