Health care economics tidbits: Mackey, New York Times, Horwitz

Lynne Kiesling

One great thing about being on holiday out of the country is that I have blissfully been spared the annoying, politicized, and frequently wrong-headed and vapid health care policy discussions and media coverage thereof. I read John Mackey’s WSJ editorial with his health care policy recommendations, the top three of which being:

• Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits. Now employer health insurance benefits are fully tax deductible, but individual health insurance is not. This is unfair.

• Repeal all state laws which prevent insurance companies from competing across state lines. We should all have the legal right to purchase health insurance from any insurance company in any state and we should be able use that insurance wherever we live. Health insurance should be portable.

• Repeal government mandates regarding what insurance companies must cover. These mandates have increased the cost of health insurance by billions of dollars. What is insured and what is not insured should be determined by individual customer preferences and not through special-interest lobbying.

These are precisely the over-the-dinner-table health care policy recommendations the KP Spouse and I have been discussing. I left for vacation the day after Mackey’s editorial, so I missed all of the “boycott Whole Foods” hullaballoo. And, honestly, it makes no sense to me.

Seriously, Mackey has been describing himself as a libertarian for years. Years. He runs his business in ways that are largely consistent with a classical liberal philosophy, although some may not agree with his specific choices. But markets talk, and the expansion and market cap of Whole Foods speak volumes. So I don’t get how those agitating to boycott Whole Foods have any grounding for their advocacy. He is making proposals consistent with his philosophy, and with policies that his highly-successful business has followed for years. If those who want to boycott Whole Foods now had been paying attention, they would not be surprised by his recommendations.

Or am I being too logical and analytical … ? Probably!

In other health care policy writing, Ron Bailey points us to “an amazingly perceptive article” in the New York Times from David Leonhardt, examining the effects if we had competition, choice, and more free markets in health care. Both Ron’s post and the Leonhardt article are worth a read, if only to remind yourself that removing the counterproductive existing regulations that hamper health care and raise costs is not as difficult and complicated as the administration and Congress want to make it.

Finally, in a must-read 2008 article on health care economics in the Freeman, Steve Horwitz nails exactly why profits are much more than a motive, and therefore are as important in creating efficient and ethical health care as they are in other aspects of human action. He closes with this money quote:

Thus the real problem with focusing on the profit motive is that it assumes that the primary role of profits is to motivate (or in contemporary language “incentivize”) producers. If one takes that view, it might seem relatively easy to find other ways to motivate them or to design a new system where production is taken over by the state. However, if the more important role of profits is to communicate knowledge about the efficiency of resource use and enable producers to learn what they are doing well or poorly, the argument becomes much more complicated. Now the critics must explain what in the absence of profits will tell producers what they should and should not do. Eliminating profit-seeking from an industry doesn’t just require that a new incentive be found but that a new way of learning be developed as well. Profit is not just a motive; it is also integral to the irreplaceable social learning process of the market. Critics may consider eliminating the profit motive the equivalent of giving the Tin Man from Oz a heart; in fact it’s much more like Oedipus’ gouging out his own eyes.

Amen, brother. Hat tip to Art Carden for the link to Steve’s article, which had escaped my notice before (sorry!).


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