In health care, the rich and powerful really aren’t insulated

In health care, the rich and powerful really aren’t insulated

Princeton economist Uwe Reinhardt wrote a letter to the Wall St. Journal last week, tweaking the Journal for espousing market forces in health care in the form of high-deductible plans. After all, writes Reinhardt, corporate executives often receive generous, lifetime health insurance and are even reimbursed for out-of-pocket expenses. Shouldn’t they have “skin in the game,” too?

Today the Journal published a thought-provoking response by Matthew Huggins:

Perhaps the… isolation from the market… makes [corporate executives] ill-suited to oversee the wholesale purchase of health-care services for others. [I]nstead of stripping executives of their… coverage, as Prof. Reinhardt wryly suggests, in furtherance of sounder markets, why not strip them of their predominant role in purchasing health-care services? Reassign such purchasing decisions to individual patients by dismantling the regulations and tax incentives that tend greatly to enhance the relative purchasing power of large employers and governmental bodies.

Another letter by Brian Acker pointed out that we don’t advocate equality in other sectors, so we shouldn’t worry about inequality in health care benefits either.

Actually, there is more equality in access to health care services than there is for most other things. For example, think about disparities in transportation from Boston to Washington:

  • Lots of people don’t have enough money to go. They stay home.
  • Others take the bus
  • Some drive –in cars of various levels of comfort
  • Some fly coach
  • Others fly first class
  • Some (like the executives we talked about earlier) go by private jet

Now think about what happens to someone who needs to go to the hospital in Boston

  • Anyone can go to a top hospital like the Brigham and Women’s or Mass General and be treated pretty much the same. You might get hassled by accounting if you don’t have insurance, but the doctors and nurses don’t tend to give you a hard time based on your economic status
  • If you’re someone special (e.g., a big donor) you might find yourself on a VIP floor at Mass General (though it’s unlikely elsewhere). The room’s not that much better, though, and you probably won’t receive better care. And I’ll go out on a limb and say your chance of having something go wrong due to medical “error” is not much affected by being up there. Maybe you can get access to better or more prominent physicians, but not necessarily. And anyway, do you really know how good or bad they are?

Overall, the rich and powerful are highly constrained in their ability to get exceptional service and quality in health care compared to other spheres in their lives. That’s one reason that corporate executives are interested in improving the quality quality and service levels of the US health care system. They are not insulated from commoners in health care the way they are everywhere else. Unlike Huggins, I wouldn’t take health care purchasing out of their hands just yet.

December 7, 2006

3 thoughts on “In health care, the rich and powerful really aren’t insulated”

  1. Any thoughts on why it is commonly believed that the disparities are great in the US?

    FWIW, in the community where I work, the immigrant community gets substandard primary care, but that’s not quite the same thing that you’re arguing.



  2. Certainly there are differences, they just aren’t as stark as the differences in other parts of the economy. The immigrants receiving substandard primary care may live –for example– in 800 square foot apartments in neighborhoods where it’s not totally safe to walk at night. CEOs may live in a 15,000 square foot house in safe neighborhoods and have 3 or 4 other houses for vacation.

    I think people focus on the disparities because they equate absence of insurance with absence of care. In addition, there’s less acceptance of inequality for things that are considered basic rights.

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