The profit motive is a staple feature of a market economy. It can be defined as the condition of being principally motivated by making money. This motive ideally incentivizes people to take some sort of productive action, be it starting a business, getting a job, or doing creative work, so that they can sell the product of that work to make money. This kind of system ultimately can incentivize people to discover and satisfy the wants and needs of others freely through market exchange, without very much external control or oversight. In other words, the profit motive ideally incentivizes people to figure out what is valued, and work to provide that value. This works well in markets of goods like consumer electronics, where what people want is relatively unknown. Who knows what kind of toy or game people will want next.
In healthcare the situation is fundamentally different. The question of value is NOT an unknown that needs to be discovered. The value of healthcare is not abstract, or ephemeral. A system of healthcare gains its value from its capacity to improve the health and wellbeing of individuals. That is the fundamental purpose of healthcare, and the true value that it provides. Helping people is the reason that healthcare exists. In this case, “value finding” property of a market is not only unneeded, but it creates incentives aligned directly against the underlying core value of human wellbeing. The principle motivation of all those in a healthcare system therefore must be to act in the best interest and service of human wellbeing, not to make money. This includes not only hospitals and clinics, but all institutions providing for healthcare needs, especially institutions developing and providing medicine.
What does it really mean to say that the true underlying value of healthcare is human wellbeing? It means that, in the domain of healthcare, the actual time spent and resources used are maximally effective if they are being used in the service of human wellbeing. If resources are being used in other ways, those resources are not as effective. Resources used, for example, to develop new drugs treatments and medications are used in a way that directly improves human wellbeing in the future. Resources used to administer health insurance, however, are not used directly in the service of human wellbeing. Spending extra resources on treatment research and development will eventually increase the value that healthcare provides, while spending extra resources on health insurance administration will not.
Human health is measurable in many ways. Blood pressure, disease diagnoses, BMI, x-rays and other medical scanning technology are only a few effective ways of determining the condition of health. Because it can be directly measured, human health does not need a market to quantify. The ultimate motivator of healthcare can therefore be achieving the best measurable health outcomes given the available resources. This is what is ideal from the perspective of those paying for healthcare as well, mazimizing the benefit received per dollar.
Not only is it unnecessary to have healthcare institutions operate by a profit incentive, but when profit is involved, something actively very damaging occurs. It introduces a set of FALSE VALUES. A set of motivations, or incentives, that act against the true underlying value of healthcare. A set of reasons to make decisions that are not ultimately in the service of human wellbeing. Why is this so damaging? Operating to make profit incentivizes healthcare institutions to make decisions that are not motivated by achieving positive health outcomes. This means that these institutions essentially end up using more resources, more man hours, more medical devices, all while providing less real value to patients. It means that these institutions are not using their resources, their knowledge, and their expertise nearly as effectively as they could be. It means that while our society spends more time, more energy, and more resources on healthcare, the benefits that our healthcare institutions provide actually decrease.
This is very clearly illustrated when we look at how effectively resources are used in the united states, which has a profit-motivated healthcare system, vs Japan and France, which both have fully non-profit, single payer subsidized systems. Money spent is correlated with resource use, so looking at the money different kinds of services cost can help illustrate how many resources they use in total.
The functional burden of paying for a service can be illustrated in a useful way by determining how much of the average yearly salary it takes up. This determines roughly what percentage of a person’s actual time and effort spent working goes toward paying for a particular service. In the US, 18% of the annual salary on average goes towards paying for healthcare. In France, even though salaries are significantly lower, only 14.3% is needed to pay for healthcare. In Japan, which has a median salary similar to France, about the same 14% is needed to pay for healthcare. The massively increased cost of healthcare in the US means that people there end up spending significantly more of their working hours paying for healthcare, even though they make significantly more on average. In addition, US healthcare does not cover everybody, and the additional cost imposed for operations can be significantly higher. There are, additionally, less actual healthcare resources available per person in the united states.
There are fewer physicians per person than in most other OECD countries. In 2010, for instance, the U.S. had 2.4 practicing physicians per 1,000 people — well below below the OECD average of 3.1.
The number of hospital beds in the U.S. was 2.6 per 1,000 population in 2009, lower than the OECD average of 3.4 beds.
Life expectancy at birth increased by almost nine years between 1960 and 2010, but that’s less than the increase of over 15 years in Japan and over 11 years on average in OECD countries. The average American now lives 78.7 years in 2010, more than one year below the average of 79.8 years.
The profit motive naturally produces incentives that act directly against the value of human health.
For example, the profit motive always naturally incentivizes producing and selling a larger quantity of goods. Of course, the more of a product is sold, the more profit is earned. In a market there is a natural incentive for producing and selling larger volumes of a product.
Human health, on the other hand, involves a delicate balance. Many pharmaceuticals have various unintended side effects, and so using the smallest functional amount is what is in the best interest of human health. It is also, of course, the most effective way to use medicine. Medicine that is over-prescribed is damaging, functionally no different from a poison. Over-prescription of opioids like codeine can lead to crippling addiction, a major problem currently.
"Drug overdose is the leading cause of accidental death in the US, with 52,404 lethal drug overdoses in 2015. Opioid addiction is driving this epidemic, with 20,101 overdose deaths related to prescription pain relievers, and 12,990 overdose deaths related to heroin in 2015. "
Addiction involves a large quantity of consumption, and is actually incentivized by the profit motive. Profit incentivizes EXCESS, while the value of human wellbeing incentivizes BALANCE.
Many ailments can be treated by consuming LESS. Obesity is treated by consuming less food. High blood pressure and hypertension can also be treated with diet and exercise. Less food and less medicine don’t produce more profit, so any system that values profit will automatically dis-incentivize the objectively optimal treatments. The ultimate goal of healthcare should essentially be to be used less, and be used primarily for prevention instead of acute treatment. To provide the maximum amount of benefit while using up as few resources as possible.
The false value of profit produces a cost in terms of human health, efficacy of medicine, and ultimately passes that on as an increased cost to the recipient of care.
Not only this, but in a profit driven capitalist system, profits don’t go to improving medical care, but to enriching an executive and investor class. These people aren’t even directly involved in improving human wellbeing, yet they benefit hugely from the process. They end up directly gaining control of resources for their own benefit that would be used much more effectively if kept in the healthcare system. The resources that an investor gains control over when profit is made isn't actually part of a process that makes anyone healthier, so those resources would be much better used,for example, to improve infrastructure.
Resources that go to an health insurance executive's private yacht would be used much more effectively if they were instead used to improve healthcare infrastructure.
AN EXCESS MACHINE
Consider another feature of a market system: payment. This is the process of distributing resources using currency. This is handled generally through a form of insurance, where currency is paid in small increments over a long period of time, and large large expenses are covered when they occur. Healthcare, of course, uses an immense amount of real resources, man hours, infrastructure and expertise. These things require immense amounts of time and effort, and therefore of course must be paid for. There also must be a process to distribute these resources, and manage payment. However, managing payment of healthcare does not involve directly using resources for the benefit of human health. Therefore, the resources spent on managing payment don’t contribute directly to the true value that healthcare provides. The resources, the time and energy spent managing payment for should therefore be minimized. Payment is a supportive auxilliary to healthcare, a side-task that should be taken care of with as few resources as possible, so that more focus, and more resources can end up improving human wellbeing. The underlying reason for this is to achieve the most effective possible total use of resources.
The market system in the USA is today used to manage distribution of healthcare resources. Health insurers compete for customers and for profits. This entire market, entire system is a complex machine, but it is still simply managing the use of currency to distribute healthcare resources. It is not involved in directly improving human well-being.
Therefore, the health insurance market is ultimately an ineffective use of resources. What does this mean in a practical sense? It means that the all the time people spend working for health insurance companies, all the infrastructure needed to maintain health insurance, and support it, would be used much more effectively if it was instead automated or used in direct support of human health. If the time and effort used to maintain the health insurance industry was instead used to improve hospitals, emergency clinics, and available medical services, those resources would be doing much more to actually help people.
The competitive health insurance marketplace is an ultimately unnecessary institution, which means it is a catastrophically ineffective use of energy and resources. Its existence is motivated solely by the false value of profit. This is extremely damaging, because it essentially sinks a sizeable portion of the limited available energy of our civilization into an effort that is not externally beneficial. The profit motive is a powerful incentive for these this unnecessary institution to expand in size and scope, which simply sinks more and more energy and resources into an ultimately ineffective use. As healthcare insurance companies make higher profits, they force more and more resources to be used ineffectively.
No other modern industrialized nation has a similarly bloated insurance marketplace. It is simply not necessary to have an effective healthcare system.
In France a single national insurance company is required to manage the task. In Norway, a government run public fund pays directly for medical coverage. In both cases the task of managing payment is done much more efficiently.
Paying this unnecessary overhead in profit, excess, and beaurocratic management is a large part of the reason that the same procedure costs vastly more in the United States than in other developed countries. Individuals in the United states give up much more to receive the same treatment.
For typical medical care, patients in the United states can pay 3-5 times as much as those in France.
The United states, of course, could easily achieve healthcare for all at a much lower cost per person it does today. With not only lower costs, but better coverage, and more favorable health outcomes. In order to do this, however, the prime motive of the healthcare industry must shift away from profit, and toward human wellbeing.