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American Focus > Blog > Economy > Players, Games, and Rules
Economy

Players, Games, and Rules

Last updated: November 6, 2024 10:42 am
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Players, Games, and Rules
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In Joe Nocera and Bethany McLean’s book, The Big Fail: What the Pandemic Revealed About Who America Protects and Who It Leaves Behind, the authors highlight numerous criticisms of how medical institutions operated during the pandemic, as well as in general. One common argument made is that the United States healthcare system demonstrates why a free market in healthcare cannot work. However, Nocera and McLean do not describe the American healthcare system as an example of free-market capitalism. They refer to it as a perverted version of free-market economics or a bastardization of capitalism.

One example they provide of this is the decision by many states to reduce the number of hospital beds in an attempt to control Medicare and Medicaid costs. While this decision may have seemed logical in theory, it ultimately led to the closure of hospitals in disadvantaged neighborhoods, further separating wealthy hospitals from poorer ones. This policy, aimed at reducing spending, actually resulted in an increase in Medicare spending. The closure of hospitals in underserved areas did not lead to a decrease in overall healthcare costs but simply reduced access to essential services for those in need.

The authors also point out that the structure of the healthcare market in the United States is not a result of natural market forces but rather a product of government regulations and policies. The dominance of insurance companies in the healthcare system was not inevitable but rather the result of political decisions that shaped the system over time. Insurance companies have been given significant power to determine which services are covered, set reimbursement fees for providers, and influence medical practices.

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The way government regulations have structured healthcare payments has created dysfunctional incentives within the system. Hospitals are often paid based on the number of procedures they perform, leading to cost inflation and unnecessary treatments. The fee-for-service model, which incentivizes providers to deliver more care rather than focusing on patient health outcomes, has been a major contributor to the inefficiencies and high costs in the healthcare system.

In conclusion, Nocera and McLean’s book highlights the complexities and shortcomings of the American healthcare system. While it may be tempting to blame hospitals and insurance companies for their actions, it is important to recognize that they are responding to the incentives created by government regulations. Addressing the root causes of these issues, such as restructuring payment models and increasing access to care in underserved communities, will be crucial in creating a more efficient and equitable healthcare system.

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