Publicly-Owned Cooperatives Could Shine a Light on Our Healthcare System

The author contends that the free market medical system no longer meets our healthcare and suggests the communities take ownership of healthcare facilities and hire competent officials to staff them.

OPINION -- In the 1960's many airports, department stores, businesses and municipalities experimented with pay toilets as a means to generate extra revenue. Thankfully, pay toilets are a thing of the past, having been removed from our society for reasons that should be obvious to anyone with even a slight amount of common empathy.

But if we won't put up with pay toilets, why do we work so hard to protect the free market model for healthcare? Healthcare in the U.S. has never actually been a functioning example of open and free markets. Prices vary according to mysterious and hidden factors and are rarely known at all until well after a service is performed.

By design there is little competition in most areas. Decisions about treatment are largely left to the discretion of those who profit from increased treatment and testing. The anxiety of many medical circumstances, combined with our inborn will to live, has given healthcare providers a near vertical price curve which some have exploited and some not. To the extent that the free-market model works in healthcare, it too often achieves its highest success from catching people at their most vulnerable moments, and by discouraging those who can't pay.

Compounding the rise of healthcare cost has been the curious way in which free-market businesses unrelated to healthcare have a hand in the pie. In order to see a doctor, the standard procedure in our area is to go to a school district, grass seed warehouse, engineering firm or zirconium maker, and purchase a legalized financial betting product! We call that betting product, purchased from employers, "insurance," but in the case of healthcare it has really become a form of reverse insurance.

Real insurance, just like the lottery, works when a large number of people 'wager' a small amount each in order to provide a big payoff to just a few. We don't complain that our fire insurance company may be skimming 40% for the cost of selling policies, fronting the risks, and verifying claims, because by betting together on the unusual, we achieve something that we couldn't achieve separately.

But using free-market betting pools to pay for normal events like a doctor visit, or a pair of glasses is silly and very expensive. Betting on the usual doesn't cover the cost of the running the game. In fact, people who buy or accept a medical insurance plan that pays for nearly everything are buying the equivalent of a $1.00 lottery ticket that wins virtually every single time! ... and pays 69 cents. Who would do that!

Ironically, the Affordable Care Act makes 69 cent lottery payouts the law, and makes major medical coverage, which is the only economically responsible type of medical insurance, illegal! Even worse, because low-deductable insurance policies for people who don't have any savings can be double or triple the cost, our protected free-market system charges poor people more because they have less money.

Historically in other situations where the free market did not work to our advantage, we have acted together in our local common interest. Competing fire-fighting companies of the 1800's have been very successfully taken over by trained municipal fire fighters. Likewise, in the early days of telephone and electricity when competing utilities ran wires on the opposite sides of the street, dodging and occasionally falling over each other, local communities found successful ways to avoid the expensive mess. One of the more successful ways has been to form local, publically owned utility cooperatives providing service economically for all.

Since the free market medical system no longer acts efficiently to meet our medical needs, maybe it is time for more of the communities we live in to own the local healthcare facilities and to hire the competent professionals to staff them. If national averages hold true, the total amount spent on healthcare in Linn and Benton Counties is over $500,000,000 each year. Given the need and the urgency, why wouldn't we consider bypassing the 69 cent lottery ticket and saving 20% or more of the cost. It seems to me that $100,000,000 a year is a lot of extra money to pay just so we won't accidently look like socialists.

Warren George has 30 years managerial experience in private industry, most of which has been for a major mid-valley manufacturing company.  He is an advocate for trans-partisan dialogue and for returning to consensus building in public decision making rather than reliance on adversary systems.

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Mr. George does a great job of putting our current health care "non-system" into clear perspective, and his comparison of health insurance to returns on lottery "investments" is particularly lucid. While his call for local (county-level) solutions to the wasteful monopoly that is for-profit health insurance corporations bears consideration, I'm uncertain how practical (or possible) such a course would be. One of the features of health care affordability and efficiency is the size and diversity of the risk-pool. (One of the sources of waste currently is redundancy of administration.) What he's proposing would make more sense on a statewide level - and that's why an increasing number of Oregonians are working for that. His analysis of what Benton County and Linn County might save by creating a joint health care system that would cover all residents is intriguing, but I think the numbers, based on population and assumed per capita health care costs, are greater than he claimed. The combined population of the two counties is about 200,000, and at the national per capita expenditure of over $8,000, the two county total for health care would be $1.6 trillion, not $500 M. So, his projected savings would be $300M or more. Mr. George's guest editorial provides a very clear way of understanding how and why the current for-profit health insurance "system" falls far short of what enough Americans grasp well enough (else popular support for Single Payer would be far greater by now.). Hopefully, readers beyond the Lund Report, to which thanks are owed for printing the editorial, will be able to access it.