Health care will always be business

“The health of Americans should not be a profit center. Health care is a right. Full stop.”

That comes from the Twitter feed of personal finance writer Helaine Olen. But it could have been issued straight from the heart of any progressive in the land. Subjecting health care to the sordid whims of the marketplace strikes many people as simply immoral. Nor is this feeling confined to the left. Conservatives may be less enthusiastic about socialized medicine, but talk to one about the health care system, and there’s a good chance you’ll get a rant from them, too. Almost everyone feels that there is something fundamentally wrong about making money off of someone else’s illness.

Why do we feel this way? Why is health care special?

About 10 years ago, economist Robin Hanson suggested something that solves a lot of the mysteries of our health care system. We are evolved, he suggested, to provide costly forms of care to members of our community when they get sick, not just in the interests of making them better, but to demonstrate loyalty.

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Anthropologists tell us that there are two different economic systems by which members of groups obtain what they need to live. One kind, market exchange, is the form that we’re all familiar with. You go to the store, you give the clerk money, and you get to take goods away with you. Market exchange is impersonal, explicit and limited.

The second form of exchange is “reciprocal altruism,” and you’re also familiar with it, though you may never have given it a name. It is a system of mutual obligation: I do a favor for you now, and you do a favor for me at some unspecified point in the future. Reciprocal altruism is not explicit, and it is not limited in the same way that market exchange is.

Hanson is suggesting that we have a strong intuitive preference for altruistic health care – for an enormous, practically unlimited amount of altruistic health care – because health care is a way to demonstrate loyalty and caring to people you love. But the thing about reciprocal altruism is that it’s not supposed to be an explicit quid pro quo. That may explain why we like insurance that covers as much as possible and dislike any suggestion that the people who provide our health care are calculating what it will cost them to provide it. Bringing money into an altruistic exchange taints it.

The issue, in other words, is not necessarily profit. The issue is making decisions based on money.

Unfortunately, this leaves us with something of a problem. Reciprocal altruism is fine if all you need is for Mom to sit with you and brew you some herbal tea. But in a modern society, you need to procure health care from strangers – which is to say, through the transactional system of market exchange.

Before the internet, most people had no way of knowing whether there were other treatments than the ones their doctors recommended. And that worked because most doctors take a lot of different kinds of insurance, and they don’t know what will be covered until after they’ve discussed treatment options.

But it’s getting harder for everyone to conceal the calculations; information travels faster, and patients are better organized. Which means that no matter how much it horrifies, we have to stop hoping for a system that will make those hard decisions and unhappy trade-offs go away. •

Megan McArdle is a Bloomberg View columnist.

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