Saturday, August 04, 2007

Making Money on Health

While reading this post by Mark Sisson (HT: Stuart Buck) offering suggestions, mostly ill advised, for fixing the American health care system, I was reminded of an important philosophical issue that is larger than the health care debate that nonetheless is driving various viewpoints as to how to fix it. That issue is related to the moral and practical fallout from the ability of a system participant to make a profit.

Those who favor some form of socialized medicine frequently impugn the profit motive as a source of greed and ill-gotten gain on the part of insurers and health care providers that results in driving up system costs. Of course, human nature being what it is, this viewpoint has an element of truth. However, it is only part of the story. The profit motive can also be a source of entrepreneurial zeal, as it drives people to produce the best product or provide the best service possible in order to maximize income. Those who think that removing profit will improve the system by making people less concerned about making money fail to understand that the lack of a profit motive is exactly what is wrong with so many government programs. Absent any self-interest, frequently such programs are characterized by bureaucratic malaise and inefficiency.

Is greed an unfortunate aspect of our health care system? Of course, it is. But rather than relish the thought of ridding the system of the profit motive, one perhaps should fear it.

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