The Socialist Imperative in Medical Care

Have you gotten a bill for medical care lately -- demanding money from you that had already been paid? It seems to be the way hospitals operate: just keep sending bills, whether they have been paid or not, in the hope that some of them will be paid a second time, to fill in a little of the gap between costs and revenues. The irrationality of our health care system has reduced our healers to swindlers, to try to pay the bills. And it's our fault, because our capitalist ideology has made us blind to our own better nature.

It seems clear that Americans will not tolerate the refusal of medical care to those who need it, and that is to our credit as a compassionate and morally decent people. However, we refuse to create any institutions to finance medical care for those who can not, or will not, pay for it, and that is not much to the credit of our intelligence as a people. Our failure to find a way to pay for the medical care that our society provides has led to the unseemly scramble for reimbursement among hospitals and government agencies and insurers, which corrupts medical care and threatens its basis. Our refusal to acknowledge the costs of the medical care we choose to provide has led people to be forced into "Health Management Organizations" that operate as capitalist cash cows rather than as health providers.

The traditional socialist view has been that medical care ought to be free, provided by "society." Thus, American attitudes on medical care are "socialist," however much we hate the word. We have "socialized medicine" in fact and we like "socialized medicine." That is the "socialist imperative in medical care." But we hate the word "socialist" so much that we are unwilling to face up to the facts and create institutions that will pay for our medical care and get it the resources it requires. And this emotional bias threatens our health as well as the health of our economy.

But that is only the surface of the matter. How does free health care fit into cooperative socialism?

Neoclassical economics includes a "special case" analysis in which free government provision is both efficient and unavoidable. This is called the "public good" case. A "public good" cannot be provided by profit-seeking business because it is impossible to exclude those who do not pay from the benefits of the good. A "public good" also has the property that the good can be used by one more person without either depriving anyone else of it or increasing its costs. Non-commercial broadcasting is an example on both scores: it is quite difficult (if not impossible) to charge those who tune in, and the additional listener does not deprive anyone else of the benefits of the broadcast.

By that definition, though, medical care is clearly not a "public good."

This means that free provision of medical care is not likely to be fully efficient. When medical care is free, patients have no incentive to consider the costs their care imposes on the system. And, while some medical care is motivated by objective need, much is optional, ranging from face-lifts to bunion-trimming to tranquilizers. It is reported that in Britain, under their public health service, lonely people will go to the doctor to have someone to talk to. The potential wastes in pure free provision at will are large.

That means there will have to be rationing, and that means bureaucracy, and bureaucracy is something we libertarian socialists want to get rid of. Can socialized medicine play a part in a libertarian socialist society? Of course, it must. The question is, how?

It is true that the economics of medical care deviate from the assumptions of neoclassical economics in some other ways. There is the element of objective need, and there is uncertainty. It is not difficulty to bring those elements into the theory, but when we do so, the efficiency issues are changed. (Here is a footnote[1] for economists who want a few more details of what I have in mind.)

The short story is that anyone may need medical care of some specific kinds, unpredictably, in order to continue life of some quality or to continue life at all. This uncertainty leads to the idea that the problem is one of insurance. Why should medical care not be provided by profit-oriented providers, with a profit-oriented insurance system to see to the payment? There are two reasons. One is the self-selection problem. When people are free to buy or to not buy medical insurance, the healthier ones will choose not to buy, and the insurer will be left with the worse risks -- and have to raise the rates to get by. That tips still more of the better risks out of the pool, to take their chances with their generally good health, and leaves the insurer with an even worse pool of risks, and so on -- this is a "slippery slope" that can lead either to no insurance at all or to a system of health care system that is inefficient because it does not include enough of the population. Second, people who are poorest may not buy medical insurance even if they are in great need of it. Say what you will, if they don't have the money, they can't pay it.

For the chronically ill and some elderly, the insurance idea doesn't make much sense anyway, because their need is not uncertain. Rather, it is a certainty that has to be provided for somehow. They are also the very worst risks, the victims of "pre-existing conditions" excluded by most insurance policies. At least that is the way it looks to the insurance company, scouting for profitable customers. Taking the individual's life cycle as a whole, it looks a little different. At birth, no one can say with certainty that at some time in life, this baby will not become a chronically ill person, whose "pre-existing conditions" demand costly medical care to preserve life and normal activity. It is this risk that we all need assurance against. In other words, health insurance -- to be efficient and to fulfill our values, that no-one should be excluded from necessary medical care because she can not pay -- must be universal social insurance. That cannot be provided by a profit-oriented, capitalistic medical-industrial complex.

Of course there must be limits to what can be provided for free. Most people would probably say that face-lifts are a luxury, and the person who wants his jaw lifted for cosmetic purposes can reasonably be expected to pay the freight. Even some cases of objective need may not qualify for free treatment. Think of an unfortunate person suffering from two illnesses -- not uncommon among the very old. One will kill him tomorrow, if he does not have expensive treatment, but the other will kill him in a month, whether he is treated or not. People with the best will may debate whether the extension of an old man's life for a month justifies a great expenditure of resources.

In any case, these reflect objective conditions that can only be determined competently by medical doctors. Will the treatment extend life for a day, a month, or good years? It is a medical question. The problem is to have the medical question decided in a way that reflects costs appropriately, distorted neither by the doctor's aspiration for a higher income nor by a corporation's profit targets.

The traditional way of providing medical care, without insurance, went some way in that direction. The doctor prescribed a drug. The drug was dispensed by a pharmacist, so the expense of the drug did not influence the doctor's income. If the individual could not afford to pay, he might ask the doctor if there might not be some cheaper "generic" equivalent. If insurance is paying for the drug, though, then neither the doctor nor I myself have any self-seeking incentive to consider the cost and substitute a cheaper alternative, or to forego treatment entirely if it does not give the individual an improvement commensurate with the costs.

So now we are under pressure from all sides to rely on "health management organizations," which employ the doctor -- reducing the bourgeois professional to a wage-slave, incidentally -- and supply the drug as well, for a fixed amount. Naturally, profit-oriented HMO's put the pressure on the doctor to cut the costs even when they should not be cut, to forego treatment when treatment really is essential, to prescribe the generic drug even when it will not do the job as well. More than that, the HMO's have very incentive to supply cheaper generic doctors, rather than more highly qualified, board-certified specialists. And "competition among providers" is supposed to prevent this, but that only works if they compete on quality, and they don't. And even if the system worked perfectly, as designed, it would not solve the underlying problem, since the poor and the unfortunate victims of "pre-existing conditions" still have to get their treatment at the emergency room, with no-one to pay the bill when it comes due.

Some simpler societies have a rather fine kind of "socialized medicine" based on traditional reciprocity and the "harvest heap." In these societies, most people are farmers and village-dwellers, and tradition requires each farmer to bring a certain fraction of his harvest and contribute it to the "harvest heap" in the village square. The village specialists -- the carpenter, the smith, the priest and the healer -- are each obliged to provide anyone in the village with their services, and in return, each of them is entitled to a certain share of the harvest heap. If a farmer or the carpenter or the smith or the priest gets ill, the healer does what he can, without expectation of yet more payment (unless the patient is rich and proud). If the healer needs a house, the carpenter is expected to provide it similarly free, and those for whom the healer can do nothing can expect the priest to perform the rites, without sending a bill to their survivors; and similarly if the healer's horse needs shoeing, it is the smith's obligation to do the job without extra pay.

That's idealized, of course, and in any case blind tradition could never be the basis of a libertarian society. But reciprocity might. In the early 1900's, a libertarian and cooperative school of thought in socialism, the Guild Socialists, worked out their answer to the problem of supplying free services in a non-bureaucratic socialist system; and their ideas remain some of the best. They envisioned a society in which every adult would be a member of a "guild," that is, a democratic organization for producing goods and services. Each would be, at once, an employee and a citizen of her or his guild. The relationship among the guilds would be one of reciprocity: each supplying what the others need from its own specialization in production. Some of the guilds might be able to sell what they produce for money, to provide an income for their members. But others, the producers of public services such as medical care, would not do so. These are the "civil guilds," in the Guild Socialist scheme. How are the members of the civil guilds to get their income?

The Guild Socialists proposed that the Civil Guilds would not be paid from taxes (as we know them now, anyway). They wanted to build a libertarian society and they understood that as a society without taxes (on individuals). So they said that the Civil Guilds would be financed by direct transfers from the other guilds -- "taxation at the source," they sometimes called it, because it would come out of the production of the other guilds before any incomes would be paid. Their idea was that the transfer would be determined by collective negotiation, essentially mutually voluntary, and part of a plan for social production not decided by some government but negotiated by the producers themselves, for their own mutual benefit.

How would a Guild Socialist society organize medical care in modern technological conditions? I suppose that the Philadelphia Medical Guild would probably operate much like an HMO, but one run by the physicians themselves and without a profit-oriented ownership. The Philadelphia Guild of Software Engineers might have an annual contract with the Philadelphia Medical Guild to provide medical care for software engineers in return for a payment to the guild. The payment would be negotiated, but so would the standards of care. If a software engineer felt that he was not getting care up to standard, he would have his own guild to go to bat for him. If the Software Engineers should find that the Philadelphia Medical Guild were unwilling to supply care of an adequate quality, the Software Engineers might be able to find another source of supply -- perhaps the Philadelphia Osteopathic Guild, or perhaps the Baltimore Medical Guild might establish a Philadelphia outpost, or the software engineers might start an internal medical division to supply their own medical care. Or (more truly to the ideas of the Guild Socialists) they might appeal to a more inclusive body for arbitration.

There are no easy answers, but we cannot safely ignore the questions. If we cannot answer "The Socialist Imperative in Medical Care," we most likely will not have any civilization at all, because we will be equally unable to face the other challenges that our profit-driven economic system will face. Conversely, a successful medical care financial system might give us a model that could be applied to some other issues that are not so vexing today, but that promise to grow as we continue the transition from agricultural self-sufficiency to a world-wide division of labor.

Perhaps this is all a pipe dream, or perhaps, on the other hand, it is too realistic (as some anarchists would say) and not idealistic enough. The point is that we have gone quite some distance in the direction of reciprocal socialism in medical care. In truth the relationship between the medical system and the rest of us is one of reciprocity and socialism, not a market relation. But it is a messy, self-denying, incomplete, and finally unstable one, because we refuse to face it for what it is. And while all our public policy is aimed at making it a market relation, there is good reason to believe that such a market medical system will be even less stable -- if we would tolerate it, which, decent people that we are, we will not.

One thing is clear, in any case. The hodgepodge medical care system we have will not go on without change. Either the system will change or the values that drive it will change. Perhaps that is our destiny: to give up our aspiration to provide medical care to those who need it, to become callous to the sufferings and deaths of those who have exhausted their resources and can no longer buy the care or the insurance they need; to realize all the while that our fellow human beings will be equally callous to our own suffering and death when we, too, have been impoverished by the cost of the care we cannot survive without, and to die, at last, because we cannot pay the capitalist profit-margin on our life any more -- to die, that is, of the disease called capitalism. To hope that this will never happen is to be a socialist, whether one knows it or not!