The free market fallacy in health care

Free marketeers have been lauding Gov. Sarah Palin’s efforts to eliminate Alaska’s restrictions on new health care technology and facilities, calling it a push for “less regulation of health care providers and more competition”.
This blind faith in the marketplace to somehow solve the American health care crisis demonstrates not only a superficial understanding of health care, but an ignorance that would increase costs and reduce quality.
One excellent example of how wrong these ideologues are comes from KFF. The good folk at Kaiser report that:
“Physicians in 2007 ordered 68.7 million CT scans, more than three times the number ordered in 1995 [emphasis added], according to IMV Medical Information Division. In addition, a 2007 study by McKinsey Global Institute found that the number of CT scan machines in the U.S. had increased to 24,000 since the first apparatus was purchased in the U.S. in 1973, which is nearly three times the number of machines available in most other industrialized countries.
…the declining cost of the devices has encouraged more private practice physicians and independent imaging centers to install their own machines, the Times reports. According to the Times, manufacturers of the scanning machines, such as Siemens, “tout the ease of making money with the devices.” A Siemens marketing brochure notes that two scans daily generate enough revenue to cover the cost of the machine and its operation over a five-year period, while 10 scans daily can generate more than $400,000 in annual profits.”
And let us not forget the increased health risk from excessive radiation doses…
The CT scan issue is merely the latest in a long line of well-documented, rigorously-researched studies that clearly and unequivocally prove supply drives health care costs. The more health care facilities, beds, technology, the more physicians and care givers there are, the higher the cost and the worse the outcomes..
The authors of the Dartmouth Atlas have done an outstanding job in this area. Here is just a sampling of their findings:

• the U.S. could lower health care costs substantially if the highest intensity hospitals adopted the practices of the nation’s best performing hospitals.
• where medical decisions are most discretionary…admission rates are strongly correlated with the local supply of hospital beds
• higher spending and greater use of supply-sensitive care is not associated with better care
• more care does not necessarily mean better care. In fact, more hospitalizations and more procedures among similar populations resulted in higher mortality than for populations that received more conservative care.
• and the killer – any expansion of capacity will result in subtle shifts of clinical judgment toward greater intensity of care

Yet some persist in ignoring facts in favor of ideology. A piece in that bastion of intellectual rigor, the American Spectator, claims “Sarah Palin means it when she says she’s in politics to “challenge the status quo and to serve the common good.” Moreover, her push for greater competition also demonstrates that she understands the potential of the free market to cure much of what ails American health care.”
Actually, Palin’s statements don’t do that at all. Her actions show her to be ignorant of cause-and-effect, blind to the facts, and willing to sacrifice the good of Alaskans on the altar of the free market.
thanks to FierceHealthcare for the heads-up.