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Letters to the Editor
No Free Marketplace
Psychiatric News
Volume 40 Number 23 page 49-49

In the president's column in the July 15 issue, "Every Psychiatrist Needs to Be an Advocate," Dr. Steven Sharfstein refers to the American health care system as being "in crisis," and he blames the crisis on a fundamental shift in 1980 to a "for-profit" system of providing health care. While I strongly agree that the system is in a state of crisis and that limited access is a big part of that crisis, I believe Dr. Sharfstein has gotten it backward when he points his finger at the for-profit system for the mess we are in.

Our current system is a perversion and not a true "for-profit" system. Indeed, we turned away from a free marketplace in health care in the 1930s. We physicians were instrumental in developing a new animal: a three-party system where one entity receives care, one entity provides care, and yet another entity pays for care.

Our government uses tax laws to make it uneconomical for individuals to pay directly for health care. Moreover, employees do not have to pay income tax on the value of health insurance they receive from their employer or on the value of health care received as an insurance benefit. However, when patients do pay directly for health care expenses, they use dollars that do incur an income tax. Thus, there is a huge economic incentive to get broad insurance coverage even if it means lower salaries and to have a third party pay for care received.

This evolution in health care financing ("insurance" is truly a misnomer) created a prolific revenue stream to doctors and other clinicians, as well as health care institutions. More importantly, all free-market forces that would have restrained health care costs—namely, competition at the provider level, clinician with clinician, hospital with hospital, and so on—were circumvented. Health care consumers do not have a financial stake in where they receive care. And while the third-party entity paying the bills was initially a "silent" partner, it was destiny that this silence would be short-lived (evolution of managed care).

The result is a bloated, inefficient, pseudoegalitarian bureaucratic system that often provides excellent care but at a much-too-high cost. Competition for huge health care contracts among giant corporations managing group health care does not constitute a free marketplace at all. I believe that if one studies the history of health care financing in our country, one would conclude that we need less centralized control over health care, not more, as Dr. Sharfstein implies.

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