The fiction of health-care market efficiency

This blog entry is written as the U.S. debates whether or not to increase its socialization of medicine to come up towards something more completely approaching making health care universally available to its citizens.

I propose an unusal addition to the argument for socialized medicine. And that is the market argument. If you look at how non-government corporations treat health care among their employees, they virtually all reject market solutions in favor of socializing the costs within their jurisdiction. The vast majority of successful corporations offer subsidized health insurance to their employees. Indeed, the most successful of these corporations offer the highest degree of socialization of these costs: high quality health care available to their employees and employee families at little or no out-of-pocket cost.

Let me make this clear. Essentially all successful U.S. corporations, acting as rationally as is concievable in the modern world, reject market solutions for the health care of their employees. This rejection is notable for what these corporations do NOT choose

1. They do not offer less insurance to large famililes than to smaller families or single employees
2. They do not choose insurance plans with very large co-pays or partial coverages
3. They make no attempt to alternatively compensate employees who use the benefit less, and therefore cost the company less

How remarkable is it that U.S. corporations, these bastions and beneficiaries of free market capitalism, treat health care in this market-rejecting way? Not that remarkable. Think of the other ways U.S. corporations reject markets every day.

1. There is no market in offices. Wouldn't there be a great efficiency and fairness in calling upon employees to rent their offices in a market system? Shouldn't the employee willing to work in a windowless cubicle be paid some of what he saves the company compared to his colleague in the corner office with windows?
2. Information Technology (IT) help is available for free. I'm sure there are some employees who beat their computer problems to death before they make that call to IT. I'm sure there are other employees, like myself, who love the high quality help so much that we look forward to finally addressing the problems of our laptops with hour-long calls to IT. Shouldn't the company charge employees for their IT calls? Isn't the efficiency of the enterprise dependent on employees making intelligent choices about which resources to use, something they can only do when signalled by pricing information? Shouldn't the low-impact employees make a little bit more money, since they are saving the company money?
3. Indeed, there is no market in computer equipment, office equipment, or access to printers and fax machines. For years I have bureaucratically fought for the best computers and laptops I could get. I have always had a better laptop from work than anything I would ever buy at home. How crazy is it to think that a profit-seeking company can ignore the information a priced market would provide to improving resource allocation.

In summary, the refrain that the market is always more efficient than the government seems fraught with the peril that even those making it choose non-market solutions time and time again. If the market is no good for the health care of the employees of the best, richest, smartest, most profit-managed corporations in the world, then why would anyone think it is a good idea instead of a government program for health care?

An OT reply to a Motley Fool post

A reply to http://boards.fool.com/Post.aspx?mid=28031986&reply=true#reply

Darn it, man, I recieved my used copy of the Emperor's New Mind not two weeks ago and am already on page 14. You just made me surf all over the place on "Goedel Escher Bach strong AI" to find out what Hofstadter might think as this kind of thing matters to me very much these days. THe best I could find is "...his conviction that human-level consciousness/strong AI can appear in a machine."

I accept the Chinese Room and no longer believe you will get true AI by programming a computer. You MIGHT get fake AI, a simulation of intelligence which can do many of the things you think can only be done by someone/something intelligent. BUt they will not be intelligent, I now agree. A simulation of intelligence is no more intelligence than is Sim City a real city, World of Warcraft a real battle between monsters, or a simulation of an H=bomb likely to ever knock down a building. And classic AI is, I think, a simulation of intelligence. We keep looking to see what intelligences do, and where we can find patterns we code them up.

But can a machine have intelligence? Of course. What are we other than a wierd bioligical machine? Maybe we have wierd quantum stuff going on in our brains. But either there is a god with a personality that comes down and plugs souls into machines, in which case it is pretty much up to her mood whether an appropriately built machine gets a soul plugged into it, or it is something about the way the brain/body is built that gets it consciousness, in which case it seems we could eventually figure out how to build something like that, too.

I have to say the Chinese Room thing now seems obvious to me. A chess playing program is no more intelligent than is the calculator I use to figure my taxes. All the intelligence is in the programmer of the machine. Building real intelligence will require something very different from programming.