I’ll spoil it if I intro it, so I’ll just launch right in:
Suppose that one day all prices are removed from all products in the supermarket. All labels too, beyond a simple description of the contents, so you can’t compare products from different companies. You just take whatever you want, as much as you want, and you bring it up to the register. The checkout clerk scans in your food insurance card and helps you fill out your itemized claim. You pay a flat fee of $10 and go home with your groceries. A month later you get a bill informing you that your food insurance company will pay the supermarket for most of the remaining cost, but you’ll have to send in a check for an additional $15. It might sound like a bargain to get a cartload of food for $25, but you’re really paying your grocery bill every month when you fork over $2000 for your food insurance premium.
Under such a system, there is little incentive for anyone to find innovative ways to reduce the cost of food or increase its quality. The supermarkets get paid by the insurers, and the insurers get their premiums from you. The cost of food insurance begins to rise as supermarkets stock only the foods that net them the highest insurance payments, not the foods that deliver value to you.
-Jonathan Haidt, “The Righteous Mind”
There are a couple of messages, and let me caution you to view them through Haidt’s eyes. He has no political axe to grind. By his description, he was a partisan liberal well into adulthood, but his work in Psychology have led him to re-evaluate, and try to transcend the left/right distinction in his analyses. So, his messages:
- Insurance shoud be for Emergencies. Historically, it emerged to protect ship owners against cargos lost at sea. Using it to cover any sort of routine, predictable cost is a departure, and a mistake for the reasons given in the quote above. Yet, health care is run through insurance in so many parts of the world.
- Government Insurance is no better. The same financial pressures that have famously made hammers and toilet seats cost hundreds of dollars could cause food prices to skyrocket. In fact, this is exactly what has happened to prices of medical equipment and procedures!
- Markets are Amazing. Haidt doesn’t shirk from finding evils in Pure Capitalism, but this example points out something that Markets do really well - self organize into efficiency!
To highlight that last point, I’ll use another snippet from Haidt:
The next time you go to the supermarket, look closely at a can of peas. Think about all the work that went into it - the farmers, truckers, and supermarket employees, the miners and metalworkers who made the can - and think how miraculous it is that you can buy this can for under a dollar.
How can this be? At each level of the growing, processing, transportation and selling, there is competition, and thus pressure to find new efficiencies.
My deep-down political conditioning just shudders at the idea of a purely capitalist health care system!! I mean, how can you make consumers care about the cost without making some medecine unaffordable to society’s vulnerable? But I wonder, would we have a medical system that displayed the same kinds of stupifying thrift we can see in a can of peas?
Food for thought (pardon the pun).