Sunday, April 04, 2010

Public Services

One of the more common liberal arguments in favor of a large government role in healthcare is that people do not object to the government providing fire protection, or roads or schools. These examples are expected to strike dumb the opponents of the progressive vision, and establish the notion that benevolence is best left to bureaucrats. Thoughtful analysis of this proposition requires identifying those factors that make it appropriate for public entities to provide monopolistic fire protection services and roadways, and then determine if similar principles apply to healthcare.

As a preliminary matter it should be observed that governments do not produce fire houses, or fire engines or the firefighter's personal protection equipment. Just as with healthcare, it buys these from private enterprise, and does so for a good reason: private enterprise provides the optimizing benefits of competition, which stimulates efficiency and innovation.

Government does of course pay for the firehouses, trucks and firefighter services, but two things are readily apparent. First, it is inobvious how competition between competing firefighting companies would lead to more efficient firefighting. The spectacle of two groups, each wearing its team's colors, jostling with each other for access to a hydrant while the distressed home succumbs to the conflagration, would not be expected to contribute meaningfully to public safety. It is probably true that certain fire departments are better than others, but given the relative uniformity in approach to their primary obligation, it is difficult to say that significant benefits would accrue from having fire departments compete with each other for the right to put out fires and respond to emergencies.

Secondly, society has decided, thorough tradition and experience, that it will not impose the cost of fire protection services on those whom necessity forces to use those services. One obvious reason for this is that, if a fire protection company was reliant on collecting fees from distressed homeowners and accident victims, and was unable to do so (or if not enough buildings caught fire), it might fail financially. This would leave others without fire protection, even though they themselves might be able to pay for it. Communities have thus concluded that it is better to have everyone pay for the availability of a certain level of service, since it is very unlikely that that the average person will ever need such services.

These considerations are to be compared with healthcare. There is an obvious role for the beneficial atributes of market economics and competition. Advances in medicine and medical technology are obvious evidence of this fact. Similarly, it is not efficient for society or individual communities to pay for availability of the full spectrum of healthcare services, for the simple reason that there are a much broader spectrum of these services than there are in the area of fire suppression. It is quite comfortable for a community to maintain readiness for the limited classes of emergencies requiring a fire department. It is quite another to expect it to maintain bone marrow transplant units, burn centers, labor and delivery wards, MRI scanners, radiation medicine facilities, substance abuse programs, Alzheimer's units, rehabilitation facilities, psych wards, trauma centers, poison control services, neonatal intensive care units, cardiac surgery suites, endoscopy units, robotic surgical equipment, pathology labs, CT scanners, blood transfusion centers, prosthetic device services, hyperbaric oxygen facilities, reconstructive surgery units, mammography services, laparoscopic surgery facilities, arthroscopy, etc., etc. It is appropriate for patients to select providers of these services based on consideration unique to the individual patients; it is unlikely that a homeowner would take his burning dwelling to a firestation more suited to his tastes.

A similar anysis applies to the issue of roads. It is readily apparent that the most efficient way to facilitate traffic between one place and another is to have a single thoroughfare; that it is absurd to have competing roadway providers construct multiple parallel avenues between two points so that motorists can choose between them. Furthermore, as is the case with fire protection, there simply is not enough variability in the operation of roadways for the marginal increments in efficiency that competition provides to make much difference. We can accept collective operation of roads because the private ownership of them isn't likely to result in significant innovation or room for increased efficiency. People still use roads that were built by the Romans.

It is of course appropriate for governments to provide public health programs, which are clearly distinct from individual healthcare. Similarly, it is appropriate for societies to provide thoroughfares and roads so that people in general might benefit from being able to get from one place to another. Of course, individual circumstances and preferences properly make it responsibility of those individuals to pay for the means of conveyance.

So, no, public provision of some service does not establish the proposition that the public is the best provider of all services. Especially when the dignity, values and individual circumstances of human beings are concerned, there are some things that work much better when people have choices.

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