Against “A Capitalist Case for Health Reform”

Originally posted at on September 25, 2013

Recently, John Green—one half of the Youtube duo “vlogbrothers”, along with his brother Hank—has embarked on a video series discussing health care reform in the United States in light of the dawning of the Obamacare era. The most recent instalment is titled “Bigger Pizza: A Capitalist Case for Health Care Reform”. Watch the video here:

Unfortunately, the only capitalist case to be found for health care reform is in the title of the video only.

The video starts off well enough with a general defense of capitalism, which led up to the cheeky line that “Free markets create free pizza” (although he made a couple of unnecessary caveats, namely that innovation usually comes at the expense of the increased destruction of the environment, but that’s another issue for another time), because if we imagine the wealth of society as a large pizza, free markets—through constant and unbridled innovation—increase wealth, and therefore increase the size of the pizza. John then says “the only way to get that free pizza is to make the world safe for innovation and competition.” This is very true. He follows this up with “Our current health care system sucks for facilitating this.” This is also very true. However, from this true point he dives into the unfortunate depths of absurdities.

His first point is that insurers do not insure those with pre-existing medical conditions. He brings up his friend Henry, who, because of a new rule under Obamacare, was able to avoid going to grad school for physics (in order to stay insured) and instead start what became a very popular Youtube channel. John also brings up his brother Hank, who has made all kinds of successful investments since his home state of Montana forced insurance companies to cover him despite his pre-existing condition, and thereby allowing him to become an entrepreneur instead of joining a big corporation solely for the health care benefits.

But John’s major problem with his argument is his failure to distinguish between the seen and the unseen. What John sees is his friend Henry having a very successful Youtube career; but what he doesn’t see is perhaps Henry becoming a world-renowned physicist making significant discoveries that could directly and more significantly affect a lot more people than his online videos. In the case of his brother Hank, he does not consider the case where Hank could have become a hot-shot executive at his big corporate gig and had made decisions that would have profited the company (and therefore, of course, society) millions or even billions of dollars.

Another problem that John didn’t account for was the already existing (and most likely to be increasing) restrictions on competition within medical care itself. With the combination of the FDA and the evil and preposterous patent system forcing pharmaceutical companies tonecessarily spend billions of dollars and years in research & development in order to bring new drugs to market; and with government subsidies to insurers, doctors, and medical equipment suppliers creating disincentives for lowering of costs and prices; and with quasi-governmental organisations like the American Medical Association along with medieval licensing laws controlling not only who gets to call themselves a doctor, but also dictating what those doctors can or cannot do to treat their patients; all working together to not only slow advances in treatment, but to increase costs and raise prices.

(This is all ignoring the fact that universal healthcare does not necessarily imply rampant entrepreneurship. Consider, for example, the cases of Cuba and North Korea.)

At the end of the day, free markets raise quality and lower prices, regardless of industry. Even health care: think of the affordability of Lasik and other laser eye surgeries, and breast augmentation, and nose jobs. What once was available only to the seriously injured or seriously wealthy, is now fairly commonplace—and of much higher quality.