Sen. John McCain, putative GOP presidential nominee, says the best way to keep down health care costs is to increasingly privatize health care. I say that is ludicrous on its face, and here's why:
"Privatization" equals "for profit." "For profit" equals "make as much more money as possible than you spend," which in turn equals "sell more, cut costs, or (the usual course) some combination of both."
"Selling more" equals one or a combination of any or all of the following: get more people to buy what you are selling; sell things that no one else sells; create follow-on and/or add-on purchases to increase the amount brought in from each and every sale; reduce the costs of producing or providing what you sell without reducing the price you charge for same; maintaining the costs of producing or providing what you sell while increasing the price you charge for same.
"Cut costs" equals one or a combination of any or all of the following: buy cheaper materials and supplies; reduce the amount of staff while producing the same amount of product or providing the same quantity of service; reduce spending on investments (such as new research equipment); reduce spending on advertising; reduce spending on research; reduce regular repeating expenses (such as telephone bills).
Companies in the health care business have no incentive to cut costs in any way--cheaper materials and supplies mean a less successful image (and to be successful, especially in getting investors to invest, is to look successful); a certain level of staff is required to support research and development of new products (the real source of lucrative profits . . . consider the creation of Viagra, for example); if you want to have the biggest share of the market in the sales of new products, you need the most up-to-date equipment to support your research and development of same; advertising boosts consumer demand for your products, even though consumers cannot buy prescription medications, for example, without a doctor's OK via prescription; spending less on research means losing out in the race to develop new products; regular repeating expenses, like telephone bills, tend to be inflexible and thus not subject to much reduction.
So most companies are going to focus their primary efforts to increase sales on selling more. This in turn increases the need to spend for advertising (people can't get what you're selling if they don't know about it); increases the need to spend for research (so you can corner an entire market by selling things no one else has); requires developing entire lines of related products and and services to increase add-on or follow-up sales (projecting the idea that none of the products will work as well alone as they will in consort); reducing what's in each package as you sell less product/service for the same amount as you did before the reduction. Hey, it happens every day in every area (look at the size of paper towel rolls if you don't believe me).
Thus selling more often increases the pressure NOT to cut costs. Which means the company, to be successful in its goal to maximize the return on investment its owners/shareholders get, must get more money from its customers . . . and that's you and me, Bunky . . . and that is the opposite of keeping our expenses down.
If McCain really wanted to cut health care costs for all Americans, he'd give them the benefit of the same system he gets through his military and legislative service. Why the people who get the most advantage from what is truly socialized medicine want to deny it to the rest of us is beyond me. At least until I remember my mantra: them what has, gets. The rest of us gets screwed.
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