The Bush program for health care focuses on Health Savings Accounts, a program to give tax deductions to the individual health-care consumer for certain amounts of money, on condition that the individual spend the money on health care needs at his or her own discretion. The program has been in effect since the beginning of 2004, and has just recently been re-emphasized by the Bush administration, including mention in the State of the Union address.

The Bush administration hopes that Health Savings Accounts will engender competition, i.e. “market forces” that will drive down health-care costs, just as market forces drive down the costs of other commodities.

This approach is fallacious, for health care is not like other commodities. For one thing, health care is crucial to our well-being; it may literally be a matter of life or death. In this it is like food and (to a lesser degree) housing; however it is unlike food and housing in another way: The more important difference between health care and other commodities calls for a little analysis. In the purchase of a commodity we find four features, or functions:

1) Selection: Someone decides on what is to be purchased.

2) Payment: Someone must pay for what is purchased.

3) Benefit: Someone benefits from the purchase.

4) Evaluation: Someone evaluates the purchase as being the proper choice in view of the benefit desired, and that person is (or should be) competent to do so.

In the purchase of an ordinary commodity, all four of these functions are united in one individual, the consumer. Groceries are an example. Suppose you are in the grocery store, buying breakfast cereal for yourself. You decide on what to purchase and you pay for it. You are the one to benefit from it, and you are competent to evaluate your purchase because you know your own tastes and needs and what will satisfy them.

Only when these functions are united can market forces be presumed to operate properly.

However, in the purchase of health care, these four functions are generally not united in one person. Rather, they are disunited, disconnected. At the very least, there is a disconnect between evaluation and all the other functions, because only a health-care professional, generally a doctor, is competent to evaluate what the consumer needs and how it is best obtained.

So if you are an individual purchasing health care on your own, without benefit of insurance, the first three functions (selection, payment, benefit) are united in you, while the fourth function (evaluation) is performed by the doctor. If you have insurance, you benefit, the insurance company pays, the doctor evaluates, and selection may be performed by either you or the insurance company, or both.

The disconnects I have just described are responsible for the tensions and the endlessly rising costs that have marked the health care scene. An example is the well-known conflict between the doctor’s prescription for treatment and what the insurance company (or HMO) is willing to pay for. If the insurance company sets limits on cost, the result may be an unhappy consumer, and in some cases one who becomes seriously ill. If the insurance company doesn’t set limits, the result may be an endless rise in costs. In any case, the general appeal to competition, or market forces, as the means to drive down health-care costs is merely another unjustified abstraction – empty ideological rhetoric with no discernible relation to reality, presented to us in place of real analysis.

Still, even though the abstract appeal is worthless, the program itself might have some value. We need to look at the specifics, and this is what I will do in the next issue.