Banishing Profit Is Bad for Your Health

The Medicare for All proposal from House Democrats follows New York state’s bad example

By Bill Hammond. He is director of health policy at the Empire Center. Excerpts:

"The Empire State’s hospital industry has been 100% nonprofit or government-owned for more than a decade. It’s a byproduct of longstanding, unusually restrictive ownership laws that squeeze for-profit general hospitals. The last one in the state closed its doors in 2008.

A report last year from the Albany-based Empire Center shows the unhappy results. The state health-care industry’s financial condition is chronically weak, with the second-worst operating margins and highest debt loads in the country. And there’s no evidence that expunging profit has reduced costs. New York’s per capita hospital spending is 18% higher than the national average.

The overall quality of New York’s hospitals, even factoring in Manhattan’s flagship institutions, is poor. Their average score on the federal government’s Hospital Compare report card was 2.18 stars out of five—last out of 50 states. Their collective safety grades from the Leapfrog Group and Consumer Reports magazine have also been dismal.

The state’s nonprofit hospitals also fall short on accessibility for the uninsured. On average they devoted 1.9% of revenues to charity care in 2015, a third less than privately owned hospitals nationwide.

Finally, New York’s antiprofit policy doesn’t even prevent people from getting rich. Seven-figure salaries are common among the state’s hospital executives. If banning profit is an effective way to improve health-care, there’s no evidence to be found in New York.

Not content to destroy the profit system for health-care providers, sponsors of the House Medicare for All bill would also blow up the patent system for prescription drugs. If a manufacturer won’t agree to an “appropriate” price for its product, federal officials could abrogate the patent and assign another company to make the drug. The original patent holder would receive “reasonable” compensation for its losses, but only after the government discounts costs as it sees fit. Knowing that patents could be overridden at anytime, the private sector would have far less incentive to invest billions to find medical breakthroughs, slowing progress against disease and disability."