Is the Texas Power Grid Failure a Metaphor for Blocked Healthcare Reform?

Here’s why the Texas power grid failed. This story sounds hauntingly similar to why healthcare reform has failed so far. It reminds us of what must be done to fix both.

The system experienced rapid growth in the mid-20^th-century. Investors used legal and political maneuvers to shield themselves from government oversight and to protect their market advantage. Thus freed, entrepreneurs produced marvelous innovations. They reaped lavish profits. They grew larger and more powerful. Their investors focused on short-term gains, quarter by quarter. Unprofitable clients were only grudgingly accommodated, if at all. Crisis contingency planning gave no return on investment, and thus was minimized.

Then the crisis hit. There was no surge capacity and no back-up system. The most vulnerable were the most affected. Some – or many — died.

What They Have in Common and How They Differ

Both the Texas power grid and the U.S. healthcare system currently do not function as providers of public goods. Instead, they buy and sell their services as commodities in a market. Consumers who cannot pay are out of luck, with only a few “safety net” exceptions. This is what economists term as “excludable.” Moreover, at any given moment – especially under crisis conditions – there is a potentially limited supply of each, which is termed “rivalrous.”

Of course, there are differences between the two cases. The Texas power grid is a utility, and provides electricity within the geography of a single state. The U.S. healthcare system is actually a fragmented nationwide non-system of local often-uncoordinated systems providing healthcare. These services are underwritten by a hybrid of state, federal and private financing. The care provided by the system is entwined with societal determinants of health, and it interfaces with equally fragmented public health agencies.

Should Electric Power and Healthcare Be Designated as Public Goods?

The Texas power grid failure and the COVID-19 pandemic crises make us consider whether electric power and healthcare should, in fact, be designated as public goods. If so, they would fit economist John Kenneth Galbraith’s definition as good that “must be provided for everyone if they are to be provided for anyone, and they must be paid for collectively or they cannot be had at all.” If operated as public goods, our society would be making the deliberate choice that these goods should be “non-excludable,” that is, financed collectively for the benefit of all. They should be “non-rivalrous,” that is, supplied sufficiently to meet all “public need.”

In her book Why Democracy Needs Public Goods, Angela Kallhoff argues that public goods are part of the social contract. She points out that providing public goods in a fair manner contributes to strong democracies. Public goods do not necessarily need to be provided directly by the state itself, but the state must ensure equitable access to them for all members of society.

This blog has concluded that healthcare is indeed a public good. The public, acting through government, should ensure equitable access to “essential” needed care. Government should set standards for quality, promote streamlined administration, and require local coordination. In so doing, it could leverage its economic influence to control costs.

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References:

Sandro Galea, Public health as a public good. Boston University School of Public Health newsletter, January 10, 2016. URL: https://www.bu.edu/sph/news/articles/2016/public-health-as-a-public-good/
Angela Kallhoff, Why Democracy Needs Public Goods, New York: Lexington Books, 2011
https://en.wikipedia.org/wiki/Public_good_(economics)