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Criticism of a speech by Graeme Samuel
to the World Bank, 29 February 2000

J. Michael Wynne MB. ChB, FRCS, FRACS, Grad Cert Ed (UQ)
19/12 Bellevue Pde, Taringa, QLD 4068, Australia

Criticism Number 1

TIMELY: - Samuel's speech is timely. The Australian senate is currently examining the funding of public hospitals. We have recently experienced the first fruits of our efforts to "reform" health care using market principles - widespread and systemic failures in aged care.

Samuel sets out the economic health care thinking which underpins the policy of the present government. He is clearly one of its strongest proponents. He adds depth to the policies set out by Dr Wooldridge in May 1996. If we examine government's policies and practices over the last 10 years they are the story of attempts to set Samuel's model for health care in place. It is almost as if Samuel has been the mind behind the minister. It is also the story of how these plans have been frustrated by the actions of citizens who recognised their dangers.

QUALIFICATIONS AND PREJUDICES: - During the last 10 years I have taken a particular interest in the development of marketplace in the USA and the way in which market systems for providing health care have been marketed across the world. I have practiced in three countries and in several different health care systems so have some "inside" experience. I have had access to many thousands of documents, analyses and arguments. This criticism is based on this experience. Like many citizens my level of economic understanding is based on checking my supermarket docket, being sold insurance policies, and buying motor cars - some second hand. I have become a successful consumer by learning to check my docket and learning the hard way to check every claim the salesmen make. By learning to distrust I have become an effective consumer, but this has not made me a better citizen. My study of market medicine has done nothing to change my view about trust in the marketplace.

In coming to economic and marketplace language my experience is of documents heavy in words, strong in rhetoric, impressive in style, plausible in argument but weak in fact, logic and common sense. I was delighted to find my assessment of modern economic thinking and the ideology, which supports it, confirmed by John Ralston Saul in his Massey lectures. In his view abstractions had become a substitute for reality. I bring the distrust of the market and the scepticism about words developed from this experience to Samuel's attempt to sell a market model for health care.

SAMUEL'S APPROACH: - Samuel's model is developed from economic theory. Understandably it is full of economic concepts and arguments. I sometimes had great difficulty in understanding exactly what he was proposing and struggled to get simple meanings from his claims and his arguments. I felt that he ignored some important considerations and was far from clear on others. I realise that the speech was to the World Bank, a group of economists who would have a far better grasp of what he was talking about. He was limited by time.

I have sent Mr Samuel a copy of my criticisms and invited him to respond to these in simple terms - the same sort of terms in which doctors explain complex illness to their patients in order to empower them and enable them to make decisions.

These issues are very important for Australia and for developing countries. Citizens in the USA are finding that it is almost impossible to move away from a market system once it is established. My criticisms and Samuel's explanations and responses if he chooses to make them are placed on this www site. It is intended to be a critical resource for those interested in marketplace medicine. This issue should be widely debated from many different points of view.


SAMUEL'S MODEL: - Samuel's model proposes a set of roles, which are set at arms length from one another. These include funders, purchasers, providers, monitors, and regulators. The model operates through a system of carefully structured contracts. Competition and market principles are the basis for the arguments. Desired outcomes are to be achieved by market pressures, competition and incentives. Adherence to the contracts is to be ensured by outcome measurement and regulation.


A LACK OF LOGIC: - Like Dr Wooldridge, Samuel argues his model on the basis that health care is an industry and that it is therefore a marketplace activity. Similar processes and practices have been successfully applied to other sectors of the market. He claims that because these measures have been successful in other market activities they will succeed in health care.

I point out that the argument is not logical and so is fundamentally flawed. It is not a necessary condition of qualifying for the term industry that market applicability follows. In fact industry, as is revealed by my dictionary is a very broad term embracing many different types of human activity. There is no logical basis for asserting that because some industries operate in and are well served by the market that all industries will be well served this way. It is as logical as saying that a dog is an animal, therefore all animals are dogs.

The marketplace activities, which he uses as examples, are in fact very different activities and his basic reasoning is consequently fatally flawed.

IGNORING THE HEALTH CARE MARKETPLACE: - There has been a very well developed health care marketplace in the USA for 30 years yet Samuel does not use this to support his arguments, nor does he confront the considerable volume of information about the way it operates. Instead he points to other countries which have only more recently experimented with market principles. They are not yet evaluable.

These two in my view fundamental and obvious deficiencies fuel my suspicions about exactly what Samuel is saying and the remainder of the arguments, some of which I had difficulty in grasping. I am concerned that the language conceals similar problems.

FROM THEORY TO PRACTICAL CONSIDERATIONS: - In my criticism I confront Samuel's theoretical model with the practical experience of market principles as they were applied in the US marketplace and the early experiences in other countries including Canada and Australia. I analyse these to show how the pressures of competition and the profit requirements of the share market have undermined the ethical structures of the health care professions and betrayed the trust of the community.

I examine the cognitive factors, which operate in the marketplace and suggest that a form of Social Darwinism has selected for the least suitable people and the least suitable corporations. As a consequence the health care marketplace has been characterised by massive fraud, the widespread misuse and abuse of patients, denial of care to many who are entitled to it and the neglect of vast numbers of frail elderly. Corporate giants have appropriated the money intended for care and used it to fuel growth and create massive corporate empires. The competition has been for market share and not customer service.

THE RELEVANCE OF THE US MARKETPLACE: - Samuel later in his argument tries to distance his model from the US system of care claiming that what he is advocating is fundamentally different. I am unable to understand how it is different as the underlying principles, which he sets out and the structures, which he uses, are almost indistinguishable. He has simply rearranged the bits and then claimed that this makes it all different.

I argue that an analysis of the way in which commercial forces and competition have operated, and the outcomes which have resulted in other health care markets are directly relevant to assessing the way in which the same forces and similar competition will operate in Samuel's model. They are relevant even if, as Samuel claims his model is different.

I also argue that US health care corporations dominate the health care market in the USA and internationally. They have global ambitions and are strongly supported by the US government and international trade organisations. Regardless of Samuel's wishes and his model the market system is so powerful and the trend of the global market is so strong that the US system will be transplanted once it gains entry.

Samuel claims that government will maintain control. I point out that it is corporations, which have controlled government in the USA and Australia. The market has simply imposed its practices. Large US megacorps are wealthier than most governments. They are extremely skilled and there is little likelihood that they will be controlled. World trade agreements and the World Trade Organisation's (WTO) processes will place strict limits on any government's ability to control multinationals.

A TAUTOLOGY: - Robert Kuttner argues that there is at the core of the celebration of markets a relentless tautology. If everything is a market and market principles are universal then if anything is wrong it "must be insufficiently market like. This is a no-fail system for guaranteeing that theory trumps evidence." and "It does not occur that the theory mis-specifies human behavior." Kuttner asserts that "real people also have civic and social selves."
(Kuttner R "The Limits of Markets" The American Prospect No 31 Mar-Apr 1997: p28-41)

If Kuttner is right then the response of the true believer to a failure of the market is to either ignore that failure or to claim that the situation was not sufficiently market like and market principles need to be more rigidly applied.

The latter strategy has been employed repeatedly in the USA as new attempts have been made to modify the market system to make it work. "Managed care" is one of these. The concentration of international arguments on the catch phrase "managed care" has served to skew the debate and divert it from much more fundamental and important issues about the application of market principles to health care. Managed care is only one example.

Samuel writes of " --- the principle of maximising reliance on market forces and the need to ensure enhanced competition ----". Later he talks of the " adoption of the fully competitive model of health care provision". When talking about US-style "Managed care" he claims "the model I have outlined differs crucially in having a greater reliance on competition and market mechanisms". I suggest that his statements and his model illuminate Kuttner's claim.


CONSEQUENCES OF COMPETITION: - I show how competitive profit pressures have resulted in fraud, overservicing, and the exploitation of vulnerable people for profit. When the market pressures were restructured to address these problems and reduce costs they resulted in the denial of care and in the underfunding of services to the extent that many of the most vulnerable elderly were neglected and died.

Contrary to Samuel's claims disenchantment with the health system in the marketplace far exceeds that in any other system. It is more costly. It has limited choice. Its complicated competitive structure renders it extremely inefficient. Excessive profits are taken from the system so that there is less for care. Samuel's model has a similar complex structure.

CONTROLLING THE SYSTEM: - Samuel's model depends on measuring outcomes, monitoring, regulating and penalising. I challenge the logic of developing a system that depends for its successful operation on forces, which foster undesirable practices that then need so much regulatory vigour to control them. I suggest that a much simpler system, without competitive market pressures, built on the concept of cooperation and integration and directed simply to achieving good health care would be infinitely preferable.

I examine the difficulty in getting accurate data in a competitive market system and the limitation this places on medical progress, ongoing oversight, audit and in fine-tuning care. I also question the validity but not the importance of simple outcome measures in accomplishing Samuel's purpose.

I show how monitoring, regulation, oversight and penalties have failed over and over again in the USA and in Australia. I explain why this has happened and why these processes do not work. It has been ordinary citizens and not formal oversight structures that have exposed the glaring problems in the health care market.

ARMS LENGTH ROLES AND POLITICS: - Samuel's lays stress on arms length roles in making his model work. I show how arms length structures intended to protect patients have repeatedly failed in the USA and Australia. The arms length has simply been ignored. Politicians intent on supporting corporate interests have failed to regulate to control them. They have failed to give regulatory structures legal backing so that they can be enforced. Regulations designed to protect citizens have been subverted. Important clauses in regulations protecting citizens have simply been ignored. The nature of the political process, and the close relationship between politicians and credible sectors of the establishment render Samuel's model inoperable.

BUILDING A CHAIR: - I argue that health care is a complex area of human activity, which cannot be grasped or handled within any single paradigm of understanding. To use economic theory, a single paradigm as a framework for building a health system, or for that matter any other social structure is like building a chair with a saw. Many other tools are required. Paradigms of understanding are the tools we use to examine the various options, which are open to us. They each play a lesser or greater part in building the chair. Economic understanding is one tool with which to evaluate proposals and to help in running any system. It is not a tool for designing structures where the objectives are not economic.

The market is characterised by self-interest, temptation, and distrust. Its willingness to exploit the weakness of others is well recognised. This is why it has traditionally been kept at arms length from humanitarian services to vulnerable citizens. Health services have accomplished this by a system of professional ethics. When these have been supported by society they have worked. When society's view of the world has put strong pressure on ethical traditions they have crumbled. Samuel's model disregards and discredits the lessons of history.

INSIGHTS FROM THE MARKET IN DESIGNING SOMETHING BETTER: - I use the insights from the study of market practices and the impact of the market on cognition to suggest principles on which a health system could be structured. I suggest ways in which these issues can be explored in order to advance the process. Communication technology has much to offer health care. Ways in which these benefits might be attained without subjecting health to the problems engendered by the marketplace are suggested.


I have used Samuel's speech as the framework for my criticisms, writing around sections of his speech. As a result there is some repetition. I have not adhered strictly to his topics but have digressed in order to explain the operation of the marketplace before a section is reached or to throw more light on matters which are relevant to the application of market principles to health care.

CRITICISM AND PARADIGMS: - One of the difficulties in using Samuel's arguments is that I am forced into his frames of interpretation and the logic inherent in the paradigms he uses. The real criticisms come from standing outside the health care marketplace and examining its activities from alternate points of view.

Annas points out that arguing within a single paradigm (he calls them metaphors) generates logical simple to understand solutions. Mixing paradigms create ambiguity, complexity and uncertainty. Humans seek coherence, simplicity and certainty. The appeal of ideology is that it offers all of these. Social change and upheaval creates angst and uncertainty. We more readily grasp at single paradigms. They provide coherent systems of meaning within which we can define and build our lives. The existential forces generated may make us blind to fact and logical arguments from outside the paradigm. This has happened on multiple occasions this century sometimes with tragic consequences (eg Germany, South Africa). Society and humans are not simple. A healthy society supports and benefits from a wealth of paradigms. It addresses the conflicts and copes with the complexity.

(Annas G. J. Reframing the debate on health care reform by replacing our metaphors N Engl J Med 1995; 332:744)

THE MARKETPLACE PARADIGM: - Market solutions have an internal logic. This is difficult to confront by arguing from within the marketplace paradigm. The criticism is that the marketplace paradigm has developed within one of society's structures and derives its self evident legitimacy from that domain of human activity. It is consequently limited in its insights. It does not have universal applicability. As a universal system to live by it is fatally flawed.

I have argued that there is discordance between the narrow marketplace paradigm that is driving the world, and the traditional paradigms within the wider community - our culture. This discordance is at the heart of the Pauline Hanson phenomenon in Australia. A similar discordance between the 20th century penchant for all embracing theory and an emerging post modern understanding of the importance of the context within which lives are lived lies behind the demonstrations in Seattle and Melbourne.

The extent to which market advocates are out of touch with the concerns of their critics is revealed by the claim made after the Melbourne meeting that critics do not understand and should be educated.

The critics are media savvy. The thinking and the arguments that are driving marketplace globalisation are being closely watched. They are being critically evaluated, as are the attempts to educate the public. The deficiencies and incongruence are glaringly obvious to those living outside the marketplace paradigm. Samuel's speech lies within the market paradigm and uses marketplace logic, yet and its flaws are glaringly obvious. The task facing critics is to express these criticisms and expose the flaws in a world where language, our means of communicating has been appropriated and restructured in marketplace terms.

In fairness to Samuel I ask that you read the sections of his speech first so that the flow of his arguments are not disrupted by my criticisms. Then return and read the criticisms.

CLICK HERE -- to go to the criticism (Nu 2) of the first section of the speech

CLICK HERE -- to go to the beginning of Samuel's speech.

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This page created October 2000 by Michael Wynne