A Pyrrhic Victory for the Free Market
Cape Girardeau will soon have a new $10 million dental and vision cooperative. From an article in the Southeast Missourian:
“The clinic will provide affordable access to top-quality dental and vision care to its members without the limitations and costs associated with traditional insurance,” Dickerson said.
People who join the cooperative become part owners and pay dues to get basic services such as checkups, cleanings and comprehensive exams.
For many reasons, health cooperatives are a great free-market health care solution. There are many positive consequences to increasing the number of health cooperatives in the market, such as improving patient access, lowering costs, and reducing bureaucracy. Because individuals will be spending their own money (not the money of a third-party insurance provider), they will consume health care more deliberately, as they would with a health savings account (HSA). Increasing the number of health care cooperatives in the market would place downward pressure on the cost of routine medical care. Patients would be better off, not only because their health care would cost less, but also because specialty providers could focus their resources on the patients that need more critical care.
To my grave disappointment, however, the project is subsidized by state targeted tax credits. Again from the article:
Gov. Jay Nixon joined Watch Me Smile dental and vision cooperative developer W. Weaver Dickerson at the former First Federal Bank building to announce the project and $2.05 million in state economic development incentives. […]
His company is receiving $1.3 million in Missouri Quality Jobs funding and a $750,000 community development block grant, Nixon said.
If past performance of the Quality Jobs program is predictive of its future, this particular project might not deliver on its projected fiscal impact. According to an April 2010 report on tax credit cost controls from the state auditor’s office, the actual redemptions of the Quality Jobs program exceeded the projected long-term fiscal impact. For fiscal years 2005 to 2009, the fiscal notes projected $124,000,000 in economic impact, but only $10,724,353 was measured — $113,275,647 below the projection. Failing to deliver on promises, in terms of job creation and economic activity, is a problem that’s pervasive in tax credit programs in Missouri and other states.
Because the consumer demand for routine primary health care services is high and constant, I suspect that this project would be successful independent of subsidy. The general welfare in Missouri would benefit from the proliferation of health care cooperatives, but subsidizing their development negates at least some of their benefit.