The unfree market in health care

Keyser Söze

“The greatest trick the Devil ever pulled was convincing the world he didn’t exist.”

Remember this line from The Usual Suspects?  It surely applies to health care reform. As the Cato Institute’s Michael Cannon  has written:

To paraphrase Keyser Söze, the greatest trick that supporters of socialized medicine ever played was to convince the American people we don’t already have it.

Check out President Obama’s blaming the free-market for the problems with medical care and insurance in the Unites States.  The New York Times quotes President Obama as saying that the proposed government-run insurance plan (the “public option”) would “ensure coverage for people where the free market system fails,” …, “We’ve got to admit that the free market has not worked perfectly when it comes to health care.”

What free market?

Does Barack Obama seriously think that there’s a free market in medical care or insurance in Unites States?  Is he ignorant?  Is he trying to trick us?

Sure, there is a market, that is, people exchange goods and services. But it is by no means free from political mandates, controls, and prohibitions.  That is what a “free market” is supposed to be free from, where people interact on a voluntary basis. Government’s taxing citizens to pay for other people’s medical care, prohibitions and mandates on how insurance companies, hospitals, physicians, drug companies, etc. can interact with customers are all intrusions the market that make it less free.

As Ronald Bailey points out, “about 47 percent of all health care expenses today are paid for by federal, state, and local governments, e.g., Medicare, Medicaid, and State Children’s Health Insurance Program (SCHIP).” Both Medicaid and Medicare drive up insurance premiums, not to mention the taxes you pay for them.

And then there’s regulation.

Chris Connover at Duke University concludes that that cost of “regulation of health facilities, health professionals, health insurance, drugs and medical devices, and the medical tort system, including the costs of defensive medicine” … “exceeds $339.2 billion.” “the net burden of health services regulation is considerable, amounting to $169.1 billion annually. In other words, the costs of health services regulation outweigh benefits by two-to-one and cost the average household over $1,500 per year.”

Let’s not forget why many of us buy the medical insurance our employer offers: the tax code penalizes us if we forgo this and choose to buy it on our own. It has disfigured real insurance into prepaid health care, or health insulation.  This biased tax code shields insurers from competition, amplifies the threat of pre-existing conditions, and encourages over-consumption of treatment which drives up costs for everyone.

There’s also insurance regulations, like guaranteed issue and community rating, which increase the costs of insurance and the number of uninsured.

For more, check out Michael Cannon’s article, his analysis of Obama & socialism, and my additions, about how the U.S. already has socialized medicine.

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2 Comments

Filed under Policy - National, regulation

2 responses to “The unfree market in health care

  1. Pingback: Donald Berwick: blame “private” enterprise, embrace politically-controlled medicine | Independence Institute: Patient Power

  2. Pingback: The Truth About Government-run Health Care :: Michael Island

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