Tuesday, June 23, 2009

The Unfree Market in Health Care

In response to President Obama's claim that the free market has failed us in health care, Brian Schwartz reminds us why the current problems in health care should not be blamed on the free market but rather on government interference in the free market.

Here's an excerpt from his post:
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...
Read the whole thing.

George Mason University economics professor Peter Boettke makes a similar point in this article:
If you bound the arms and legs of gold-medal swimmer Michael Phelps, weighed him down with chains, threw him in a pool and he sank, you wouldn't call it a 'failure of swimming.'

So, when markets have been weighted down by inept and excessive regulation, why call this a 'failure of capitalism'?
Although Boettke was referring to the financial crisis, his analysis applies equally well to health care policy.

Or as Ayn Rand stated in 1975:
One of the methods used by statists to destroy capitalism consists in establishing controls that tie a given industry hand and foot, making it unable to solve its problems, then declaring that freedom has failed and stronger controls are necessary.
Before we can fix the problems in American health care, we must correctly identify the source of those problems. Thank you, Brian, for doing exactly that.