It is not the free market that has failed. It is government.
Therefore, the second approach to cost-cutting is in order: Eliminate all the ways that government causes medical price inflation. These range from supply-side interventions—including occupational licensing, certificates of need, the FDA, and patents—to demand-side interventions—including tax favoritism toward employer-based insurance, Medicare, and Medicaid. Third-party payment that makes medical services appear free or nearly so encourages overconsumption and raises costs indirectly for everyone, with particular hardship to those not participating in the programs.
To set things right, consumer prices and true costs must be aligned through the market process. People would then become cost-conscious buyers of services and would most likely reserve insurance for truly insurable catastrophic events. Of course, some who need medical attention wouldn’t be able to afford it. That would be less frequent in a real free market, but when it occurred, the answer would be voluntary charity rather than clumsy bureaucratic intervention.
Government always tries to blame its failures on the free market. Government intervention in the healthcare system goes all the way back to WWII, when the third party payment system emerged as a way to avoid government imposed compensation caps. The more government has gotten involved in healthcare, the faster the price has risen. The obvious answer is to reduce the role of government in healthcare (and the insurance companies who only got involved through government intervention in the market), but when was the last time government offered to reduce its role in anything?
No comments:
Post a Comment