January 12, 2017


Health Care Industry: Markets Work Better than Government (BEN SHAPIRO, January 11, 2017, National Review)

[M]edical care is a commodity, and treating it otherwise is foolhardy. To make a commodity cheaper and better, two elements are necessary: profit incentive and freedom of labor. The government destroys both of these elements in the health-care industry. It decides medical reimbursement rates for millions of Americans, particularly poor Americans; this, in turn, creates an incentive for doctors not to take government-sponsored health insurance. It regulates how doctors deal with patients, the sorts of training doctors must undergo, and the sorts of insurance they must maintain; all of this convinces fewer Americans to become doctors. Undersupply of doctors generally and of doctors who will accept insurance specifically, along with overdemand stimulated by government-driven health-insurance coverage, leads to mass shortages. The result is an overreliance on emergency care, costs for which are distributed among government, hospitals, and insurance payers.

So, what's the solution for poor people? Not to declare medical care a "right," and certainly not to dismiss reliance on the market as perverse cruelty. Markets are the solution in medical care, just as they are in virtually every other area.

Treating medical care as a commodity means temporary shortages, and it means that some people will not get everything we would wish them to have.

The notion that lower commodity prices depend on freedom of labor is at best a non-sequitor.  But that we can obtain said freedom of labor by preserving a system where 60% of Americans get their health coverage through their employer is truly peculiar.  

Globalization has commodified everything, not just health care, and prices have fallen, in almost all areas, because market pressures have been brought to bear. But the health insurance industry as currently constructed thwarts those market pressures.  Since we consumers of health care have no pecuniary interest in saving on costs we pay no attention to them.  It is precisely the current private health care system that drives prices higher (though W's HSA law has already begun to change this too).

Treating medical care as a commodity means letting consumers decide what they want to short themselves.  It means we won't get everything we wish because we'd rather have the money we would waste on unnecessary health care to use for something else.

As for whether health care is a "right"?  Every citizenry in every developed nation believes that one of the core purposes of government is to guarantee health care.  Six in ten Americans would just as soon it be provided by universal Medicare--a National Health system.  The argument is over, irrespective of whether we call health care a right or a privilege. It is a commodity that--like food and housing--we feel everyone is entitled to.  Fighting against that is an exercise in futility.

The real fight is over how we decide to drive down the cost of the commodity, with a single payer who has an interest in lower prices (which is how other countries do it), or by giving every actual consumer such an interest.

Posted by at January 12, 2017 7:39 AM