Below The Beltway

I believe in the free speech that liberals used to believe in, the economic freedom that conservatives used to believe in, and the personal freedom that America used to believe in.

Don’t Blame The Free Market For The Health Care Mess

by @ 8:46 am on August 3, 2009. Filed under Barack Obama, Economics, Health Care Reform, Politics

The Reason Foundation’s Shikha Dalmia points out that the current health care system in the United States has far more in common with European socialized medicine than anything resembling a free market:

The fact of the matter is that America’s health care system is like a free market in the same way that Madonna is like a virgin–i.e. in fiction only. If anything, the U.S. system has many more similarities than differences with France and Germany. The only big outlier among European nations is England, which, even in a post-communist world, has managed the impressive feat of hanging on to a socialized, single-payer model. This means that the U.K. government doesn’t just pay for medical services but actually owns and operates the hospitals that provide them. English doctors are government employees!

But apart from England, most European countries have a public-private blend, not unlike what we have in the U.S.


The most striking similarity between America, France and Germany, however, is the model of “insurance” upon which their health care systems are based. In other insurance markets, the more coverage you want, the more you have to pay for it. Consider auto insurance, for instance. If you want everything–from oil changes to collision protection–you’d have to pay more than someone who wants just basic collision protection. That’s not how it works in health care.

For the same flat fee–regardless of whether it is paid for primarily through taxes as in France in Germany or through lost wages as in America–patients in all three countries effectively get an ATM card on which they can expense everything (barring co-pays) regardless of what the final tab adds up to. (Catastrophic coverage plans are available in America, but the market is extremely limited for a number of reasons, including the fact that most states have issued Patients Bill of Rights mandating all kinds of fancy benefits even in basic plans.)

Thus, in neither country do patients have much incentive to restrain consumption or shop for cheaper providers. In America and Germany, patients don’t even know how much most medical services cost. In France, patients know the prices because they have to pay up front and get reimbursed by their insurer later–a lame attempt to ensure some price consciousness. But since there is no cap on the reimbursed amount, the French sometimes shop for doctors based on such things as office decor rather than prices, according to a study by David Green and Benedict Irvine, researchers at Civitas, a London-based think tank. (Green and Irvine reported this as a good thing.)

The next time you hear President Obama or anyone else who advocates greater government control over the health care industry claim that the failures that we’ve witnessed around us — ranging from some people’s inability to obtain insurance coverage to the rapidly rising costs of medical care — on the free market, remember this; we don’t have a free market in health care in this country.

So, if something’s wrong with the current system, and the current system is dominated by government involvement and control, why exactly is the solution more government ?

H/T: Liberty Maven

3 Responses to “Don’t Blame The Free Market For The Health Care Mess”

  1. Jonathan says:

    I hear too often the argument made, that the reason costs are so high here, is because we have the highest quality health care in the world.

    This argument seems to push the real argument off the table, that costs are so high because of social mandates and social regulations.

    I would also love to see a statistic that compares people who sue hospitals, of those who pay their own way versus those who don’t have a job, and rely on the state to provide it (and, because they do not have a job, they get to watch lawyer commercial after lawyer commercial in between Jerry Springer segments).

  2. [...] Read more here: Below The Beltway » Blog Archive » Don't Blame The Free Market For … [...]

  3. Matt says:

    More government is the solution for healthcare for the same reason that more debt is the solution to our country’s bankruptcy.

[Below The Beltway is proudly powered by WordPress.]