Sunday, December 16, 2007

On Medical Freedom

Lately, in regards to the current debate as to whether we ought to have some form of federally sponsored health care regime, I've been running across the following type of comment: We already know what a free market in medicine looks like (or capitalistic health care), and we already know that it doesn't work. I beg to differ.

I am not any kind of expert on the health care industry. I am not a doctor. I do not work in the insurance industry (though I did once process records for workman's compensation). I'm not any kind of lawyer. However, from my own vantage point, I can see that we do not have a free market in health care in this country. And it isn't merely that it isn't "free enough," so far as I'm concerned, it's not really all that free, at all.

I have worked for a couple employers over the years that provided health benefits. One of them allowed a choice between Kaiser Permanente and Cigna; the other, Kaiser only. Those were my options. Sure, I could have opted not to participate in my employer's program and gone with an independent provider, but in doing so I both forgo the matching contribution of my employer, and become one in a very small, noncompetitive market: people who get their health care through someone other than their employer. In short, it is very expensive to get health insurance via any source other than an employer, and your employer offers very limited options, if any. With such a captive subscriber base, is it any wonder health insurance is expensive?

This state of affairs is not the result of the functioning of the market. It is the result of government regulations that require certain kinds of employers to provide health care to certain kinds of employees. These regulations, creating a captive market, drive up the price of health insurance. Given it is mostly insurance companies paying doctors for their services, it also drives up the cost of health care, in general.

Then there are the doctors themselves. Medicine is a highly guarded field in this country. In unregulated product and service fields, you generally have a range of qualities of product and service, with a similar range of prices. You can pay some kid or immigrant to mow your lawn, or you can hire a professional, highly paid landscaper to turn your yard into a work of art. You can buy the older model car used for a couple thousand, or you can pay fifty grand for a luxury car. You can get a free cell phone from a service provider that has frequent outages for next to nothing, or you can get one of the latest models with all the bells and whistles from a carrier that covers everything for considerably more. But when it comes to medicine, if you're not doing it yourself, it's either The Doctor, a Nurse supervised by The Doctor, or nothing at all.

Simply put, Doctors (along with people in many other service professions, including teaching and my own industry: pest control) enjoy a situation much like that of the crafts guilds in mercantilist Europe: the right to control the supply in order to keep prices artificially high, to the point of being able to prosecute anyone outside their club of practicing "without a license." With the AMA enjoying a monopoly--established, once again, by the government, not by the market--in medical services, is it any wonder prices are high?

Even if anyone was allowed, there's still the paperwork. No, I don't know the details, but sending enormous stacks of records and reports to the government costs money, as well. Either the doctor has to waste time he could spend helping patients filling out stacks of redundant paperwork, or he can hire someone else to do it. Either way, that's more money to spend.

Then there's prescription drugs. The price of bringing new drugs to market includes the price of assuring the government that the drug is totally and completely safe: that price is astronomical. And if you think that the approval process is necessary for public safety, understand something: under current regulations, aspirin would not be approved. This is a drug that, while most people are aware there are potential problems with it, most people use safely both as a pain reliever and as a heart medication. I won't even go into the tendency of the federal government to ban any potential medicines that could be grown just about anywhere (cannabis was long known as an effective medication until that "evil Mexican weed" marijuana was banned during the early twentieth century).

Put all this together, and you have an enormously expensive system, and every last extra expense is the result of government regulation. I'd say it isn't the result of the greed of the market participants, but understand that the organizations I mentioned earlier--the AMA and the big pharmaceutical corporations--lobby for and approve of efforts to regulate the industry further. There is corporate greed, but the tool with which they express that greed is not the market (where the consumer is king--that's you and me), but the government.

Sure, there are people out there that can't afford medical care regardless, and perhaps some change is necessary to help those people out. However, I am certain that the number of people unable to get care would drop considerably if both existing and potential medical providers were given the freedom to compete for our business, rather than existing providers alone being given barriers to prevent competitors from finding ways to lower prices. It wouldn't surprise me a bit if those last few who couldn't afford care in a society that possesses medical freedom are few enough that doctors (and other medical practitioners) could afford to treat them themselves, without government payment. Or not.

Public distribution of land rent could help.

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