In what’s left of Newsweek my good pal David Cay Johnston does a fine job of pointing out what Cato and all libertarians and free-market gurus like Milton Friedman have been pointing out for half a century — we don’t have a free market in health care (The Myth of Health Care’s Free Market).
It’s rigged in many many ways. Let’s do some more ‘splaining about why it’s rigged — and why eye care and dentistry don’t have the same crazy price differences and have seen real prices go down over the last 30 years, not up.
Only governments can kill free markets. The current mess we have is largely a result of government intervention, subsidies, excessive regulations, things like the prohibition of midwifery and transplant markets and protections granted to cartels like the doctors, who, unlike the average widget maker or investment counselor, can keep their numbers down and prices up because they are given the power and cover to do so by state licensing boards.
Price competition exists in health care — across national boarders, which is why medical tourism flourishes in India (or in the USA, when Canadians come to get their new knees and hips at the Cleveland Clinic instead of having to wait 14 months for the “free” Canadian system to get around to providing them).
Price competition doesn’t exist within the USA borders because there is no price information shared with consumers (it’s essentially “illegal”), as David pointed out, and because doctors and hospitals collude and pass along the costs (often arbitrary and bloated).
You don’t need to know how to make a car to pick a good one to own; you don’t need to know how to take out your appendix to hire a doctor who can.
But you wouldn’t go into a BMW dealer, order a car without looking at the price tag and tell them to send the bill to your employer or favorite government health care bureaucracy.
Free markets work wonderfully for everything from cars to shoes. Consumers of each have virtually infinite choices in price and quality of both goods.
There is nothing preventing the health care sector from achieving the same efficiencies except the heavy hands and feet of government and the politicians who pretend everyone can get free health care for nothing.