Way back in 2009, I cited a very good article in The American Spectator in hopes of getting people to understand that the United States does not have a capitalist health care system (and I’ve since tried to reinforce that argument, over and over and over again).
Instead of a free market system, we have an inefficient and expensive system that it almost entirely the result of bad government policies.
Medicare, the government health program for old people
Medicaid, the government health program for low-income people
These programs and policies cause “third-party payer,” which is what happens (as explained in this video) when consumers pay for something with other people’s money.
For this sequel column, here’s a visual that further cements the argument. It shows prices rising as the third-party payer problem worsens.
The chart comes from an article in National Affairs by Michael Cannon.
Here’s some of what he wrote.
Many critiques of U.S. health care begin with the assumption that, as The Economist put it, the United States is “one of the only developed countries where health care is mostly left to the free market.” …That assumption gets the situation backward: In truth, among wealthy nations, the United States may have one of the least-free health-care markets. In a free market, government would control 0% of health spending. Yet the Organization for Economic Cooperation and Development (OECD) reports that in the United States, government controls 84% of health spending. In fact, government controls a larger share of health spending in the United States than in 27 out of 38 OECD-member nations, including the United Kingdom (83%) and Canada (73%), each of which has an explicitly socialized health-care system. When it comes to government control of health spending, the United States is closer to communist Cuba (89%) than the average OECD nation (75%). …Direct government price-setting, price floors, and price ceilings determine prices for more than half of U.S. health spending, including virtually all health-insurance premiums. …U.S. health-care prices are excessive because government controls them.
By the way, this is just a small excerpt from an article that is almost 3,800 words. As they say, read the whole thing.
But I will share Michael’s proposed solution. Simply stated, get government out of the way.
Making health care more universal will require policymakers to eliminate regulatory and tax distortions of health-care prices, and to remove government from the business of purchasing health insurance and medical care. The most important step would be to adopt tax and entitlement reforms that let consumers control all $5.6 trillion in U.S. health spending. When 340 million consumers find that they — rather than employers, insurers, or the government — get to keep the savings from price-conscious purchasing, they will spark price competition that will cause prices to plummet and thereby make health care continuously more universal. Insurers and providers will offer consumers what they want — better, more affordable, more secure health care — or go out of business. The government could still redistribute to the elderly, the poor, and the sick. But it would do so as Social Security does: with cash. No more centralized economic planning to drive up health-care prices and reduce health-care quality. The next step would be to eliminate the reams of regulations that block access to lower-cost, higher-quality health insurance and medical care.
Basically, we should want the market for health care to work the way it does for strawberries or laptops.
Like shown by this comparison of free-market simplicity and Obamacare complexity.
As you might expect, I’m partial to this visual I created, which shows how government creates layers between consumer and providers.
It’s another way of depicting the spread between free markets and statism in health policy.
Last but not least, I can’t claim any credit for this meme, but it accurately depicts the way government is responsible for messing up the market for health care.
