Fixing Healthcare Distortions


The first step is, the American public must understand that there is an alternative. Stand up and demand it.

This quote is excerpted from a great article in the WSJ by economist John Chochrane explaining the health market problem. Just realize that any time someone tells you the open, competitive (free) market doesn’t work, they are blowing smoke out their %#$.

The U.S. health-care market is dysfunctional. Obscure prices and $500 Band-Aids are legendary. The reason is simple: Health care and health insurance are strongly protected from competition. There are explicit barriers to entry, for example the laws in many states that require a “certificate of need” before one can build a new hospital. Regulatory compliance costs, approvals, nonprofit status, restrictions on foreign doctors and nurses, limits on medical residencies, and many more barriers keep prices up and competitors out. Hospitals whose main clients are uncompetitive insurers and the government cannot innovate and provide efficient cash service.

We need to permit the Southwest Airlines, Wal-Mart, and Apples of the world to bring to health care the same dramatic improvements in price, quality, variety, technology and efficiency that they brought to air travel, retail and electronics. We’ll know we are there when prices are on hospital websites, cash customers get discounts, and new hospitals and insurers swamp your inbox with attractive offers and great service.

The Affordable Care Act bets instead that more regulation, price controls, effectiveness panels, and “accountable care” organizations will force efficiency, innovation, quality and service from the top down. Has this ever worked?

It is unfortunate to say, but my impression is that a functioning healthcare market is not really what our national politicians want, at least not the statists calling for government-controlled healthcare. Instead they focus on dominating national politics by obliterating the opposition party. They can accomplish this if they can bind voters to government entitlements through dependency: “Vote for us or lose your benefits!” Without a viable opposition, single party government can then do what it wants according to their own interests, but ostensibly for the “good” of the people.

This has actually worked for the politicians of many socialist societies, until economic reality blows up the machine. (For a good case of how this is working in capitalist America see Detroit and Chicago…) The only thing that stops this is a voting majority that realizes we never receive something from government (ourselves) for “free.”

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