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Some economists and probably many people in the public are concerned about markets providing healthcare instead of the government. In Europe, its practically unthinkable.
Sure, you can have some private healthcare on the side, but let the government due the bulk of the work and guarantee that everyone has access to healthcare.
Now, there are many sides to this arguments, but in this post, I will try to focus on just one: the fallacy that healthcare has to be so expensive that only the government can provide it to everyone.
Healthcare Costs
Typically, when markets are left alone (ie, no or minimal government intervention), the prices of goods tends to go down while the value of goods tend to go up at the same time. This can be explained through increases in productivity and innovations in that sector. This can be shown in the chart below:
(Blue lines = prices subject to free-market forces. Red lines = prices subject to regulatory capture by government. Food and beverages are debatable either way.)
Healthcare in particular, is an area the government has very heavy intervention and as we can see, this results in higher prices over time.
Between 1998 and 2021 prices for “Medical Care Services” in the US (as measured by the BLS’s CPI for Medical Care Services) more than doubled (+132.2% increase) while the CPI for “Hospital and Related Services” (data here) more than tripled (+230.4% increase).. Those increases in the costs of medical-related services compared to only a 66.2% increase in overall consumer prices over that period.
Cosmetic surgery (ie, a more free market), only grew 38.2% during that same time, which is under the inflation rate of 66.2%.
Health Insurance
As healthcare costs become higher or go beyond a certain price level where it becomes unfeasible to pay out-of-pocket, people are forced to rely more on health insurance to pay for medical issues they may have.
Government-Caused Problem
The heavy intervention of the government into healthcare over the years has caused the prices to go up and become less affordable by regular people ? which in turn has resulted in people turning more to health insurance. The problem is that the prices keep going up and as a result, health insurance prices also have to keep up ? until at some point they will become unaffordable by most of the voting public and they will ask the government to step in one last time and nationalise the whole thing.
But What If?
What if prices didn’t have to keep going up? What if healthcare went back to the market and prices started going down?
This will allow people to afford paying out-of-pocket for prescription drugs.
It will allow people to pay to doctors directly for a visit for around $35 or a monthly subscription fee of $50-$100
It will allow people to invest in themselves and purchase consumer healthcare monitoring products that will give them and their specialists better information about which pro-active healthcare they need.
Of course, we would still need healthcare insurance for larger emergencies, but the price of those would necessarily go down as the price of care goes down and more people opt to pay out-of-pocket for smaller issues. We could also have more control over your money intended for healthcare with a tax-free healthcare savings account that may give you more flexibility and peace of mind.
