Ever since the US government began to sink its claws into the medical industry a good 50 or so years ago, attempts at reducing costs have failed again and again. This is par for the course whenever government invades an industry.
Trying to reform this Frankenstein with either Obamacare, or Trumpcare, will solve nothing.
The problem is structural. Tinkering with this or that will just waste more time.
RELATED: “How Government Regulations Made Healthcare So Expensive“ by Mike Holly
In order for real change to happen, a fundamental change has to occur in the thinking about what health care actually is. It’s not what Americans have been conditioned to believe.
Peter Klein has put it into plain language in the following short video. I’ve also transcribed key sections below:
From a fundamental economics point of view, what is healthcare exactly? One of the things that’s particularly frustrating for me as an economist is this notion that “healthcare” is some kind of a unique good or service, that everybody needs, everybody wants, but cannot be provided by the market the way the market provides shoes, or tomatoes, or automobiles, or any other good.
But what is healthcare?
Nobody consumes “healthcare”. No one has a right to “healthcare,” because healthcare is not a homogeneous thing.
There’s no such thing as one unit of healthcare.
Rather what we mean by healthcare is a discreet set of specific commodities, goods and services, that you can buy in combinations, or different quality levels.
So open heart surgery is a service you can purchase on the market that contributes to your health. But so is taking an aspirin.
In other words, there’s no such thing as “healthcare.” There’s a heterogenous bundle of goods and services that different individuals will want to consume at different levels.
Now when we think about it this way, it becomes far from obvious that these particular kinds of goods and services cannot be supplied on the market just like other goods and services.
If we would just allow the free market to work, if we could eliminate the third party payer system, the government subsidies on the expenditure side that drive prices up, there’s no reason why a truly free market in healthcare goods and services couldn’t be just as effective in the U.S. as the market for computers, software, automobiles, or the market for anything else.
It should be noted that it’s not just the government that opposes the free market. Yes, politicians love wielding power and like forcing people to do things against their will.
But the cornucopia of crony businesses in the medical industry would oppose the free market as well. They have a sweet deal using government power to their advantage. The last thing they would want is to compete in a free market without government giving anyone an advantage.
So this is not a government vs. business issue.
