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Opinion

Health care benefits from free market

Monica Granger 
Opinion Columnist

Before the glorious blur that is spring break, the first column in this four-part series on health care told how the current medical guild system came to be subsequent to pressures on first state and later the federal government by the American Medical Association in the late 19th and early 20th centuries. The restricted supply of doctors caused an immediate price increase that remains today. 

It also described how access to the power of the coercive state apparatus perverts market incentives like the profit motive by prostituting the penultimate protector of our lives, liberty and property to the highest bidders (penultimate because that responsibility must lie ultimately with the individual or higher being if you so believe). 

The Walter Reed Army Medical Center fiasco sadly highlights that government health care cannot care for even a relatively small number of esteemed soldiers, much less an entire nation. In the wake of this story, we find a slew of other government-run hospitals now receiving apt criticism. The solution is not more government intervention.

Even if government was filled with impossibly altruistic persons rather than the usual power-hungry egomaniacs, central planning will always fail. Socialized health care is neither universal nor moral nor worth its cost to consumers.

The primary reason central planners cannot plan markets is because there is no way to plan the voluntary interactions of millions (even billions) of consumers, producers and entrepreneurs. Every coercive mandate deprives these market participants of the liberty to provide and purchase health care how they choose. 

Typical justifications given for government intervention in health care are price, morality and quality. Intervention is necessary, it is said, because prices are too high, health care is a right and because quality is too important to leave unaddressed.

Prices reflect a wealth of information such as resource scarcity, which is a dynamic process of supply relative to demand. More nuanced is that the plethora of ever-changing subjective preferences held by market participants is what guides market exchanges and establishes prices -- a function impossible for central planners to replicate. 

Eminent economists like Ludwig von Mises and Friedrich Hayek vividly describe this beautifully organic process in many works available free from the non-profit Ludwig von Mises Institute at www.mises.org.

Proponents of socialized health care also claim health care is a right, but to say so implies that it can be taken from another (since not everyone is a health care professional). No right endows an individual with the ability to enslave another for his or her own benefit; therefore, health care is not a right.

Which is not to say that health care should not be public. It should be available to all, and this widely held belief is precisely the kind of information private corporations attend to in a freely competitive marketplace. The more competitive the market, the more innovative producers of health care must be in order to attract patients' loyalty. 

In socialized medicine, there is one provider: government, which is not subject to the same profit incentives as in the free market. Instead of turning to patient-consumers as the profit purse-keepers, health care providers would be forced to seek government favor and funding, leading to the further politicization of health care. If you think bureaucratic red tape is bad enough now, just wait. Or rather -- tell your Congressperson socialized medicine is not the answer.

This leads to a third argument of proponents of socialized health care -- that health care is too important a service to allow quality standards to go unenforced. To this most consumers agree, which is why private ratings and information institutions like Erowid.com or CareScout.com, which cater to elderly persons seeking assisted living homes, are so vital to informed health care decision-making.

Price controls will unavoidably restrict the supply of health care and health care providers in America as producers exit the market for lack of profit. There goes the "universal" bit of health care propaganda.

This restricted supply will then prompt rationing of and lower-quality services as in Canada's system that compensates for its inefficient product by forcing patient-consumers to wait months for simple procedures such as MRIs. Timing is critical in many health care decisions and rationing will lead to preventable deaths. 

The coercive foundations of our current health care system are divisive, moreover. It is not doctors, per se, that are loathed but the protectionist guild system that artificially inflates doctors' wages and health care costs by restricting supply.

The tendency of free markets, however, is toward greater supply, lower costs and higher quality as hospitals compete for patients on these and other aspects of health care. Socialized health care is neither universal nor moral, and America's medical guild system is unjustifiable any longer.

This is Part 2 of a four-part series concerning health care. 

Granger, an economics/political science senior,
can be reached via dccampus@mail.uh.edu