“Where it is impossible to create the conditions necessary to make competition effective, we should resort to other methods of guiding economic activity.”
-Friedrich Hayek, The Road to Serfdom, p.37
Republicans still struggle to promote a credible ownership culture largely because they refuse to wrestle honestly with the hard cases; the situations in which market forces fail to allocate value effectively. Medical care is probably the most frustrating example since it stubbornly resists market solutions and affects everyone deeply.
Health care is not a market. It lacks any of the vital features of a market. Treating health care like a market means living and dying without modern medicine. To advance a culture based on opportunity rather than government dependence, we need an alternative to state-owned health care that keeps key decisions in personal hands, preserves market triggers where appropriate, and rids us of the strangling influence of the massive federal bureaucracy. Republicans cannot do this without abandoning some cherished fantasies about the unquestionable, divinely-ordained righteousness of markets.
In a free market, goods and services are allocated through transactions based on mutual consent. No one is forced to buy from a particular supplier. No one is forced to engage in any transaction at all. In a free market, no transactions occur if a price cannot be agreed.
The medical industry exists almost entirely to serve people who have been rendered incapable of representing their own interests in an adversarial transaction. When I need health services I often need them in a way that is quite different from my desire for a good quality television or a fine automobile. As I lie unconscious under a bus, I am in no position to shop for the best provider of ambulance services at the most reasonable price. All personal volition is lost. Whatever happens next, it will not be a market transaction.
Insurance is the obvious solution. By agreeing to a transaction for insurance coverage at a time when I am healthy, I can in theory provide for my needs when I am ill. But an insurance-funded medical system means abandoning an unregulated free market for health care. The insurer-model creates a three-party managed market in which the patient has surrendered their buying power and much of their discretion to an entity whose interests are not aligned with their own. Insurance companies don’t bleed. Insurance companies don’t get pregnant. Insurance companies don’t get cancer. Insurance companies have certain needs and interests that will never line up squarely with their customers'. I cannot represent my own needs in a conflict with my insurance company when I am seriously ill. At the most critical moment I am at the mercy of an entity with interests at conflict with my own.
Despite the misaligned interests, an insurance-based health system can work quite well. Private insurance coverage is the method most of the world uses to deliver universal health care. But an insurance-driven system, even with private insurers and private health providers, cannot survive under unregulated, free market conditions.
We cannot maintain an insurance-based system of health care unless there is some force aligned with the consumer that has the superior authority and financial backing to hold the insurance providers to their end of the deal. As I lie under that bus in the road, what if my insurance company refuses to pay for my care? What if the insurer tried to intervene in my care to their own benefit instead of mine? What if the company with which I contracted for insurance services collapses and cannot pay for my medical care when I need it?
Absent a competent regulatory scheme, patients, at the moment in which they make their insurance purchase, have no way to be certain which provider will actually deliver on their promise. They will only discover the answer when their life, or the lives of their family members, depend on it. Under an insurance system without effective, powerful regulation, the market forces that would exist in a face to face transaction between consumer (patient) and supplier (doctor) disappear, replaced with a grim gamble in which the insurance company has every incentive to cheat.
Modern health care with all its fancy instruments, amazing methods, and success in extending life and happiness only exists because we started abandoning the free market in medicine a century ago. Go back to paying your doctor with chickens and your doctor will go back to being a part-timer who learned his craft from a book so he could augment his income from blacksmithing.
Does that mean we will eventually have to submit to a fully nationalized, single-payer health system controlled entirely by the federal government? No, the developed world includes a kaleidoscope of different approaches to health care from single-payer to almost exclusively private. They generally deliver better care at lower cost than ours. Alternatives to our broken system are proven, established, and readily available. So far, Republicans have refused to even look at them.
Less government does not necessarily mean more freedom. Lower taxes do not necessarily produce faster growth. It takes smart government to accomplish these goals. Sometimes it takes a government program, a new tax, and an intelligent regulatory scheme to free up the next wave of innovation and individual initiative.
One of the most frustrating obstacles to the growth of a broader entrepreneurship culture in the US is the structure of our health care system. It punishes innovators, chains employees to traditional work, and leaves millions of struggling Americans without access to care. We count on Republicans to deliver pragmatic, sensible solutions that foster a culture of business growth, but when it comes to health care Republicans are off their meds. Until the GOP is ready to move past their free market fundamentalist fantasies in health care and on other issues, our hopes of developing an ownership culture will remain stalled.
Chris Ladd, former GOP Precinct Committeeman, author of The Politics of Crazy and creator of PoliticalOrphans.
-Friedrich Hayek, The Road to Serfdom, p.37
Republicans still struggle to promote a credible ownership culture largely because they refuse to wrestle honestly with the hard cases; the situations in which market forces fail to allocate value effectively. Medical care is probably the most frustrating example since it stubbornly resists market solutions and affects everyone deeply.
Health care is not a market. It lacks any of the vital features of a market. Treating health care like a market means living and dying without modern medicine. To advance a culture based on opportunity rather than government dependence, we need an alternative to state-owned health care that keeps key decisions in personal hands, preserves market triggers where appropriate, and rids us of the strangling influence of the massive federal bureaucracy. Republicans cannot do this without abandoning some cherished fantasies about the unquestionable, divinely-ordained righteousness of markets.
In a free market, goods and services are allocated through transactions based on mutual consent. No one is forced to buy from a particular supplier. No one is forced to engage in any transaction at all. In a free market, no transactions occur if a price cannot be agreed.
The medical industry exists almost entirely to serve people who have been rendered incapable of representing their own interests in an adversarial transaction. When I need health services I often need them in a way that is quite different from my desire for a good quality television or a fine automobile. As I lie unconscious under a bus, I am in no position to shop for the best provider of ambulance services at the most reasonable price. All personal volition is lost. Whatever happens next, it will not be a market transaction.
Insurance is the obvious solution. By agreeing to a transaction for insurance coverage at a time when I am healthy, I can in theory provide for my needs when I am ill. But an insurance-funded medical system means abandoning an unregulated free market for health care. The insurer-model creates a three-party managed market in which the patient has surrendered their buying power and much of their discretion to an entity whose interests are not aligned with their own. Insurance companies don’t bleed. Insurance companies don’t get pregnant. Insurance companies don’t get cancer. Insurance companies have certain needs and interests that will never line up squarely with their customers'. I cannot represent my own needs in a conflict with my insurance company when I am seriously ill. At the most critical moment I am at the mercy of an entity with interests at conflict with my own.
Despite the misaligned interests, an insurance-based health system can work quite well. Private insurance coverage is the method most of the world uses to deliver universal health care. But an insurance-driven system, even with private insurers and private health providers, cannot survive under unregulated, free market conditions.
We cannot maintain an insurance-based system of health care unless there is some force aligned with the consumer that has the superior authority and financial backing to hold the insurance providers to their end of the deal. As I lie under that bus in the road, what if my insurance company refuses to pay for my care? What if the insurer tried to intervene in my care to their own benefit instead of mine? What if the company with which I contracted for insurance services collapses and cannot pay for my medical care when I need it?
Absent a competent regulatory scheme, patients, at the moment in which they make their insurance purchase, have no way to be certain which provider will actually deliver on their promise. They will only discover the answer when their life, or the lives of their family members, depend on it. Under an insurance system without effective, powerful regulation, the market forces that would exist in a face to face transaction between consumer (patient) and supplier (doctor) disappear, replaced with a grim gamble in which the insurance company has every incentive to cheat.
Modern health care with all its fancy instruments, amazing methods, and success in extending life and happiness only exists because we started abandoning the free market in medicine a century ago. Go back to paying your doctor with chickens and your doctor will go back to being a part-timer who learned his craft from a book so he could augment his income from blacksmithing.
Does that mean we will eventually have to submit to a fully nationalized, single-payer health system controlled entirely by the federal government? No, the developed world includes a kaleidoscope of different approaches to health care from single-payer to almost exclusively private. They generally deliver better care at lower cost than ours. Alternatives to our broken system are proven, established, and readily available. So far, Republicans have refused to even look at them.
Less government does not necessarily mean more freedom. Lower taxes do not necessarily produce faster growth. It takes smart government to accomplish these goals. Sometimes it takes a government program, a new tax, and an intelligent regulatory scheme to free up the next wave of innovation and individual initiative.
One of the most frustrating obstacles to the growth of a broader entrepreneurship culture in the US is the structure of our health care system. It punishes innovators, chains employees to traditional work, and leaves millions of struggling Americans without access to care. We count on Republicans to deliver pragmatic, sensible solutions that foster a culture of business growth, but when it comes to health care Republicans are off their meds. Until the GOP is ready to move past their free market fundamentalist fantasies in health care and on other issues, our hopes of developing an ownership culture will remain stalled.
Chris Ladd, former GOP Precinct Committeeman, author of The Politics of Crazy and creator of PoliticalOrphans.
