What's wrong with the U.S. health care system?

The Freakonomics blog recently published a guest post about U.S. health care which proposes that America's "market economy approach to medicine has to change", and the way to fix the system is to have the federal government pay for everyone's health costs.

Many commenters respond that the U.S. health care system isn't really a free market, and that this is part of the problem. I agree with those comments. The U.S. government distorts the system in various ways:
  • by imposition: the government prescribes standards that may not necessarily make sense in every case; the government requires practitioners to provide treatment in some cases even if patients can't pay, transferring the cost to others;
  • by prohibition: the government tells people what medicines and drugs they can and cannot take, and under what conditions; the government prohibits markets in organs;
  • but most significantly, by distortion: when the government permits companies to pay for employees' health insurance costs out of pre-tax income, it provides an incentive whereby it is cheaper to get all health care (even if it's just a Tylenol) through this system, which provides most patients with no direct insight or control over costs. Total cost is increased and efficiency is decreased because control over the financial aspect is taken completely away from the doctor and patient in situ.
As usual, people whose ideological ancestors brought on these problems by asking for government involvement in the first place, now react to failure of this system by requiring yet more government intervention.

The logic goes that, obviously, absence of government must equal absence of control. On the other hand, more government must equal more control. So if the system is failing, then obviously, what we need is, more control.

My perception is that the system would work fine if it were simply allowed to truly function as a market. Don't force anyone to provide service they don't want to provide, and don't provide incentives for patients to surrender control over their own health care costs. Let those who wish to be treated in case of heart attacks purchase insurance for it, and let all non-urgent health care be self-paid.

Unfortunately, I do not see a true market-based system being accepted, because it implies that everyone either needs to pay for the treatment they need, or get a charity to pay it for them. If we want the system to be market-based, there can be no third option - money cannot just appear from nowhere in order to pay for those who cannot pay and cannot find a charity to help them. But such a system would be both fair and efficient: fair because cause leads to effect; efficient because those people who no one cares for, well, no one cares for. It is wrong to force people to pay for the health care expenses of those people they don't care for.

But this is hard for most tender-hearted people to accept, even as they give no second thought to how the steaks and eggs they eat come from cows and poultry living and dying in overwhelming numbers and miserable conditions. For some reason, no human should be allowed to suffer the way we make other creatures suffer. Even if we personally do not care enough for that human to help a charity pay for their medical expenses, our neighbor should do it. And if he doesn't want to, he should be forced.


I like your blog! We here in Life Insurance Canada are discussing this topic a lot, because we are dealing optional health insurance here and that is very rstricted area. I believe completely free health care would work, BUT some percentage of people would be excluded. That's how market works, not everybody is so productive to buy some products and good health care is a luxurious product. I think we should follow principles of humanity, even when economic laws say something else...
denis bider said…
Well, the question is: should people who want to follow principles of compassion and charity, or should everyone have to follow these principles - regardless of whether they want to or not?

Should we be forcing people, essentially at gunpoint, to follow principles of compassion and charity?

Is it compassionate and charitable to do so?

What about when the beneficiaries of this "compassion" and "charity" begin to grow so numerous, that they become the primary support for the system in the first place?

Slovenia is a country where some 40% of the people are paid out of tax money taken from the other 60%. Is that "compassion" and "charity", or is it "parasitism"?

The difference between me and most people is that I would draw the line at the very beginning.

In my opinion, no one can legitimately force other people to be compassionate or charitable.

If you want to be "humane", and support a homeless person's medical treatments, by all means, go ahead and do so. Wire the money to Red Cross or whatever organization will take it.

But I believe it is illegitimate to force other people to do so as well. Compassion and charity should be optional, not forced.

Otherwise they stop being "compassion" and "charity", and start being "parasitism" and "exploitation".
Anonymous said…
Great response to the guest blog! I have added portions, with complete attribution, as favrite quote on my Facebook page.

Cheers, Allen
The logic goes that, obviously, absence of government must equal absence of control. On the other hand, more government must equal more control. So if the system is failing, then obviously, what we need is, more control.

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