Video: Free Market Health Care Is Possible

Free-Market-Health-Care1

In a free market, transactions are pretty simple. I give you something you want in return for something I want.

You give your employer your time in exchange for your paycheck. Your grocer gives you food in exchange for money. Television stations give you news and entertainment in exchange for your attention to their sponsors (and your subscription payments, as the case may be). These are mutually-beneficial transactions.

Billions of people making trillions of economic decisions each and every day are what shapes our society and economy. We don’t need laws mandating that food be produced and sold, or that fuel be available at gas stations. The spontaneous order of the free market takes care of such things, and also sets prices at an equilibrium, keeping things affordable for consumers while also fairly compensating producers (which is also why we don’t need laws fixing prices, despite what some may believe).

Products that can’t be produced at affordable prices don’t survive long on the market.

But in some areas of our economy, things aren’t affordable at all, and the best example of this is health care. Unless you’re very, very rich you probably can’t afford to pay for your health care out of pocket (not at a traditional hospital anyway, we’ll get to that in a moment). So why is health care so unaffordable?

It’s because the market is heavily distorted. In most of the economy, transactions are an individual decision. You spend your money to get something you want. The cost obligation is yours, and not anybody else’s.

But in health care most of us aren’t the direct customer for our health care. We go to the doctor or to the hospital, and the bill gets submitted to our insurance company. We pay pay a portion, in the form of a co-pay or a non-covered element, but for the most part the insurance company pays most of the price. And while we do pay premiums for insurance policies, most of us aren’t even the direct customer for the insurance companies either.

Well over 80% of Americans get their health insurance through a third party, usually an employer, meaning that our insurance policies aren’t crafted to serve our priorities so much as they’re crafted to serve the priorities of the third parties through which we get access to those policies.

This status quo is maintained by tax policy, and now Obamacare, which both gives tax incentive to getting insurance through an employer (premiums are withheld pre-tax and lower taxable income) and punishes employers who don’t provide insurance.

But the status quo also represents an enormous disconnect between the patient who is the beneficiary of the medical services provided and the cost of those services. That disconnect results in massive waste and unnecessary costs.

So what happens when patient and costs are more directly connected? Prices go down, significantly, as this video from Reason shows:

Price signals are an important part of the marketplace, but in health care price signals are so thoroughly obfuscated that prices themselves have spun out of control. The answer, rather than further obfuscation as the result of intrusive government policy, is a return to a on-on-one relationship between patients and their health care providers.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • Uh, What?

    FANTASTIC

  • HG

    Awsome. This is how things should work. Insurance drives costs through the roof.

  • Mike Quinn

    28% of the cost of health care is administrative cost. Most civilized countries only pay 13%. Because of the parasites Rob Port and the Republicans will not recognize like the CEO of Blue Cross getting paid millions, everyone suffers. Because the drug companies paid off congress and do not have to compete we pay millions extra. Our system where companies profit from peoples misfortune is not imitated by any other civilized country. Republicans insure that customers are raped by special interest, but Rob just cannot figure it out.

    • alanstorm

      MQ, good to see you have those talking points memorized. Shame you can’t think about what you’re saying.

      You want parasites? How about the extra overhead added by the government? There’s your true wastage.

      Drug companies paid off Congress? Assume that’s true – do you notice that it’s not a problem if Congress isn’t part of the equation?

      “Our system where companies profit from peoples misfortune is not imitated by any other civilized country.” Love it – the classic “All the REALLY COOL countries are doing it, Mom!” argument. It probably didn’t work when you were a teenager, and it makes no more sense now.

      Your brainwashing appears to be complete – nothing can happen without the government running it. You are a prisoner in your own mind.

    • Mike Peterson

      Despite your age, you’re still pretty naive to think in terms of black/white, red/blue. The classic extreme partisanship that resorts to “it’s always the other guy’s fault.” You either have more freedom and more liberty with less government, or the other way around. You think Obama got in because voters approved of Obamacare. No. Millions of people stayed home because they reocognized that there is hardly an ounce of difference between the two parties and they essentially want the same thing – to maintain the status qou. Mitt Romney’s campaign burned hundreds of thousands of people to achieve the Republican nomination and as a result, nobody felt they owed him any loyalty on November 6th.

      We have a permanent welfare/warfare state in which both sides are equally responsible with neither willing to cut a single penny on either warfare or welfare, but rather arguing on varying degrees of spending increases.

      So no, the problems with the world are not 100% Republicans’ faults like you believe. The problem is we have a currency with no anchor as to how much money can be printed or spent.

  • Mike Quinn

    Rob what about all your right wing dinger friends who say we have the best health care in the world, your video kind of shows how crooked it is.

    • http://sayanythingblog.com Rob

      We do have the best care in the world. Its just over prices.

      • HG

        ….thanks to gov’t regs and insurance.

  • NDWinds

    So, when will their doors close? We do realize that this will not be tolerated by the tolerant.

  • banjo kid

    The problem with health care came about because everyone looked at health care as free . Employers used it first as a way to keep good employees a benefit you might say in the package and then the Unions caught on and they got it also as a benefit no one was paying but the companies there fore the health care provider felt they needed their piece of the pie also so rates went up slowly at first and now we have $15 dollar aspirins when you stay in the hospital, x-rays that used to cost five to ten bucks cost $35 before we knew it . Today cost have risen so high we may never see them with in reason again we now have $165.00 for an office visit and I can remember when it cost five and ten bucks. the 60’s and 70’s it was that way, and now just 50 years later we have a monster, instead of health care we have insurance `and to be with out it can cost you a life’s work.

  • Clint F

    I’ve been saying this for years, and the looks on people’s faces when they get it is priceless. Now Obamacare will put a THIRD distance between the customer and provider. Sounds legit.

  • SigFan

    But that makes far too much sense and takes the power away from those who wish to control everyone (Democrats) and empowers the individual. And for that reason alone the left will fight to prevent this from taking hold on any large scale.

  • JW-American

    Surgeries, and treatments, I can see you they can fix cost that, what about say long term illness where they need to keep you in? Do they just market “$X” per day… weather you need 4 aspirin or not?
    I’ve heard of this before, I’d like to know more.

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