Anything Different About Medical Care?

by Don Boudreaux on May 3, 2006

in Health

A reader writes to ask me

to explain in more detail why [I] think free market
ideas apply as well to healthcare as to  other things, given two factors:
that life and health are of overwhelming importance to everyone; and that
most people don’t know much about medicine or good healthcare.

I’m never quite sure how to answer such a question because I
always am unsure just what the question really is.

On its face, you see, the question is easy to answer.  Health care is an input into extending life
and making it more enjoyable.  But so,
too, are food, water, clothing, and shelter. (Indeed, save for health-care in the most extreme circumstances, a
person can live much longer without medical treatment than he can live without
food or water.) The very same
public-choice and knowledge-deficiency problems that prevent government from
effectively supplying food and housing prevent government from effectively
supplying health care.

There’s simply nothing about the importance of health care
that distinguishes it from many other goods and services routinely supplied by
markets.  Or, put differently, nothing in
the theory of markets is built upon the supposition that goods and services
aren’t “of overwhelming importance to everyone.”

As for most people not knowing much about medicine or good
healthcare – the same is true of internal-combustion engines, computer software
and hardware, pencils, and almost everything else produced and sold in a modern
market economy.  Of course, the qualities
of some goods (such as pencils) are easier than the qualities of others (such
as open-heart surgery) for non-experts to evaluate.  But our world is chock-full of institutions
that address such problems: department stores evaluate the quality of clothing
and draperies so that non-expert consumers don’t have to learn about stitching
and textile properties in order to make secure purchases of clothing and
draperies.

In the U.S., government – in league with the American Medical Association – certifies that
physicians are of at least minimal quality.  (Without such government licensing, I’ve no
doubt that private means of certifying the quality of physicians would arise.) Physicians themselves are agents for their
patients in choosing medications and medical procedures.

I simply don’t see anything about health care that makes it
naturally immune to market pressures.

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