In our book Free Market Revolution, Yaron and I spend an entire chapter detailing the way in which Americans do not have a free market in health care.
Americans are understandably worried about the rising cost and deteriorating quality of health care. And they’ve been told that the explanation of this health care crisis is our free market in medicine. As Lyndon B. Johnson’s deputy assistant secretary for health put it in 2004, “Today’s dysfunctional health care system is a palpable example of the lessons that come from our national obsession with markets at all costs.”
But markets don’t lead to mounting bureaucracy and skyrocketing prices—they lead to ever-improving customer satisfaction and steadily declining prices. It’s no accident that we don’t have a computer crisis, or a hair salon crisis, or a veterinary crisis. Nor is it an accident that we did have a housing and financial crisis. Along with housing and finance, medicine is one of the most regulated industries in the United States, and those regulations take center stage in precipitating the health care crisis.
So it was with high hopes that I started reading a recent piece by conservative health care experts Douglas Holtz-Eakin and Avik Roy, “The Future of Free-Market Health Care.” And they started out well enough:
Over nearly a century, progressives have pressed for a national, single-payer healthcare system. When it comes to health reform, what have conservatives stood for?
For far too long, conservatives have failed to coalesce around a long-term vision of what a free-market healthcare system should look like. Republican attention to healthcare, in turn, has only arisen sporadically, in response to Democratic initiatives.
Obamacare is the logical byproduct of this conservative policy neglect.
All of that is true. What is badly needed is a vision of free-market health care—and a powerful intellectual defense of that vision. Sadly, what Holtz-Eakin and Roy offer is nothing of the sort.
After praising George W. Bush’s massive prescription drug entitlement as a “market-oriented” reform, the authors write, “While most Americans view their healthcare system as ‘free-market,’ Switzerland actually has the most market-oriented healthcare system in the West.”
Switzerland? A free market? Really? Listen to their description of the Swiss system:
Swiss government entities spent about 3.5 percent of gross domestic product on healthcare in 2010, compared to 8.5 percent in the United States. That’s a difference of more than $5 trillion over 10 years: real money, especially relative to our $16 trillion debt.
There is no “public option” in Switzerland. Instead, citizens qualify for means-tested, sliding-scale subsidies and choose among a variety of regulated, private-sector insurance products.
Whatever the virtues of the Swiss system, here we have a giant government entitlement program with insurance regulation. Does that sound like a “free market”?
To be fair, the authors do not outright call the Swiss system a “free market.” But they do offer the Swiss system as their model for what “a long-term vision of what a free-market healthcare system should look like.”
Problem is, their vision of a free-market isn’t free. Less controlled? Maybe. But how inspiring is a crusade for “a less controlled healthcare system”?