Find It Hard to Defend Free-Market Medicine?

The resources in the following comment, posted on this here blog (on this post), will help:

Your question regarding whether insurance “covering everything under the sun” is a product of the market or mandates is a good one. There have been studies on the impact of mandates by the Council for Affordable Health Insurance. The 2010 study says:

“The Council for Affordable Health Insurance (CAHI) estimates that mandated benefits currently increase the cost of basic health coverage from a little less than 20 percent, but may be much higher, depending on the number of mandates, the benefit design and the cost of the initial premium.”

The 2009 study says that, depending on state, mandates can raise basic insurance costs up to 50% more.

Note that not all mandates are the same so their impact on overall costs will vary between different mandates and between states which do or do not include them. The total mandate count for the 2010 edition is 2,156.

Also, government interference in healthcare is not at all a new phenomenon, its been going on for decades. Over time, people get more and more conditioned to having “everything under the sun covered” but this is a result of government interference.

A classic example of government interfering with individual providers and patients is from New York, NY where State Bureaucrats Fight Doctor’s $79 Flat Fee for Uninsured. The market is not allowed to work unless it fits in with the dictates of government. There may be many more of these entrepreneurial doctors, nurses practitioners, and others but they simply dont attempt to be creative like the doctor from NY bcause of the consequences from government.…

Though SimpleCare and Minuteclinics are an attempt to get more market oriented by directly providing basic services for flat fees. Third party payer system naturally tends to increase costs. What do we care what it costs if insurance is paying or mandated to pay for it?

Some additional resources if you are interested:

100 Years of US Medical Fascism (this has a good history of American medical care)

What’s Really Wrong with the Healthcare Industry (a good summary)


Government tax policies have led to greater migration from direct to third party payments, helping to disconnect the individual payer with the physician. Out of pocket health care payments have decreased from 47% in 1960 to 23% in 1980 to 13% in 2004.


Don’t Fall Prey to Propaganda: Life Expectancy and Infant Mortality are Unreliable Measures for Comparing the U.S. Health Care System to Others by David Hogberg, Ph.D.

Fifty Links to Our Healthcare Future?

He later added:

In my opinion, truly free markets in healthcare would reduce overall dependence on insurance. Minute Clinics and SimpleCare type business would grow and thrive. Business where doctors directly treat people would expand. The AMA would no longer have its power to limit the supply of doctors and high skilled nurses could become more empowered to handle a greater amount of basic care that doctors currently must do. They could own their own practice, rent, or even work as part of Walmart (just like they have prescriptions, eye care, etc). I am not pretending to know it all, I am just speculating here. But without all the regulations and excessive paperwork with both government and insurance, it would certainly reduce costs (and wasted time) along with it becoming more competitive.

If insurance is only used as a catastrophic plan, It would be pretty safe to assume that the demand for medical services outside the scope of insurance will increase dramatically, creating more of an actual market with a greater direct connection between provider and patient (no third party). I think services would greatly expand in various ways.  The greater the connection there is between the patient and the doctor financially (paying and receiving) the harder it is in our general humanity to turn people away or rip them off. The real money is with the masses. Sure, insurance could only be for the rich or semi-wealthy but they are missing out on a big part of the market. i would also expect that prices for policies for catastrophic care would go down quite a bit because people are not always trying to get everything they can out of them (shots, check ups, basic tests, etc). They will need to compete more for peoples business by lowering rates or offering greater options.

Markets do so much better in everything else. It can be hard to take the emotional part out of it though, I understand. Some examples; Lasik eye surgery and cosmetic surgery both have had prices have go down considerably. I believe Lasik is down at least 30-40% from 10 years ago. Thankfully, its not covered under insurance otherwise it would be 30-40% more expensive. Similar results with cosmetic surgery. They don’t have the same regulations (yet) and are generally not covered by insurance, yet prices have gone down and quality up… hmm. Just stuff to think about.

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  • classicalliberal

    Those are good resources. Thanks for posting my comments.

    Dave B.

  • Kinetic

    Thanks for the great study presentation.

    Let me know if I have this right using your example of Lasik working within the free market. Other treatments and surgeries ought to follow suit with similar results. Doctor-to-patient relationships would be impacted positively as cost decrease without government interference. Eliminating the added paperwork requiring additional staff and with it, the overall bloated government bureaucracy, and a host of expensive and intrusive supposed ‘oversights’ presented by a central system that determines who gets what as the patient waits for the state to decide, individuals would be able to move more quickly to a result with their doctor thus avoiding further harm and saving even more.Until that happens, the only free market is a black market where doctors could keep safe the private and personal patient health records. Staying off the government grid would render meddlesome political policies irrelevant and stop the state’s ability to learn patient charts, medical history, names, addresses, and other unwanted government invasions into what is between a doctor and patient solely.

  • Bruno Tata

    I agree with or already knew much of what was said in the articles cited.  Unfortunately Vijay Boyapati seems to possess the same fatal flaw that many other libertarians have.  The propensity to ruin a perfectly good argument by throwing in a personal belief unsubstantiated by history or by other real world proof that makes him sound completely nutty and therefore easily dismissed by the mainstream.

    Intellectual property laws and patents are causing higher costs and aren’t a good thing?  Really?  How about I buy a copy of Rollback and have a printer print me up a few thousand copies to sell, then.   Or what happens when you spend $10B developing better engine technology but it is seized and distributed to other companies in the name of “green energy” and the “common good”?  How many more efficient engines do you think everyone else is gonna sink $10B into if they can just steal it from you? 

    He makes the argument that property rights (intellectual) are monopolistic and a detriment to advancements and therefore HE and others like himself should get to determine what it really costs to develop drugs, and therefore I presume set the prices.   This is the very antithesis of liberty.

    Seriously, there must be a gene in libertarians that compels them to self-sabotage.

  • Tom Woods

    Are these your off-the-cuff remarks, or have you in fact read and rejected the sizable literature that takes aim at these admittedly plausible-sounding arguments?

  • Wheylous

    For even more links on healthcare, see here:

  • Wheylous

    Dr. Woods, I have a question about the linked articles which I brought up in a forum discussion recently:

    Essentially, while it’s tempting to claim that the break between healthcare spending and inflation begins with the Great Society programs, couldn’t an alternative explanation be related to the change in the way CPI was measured in the ’80s? Correct me if I’m wrong, but the change in CPI happened at the time where the break between the two indexes begins. So it might not be that healthcare spending is increasing exponentially – it might instead be that the new inflation measures vastly under-report inflation.

    Your thought?

  • Wheylous

    Whoops, I meant “healthcare price inflation”