Can a free market in health care really exist?

by James Matthew Weber

Some like to talk about a “free market fix” to health care. However, health care and free markets are a contradiction.

A free market is an environment where neither the buyer or the seller is compelled to act. There is also an assumption of some level of transparency within the market. In other words, consumers and sellers know what goods and services cost, and can shop around for them.

Both features are notably absent in health care.

Most of the money spent on health care is spent on those who are compelled to act, or others who are compelled to act for them. If you are injured in automobile accident, will the ambulance allow you to shop around for the lowest cost treatment? Will they take you to the hospital of your choice? Of course not.

How much will your hospital treatment cost before you receive it? Call a hospital and try to get a price on a chest CT scan, along with a price on the radiologist’s professional fees. I wish you luck.

Consider another example I have witnessed, where hospitals within the same system can have large price discrepancies despite being just miles apart. Both are owned by the same not-for-profit corporation. Both use the same brand multi-slice CT scanner. However the “sticker” price on the scan from one is twice as much as the other.

And even if the hospital bills it, there is no relationship between the bill and what the hospital has agreed to accept as payment in full for those services.

The reality is that real pricing is anything but transparent, and both insurance companies and hospitals prevent consumers from having any idea of what health care actually costs. Worse, the uninsured are expected to pay the full, billed price, which is often several times more than what the hospital has agreed to accept from an insurance company.

So, anyone who expects a free market to fix health care simply doesn’t understand what a free market is.

Health care is not a free market, and certainly does not have transparent pricing.

James Matthew Weber is a regular reader
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