Capitalist Hero - Financial News and Commentary
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The Free Market; The Cure for What Ails You
The Free Market; The Cure for What Ails You by Capitalist Hero
As mentioned in a previous article, the free market reaches equilibrium (supply = demand) for every good and service including health care. However, free market solutions will be a tough pill to swallow for the vast majority of Americans. It forces us to confront the scarcity of resources and compels us to make tough choices. Do I buy my kid his asthma medicine or a pack of smokes? Do I spend my lunch hour at McDonald's or the gym?
Capitalist Hero is not only an economist but also a humanitarian and works as an emergency physician at 3 busy metropolitan emergency departments. I can say, from personal experience, the biggest distortion to the free market is the heavily subsidized and entrenched third party payer system. Neither the physicians nor the patients really know the charges of the various tests and treatments rendered. Rarely will a patient ask about the price. If they do not have insurance, they don't care because they are not planning on paying anyway. Insured patients only care up to their deductible. Once a patient deductible is met, everything else is essentially free. It does not matter that the analgesic (Tylenol) costs $100 or the mucus receptacle (box of tissue paper) costs $75. These outrageous charges would never hold up if the patient actually had to dip into his own pocket to pay them. In contrast, medical services that are paid out of pocket have decreased in price and increased in quality.
When I had Lasik surgery, I shopped around. I got recommendations and researched online. When I settled on an opthamologist, I was able to negotiate a twenty percent discount and the doctor gave me his cell phone number in case I had any concerns. The surgery was a resounding success and I now my vision is 20/15. We are price sensitive to everything from cell phone plans to fast food to automobiles. This market force keeps suppliers lean and efficient. Price competition forces suppliers to keep prices low while keeping quality high. If they fail this, then they are out of business. If you don't believe me, just ask the guys at GM.
If the immense subsidization of health care were eliminated and if patients were not removed from their health care charges, then price competition would reign. Patients would not stand for a $200 aspirin. They would go to the hospital that advertised $150 aspirin and then the hospital charging $75 per aspirin. Pretty soon hospitals would be comping you aspirin just to get you in the door in the hopes that you'll purchase some of their other services. Of course giving up tax free employer sponsored health benefits and goverment provided insurance is a bitter pill to swallow and wont be accepted by the American people until the full brunt of these subsidies are borne by American taxpayers and not our Asian and Middle Eastern benefactors.
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Copyright . Roger Martinez. All rights reserved.
