11 July, 2007

Free Market Health Care


Rudy Giuliani recently commented on our health care crisis:

Free market principles are the only things that reduce costs and improve quality. Socialized medicine will ruin medicine in the united states.

This statement is self-evidently fatuous as can be demonstrated by a few examples:

• The market for world-wide vaccines is about eight billion dollars annually, less than the 35 billion spent annually on the leading heart medication (and probably less than is spent on life-style drugs like Viagra). The market incentive, therefore, is for drug companies to develop and market drugs that must be taken daily and will thus generate a continuing revenue flow than to develop drugs like vaccines that actually solve the problem once and for all. Most vaccines have been developed through government research.

• Doctors are paid for doing something, not preventing something. There is thus no market incentive for a doctor to keep you healthy, since he only makes money when you are sick.

• The much touted idea of medical savings accounts would not provide an incentive to seek treatment promptly or to take prophylactic measures, but rather would provide a monetary reward for staying away from necessary medical services.

The market is all about production for profit, not production for use. Only by recognizing that the market is not the solution to problems that require maintenance, not consumption, can we even begin to address our health care crisis.

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