The Health Care Market
By Arnold Kling
Do high health care costs in the United States prove that free-market health care does not work? Steve Verdon responds.
The Medicare program subsidizes health care consumption for some of the largest consumers of health care dollars. When you subsidize something people consume more of it. While the various individuals might see their out-of-pocket expense decrease, the total expense (private plus public expenditures) will in all likelihood go up. As more health care resources are consumed the price will rise for those who are not subsidized.
A free-market but compassionate health care system would provide vouchers for catastrophic insurance coverage, but eliminate all other subsidies, including the tax-advantages for employer-provided health insurance.
For Discussion. What metrics should be used to assess the efficiency of a nation’s health care system?