What do legislators really know about health care?


It’s easy to get distracted by the details and crushing cost estimates of “health-care reform†while losing sight of the key question: Can a handful of congressmen, most of whom probably have never even run a small business, design an entire market for medical services and insurance?

A few moments’ thought should be enough to see the answer. Markets are unbelievably complex, and the details are beyond the grasp any individual. They consist of hundreds of millions of people making countless judgment calls, tradeoffs and transactions with respect to a huge array of services and products. Each person makes these choices within his personal situation, which no one can know as well as that particular person can. Providers of medical services, insurance and products undertake those activities after calculating that such work is their best opportunity for income and other forms of satisfaction.

Given this complexity, only someone lusting for power or incredibly conceited would presume to design a market. An appalling ignorance of economics is also a prerequisite for such a conceit.

    u    u    u

As a way to coordinate supply and demand, economize resources and create wealth, markets are simply unmatched. They do so well precisely because they use the critical knowledge scattered among all the participants. This is one reason central planning never works. No planning board could possibly know what everyone put together knows. Individuals contribute their partial knowledge to the market process through their decisions about what to buy, how much to buy, and what not to buy. Those decisions, based on subjective, often unarticulated information, send signals through the price system, guiding entrepreneurs who buy resources and turn them into usable products and services according to consumer demand.

The process constantly rewards those who serve consumers well and penalizes those who don’t. That is the economic function of profit and loss.

When politicians arrogantly attempt to design a market — specifying services, setting terms, controlling prices — they undermine precisely those features that make markets perform effectively. Planning a market is a contradiction in terms. When it’s the medical market that’s being designed, the politicians are playing with people’s lives.

The philosopher and economist F.A. Hayek called the belief that institutions such as markets can be consciously planned “the fatal conceit.†In the case of the medical market, the term is highly appropriate because those who vote to overhaul the medical industry rather than let the market work spontaneously will be responsible for the death and suffering of a great many people.

    u    u    u

But, the advocates of “reform†say, people are dying and otherwise suffering now because of the deficiencies of today’s medical system. That is no doubt true, but it is not the free market that is doing it. There is no free market in medical care. On the supply side, government controls the production of medical services and insurance through licensing and comprehensive regulation. On the demand side, about 80 cents of every dollar spent on care is paid for by government — Medicare and Medicaid — or employer-based insurance, which most people neither choose nor pay for directly.

The upshot is that most people’s medical care, even routine services, seems to be paid for by someone else. As a result, they do not act like cost-conscious consumers, which is key to efficient markets. (Unlike other medical services, the price of elective services not covered by insurance, such as cosmetic surgery, has been falling.)

In contrast, people in a free market would typically buy high-deductible catastrophic insurance to protect themselves financially in case of serious illness, while paying for cheaper routine services out of savings. The analogy with homeowner’s insurance is obvious.

Competition and innovation, unmolested by bureaucrats, would bring down the price of medicines and medical devices, as they have brought down the price of cell phones and computers.

What about low-income people? This question dissolves when one understands that it’s government that inflates prices by stifling competition and stimulating demand.

In a free market and an ever more prosperous and generous society, no one need go without medical care.

If the egotistical medical czars on Capitol Hill get their way, lots of people will go without. I predict the politicians won’t be among them.

Sheldon Richman is senior fellow at The Future of Freedom Foundation (fff.org) and editor of The Freeman magazine.

Latest News

Robert J. Pallone

NORFOLK — Robert J. Pallone, 69, of Perkins Street passed away April 12, 2024, at St. Vincent Medical Center. He was a loving, eccentric CPA. He was kind and compassionate. If you ever needed anything, Bob would be right there. He touched many lives and even saved one.

Bob was born Feb. 5, 1955, in Torrington, the son of the late Joseph and Elizabeth Pallone.

Keep ReadingShow less
The artistic life of Joelle Sander

"Flowers" by the late artist and writer Joelle Sander.

Cornwall Library

The Cornwall Library unveiled its latest art exhibition, “Live It Up!,” showcasing the work of the late West Cornwall resident Joelle Sander on Saturday, April 13. The twenty works on canvas on display were curated in partnership with the library with the help of her son, Jason Sander, from the collection of paintings she left behind to him. Clearly enamored with nature in all its seasons, Sander, who split time between her home in New York City and her country house in Litchfield County, took inspiration from the distinctive white bark trunks of the area’s many birch trees, the swirling snow of Connecticut’s wintery woods, and even the scenic view of the Audubon in Sharon. The sole painting to depict fauna is a melancholy near-abstract outline of a cow, rootless in a miasma haze of plum and Persian blue paint. Her most prominently displayed painting, “Flowers,” effectively builds up layers of paint so that her flurry of petals takes on a three-dimensional texture in their rough application, reminiscent of another Cornwall artist, Don Bracken.

Keep ReadingShow less
A Seder to savor in Sheffield

Rabbi Zach Fredman

Zivar Amrami

On April 23, Race Brook Lodge in Sheffield will host “Feast of Mystics,” a Passover Seder that promises to provide ecstasy for the senses.

“’The Feast of Mystics’ was a title we used for events back when I was running The New Shul,” said Rabbi Zach Fredman of his time at the independent creative community in the West Village in New York City.

Keep ReadingShow less
Art scholarship now honors HVRHS teacher Warren Prindle

Warren Prindle

Patrick L. Sullivan

Legendary American artist Jasper Johns, perhaps best known for his encaustic depictions of the U.S. flag, formed the Foundation for Contemporary Arts in 1963, operating the volunteer-run foundation in his New York City artist studio with the help of his co-founder, the late American composer and music theorist John Cage. Although Johns stepped down from his chair position in 2015, today the Foundation for Community Arts continues its pledge to sponsor emerging artists, with one of its exemplary honors being an $80 thousand dollar scholarship given to a graduating senior from Housatonic Valley Regional High School who is continuing his or her visual arts education on a college level. The award, first established in 2004, is distributed in annual amounts of $20,000 for four years of university education.

In 2024, the Contemporary Visual Arts Scholarship was renamed the Warren Prindle Arts Scholarship. A longtime art educator and mentor to young artists at HVRHS, Prindle announced that he will be retiring from teaching at the end of the 2023-24 school year. Recently in 2022, Prindle helped establish the school’s new Kearcher-Monsell Gallery in the library and recruited a team of student interns to help curate and exhibit shows of both student and community-based professional artists. One of Kearcher-Monsell’s early exhibitions featured the work of Theda Galvin, who was later announced as the 2023 winner of the foundation’s $80,000 scholarship. Prindle has also championed the continuation of the annual Blue and Gold juried student art show, which invites the public to both view and purchase student work in multiple mediums, including painting, photography, and sculpture.

Keep ReadingShow less