MCViewPoint

Opinion from a Libertarian ViewPoint

Half of Health Spending in the US Is Now Government Spending | Mises Wire

Posted by M. C. Fox on November 10, 2018

Of course, prices continue to skyrocket in the US. But this is not because there is too much “market competition,” but because healthcare is heavily subsidized by various government interventions. As is always the case, subsidized goods and services experience growing demand as the cost — as perceived by consumers — goes down.

It would seem that the goal of the free-market reformer in the current climate must be to stop speaking of preventing “socialized medicine” but instead he or she ought to focus on carving out a role for the market in what is clearly a government dominated sector.

https://mises.org/wire/half-health-spending-us-now-government-spending

Needless to say, the idea that the US has a “free market” in health care is pure fantasy. The so-called safety net is huge, expensive, and dominates the industry. With so many Baby Boomers going on Medicare in the near future, and with continued expansion of Medicaid, it won’t be many more years before a much larger majority of healthcare spending is done by governments.

This, however, won’t mean a fundamental change in the the US healthcare system, but a continuation of an established trend.

I don’t say this to advocate for more government spending on health care, but merely to point out that the US has not embarked on any sort of new road it hasn’t already been traveling for years.

You Don’t Need a Single-Payer System to Get to Single-Payer Levels of Health Spending

As it is, the US is moving toward levels of public spending that will rival those of some nations that aren’t exactly known for any devotion to “free market” healthcare.

As it is now, government-sector spending in the US is similar to that of Chile (which, by the way, has a slightly higher life expectancy).

Given the growth of Medicare benefit spending has nearly doubled over the past decade, it’s not impossible to imagine overall public spending rising to levels we now see in some countries with so-called “socialized” medicine.

publichealth.PNG

Source. “OECD Health Statistics 2015 – Country Notes”

After all, contrary to the widely-held misconception that all healthcare (including prescription drugs) in Canada is “free,” nearly 30 percent of all healthcare spending takes place in the private sector — mostly to cover prescription drugs, dental care, and other types of care not covered by the state.

Moreover, healthcare in the US offered by ostensibly private sector firms in the US is done overwhelmingly through heavily regulated and highly bureaucratic insurance schemes.

This sort of insurance is so widespread that fewer Americans purchase health services out-of-pocket than in most other OECD countries. While Swiss, Italian, and Australian out-of-pocket expenses constitute at least one-fifth of health spending, the total is only 12 percent in the US. The US is well below the OECD average of 19.5 percent. The idea that millions of Americans are handing over huge sums of cash out-of-pocket to afford basic medical procedures is fiction.

pocket.PNG

Source. “OECD Health Statistics 2015 – Country Notes”

At this point, the debate isn’t over a choice between a market healthcare system or a government healthcare system. We’re now just really talking about how much the government sector should grow as a component of all health spending.

Now that the federal government is, by far, the largest single payer for healthcare purchases in the US, we have to openly admit that there is no longer any functioning market pricing system in healthcare. The industry is now dominated by government contracts, government spending, and government regulations on healthcare services.

Of course, prices continue to skyrocket in the US. But this is not because there is too much “market competition,” but because healthcare is heavily subsidized by various government interventions. As is always the case, subsidized goods and services experience growing demand as the cost — as perceived by consumers — goes down. This happens everywhere that healthcare is subsidized, but US policymakers, so far, have lacked the stomach for controlling costs by denying care to people, or making them wait in long queues — as is done in other government-controlled healthcare systems.

It would seem that the goal of the free-market reformer in the current climate must be to stop speaking of preventing “socialized medicine” but instead he or she ought to focus on carving out a role for the market in what is clearly a government dominated sector.

Be seeing you

'Due to funding cuts, the Government has supplied us with its very own doctor!'

‘Due to funding cuts, the Government has supplied us with its very own doctor!’

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