Health Care: All You Need Are Prices

Column by Greg Haley.

Exclusive to STR


How safe vs. how fast should your car be? Where should you shop for groceries? What computer should you get? Which job should you take? Which gas station should you use?
In each case, the answer is a rephrasing of the Beatles song, “All You Need is Love”--all you need are prices.
Civilization has been built because of prices. Love may be necessary for personal relationships, but prices are necessary for the complex relationships of all manner of labor and production. They arise from the voluntary exchanges of individuals who see the benefit of the product of someone else’s labor, and exchange money for a service or good so that they can benefit from someone else’s skill without having to have that skill themselves.
The problem is many times more complex for a state to decide. But this is precisely where the state fails to act according to the desires of you and me. How many bombs to make? How many courts and police officers should we have? Should the police be walking their beat or on patrol in their cars?
Sure, the state does make decisions along these lines, sometimes for better or worse. But the problem is it will never decide in a manner in which people voluntarily decide that is best, because it acts in spite of voluntary decisions, and not as a result of them. Society simply cannot form as a result of statecraft. Civilization develops as the result of the interwoven valuations and actions of individuals who choose as a result of prices that arise from voluntary exchange.
This is because the state works by force, and not by voluntary behavior. It doesn’t mean that state employees are bad people or are somehow personally aggressive. Far from it. In fact, it’s in spite of their good intentions that the state works only by disrupting voluntary valuations. Having a price to reflect on lets you decide which cell phone plan to get or which car to buy. It must arise as a result of the forces of supply and demand, never arriving at a perfect equilibrium, but constantly tending in that direction so that people get their desires satisfied.
Health care is controversially discussed as something that shouldn’t be beholden to market forces, because market forces would mean that poor people will pitilessly die without government interference. I hate to be a contrarian, but precisely the opposite is true. By creating monopolies over health care such as the FDA and ADA, the government creates a problem that wasn’t there before--namely, a shortage in supply of medical care, and as a result, prices go up.
You could argue that the government should step in by offering health care. And I’m sympathetic to that argument in that I don’t want anyone to die or suffer unnecessarily. So people’s concern isn’t misplaced, but it’s their understanding of market forces. We’ve created an artificially short supply of medical help, tied insurance to jobs, and created a labyrinth of a medical system that people must navigate or circumvent in order to get medical care.
The solution really is as simple as prices: a voluntary network of exchange that lets prices arise out of the selling and purchasing of health care. I believe the poor and indigent must be cared for as much as anyone. The question, then, is that of means of providing help for them, but not whether they should be helped or shouldn’t. The government can’t provide proper health care for them in that it only works in spite of itself, with the help of external markets in which people can make medical discoveries and sell medical treatments to patients. Prices would be much lower than they are now and waiting times would be less.
Yes, the threat of quack doctors will still exist, but we all agree that they should be exposed and prevented from practicing medicine, yes? That would be the purpose of voluntary accrediting boards and institutions--a veritable Good Housekeeping Seal of Approval system--for doctors, rather than limiting the supply of doctors by forcing them to comply with government standards. Some of those standards may still bear out in a voluntary market. We all want good doctors. But they would be much more adept and nimble at providing health care for all the niches that exist because prices will be able to arise, untrammeled by the government.


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Greg Haley's picture
Columns on STR: 4


Jim Davies's picture

Outstanding, Angelo; welcome to STR!

Your "never arriving at a perfect equilibrium, but constantly tending in that direction so that people get their desires satisfied" is a particularly fine insight.

Almost everyone bitches about _high_ health care prices. You nailed it by omitting the adjective. Just like Mises on why socialism never works, and just like the Soviet Union that proved him right.