Let’s be frank. The idea behind health care reform is to monopolize purchasing power behind one entity – the government – in the hopes of bringing down costs. When one buyer – as in the case of Wal-Mart or the defense department – can dictate price, suppliers are forced to follow or be locked out of the market. Alternatively, the supplier side of the equation can be deregulated to such an extent that genuine capitalistic competition lowers the price of the item in question. Examples of the later include the airline industry and the telecommunications industry – prices of plane ticket are lower today than they were thirty years ago – even in nominal dollars. From an economic efficiency point of view, the second option – a deregulated supplier side approach – is probably the best alternative.
American health care as it stands today combines the worst of both worlds. First of all, it is a highly regulated industry – the average Joe is now allowed to practice medicine, hospitals must treat the poor and the indigent, and virtually all effective drugs must be dispensed (read marked up) by licensed physicians. Secondly, medical lawsuits virtually guarantee a market distortion of some sort. Thirdly, the purchasers of medical services – people and insurance companies – are fragmented, regulated on a State by State basis, and segmented by income level – the poor having little to no coverage whatsoever. The American medical industry is essentially a protected mercantile coalition.
Both the Democrat and Republican positions are idealistic in the extreme, in that any failure to adopt either of their solutions results in the current deadlock that profits no one. In other words, both extreme positions would lead to better outcomes than a compromised position. A single payer government monopoly or rampant deregulated competition would be preferable to the situation we have today.
