America’s Free Market Health Care System Sucks

When it comes to the America’s healthcare system… the free market sucks.

Here’s why:

  • Health care is a very complex marketplace.
  • An unfortunate result of that complexity is an economic condition called information asymmetry  in which consumers do not have the information required to determine which product/treatment is best.
  • Because of this imbalance in information, it is ONLY at a systemic level that WE can figure out which healthcare decisions work best and which are not worth the money.

And while that may sound a little Big-Brotherish…it’s true.

Heck…even Novartis chairman Daniel Vasella thinks so:

In America, no one has incentives to make quality and cost-effective outcomes the goal. There are so many stakeholders and they each want to protect themselves. Someone needs to ask, ‘What are the critical elements to increase quality?’ That’s what we’re going to pay for, nothing else.

It pains me to say this as a free-market advocate, but you have to have [the] government act in this case. Health care is very complex. Only at a systemic level can you figure out what works best based on the evidence, and what procedures and treatments are not worth the money

And unfortunately for my American cousins, their free market system of healthcare focuses on selling products & services…not producing the best healthcare outcomes for the American population.

For example:

  • Smoking rates are higher in France than in the United States, so the French population has higher rates of lung disease. Yet the French system is able to treat the disease far more effectively than happens in the United States, with levels of severity and fatality three times lower than those in this country. And yet France spends eight times less on treatments per person than the U.S. system.
  • Or consider Britain, which handles diabetes far more effectively than the United States, while spending less than half of what we spend per person. Studies have shown that the British system is five times more productive in managing diabetes than is the United States.

Successful healthcare occurs when the focus is on results and not on sales figures.

And until that shift in philosophy happens, Americans…and Canadians..and French..and British…and Brazilians… and every other person in the world will be receiving sub-standard healthcare.

[box type=”note”]As a Canadian, I can report that my non-Free Market healthcare system also fails badly when it comes to looking at the big picture. Instead of focusing on results, Canada’s system focuses on treatments and wait times and availability. We spend less than 1% of the healthcare budget on disease prevention even though the costs associated with poor lifestyle choices are going through the roof.[/box]



  1. Agreed – there are no “free” markets…just degrees of “freeness” (pretty sure that isn’t a real word)

  2. Your argument is not sound for a number of reasons, in addition to the US not currently in a free market for health care.

    Reason #1 above is not uniquely true of the health care industry. ALL markets are complex. MANY markets (Autos) have assymetrical information.

    I know very little about automobiles, but car companies have a competitive interest in a free market to provide as much info about their products as possible. It is up to me the consumer to take a look. I’ve been quite satisfied with my car choices over the years, and saved a lot of money on repairs even though I’m not quite sure how they work.

    You could make the medical information far more symmetrical than it is now, and the same amount of people would make poor choices.

    It’s also never a good idea to limit people’s choices to them out of paternalism. Never winds up good. It’s called tyranny.

  3. I would argue that car companies have a competitive interest in a free market to NOT provide as much info about their products as possible – their competitive interest lies in providing the info that helps them sell more product. Not the same thing.

    Is Ford going to disclose the info that their product is inferior to that of GM?

    Is Phizer going to disclose the info that their cholesterol drug is inferior to eating real food instead of processed?
    Are HMOs / insurance companies going to disclose the fact that taking control away from doctors and mandating unnecessary diagnostics is a tool to increase their profits and not improve medical service?
    Are politicians willing to admit that adhering to a “mainly” private system is delivering inferior medical outcomes while having a greater economic impact – private and public?

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