American Healthcare is Not Free Market
There is a perstistent and pernicous myth that simply won't go away. It is the myth that, while the rest of the Western world has socialized medicine, America has a cruel and unforgiving private system. There is a lot to dislike about healthcare in America, but caricaturing our system as being "free market" is a deceptive ploy to convince Americans that the only alternative is socialism (or whatever euphemism its propents prefer). Yet, the reality is that what we have is an illogical and self-destructive mishmash of public and private that appears destined to continue spiraling out of control unless we enact serious reform.
According to the Department of Health and Human Services, public health expenditures accounted for 25% of total health spending in 1965. Today, that percentage is already 45% -- almost half. Each year, public health spending (controlling for inflation) increases by an average of 5.7%! Meanwhile, private expenditures also are growing, by an average of 3.25%. At this rate, public expenditures are expected to eclipse private expenditures in 2014.
And yet, we may already be at that point. Consider this -- if you have employer provided health care, your health care is likely government subsidized and therefore subject to regulation. I know -- a tax break just means that you get to keep your own money. From the perspective of socialism vs. capitalism -- central planning versus spontaneous order -- it is the government's money, because it is the government who decides who gets rewarded for purchasing health insurance.
There are many factors pushing up the price of health care. Frivolous lawsuits, regulation, etc. have all contributed to spiraling health care costs. These problems need to be addressed, but we also need to find a better way to handle subsidization of health care. I'll explore this more next time, but government involvement has increased demand while, ironically, pushing the price of health care out of the practical range of many people. Blaming unbridled capitalism where none exists blinds us to the reality of our situation, and prevents us from having and honest and open discussion about what needs to be done in order to fix it.