In the constant debate about the delivery of healthcare in America, one of the most common talking points espoused by those who want government to play a bigger role is to say that leaving it up to the market leads to increasing costs. But does that make sense in theory?
One key counterpoint is the fact that we really never had much of a free market healthcare system to begin with – primarily because the regulations on the healthcare industry as a whole have led to a system that relies almost entirely on third-party payment. This means that instead of patients paying for the cost of their treatments up front like any other good or service, either insurance companies or the government (through medicare & medicaid) pays the cost. As a result no one under such a system has any incentive to shop around for better prices, and healthcare providers have no incentive to cut costs.
I could go on about how a variety of regulations that were put in place over the last several decades led to less quality care and higher prices. On top of that, I could even go on about how many of the statistics used to suggest that Canada or other countries with socialized medicine are at best misleading. But for now, take a look at what one center has done in Oklahoma City to use the free market price system to deliver better treatment at a lower cost:
The differences between what Keith Smith does and the rest of the healthcare industry are pretty straightforward. One stands out above them all: He actually lists the prices of various procedures so patients actually know what they are getting for what amount. Price transparency plays a necessary role in the allocation of goods as well as the lowering of costs. The latter occurs when healthcare providers compete to provide better service at a lower cost – something our current system (with or without the “Affordable” Care Act) does not allow.