Free Markets Can Keep Health Care Costs Down
Health care and, by extension, health insurance costs have gone through the roof in America. This is no big revelation as our governments are constantly wrestling with new policies intended to help control costs but that usually end up making things worse (case in point, Obamacare).
The trend is always to fix cost distortions caused by government interventions with more government interventions.
But what happens when health care is provided and consumed in a free market? We can learn about that by looking at the cosmetic surgery industry. Most cosmetic surgery isn’t covered by insurance, meaning that the transactions for services take place directly between the service provider and the service consumer.
America is one of the top consumers of plastic surgery in the world. According to a 2011 poll, Americans got 3.1 million cosmeticsurgery procedures done in 2011 with Brazil coming in a distant second at 1.447 million. Adjusted per capita, America is #4 in the world with 9.95 cosmetic surgeries performed per 1,000 citizens.
So what’s the trend line on the cost of cosmetic surgery? According to a 2007 study, it’s actually getting cheaper unlike the exponential growth in other health care costs:
It’s almost like people being individually responsible for their own costs work to keep those costs both by responding to price signals and promoting competition among service providers.
Meanwhile, in government, it seems the only solution anyone wants for out of control health care costs is more government.