Sunday, October 25, 2009

How the state ruins health care

Thomas DiLorenzo has a helpful article on Mises.org this weekend, American Healthcare Fascialism. ("Fascialism is a term he invented to reflect the combination of economic fascism and socialism on a given social phenomenon.) The healthcare industry today is the result of a century of socialist and fascist interventions, yet most people consider it a free market entity suffering from inadequate government intervention.

At the beginning of the 20th century, 90 percent of all hospitals were private, for-profit organizations. Then states and local governments began intervening in the hospital industry, so that by the 1990s only about 10 percent of hospitals were private, and even most of those received subsidies of some kind. With the subsidies come "reams of regulation, making them fascist by definition."

Milton Friedman published an essay on the hospital industry called "Input and Output in Medical Care" (Hoover Institution, 1992), in which he shows that government takeover of the hospital industry is a case study in the economics of bureaucracy: "According to Friedman, as governments took over an ever-larger share of the hospital industry (being exempt from antitrust laws), hospital personnel per occupied hospital bed quintupled, as cost per bed rose tenfold."

The healthcare industry follows a simple rule: Healthcare socialism has failed; therefore, we need more healthcare socialism.

After discussing the failures and corruption of Medicare, Medicaid, the AMA, and the FDA, along with so-called "certificate of need" (CON) regulation, in which area hospitals have the power to decide whether there is a need for more hospitals, DiLorenzo concludes:
The only sensible approach to healthcare "reform" would be massive privatization of America's socialized hospitals, combined with deregulation of the medical professions to introduce more competition, and deregulation of the health-insurance industry. Free-market competition would produce medical "miracles" the likes of which have never been seen, while dramatically lowering the cost of healthcare, just as it has done in every other industry where it is allowed to exist to any large degree.

This is not likely to happen in the United States, which at the moment seems hell-bent on descending into the abyss of socialism. Once some states begin seceding from the new American fascialistic state, however, there will be opportunities to restore healthcare freedom within them.

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