Sick of Socialized Medicine: Why the Free Market is the Remedy for American Healthcare

In its way, the state is akin to a virus: it does everything it can to infect an industry in the private sector. It bogs it down with regulations, taxes, and bureaucracy, decreasing competition and raising prices until the contagion eventually spreads to another industry to wreak similar havoc on the health of the market. In particular, there is an industry that unfortunately is not immune to this infection, with an exhibition of much more pronounced symptoms: healthcare. 


The debate over state intervention in healthcare in the United States has raged for decades at this juncture, usually over how much is necessary. Democrats and Republicans seem to desire to keep the state involved, with the degree of involvement being the primary point of contention between the two parties. The option that never seems to be on the table is allowing healthcare to be turned over entirely to the free market and eliminating the state from the equation. This alternative is dismissed with various emotional appeals, usually involving Medicaid access for senior citizens and accusations that those seeking a market solution wish for the elderly to get sick and die. Consequently, the conversation never reaches beyond baseless fallacies, and the details of a non-interventionist market for health are never fully explored. 


But hasn’t the free market already failed to provide economical healthcare costs? Hasn’t the greed of capitalists in the industry driven up the prices that patients can barely afford? Despite popular misconceptions, the healthcare industry has been politicized (i.e., socialized) for over a century, meaning that the current debate is prefaced by a grievous strawman argument that supporters of central planning have egregiously exploited to legitimize their incoherent position. Kel Kelly of the Mises Daily lays out the true history of government intervention in American medicine:


“To start with, the American Medical Association (AMA) has had a government-granted monopoly on the healthcare system for over 100 years. It has intentionally restricted the number of doctors allowed to practice medicine so as to raise physician incomes artificially. The primary way it does this is by using the coercive power of the state to restrict the number of approved medical schools in operation. After the AMA created its Council on Medical Education in 1904, state medical boards complied with the AMA’s recommendation to close down medical schools.” 


Perennial champion of liberty and retired OBGYN, Dr. Ron Paul, provides concurrence (195) on the American Medical Association’s influence on the inhibition of competition in the medical field by limiting the number of practicing physicians in the field:


“Licensing strictly limits the number of individuals who can provide patient care. Many of these problems trace to the Flexner Report of 1910, which was financed by the Carnegie Foundation and strongly supported by the AMA. Many medical schools were closed and the number of doctors was drastically reduced.”


So, like always, capitalism is unfairly maligned and blamed for the failings of government intervention in the market. Proponents of central planning refuse to understand that their presuppositions regarding state regulation are economically irrational and, when written into policy that the government enforces, interfere with the natural functions of market transactions. This interference is especially true regarding the scarcity of resources within a particular market, which is reflected directly by the price mechanism. Writing for the Mises Wire, Mark Fouradoulas outlines the failures of government healthcare via the lens of the Mises calculation problem, which holds that price cannot accurately formulate when market forces are inhibited from action by state interference: 


“Healthcare systems are mass-scale. Their development is unpredictable and their complexity unmanageable. The abandonment of market mechanisms of price formation inevitably leads to misguided incentives, rigid structures, and bureaucratization. Instead of the spontaneous order of the market, a chaotic web of unclear claims and quid pro quos emerges.”


As with any industry, it is only via competition through which pricing can accurately reflect the scarcity of goods and services in that particular market. Whenever central planning rears its ugly head, the complexity of the marketplace renders it completely obsolete, containing too many variables that the central planners cannot keep track of, hence why pricing under these parameters can never genuinely reflect scarcity and inevitably yields to rationing.  


The best solution regarding high costs would be for hospitals and doctor’s offices to participate in price transparency. If healthcare professionals enacted this policy, patients could view the prices for medical services and procedures and compare them with those of competitors. This would allow patients to make informed decisions regarding their healthcare and provide another avenue for competition, which would drive prices down to overall more affordable levels. This would be a much better alternative to government mandates that restrict competition and artificially hike prices, causing patients and medical practices to suffer. 


The prevention of free market competition and the artificial driving up of costs are not the only unfortunate by-products of state intervention in healthcare. From the Affordable Care Act (i.e., Obamacare) to the COVID-19 vaccine mandates, Americans are also facing an assault on their civil liberties regarding medical care. Attempts to force Americans to purchase insurance plans or undergo procedures that they might not need otherwise are merely further acts of tyrannical overreach by our federal government. All in the name of keeping Americans “safe and healthy,” the DC swamp, in actuality, is infringing on the rights of Americans to subsidize the mammoth corporations who, in turn, give kickbacks to the politicians that write and pass such capricious laws for their benefit. One cannot help but conclude that such blatant violations of economic and moral law are the epitome of fascism. 


How can we inoculate healthcare against the state? For starters, we need to highlight the voices of medical professionals and politicians who willingly acknowledge the damage the government has dealt to the practice of medicine in our nation. Through the education of American citizens, we can spread awareness of how the principles of the free market can easily solve the problems in the healthcare system that have their ultimate roots in centralized economic planning. From there, we do our best to support and elect liberty-minded politicians at the federal, state, and local levels who will practice due diligence toward repealing every aspect of statist intervention in medical care, thus creating a free market for medicine for the benefit of all patients as well as medical professionals. When tyranny is the sickness, only liberty is the cure. 

Eric Madden, Copywriter & Editor

* Paul, Ron. Liberty Defined. Grand Central Publishing, 2011.

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