Principles in Practice: The Blog of the Objective Standard

Friday, July 18, 2008

Medicare's 'Free Market' Facade

Posted by ARI Media at 10:21 PM

Irvine, CA—Some Republicans are bemoaning the passage of a new law they say undermines allegedly free-market elements of Medicare—in particular, Medicare Advantage, a program which gives seniors the option of receiving their government-financed care through private health plans. They claim that such "free market" elements are crucial to controlling the spiraling costs that are plaguing Medicare.

"The view that programs like Medicare Advantage have anything to do with free markets is a delusion," said Yaron Brook, executive director of the Ayn Rand Institute. "On a free market, each individual is responsible for his own—and only his own—health care. But Medicare Advantage is essentially no different from traditional Medicare: it forces some Americans to bankroll the health-care needs of other Americans. The inevitable result is our current health-care crisis.

"If the government guarantees health care to people, costs have to skyrocket. When someone else is footing the bill for health-care costs, consumers demand medical services without having to consider their real price. The artificially inflated demand this creates sends expenditures soaring out of control. It is irrelevant whether the government finances this spending spree directly, as it does with traditional Medicare, or indirectly, as with Medicare Advantage. In the end, the results are the same.

"The only way to fix the problems caused by government interference in medicine is to eliminate government interference in medicine—not to have some mishmash of government controls and market elements. By returning to a truly free system where each individual is responsible for his own health-care costs, we would unleash the power of capitalism in the medical industry, leading ultimately to high quality, affordable medical care for Americans. Let's start looking at ways to phase out government interference in medicine."

Labels: Business and Economics, Healthcare