Why a free market would work for health care

Government intervention made healthcare unaffordable long before Obamacare. Photo: AP

TAMPA, October 26, 2013 – Conservatives are confused again, rejoicing in Obamacare’s early operational struggles. One would think that their only objection to the legislation has been that the Democrats wouldn’t run it efficiently. Maybe it was. After all, the Republicans ran a candidate against Obama that had implemented virtually the same program in Massachusetts, promising only to “repeal and replace.”

Replace?


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Jon Stewart took the opportunity to join conservatives in criticizing the government’s performance during his interview with Kathleen Sebelius because he knew it wasn’t a principled argument. That the government didn’t have its website ready to handle the volume doesn’t address the principle of Obamacare.

This wrongheaded criticism by conservatives allowed Stewart to join in and appear to viewers as if he were being objective, while at the same time delivering the message that Democrats ultimately want Americans to accept — that “a market-based solution doesn’t work for health care.”

First, define “free market.” When they define it, both conservatives and liberals tend to focus on competition, private ownership of the means of production and the profit motive. These are actually results of the free market, not defining characteristics.

The free market has only one defining characteristic: that all exchanges of property occur by mutual, voluntary consent. Period.


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That the means of production are privately owned is a result of this, as no government acquisition of anything occurs by voluntary consent. Competition, too, occurs because customers are free to choose which products they buy or whether they buy at all. This motivates producers to make their products more attractive in quality, price or both. They are also motivated to operate at a profit, both for their own enrichment and in order to survive. Losing money eventually results in the dissolution of the firm.

Applying the definition, a free market in healthcare means simply that all exchanges of property, including the labor of doctors, occurs by mutual, voluntary consent. There is only one alternative to this: coercion. If all participants are not acting by voluntary consent, then some or all are being forced to make exchanges under the threat of violence if they don’t.

Anyone who doubts this should simply withhold the Medicare portion of his tax payments and see what happens next.

Stewart made a familiar argument that is compelling on its face. The free market doesn’t work for health care because patients in need of treatment are often not in a position to make choices the way they do when buying shoes or automobiles. Patients may be picked up in an ambulance delirious or even unconscious. It is unreasonable to assume those patients can make rational decisions about which hospitals they are taken to, which providers treat them or what treatments are administered to them.

Granted, but here’s the rub. Their situation is worthy of compassion, but it does not give them the right to force others to do their bidding. They have every right to ask for help, but not demand it. Their misfortune may not be their fault, but bad luck does not grant them a legal claim on the property of others. Nor does it give them the right to dictate the terms under which an exchange of property is to take place. That exchange either happens by mutual, voluntary consent or freedom is annihilated.

The same argument applies to those who simply cannot afford to purchase health care. Again, many find themselves in this position through no fault of their own. That doesn’t give them the right to use force on innocent third parties.

American governments were once constituted with the assumption that the government’s role was to ensure a free market. As John Locke said in his famous treatise, “The great and chief end, therefore, of men’s uniting into commonwealths, and putting themselves under government, is the preservation of their property.”

It is no accident that Thomas Jefferson had a resolution passed in Virginia declaring that Locke’s treatise was the basis for American liberty.

However, the argument against Obamacare is not just a moral but a utilitarian one. There are cause and effect relationships between the manner in which exchanges are made and the affordability of products. When all exchanges are voluntary, supply expands, prices fall, and wealth is distributed widely. That’s why real wages rose so dramatically during the 19th century, contrary to leftist myths.

When exchanges are involuntary, these cause and effect relationships are disrupted. It is no accident that the most heavily regulated and subsidized industries, like education and health care, are the most disproportionately expensive. Heavy regulation artificially limits supply. Forced subsidies artificially expand demand. Both interventions make prices go up. It’s simple economics.

The health care market suffered from both interventions long before Obamacare. Medicare and Medicaid alone make up about a third of all health care spending. Regulation regarding who can dispense care makes medieval guilds look liberal. It’s no mystery why the price of health care is outrageously high.

If the Republican Party is to remain relevant at all, it has to stand for something other than myopic cheap shots over inconsequential issues like the Obamacare website. It has to stand for freedom. If not, it’s time for it to step aside, as its forbears the Whig and Federalist parties did. There just might be a party waiting in the wings that more faithfully represents voters who truly want a more limited government.

 

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.


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Thomas Mullen

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. He writes weekly columns on his blog and has been featured on The Daily Caller, The Huffington Post, Daily Paul, LewRockwell.com, 321 Gold! and Peter Schiff’s EuroPac.net. Tom has been a guest on Fox’s Freedom Watch with Judge Andrew Napolitano, Adam Vs. the Man, Free Talk Live, and numerous other programs.

Tom is originally a native of Buffalo, NY and graduate of Canisius College. He earned a Master’s Degree in English from State University of New York College at Buffalo. He now resides with his family in Tampa, FL.

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