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Of Course Healthcare is Expensive. It’s a Monopoly.

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By Brett Chandrasekhar

One could probably list a thousand ways the healthcare system in the United States is flawed and anti-free market, but one of the more important aspects is rarely spoken of: the monopolization of the healthcare industry.

For the last century, the American Medical Association (AMA) has had a government-granted monopoly over our healthcare. Through state boards, AMA members have restricted the number of medical schools in existence, and through licensure laws, they’ve limited the number of doctors allowed to practice medicine.

All of this has had the detrimental effect of restricting the supply and thus raising the price of healthcare.

The typical justification for these licensure laws and other restrictive practices is that they exist for the public good. If consumers were allowed to freely choose their own medical care, they could make disastrous mistakes. How is the average consumer supposed to be educated enough to choose his own medical doctor?

Of course, this ignores the fact that consumers make decisions about complicated products and services all the time, such as decisions about finances, computers, cars, and more. But beyond that, alarm bells should go off when someone who benefits from a certain restriction tells others it’s there for their own good.

In reality, these laws are nothing but an anti-competitive behavior from a special interest. Our healthcare system isn’t free market. It’s crony-capitalist. Yet the public good propaganda has been so effective, Americans simultaneously believe that 1) licensing is a necessity in the healthcare industry and 2) our healthcare industry is free market. The two statements, of course, are contradictory. Fortunately, they’re also false.

Economist Milton Friedman had a lot to say about licensing in his book Capitalism and Freedom, where he dedicated an entire chapter to the subject and focused extensively on healthcare licensing itself. One of his major points was that even if the public good rationale had some merit, there was no need for licensing. Certification would do the job just fine:

If the argument is that we are too ignorant to judge good practitioners, all that is needed is to make the relevant information available. If, in full knowledge, we still want to go to someone who is not certified, that is our business; we cannot complain that we did not have the information. Since arguments for licensure made by people who are not members of the occupation can be satisfied so fully by certification, I personally find it difficult to see any case for which licensure rather than certification can be justified.” (p. 149 Capitalism and Freedom)

In other words, if the goal is to provide consumers with information, licensing is unnecessary. Certification (which, unlike licensing, does not ban anyone without the certificate from practicing medicine) accomplishes the same goal while leaving people’s liberty intact.

One might argue that health care is too important or complicated to allow anyone but the best of doctors. As such, the individual might go on, licensing is a necessity. Mises Institutes’ Kel Kelly doesn’t buy this:

One might retort that restricting the supply of doctors is good, because only the smartest, most knowledgeable, and safest people should be responsible for our very lives. But under this argument, we could ask, “why stop at the doctor-limiting threshold at which we currently operate?” Why not restrict the supply further so that we have only the top thousand or even the top ten doctors in the nation to take care of us? In that case, having only the most qualified doctors, even more people would die each year for lack of affordability as well as lack of opportunity to actually get in to see the doctor.

In other words, restricting doctors to, e.g. the top 1 percent of what currently exists, would let us visit only the very best of the best. But we would suffer the consequences from a lack of supply. This happens in our current situation as well.

Related: California Democrat Drops Nuclear BOMB on New Universal Health Care Bill

The reason people fallaciously believe licensing is a good thing is because they confuse technical efficiency and economic efficiency. As Kel Kelly again asks, “what if [manufacturers] were only allowed to produce cars with the quality and safety of the top Mercedes, BMWs, and Rolls Royces?” The cars produced would be very technically efficient, but this wouldn’t be a very economically efficient system: most consumers wouldn’t be able to afford an automobile. Likewise, giving medicinal practitioners a monopoly on determining who is allowed to practice medicine might be very technically efficient, but from an economic perspective, it is moronic and absurd. If one wants to protect the consumer, then the consumers, not the producers, should be allowed to determine the standards. This is exactly what occurs in a free market.

Which leads us to the question: how might the healthcare industry look in such a setting?

By replacing licensing with certification, consumers could choose to visit a higher-price, government-certified doctor or they could choose a lower-price, non-government-certified doctor. This would be up to them.

Of course, this isn’t the only possibility. The choice might not be between certification and no certification. Multiple certification agencies might exist, some private, and consumers would be able to choose amongst them.

Notable in the last example is the point that the choice isn’t so much between competent doctors and incompetent doctors. As in other industries where licensure doesn’t exist, the choice might be between high priced, extremely competent services, and lower priced, still competent services.

Furthermore, because licensing restricts medicinal practice to licensed physicians, many treatments are restricted to those physicians even if they could be performed by other specialists. This, again, reduces the quantity and increases the price of those treatments, harming the consumer. On a free market, individuals such as nurses or other specialists could perform certain tasks that are currently restricted, freeing up doctors to spend their limited time on other matters.

While the Left is arguing for government-run healthcare by saying we have a “right to healthcare,” what we really need is a right to choose our own healthcare. This would allow consumers and practitioners to come to voluntary agreements amongst themselves, and would increase the supply and lower the price of healthcare overall.

Instead, the AMA, along with state licensing boards, and their restrictions on medical schools, have dramatically increased costs. Their monopoly is anti-human rights, anti-liberty, and anti-healthcare. It needs to end immediately.

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EDITOR’s NOTE: The views expressed are those of the author, they are not necessarily representative of The Libertarian Republic or its sponsors.



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