He admits that free market allocation is efficient generally speaking: "It's undeniably true that markets do work in this way, most of the time. The auto industry and the fall of Detroit is a perfect example of the invisible hand at work."
But the medical industry is different, he says. He gives three reasons why:
1) Health care is generally not a refusable or elective service.
That's incredibly simplistic and not true at all. There are countless medical services you can refuse or substitute with less expensive services. It's not an either/or question--health care or no health care. Checkups are certainly elective, as are many kinds of "life enhancing drugs" we use.
Indeed, we use too many powerful drugs now. We opt for the most expensive drugs over much cheaper ones that are almost as effective. Doctors also subject patients to batteries of unnecessary tests and perform more expensive, more invasive surgeries, when cheaper, less expensive alternatives would be just as or almost as likely to solve the problem.
This is largely because medical consumers have been divorced from the direct costs of all these services and so do not price shop, not even for far less expensive, but nearly as effective alternatives.
2) There is an asymmetry of information
The same could be said about any other industry, including car manufacturing, in which he admits the market works. It's also true--even more true--with government. There is huge "asymmetry of information" between the government and its subjects. So how would allowing the government to control the industry solve this problem? Only if you trust the government, placing it in a category apart and above everyone else.
3) Purchasing power is concentrated in the hands of a very small number of "consumers"
He says the health care market is dominated by a few people seeking help for serious and very expensive issues who are not really able to price shop. Everyone else can but don't have much affect on the market. I don't accept this. It's true that, even in a free market, catastrophic health issues would need to be covered by insurance.
But the prices for non-catastrophic medical services--checkups, medicines--is vastly overinflated and this is due to government intervention and a third party payer system, even for those less necessary things. Were people to purchase their own medicines in a free market this would deflate the costs of medicines. That would help people with serious medical issues, as well as everyone else. It would also deflate the costs of insurance premiums is insurers are no longer covering everything but only serious medical issues. Oh, and removing laws like state trade barriers and other regulations for insurers would over greatly lower premiums too.
And, as I said, we currently overuse treatments like invasive surgeries. Take heart bypasses, for example, which he mentions. Many, if not most people, who get bypasses don't really need them. They are prescribed by doctors at the drop of a hat because the doctors make money off of them, without it costing the patient anything directly. Bypasses probably would still need to be by insurance in a free market but in a competitive free market insurance industry, insurers and their clients would be better able to distinguish between truly necessary bypasses and unnecessary ones, which they cannot do in a system in which we presume that everything must be covered.
