June 4, 2013 | Posted By Bruce White, DO, JD

In her Sunday, June 2, 2013, New York Times article titled “The 2.7 Trillion Medical Bill”, reporter Elizabeth Rosenthal reminds us once again that with the U.S. healthcare “system,” traditional economic market forces are a myth. In example after example, from angiogram to colonoscopy to hip replacement surgery to Lipitor to everyday radiology studies, she shows how U.S. costs are three-to-four times higher than charges in other countries, and how no one can really explain why. For this reason alone, why do some continue to insist on saying that American healthcare is sustained by free market forces as if it were another “business”?

Victor R. Fuchs – in his 1986 text The Health Economy – recalled that a typical market includes: (1) many well-informed buyers and sellers, with no large group of either able to influence price; (2) buyers and sellers acting independently; and (3) free entry of new buyers and sellers. The American healthcare market departs remarkably from these competitive conditions, often as a consequence of openly debated public policy. In America, it is very difficult for patients, consumers, “to vote with their feet” as Nobel Laureate Milton Friedman oft wrote.

Given that there is no free-market economy in U.S. healthcare, why do some continue to speak and act as if there is? Should we be surprised at the charges variations as reported by Rosenthal? With healthcare, there are few sellers (for example, the gastroentologists who offer colonoscopies in Rosenthal’s piece), there is cooperation among the sellers (the insurance companies negotiate a fee schedule with physicians), sellers are restricted from entering the market freely (one has to train as a gastroenterologist), price never reaches an equilibrium (the supply-demand curve fluctuates continuously), and there is very little information available to buyers about the cost of services (the primary reason for Rosenthal’s article).

Similarly, with the Emergency Medical Treatment and Active Labor Act (EMTALA), everyone – even an illegal immigrant – who seeks emergency care from some hospitals gets it. Hospital emergency departments provide care to many who cannot afford to pay. It’s ridiculous to think of patients with medical and surgical emergencies as buyers, and emergency medicine physicians and hospital emergency departments as sellers. EMTALA was enacted because some providers were gaming the “free-market” system and some patients were being placed at risk (“dumped” on inner city trauma centers by suburban hospitals).

Our healthcare “system,” is a really patchwork of governmental programs and mandates built on an employer-employee funded private insurance model. One might give countless other examples just like EMTALA. The more quickly we all readily admit that traditional free market principles simply don’t apply to healthcare delivery, the sooner we can move the public policy debate toward a rational approach to controlling costs and better allocating services.

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BIOETHICS TODAY is the blog of the Alden March Bioethics Institute, presenting topical and timely commentary on issues, trends, and breaking news in the broad arena of bioethics. BIOETHICS TODAY presents interviews, opinion pieces, and ongoing articles on health care policy, end-of-life decision making, emerging issues in genetics and genomics, procreative liberty and reproductive health, ethics in clinical trials, medicine and the media, distributive justice and health care delivery in developing nations, and the intersection of environmental conservation and bioethics.