In this article, my good buddy, Winthrop Quigley, over at the Albuquerque Journal, repeatedly cites “market failure” as the reason for the ever-increasing role the federal government is taking on in health care. I’ll give Quigley a partial pass on this one because it seems like the speaker he is citing repeatedly used the term in his presentation.
Is health care really facing “market failure?” Defined, market failure describes a situation when the allocation of goods and services by a free market is not efficient.
As the following chart shows, the percentage of health care costs borne by those who actually use the service is down to 12 percent (and shrinking):
That alone causes US health care to defy the adjective “free market.” Without even touching ObamaCare, let’s talk about the tort issue, the Food and Drug Administration, medical licensing, and the lack of an interstate market for health insurance.
These are just a few items that make the term “market failure” void when applied to US health care. It would have been nice had Quigley challenged the use of the term or at least not repeated it. And, of course, ObamaCare only takes us several steps further away from anything resembling a “free market.”