I was discussing health care reform with my wife when a few near perfect examples struck me. I was explaining to her why health care insurance is such a bad idea for routine procedures. That we pay $1.10 or $1.25 for every $1 we would pay out of pocket, but just don't see it due to tax advantages and employer subsidies. We also discussed how the prevalence of insurance, both employer provided for the top two thirds or more, and government provided for the lowest fifth or so, prevents any meaningful cost competition or alternate payment plans. (All points covered in "Redefining Insurance... To Actually BE Insurance" and "The Insurance Sham".) And then I came upon three perfect examples of how the free market would likely handle health care, were the government to get out of the field.

Now, neither example is perfect. The government still involves itself in both areas, restricting entry ("Professional Education", "Business Licensing and Regulation", "Bad Economics Part 3", "Bad Economics Part 5") and driving up prices, as well as regulating to some degree. So they are still going to be more costly and less responsive than a totally free medical market would be. But, as far as is possible within our present economy, these areas provide as good an example as we can find.

As I mentioned in general terms in "Who Will Decide" and "Cutting "Costs"", and in more detail in "Redefining Insurance... To Actually BE Insurance" and "The Insurance Sham", the prevalence of "insurance", which is used to pay for routine procedures instead of only catastrophic events, tend to cause there to be little price competition in the medical field. However, as there are areas of medicine where insurance is not used, and which the government has not yet mandated that insurance cover the procedures. And that brings me to my first two examples

Those would be Lasik eye surgery and non-reconstructive plastic surgery. Both are not normally covered by insurance, but are in high demand. What makes them interesting is that both, despite  a lack of insurance coverage, have become more common in recent years. And that phenomenon, being excluded by insurance yet becoming more common, seems to go against the conventional wisdom that without insurance we would all be left without care. yet here, two elective procedures are growing more accessible despite a lack of government involvement. How?

And the answer is precisely that, a lack of insurance and other government involvement. Thanks to a lack of serious regulation, the equipment needed has steadily declined in price, becoming more accessible, and thanks to a lack of medicare/medicaid coverage, providers were free to charge what they wanted, meaning the early pioneers earned high profits, which were then invested back into cost cutting technologies and new techniques. But, on the other hand, a lack of insurance also emant consumers were quite cost conscious, and so, after the first phase when these were the province of the rich only, pressures grew to reduce costs. And so, as profits were plowed back into the firms, one of the main uses of those profits was reducing prices to remain competitive.

And so, despite a lack of insurance or regulation, these procedures became cheaper and more common.

In addition, these enterprises also introduced a feature we rarely see in most medical practices, thanks to the prevalence of insurance. Payment on a schedule. When people ask how the poor could afford major surgery without insurance, I have a tendency to point to this feature of medical procedures not covered by insurance. It seems if insurance were much less common, not only would prices decline, but it would also become more common to pay in installments. And that change alone would likely put much of medical care within the reach of even the most modest incomes.

Which brings me to my final example. Dentistry. Dental insurance does exist, but as the government has largely ignored it, it covers very little, providing only a small percentage of the cost of most procedures. As a result, dentistry generally functions as do Lasik and plastic surgery providers. Dentists tend to be very conscious of price competition in their area, as should be obvious from the strong advertising competition between dentists, competing both in terms of price and services, unlike most doctors. In addition, almost every dentist provides some sort of installment payment. Almost every child I knew had parents making payments on their braces throughout their teen years.

What makes this most interesting is, according to conventional wisdom, dentistry should be the province of only the ultra-rich. It is not well regulated, insurance is uncommon and covers little, and most have to pay out of pocket. And yet dental coverage in the US is second to none. No one is suggesting our dental care is in any way inferior to the nations which have socialized dentistry. Yet we have almost no government involvement.

Actually, looked at objectively, dentistry is a good argument for my theory ("High Cost of Medical Care","Government Efficiency", "Medical Reform, An Overview") that government involvement is to blame for most of our problems. Without the government involved, dentistry has thrived, while medicine, with heavy government involvement, has escalating costs and a host of other issues.

And then there are other examples I didn't mention. Podiatrists, for example, as many insurers don't cover them, yet they still manage to provide services through payment plans, competitive pricing, and so on. Similarly, psychiatric care, especially in the past when it was routinely not covered, existed by offering payment plans, sliding price schedules, and through simply pricing competitively to ensure that the market price was in line with the assets of those seeking services.

And, in reality, the best example may be the whole market. Yes, health care is "essential". but so is food, water, shelter, clothing, a whole host of goods an services which we rely upon the market to provide, and it manages to provide well. Food, in fact, is so well provided that the government feels the need to intervene to make prices higher, rather than lower. No matter how essential it is, food is found in adequate supply, no evil "food providers" are driving up prices or holding essential food off the market. And even poor people get food.

How?

Simple, poor people buy lower cost alternatives. Or they scrimp in other area and buy slightly better food. And that would be the model for health care. poor people would not be denied care, they would simply have to get fewer frills, or else economize in other areas, or maybe seek out charity. All he things poor people do now to get food, shelter, clothing and all those other essentials. And, were the government out of the way, no longer making medicine non-responsive to market forces, medicine would respond by providing gradations of care, cheaper plans for those with less, better plans for those with more. We would ahve no frills clinics and five star hotel-like hospitals. Some might complain that it "isn't fair", but by allowing gradations of coverage, we could be sure almost everyone would have access. And, as an added benefit, the excess spent by the rich might even help subsidize some charitable care for the poorest. (After all, charity requires money too. So providing expensive care actually allows for providing charity as well.)

And that is the point everyone seems to miss. In every area of human endeavor, you get what you pay for, but the market does its best to make sure that everyone can get something, provided they will pay. Greed makes it certain that some service will be available provided there is one cent to be made, so even the poorest would find some sort of care. It may not be the best, but they aren't getting the best now either. But under a free market, everyone would get better, and at cheaper prices. Just as we do with every other good and service.

POSTSCRIPT

My earlier writing on this topic can be found here:

Lifespan
A Most Dishonest Commercial
Medical Regulations
There ARE NOT 46 Million Uninsured!
Envy Kills
Medical Regulation II
Envy And Analogy
A Thought on Healthcare
Misunderstanding Profits
A Passing Thought on ObamaCare
Government Efficiency
A Useless Measure
High Cost of Medical Care
A Potential Problem With Universal Insurance
Negative and Positive Rights
Private Charity
The Devil is in the Definitions (And Assumptions)
Two Examples of "Inefficiency" in Capitalism
Private Charity Take Two
Cutting "Costs"
Clarification of My Argument for a Free Market in Medicine
Big Government Creates New Problems
ObamaCare on the Ropes?
AARP Proves They Are Partisan Hacks and other Thoughts on Health Care Reform
Red Herring
The Problem With Tort Reform
Shameless Self-Promotion
Who Will Decide
Confirmation, Yet Again
My Health Care Plan
First Kill All the Lawyers, Looking Back at Katrina
The Insurance Sham
One Real Life Example
Public Insurance
Again?
Medical Reform, An Overview
The Absurdity of Mandatory Insurance
Medical Reform, An Overview
The Absurdity of Mandatory Insurance
"Compassion"? Well, For Some
ObamaCare's Achilles Heel
Private and Public Coexisting
Preexisting Conditions
Interetsing Cuts in Budget
Symmetry and Greed
Disgruntled Workers
So, Why No New Medical Posts?
Desperate Media
Redefining Insurance... To Actually BE Insurance
How to Tell They Lost on Health Care Reform
A View From the Inside
2010 and Health Care
Bad Economics Part 2
Why Health Insurance Isn't Insurance and Related Topics
Even More Harm
An Interesting Question Under ObamaCare
Public Funding is Government Control

If I missed any, I am sure the links in the posts above will help you find it. Of especially interest are "Medical Regulations" and "Medical Regulation II" , as they present my main argument for a totally free market in medicine.