Health Care

Can the Free Market Fix Health Care? Listen to Michael Cannon vs. Jonathan Cohn at the Soho Forum (Reason Podcast)

A live debate at the Soho Forum in New York City.


"The U.S. [health care system] is what you get when you let government run rampant," says Michael F. Cannon, who's the Cato Institute's director of health policy studies. "The government controls half of our health care spending directly and the other half indirectly." He elaborated:

The government tightly controls who can practice medicine, what education they must have, what tasks they can perform, where they can practice medicine, who can open a medical facility, who can purchase expensive medical equipment, where we can purchase our medical insurance, what our insurance covers, the prices we pay for insurance, how we obtain health care in retirement, what treatments doctors can describe, what manufacturers can say about those treatments and their products, the organization structure of health care providers, how health providers get paid, how much they get paid, how much we spend on health care, [and] how we help the poor obtain health care.

Michael Cannon vs. Jonathan Cohn |||

Would Americans be better off if the government pulled back and let markets function? That was the topic of a debate held Monday night at the Soho Forum, a monthly Oxford-style debate series that "features topics of special interest to libertarians" and "aims to enhance social and professional ties within the New York City libertarian community." (An archive of past Soho Forum events.)

Cannon's debating partner was The Huffington Post's Jonathan Cohn, author of the 2007 book, Sick: The Untold Story of America's Health Care Crisis—and the People Who Pay the Price.

Cohn and Cannon debated the following resolution: "A market system for medical care would save more people from suffering inadequate care than any other system." At the beginning of the event, attendees voted "yes," "no," or "undecided." After Cannon and Cohn had their say, the audience voted again.

Cohn won the debate, convincing two percent of "yes" votes and 16 percent of the undecideds to switch to his side. The results are here.

Listen to the debate on SoundCloud below. Better yet, subscribe to the Reason podcast at iTunes.

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  1. Assume that the problem is that health care is too expensive. There are two ways to reduce the price of something, increase the supply of it or decrease the demand. Obamacare and pretty much every government heath care program over the last 50 years has done nothing to increase the supply of health care. At most these programs have tried to reduce the demand for heath care but have done that through the magical thinking that somehow preventative care would reduce the demand for heath care overall. That is for a lot of reason a complete fantasy. Worse, these programs by giving people money to buy health care or health insurance and making them spend it actually increased the demand for health care over what it would have normally been. They have also served to decrease the supply of health care by making the delivery of heath care more tightly controlled and less efficient.

    1. There are two ways to reduce the price of something, increase the supply of it or decrease the demand.

      Eliminate government enabled rent seeking.

      Freedom. Let us buy medicine and medical services from whom we want. Make doctors *provide value*, instead of simply shake you down for their permission slips so you can legally purchase your health care.

    2. Podcasts/videos are a waste of time The average person can read seven times as fast as someone speaking.

  2. I don’t know that the free market will fix the price of health care. Health care is expensive for reasons that go beyond government incompetence. Health care was once very cheap because short of setting a broken bone or doing minor surgeries like an appendectomy or removing your tonsils, there really wasn’t much doctors could do for you prior to the 1960s. Health care is a whole lot more expensive today than it was then but it is also a thousand times more sophisticated and effective. Before the 1960s, if your kidneys gave you, you died. Today you get dialysis and hopefully a kidney transplant. That isn’t as cheap as just dying, to give but one of hundreds of examples.

    So health care as we have come to know and expect it, is always going to be expensive. It certainly doesn’t have to be as expensive as it is now. But anyone who claims that it will become cheap if only we operate under a free enough market is selling snake oil. And this is especially true when you consider the human nature of rising expectations. People are always going to want and pay for the best treatment. So the old treatment becoming cheap won’t help much.

    1. Looking only at aggregate spending on healthcare is utter folly. In no other market do we look at aggregate spending as a proxy for the cost of everything. Treatments that were cheap 50 years ago should still be cheap today (adjusted for all the things that government does to change the value of money). Treatments that didn’t exist 50 years ago are probably going to be expensive today. Those are two different things; rolling it all up into one number is disingenuous yet that is what everybody talking about “making healthcare affordable” does.

      1. Disingenuous, maybe, but can anyone reasonably ask for anything else? Like John said, humans have an ingrained expectation of rising outcomes. It’s be kind of crazy to say “well the few medical practices we’ve been doing for nearly 60 years, they’ll be easily affordable, but everything else is going to be quite pricey. Don’t expect access if you’re not wealthy.” Everyone would blast that as gross and unfair, and they’d be right.

        1. Unless you can tell me what percentage a society should spend on healthcare and explain why your percentage versus any other percentage is the right answer to that question, you can’t reasonably ask for the percentage because you can’t explain what it means. So what if we spend a third of our GNP on health care? Or half of it? We are a rich country. We have the luxury of spending a lot on health care.

          1. Obviously there’s no “right” answer to how much GDP should be spent on health care, but when our neighbors spend a whole lot less, it begs the question of “what are we getting for our extra spending? Is it worth it? Is it inevitably, for some reason?” Saying “well we have the money so we minds well spend it” is crazy.

            1. Our neighbors are getting a whole lot less for their money. US survival rates for serious illnesses are much higher than theirs. Our neighbors are also leeching off of our spending. The US funds most of the medical research in the world and the cost of that is passed onto US consumers. Consumers in socialized countries don’t pay for that.

              The idea that the average quality of health care in a place like Canada or worse the UK is even close to the quality in the US is a complete myth that has been debunked over and over again.

              1. RE: The idea that the average quality of health care in a place like Canada or worse the UK is even close to the quality in the US is a complete myth that has been debunked over and over again.

                Forgive me, but could you link me something explaining this? I’m extremely skeptical, as it runs counter to virtually everything I’ve read about American health care.

        2. How is it unfair for those who have earned more to be able to purchase more?

          1. At a basic level it’s not unfair, but especially when it comes to people’s health and lives, a certain amount of societal equality is necessary for that society to continue to function in a healthy way. When someone’s kid dies because they couldn’t pay for a certain procedure but a rich celebrity has easy and public access to whateverthefucktheywant, people tend to get pissed.

            1. When someone’s kid dies because they couldn’t pay for a certain procedure but a rich celebrity has easy and public access to whateverthefucktheywant, people tend to get pissed.

              What does “public access” mean?

              Most wealthy people aren’t celebrities.

              You don’t get whatever the fuck you want. You get what somebody else is willing to give you at the price you’re willing to pay.

              There are other ways to pay for things besides being a rich celebrity.

              1. I was trying to say that the celebrity’s purchase is public knowledge; it is widely known that they flew wherever, spent whatever, etc.

                Really, what I’m talking about is dramatic wealth inequality. When a big enough portion of the population feels like they’re being squeezed from every direction, and they’re also being bombarded continually by the glamorous and privileged lives of the upper class, it’s a recipe for social unrest. Even people who are inclined to believe in free market theories (which naturally create inequality – not a bad thing, BTW) can get hacked off when it feels like the whole system is tilted against them.

                1. Ok, so what? Can you buy a prescription at a reasonable price or not? What some celebrity does is irrelevant.

            2. Riddle me this, if your kid was sick would you consider it charitable, good, or fair to rob a bank and use the funds to save their life? I would assume this is something you would consider a good thing, as you advocate for the government to do that with others private property.

              1. I’ll see that strawman and raise you a “I suppose you think the commoners during the French Revolution should’ve just recognized the importance of personal property and gotten comfortable with their lot in life.”

                Hehe, I jest. No I don’t condone theft. But I do recognize a predictable situation when see one. If people are pushed far enough, if they feel like they’re being cheated, if they feel like they can’t get what is reasonable for them to have through legitimate means, they’re doing to start caring a whole lot less about morals, laws, or ideals. This is especially true when those morals are coming from the people who are benefiting from the same system that is keeping them down.

        3. Disingenuous, maybe, but can anyone reasonably ask for anything else?

          Yes, like looking at the individual costs and identifying where they come from.

    2. The problem is that the stuff that should be cheap, isn’t. So instead of needing insurance to handle those rare situations where something serious happens, you need it for almost anything more complicated than an annual checkup or trip to a doc in the box. And of course people are already paying so much for insurance, that they expect those things to be covered, too.

      1. Bingo.

        Most of the cost of routine health care is the cost of government enabled rent seeking, with the added accounting costs the Medical Mafia incurs while divvying up that pound of flesh they extract from you.

        Medicine is predominantly information technology. Should be getting cheaper as fast as information technology is. Would be, but for government enabled rent seeking.

    3. Excellent point. American health care is crap. It’s bewildering to me how we can spend so much on health care (as a percentage of GDP) and still seemingly get so little. Do free-market supporters have an estimate on how much costs will go down under a free-market system? Enough to take our currant 17% GDP to 8.8% (like in the UK), or less? And that’s setting aside the extremely difficult marketability problem it faces: it’s politically intolerable at this point to allow insurance companies to deny care and let people suffer or die. It’s plainly obvious to anyone with an iota of knowledge about health care that in EVERY system, there are winners and losers, but a free-market system has a particularly poisonous political bomb attached in it that advocates are going to need to work around before voters will accept it.

      Even the socialized portions of our system, Medicare and Medicaid, seem grossly bloated and inefficient compared to other countries. Can someone with more knowledge of these programs say why?

      1. American health care is crap

        Crap is a relative term. When you look at the survival rates for cancer and diseases that once were immediate death sentences and the enormous rises in life expectancy that have occurred over the last 50 years, it is anything but crap. It costs more than it should but it is absolutely fabulous by any reasonable standard.

        1. Quite correct; let me rephrase: American health care is absurdly convoluted, and expensive as a result of that. It doesn’t do everything wrong – we’re world-leaders in drug and health care development, for instance – but the benefits of our system are becoming less and less worth it as the Rube Goldberg nature of it continues to expand.

          1. So, we’re the world-leaders with our ‘terrible’ system but the systems abroad that are ‘better’ are in fact not at all better. Interesting.

            1. I’m going to go ahead and quote myself:

              “It’s plainly obvious to anyone with an iota of knowledge about health care that in EVERY system, there are winners and losers.”

              I.e., every system has benefits and drawbacks. American health care kinda stands alone on the world stage for a few reasons: we develop an awful lot of drugs that other countries benefit from. We also spend a fuckton more. I’m posing the question “do the benefits outweigh the drawbacks?”

              1. Spend more on what? You are doing the exact same thing I called out above. Pick a procedure, test, medication, etc. Is it more expensive? Why is it more expensive? Stop using aggregate spending as some kind of meaningful metric.

                1. I’m not really sure what point you’re making, but I’ll try to answer: haven’t you seen any of the bajillion charts showing how much more we pay for a given procedure compared to other countries? On a procedure by procedure level, we pay more than basically every other country. There’s a counterargument to be made around elite care (the quality of American health care is extremely good for the people who can pay, basically), but that dynamic is a still a trade-off: we pay more for the same thing, and the benefit is extremely good care for the extremely wealthy.

                  1. we pay more for the same thing

                    Such as what? Medication? Imaging? Diagnostics? Surgery?

                    the benefit is extremely good care for the extremely wealthy

                    That makes absolutely no sense. You pay for your own services, not those of other people, except through the public system, which doesn’t give more money to people who already have more money.

                    1. And the extremely wealthy are also those most able to shop around internationally for whatever they want at whatever price. So using them in any kind of example isn’t disingenuous, it’s ignorant. If you have the funds, you can buy a kid from Somalia and get that liver. You bet’cha.

                    2. RE: Such as what? Medication? Imaging? Diagnostics? Surgery?

                      All of it

                      RE: That makes absolutely no sense. You pay for your own services, not those of other people, except through the public system, which doesn’t give more money to people who already have more money.

                      Yes, a system that both gives rich people the opportunity to spend their money AND doesn’t redistribute money through taxes to give poorer people similar opportunities will end up with very different healthcare results for rich and poor. Our system is far from the extreme of this principle, but we’re definitely tipped further in this direction than any developed country in the world.

    4. Most people’s health care is information technology plus meds.

      Test, Diagnose, Prescribe, Monitor, repeat.

      Google would have been providing that for free already, with you purchasing meds and tests yourself.

      But for the Medical Mafia making it illegal for them to do so.

      You could be tested every time you went to the supermarket with a microfluidics pin prick from a kiosk at the supermarket pharmacy. Google would track the results. Track your usage of meds. Alert you to any issues. Use big data for treatment discovery and tests.

      Information technology, sensor technology are both getting geometrically less expensive.

      Routine health care is cheap.
      Government enabled rent seeking is expensive.

      Death to the Medical Mafia!

      1. buybuydandavis; what do you mean by “gov enabled rent seeking”?

    5. +1 artificial heart valve

    6. New medical procedures will cost more. But those costs should go down over time, like most tech (when adjusted for inflation and features). But the same MRI and cat scans we had 20 years ago cost way more now. An appendectomy should cost way less than it did in the 60s due to things like othroscopic surgery that reduce recovery. But it is not. That is because there is now mechanism to reduce cost. Emergencies and diagnoses like cancer and heart desease are always going to cost a lot. That where true insurance should come in. Basic doctor visits and routine labs, if paid out of pocket or though HSAs, would come down in price tremendously. With those costs reduced, we can then help less fortunate people who cannot afford these types of medical costs.

  3. Depends on your definition of “fix”. For government politicians and bureaucrats, it would be a disaster because it’s not about making anything better, it’s about CONTROL.

  4. A more important question is this:

    If the free market can’t fix healthcare, that why the hell would you think that centralized command & control of healthcare could fix it?

    Especially considering all of the abundant examples of how centralized command & control hasn’t ‘fixed’ healthcare in any of the numerous other countries that have implemented some style of it.

    Jesus, I feel like I’m taking crazy pills reading reason these days.

    1. But they’re aggregate spending is less!

      Let’s not look at the structure reasons why that might be so, or even examine the underlying assumption (less consumption is a good thing?), let’s just jump straight to a (full) government takeover of healthcare.

      For the children!

      1. Ugh, their*

      2. I don’t give a fuck about aggregate spending, as many have pointed out it’s a shitty metric and a moot point. Jesus H. Fucking Christ on a Pogo stick, are we really comparing ourselves to places like the U.K.? It’s an island with a population of 65 million compared to an entire continent of 318 million people.

        In other words, not comparable. And even then, you would expect their system to be able to handle things better with a smaller, more concentrated population and instead it’s still a cluster fuck.

        I had an epiphany the other night while thinking about this subject, and my generation is being expected to cover Social Security, Medicare, and now pay through the nose for our own healthcare yet we’re going to see precisely zero of these benefits.

        Want to know the real reason why? It’s because the Boomer generation is selfish beyond fucking words, and furthermore they are entitled about it. (And yes, SS/Medicare is kind of an actual earned entitlement. I know. I’m still never going to see a dime of it.)

        I’m not defending the Millennials, but where the actual fuck do you think they learned these things? Huh?

        1. So, to sum it up, all of this ‘healthcare’ debate centers around the idea that the government has promised the Boomers the moon, and now that the can is just at the verge of becoming unkickable the government has decided to fuck everyone over to try and appease the most entitled generation of American’s in the history of the United States.

          1. Who do you think the government is largely comprised of, who do you think it had since the 1980s?

          2. Now they’re promising Mars.

        2. I am a boomer. worked 40 years and payed into a system that gave me no choice. I am “entitled” because I worked and payed. What do you expect of me, just die so as not to use precious resources? I worked 40 years to support me and mine and those on gov dole. Quit whining and go to work!

    2. I just take the crazy pills. Fuck reality.

  5. America should have the most robust private insurance market in the world and a public health service providing care determined to be in the interest of the public health. You won’t get your hip replacement surgery at a public health hospital.

    1. America should have the *most free* health care market in the world.

    2. I live in Taiwan. The upgraded hip replacement that I need is about 3,000 US dollars (because I’m not a couch potato). Seems pretty cheap to me compared to the USA medical cartel (the AMA)..

  6. The quote was really promising. But again, still disappointing.

    Left out – eliminates my freedom to purchase medicine, medical equipment, and medical tests for *myself* without government permission.

    When will supposedly libertarian Reason support health care freedom for consumers, and not just corporate interests?

  7. Let pharmacists prescribe, Why let medical deities (who are hired help or advisors) dictate what you want or need? Free market or nationalization. America has the worst combination of both, because it maximizes the income of the medical/AMA cartel and Medicare/Welfare income to Quacks.

  8. Yes, there is no doubt that health care is too expensive. But the cost doesn’t end there. If people drop off the Medicaid rolls and become uninsured, they will likely wind up as charity-care patients when they get sick. Over the past three years, Gov. Chris Christie has cut the amount the state pays hospitals for providing charity care by about $373 million, citing a decline in charity-care cases due to the increase in those covered by Medicaid, and he has recommended another cut of $50 million in the coming budget. I understand the importance of health care. When I have health problems and I tend to have a high blood pressure, I go to the nearest richmond emergency room to consult with a doctor without waiting. It’s available 24/7. These guys helped me a lot of times. So I prefer to pay for what I get.

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