http://www.hoover.org/publications/digest/10673881.html
MYTH NO. 1: TH E U.S. HAS A FREE-MARKET SYSTEM.
Critics of the escalating spending on U.S. health care and the absence of universal insurance maintain that the problems of our system are evidence of the “failure of the free market.”
A free market exists when a business is governed by the laws of supply and demand and is not restrained by government interference, regulation, or subsidy. In a free market, the buyer makes value-conscious purchasing decisions and the price is a reflection of consumer demand, relative to supply of the good.
Does that sound like our system?
Consider that about 83 million Americans have health care coverage through Medicare, Medicaid, and the State Children’s Health Care Program (SCHIP), federal and state programs that account for almost half of the $2 trillion spent on U.S. health care.
Government regulation further imposes more than $330 billion on our health care system, making it the most highly regulated industry in America.
Little known by the public is that reimbursement rates to doctors and other health care providers are set by Medicare. In the end, a remarkable 80 percent or more of medical care pricing is based on government decree.
Worse, the government and the third-party-payer system have completely interfered with any consideration of cost by the patient.
Because “someone else is paying,” why would patients even bother to consider that hospital and doctor prices vary wildly among providers? If patients did want such information, they wouldn’t easily find it.
Patients have no idea what their doctor visits, surgeries, diagnostic studies, or other medical services—whether urgent or elective—will cost until the bill comes weeks later.
Moreover, information about the quality of doctors, such as experience and training, is rarely readily available.
