NCPA - National Center for Policy Analysis

Market Based Health Care

June 1, 2000

In the United States today, one of every seven dollars of income is spent on health care. And, according to a variety of measures, such as life expectancy at birth or age 65, the American health care system performs poorly, according to a new book from the Independent Institute.

This high-cost system requires fundamental reforms to improve access to high quality, affordable health care, say the authors.

Unlike most efforts at reform, which would further bureaucratize health care -- an approach that was rejected by the public in 1994 and is increasingly being abandoned in Canada, Britain and elsewhere -- the book argues for practical, market-based policies based on deregulation, privatization and competitive markets.

According to the experts who wrote American Health Care:

  • Food and Drug Administration (FDA) restrictions on advertising prevent firms from informing consumers of the full benefits of medicines.
  • Rather than price controls, seniors seeking to reduce the price of prescription drugs should seek to restrict the FDA, which raises drug costs through regulations and causes tens of thousands of deaths each year by delaying the approval of life-saving drugs.
  • Medical malpractice laws should be reformed to discourage frivolous lawsuits and encourage health-care providers to focus on actual treatments instead of "defensive medicine," thus decreasing insurance costs.
  • After the Medicare and Medicaid programs were begun, costs quickly exceeded projections -- some doubling in the first year -- and attempts to use controls and transfer programs to the states have failed to rein in runaway expenditures.
  • Medical Savings Accounts would make health coverage portable and affordable, and reduce the number of people uninsured.

Source: Roger Feldman (ed.), "American Health Care: Government, Market Processes and the Public Interest," 2000, Independent Institute, 100 Swan Way, Oakland, Calif. 94621, (510) 632-1366.


Browse more articles on Health Issues