Scarcity can be a product of reality or a product of market conditions. One of the things that eliminates scarcity better than anything else is the profit motive. This drives more players into a market.
Now a person who thinks of systems as fundamentally static sees the high prices as a fixed given but once scarcity is gone, the prices start to shift. A more crowded market can see benefits from innovation (more value for the same price or less cost) and competition (similar values for less cost).
The chief thing that prevents scarcity from being addressed is government licensing and regulation. I will argue, without supporting it thoroughly here, that no market monopoly has ever been maintained without a shift in regulation/licensing to prevent new competition on the part of governments.
What existed before the ACA was not a free market and what the Republicans propose isn't one either. For historical perspective see the podcast I have linked in A History of Strangled Health Care in the United States.
Argue that the Republicans are wrong all you want but they are not now and have never (during my lifetime) been for a free market in medicine (or just about anything else). They are consistently about cutting taxes, increasing government spending, and pandering to the Christians.
A History of Strangled Health Care in the United States
Take this in for a moment and see how you feel about it:
A free market in medical care has not existed in America for about a century.
Isn't the problem more recent than that? One struggles to imagine it. But one doesn't have to. A recent EconTalk guest, Christy Ford Chapin, lays it out in a discussion rich with historical perspective. In discussion with the host, Russ Roberts, she lays out a historical narrative of an American Medical Association that uses its licensing power to destroy the market in medicine except for individual practictioners doing fee for service care without insurance.
The story evolves as the AMA, fearing government socialization in the aftermath of the Great Depression and WWII, seek to expand coverage to prevent the socialization of their trade. They enter into a faustian bargain with insurance companies and you land where we are today.
For those who have been frustrated with the state of medicine and the fragmentation among specialists of the medical trade, you will find an interesting and informative discussion.
Enjoy.
Historian Christy Ford Chapin of University of Maryland Baltimore County and Johns Hopkins and author of Ensuring America's Health talks with EconTalk host Russ Roberts about her book--a history of how America's health care system came to be dominated by insurance companies or government agencies paying doctors per procedure. Chapin explains how this system emerged from efforts by the American Medical Association to stop various reform efforts over the decades. Chapin argues that different models might have emerged that would lead to a more effective health care system.
Healthcare, Government Mandates, and Individual Freedom
Language choice lesson: When you believe in the right of government to dictate to insurance companies what they MUST cover, you might also refer to it as government TAKING AWAY coverage when that mandate is removed. (maximum hyperbole achieved... break out the torches and pitchforks)
But when you actually ask WHY the government has any business making mandates to insurance companies and you don't take it as a given... removing a mandate might be perceived as a movement from coercion toward freedom.
As an aside, it's interesting for me to ponder people who run startups but react favorably to government control of health insurance and medicine. I think it's contradictory to do so. Startups do well because they enjoy a large degree of freedom on HOW and WHAT they do. And often they see no problem with DISRUPTING things like regulatory taxi cab franchises imposed by the government.
But, somehow medicine doesn't get the same treatment. I mean it's life or death! So questions like these don't automatically fall on the side of freedom:
- Will government mandates will manage not to reduce innovation and investment? (blank out)
- Don't insurance companies have a right to try to structure different business models that might change the entire industry? (blank out)
- Wouldn't burdensome government regulation give advantages to larger businesses than smaller ones? (blank out)
- Who the hell would want to start an insurance company given a trend of increasing regulation and decreasing freedom? (Maybe the world just needs another social media app)
- When costs get too high, how long will I have to wait for a procedure if I don't have political connections? (blank out)
- When waits get too long, will I have to call my senator to get things moving along?
In the end, we still need to answer for Liberty. Does it matter? Do we still believe in it? And if so, by what right do mandates like the ACA force us to pay penalties for our only real right: to get to decide for ourselves what we will and will not do.
A lot of people think of a guarantee of health care or basic income as a matter of kindness. They think of it in terms of what kind of guarantees a prosperous society can provide. But will society remain prosperous if we go about destroying the foundation of prosperity? What about freedom?
Folks, I don't see it as a country that believes in freedom if the government can tell a person they MUST buy insurance or pay a few hundred dollars to the government for no reason.
What will they tell us we must tomorrow? I mean... all a government seems to need is the right justification, the right notion of duty which will get them 51% of the vote to support it. And that's assuming a weak one.
What could a guy who doesn't even give a shit about freedom like Vlad Putin require? Because a guy like that can get elected. (The people who use kindness as a motivation for instituting government control of medical care tend to assume benevolent government but that is neither a law of nature nor statistically probable)
Look... those of us who believe power corrupts and absolute power corrupts, absolutely, HAVE to ask this question: What happened to universal and inalienable rights? Because everything I hear about these days sounds fucking alienable to me.
Government should begin with the premise of every person having fundamental rights to act according to their judgment in pursuit of their lives, barring violations of the same rights against others (force and fraud).
In the age of pragmatism, these ideas are dated. It's old-school to even believe in principles. It's laughable to believe in absolutes. Whatever... I am what I am and I have never been good at winning the popularity contest.
My friends might be surprised to know that I'm with the Republicans that want to repeal the ACA entirely. Frankly I don't even think that would go far enough.
My vision for better health care is a government retreat from regulation of it. No mandates. Less regulation and thus more new entrants and more stale model disruption. New smaller organizations to organize and share the burden of medical risk (which is supposed to be the job of insurance companies). No artificial state boundaries. Delete tax deductions for health care insurance premiums for employers and make the playing field level for individual buyers. Voluntary charities to help provide insurance to those in need.
Probably won't happen in my lifetime.