Let’s talk about the free market in health care. Oh, wait. It doesn’t exist.

It might look like one because health care is such a big business. Hospitals, insurance firms and pharmaceutical companies rake in billions, and our total health spending is more than $3 trillion a year, or one-sixth of the national economy.

But the transactions that produce all of that wealth are not made by people who have enough freedom of choice to make a market function.

If I get hit by a bus on my way home tonight, I’m not going to shop around for the healer with the best prices. I’m going where the ambulance takes me.

And if a doctor orders an X-ray, there’s no point in me asking her how much it’s going to cost because she won’t know. There are different prices negotiated by every insurance carrier, and billing is not the doctor’s job.

There is no free market in health care because there can’t be, which is why paying for health care is a government function throughout the developed world. What most people don’t realize is that’s true here, too.


The U.S. government was paying a big chunk of the health care bill long before Obamacare became a thing. It’s past time we take a hard look at what we are spending and ask if we are getting our money’s worth.

Everybody knows that about one-third of the American population gets health coverage through a government program, like Medicare for seniors, veterans programs, and Medicaid for the low-income and people with disabilities. But what’s usually forgotten is how the government is involved with the other two-thirds of us.

About half of all Americans get health insurance through their employer. Private employer, private insurance company, no government involvement there, right? Wrong.

The premiums for those policies are tax-exempt. Out-of-pocket costs are also deductible. That amounts to a few thousand dollars in subsidies every year for every family that gets insurance from work.

Another 10 percent buy insurance on the individual market, and many of them receive subsidies or tax credits under the Affordable Care Act. Any premiums they pay are also deductible.

The cost of “free” care for the remaining uninsured is distributed to all the other payers, which results in higher premiums and more tax deductions.


That’s hundreds of billions of dollars in government spending every year on top of the Medicaid-Medicare budgets, but it’s invisible.

People argue that a tax break is not a government expense, but they are wrong. If the Internal Revenue Service were not exempting health care spending, it would not have to tax other income as much. If not for the tax exemption, health insurance would be considerably more expensive and millions of us would not be able to afford it, but because of the policy, we can. Sorry, but that looks like government-supported health insurance to me.

The Obamacare replacement dust-up revealed some interesting attitudes that should shape how the health care debate moves forward. One surprise was how many people found that they liked the ACA after they realized that they were in danger of losing it. The other interesting discovery was what parts of the law they liked the most.

Almost universally, it was the market reforms in the ACA that had the most support. Under Obamacare, you can’t sell insurance unless you agree to let young adults stay on their parents’ plans until they turned 26. No insurer can cancel someone’s policy because they have a pre-existing condition or if they become so sick they hit a lifetime cap.

These regulations were even popular among Republicans like 2nd District Rep. Bruce Poliquin, who wouldn’t say how he planned to vote on the House bill, but did let everyone know how he supported maintaining some mandated coverage. And Republican governors in states that had expanded Medicaid were key voices in the House backing off plans to cut back that program, which brought coverage to millions of their constituents.

What’s interesting is that these are some of the least “free market” aspects of Obamacare. The part that was supposed to appeal to Republicans – the health care exchanges adapted from Mitt Romney’s universal insurance program in Massachusetts – is the part that has fewer fans, despite being the most market-based.


There’s a reason that House Republicans have had such a hard time describing a free-market health care system that doesn’t leave millions of people with no coverage. It’s because it can’t be done.

We’re already paying for a government-funded system, so we ought to demand one that works.

Listen to Press Herald podcasts at www.pressherald.com/podcast.

Greg Kesich is the editorial page editor. He can be contacted at:

[email protected]

Twitter: @gregkesich

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