The Market Does Not Ration Health Care

Understanding the difference between the free market and government control

Health care reformers say they have two objectives: to enable the uninsured and under-insured to consume more medical services than they consume now, and to keep the prices of those services from rising, as they have been, faster than the prices of other goods and services. Unfortunately, Economics 101 tells us that to accomplish those two things directly—increased consumption by one group and lower prices—the government would have to take a third step: rationing. The reformers are disingenuous about this last step, and for good reason. People don’t like rationing, especially of medical care.

But some defenders of government control acknowledge that rationing is the logical consequence of their ambition. They parry objections by saying in effect: “So we’ll have to ration. Big deal. We already have rationing—by the market.”
For example, Uwe Reinhardt, an economics professor and advocate of government-controlled medicine, writes, “In short, free markets are not an alternative to rationing. They are just one particular form of rationing. Ever since the Fall from Grace, human beings have had to ration everything not available in unlimited quantities, and market forces do most of the rationing.”

Read more: http://reason.com/archives/2012/07/15/the-market-does-not-ration-health-care