Textbook definitions of what constitutes a market differ in their nuances.
Wilfredo Paretto, Friedrich Hayek, and many other economists have formulated
their own versions. Normally the requirements are along these lines:
- there
is a sufficent number of comparable and independent buyers and sellers that the
entry or exit of any one of them does not materially change the market
- the
participation of the buyers and sellers is voluntary, that is, the sellers are
free to not sell, and the buyers are free to not buy
- there is a flow of
correct information allowing buyers to make informed purchasing
decisions
It is a fundamental belief of free marketeers that IF market
conditions exist for a given part of the economy THEN the market is the most
efficient way of allocating resources in that part of the economy.
Market
conditions exist for some parts of the economy more clearly than for others. A
farmers' market is a good example of market conditions being satisfied. The
farmers' market may have many stalls selling more or less the same foodstuffs,
and lots of buyers understand lettuce and cucumbers well enough to make their
choice. Utilities such as gas, water, and sewers just as clearly do NOT satisfy
market conditions, because the cost to sellers of building competing
infrastructures is prohibitive or downright impossible. Even free marketeers
will concede that in these parts of the economy, regulated monopolies are
inevitable, although they may argue about whether the monopolies should be
privately or publicly owned.
The trouble with the health care business is
that buyers are under duress to participate (particularly for emergency care),
so arguably market conditions don't exist. Buyer duress, if unchecked, allows
sellers to charge more. In this case, even believers in markets may feel that
regulation is needed. The grand bargain made in most Western societies other
than the USA is to assume market conditions don't apply to health care. Thus,
Western Europe, Canada, Australia, etc. have health care systems which blend
some features of free enterprise with substantial government
intervention.
The country most like the USA is probably Canada. There,
health care is a provincial (i.e. state) jurisdiction. In most provinces, the
government is both the main insurer and price setter. This system ends up having
both advantages and disadvantages compared to the US approach. Generally
speaking, Americans with lots of money and/or insurance coverage receive better
care than Canadians, while Americans with little money and/or coverage receive
worse care than Canadians. Canadians sometimes have trouble finding general
practitioners, and can face long waiting lists to see specialists, but the
system works efficiently otherwise.
The overall effect is that Canada
receives better outcomes on macro indicators (lower infant mortality rates,
longer life expectancy, and so on) while spending HALF as large a portion of
their GDP on health care as the USA. That's in a country with a per capita GDP
comparable to ours. [ Reply to This | Parent | # ]
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