ii. Health care - case for a free market

What would happen if all health care were bought and sold in the market? The answer to this question is fiercely debated. Free market economists such as David Green argue that the market would deliver the best possible care at the lowest possible cost. In How to Pay for Health Care. Public and Private Alternatives, IEA Health and Welfare Unit, London June 1997, he contrasts a free market system with the NHS which he regards as a command system financed by compulsion (i.e. taxation). He argues that the command model suffers from a number of problems:

• it does not use prices and so has to plan and ration using other tools
• it has no way of overcoming the problems of uncertainty and imperfect information
• it gives the suppliers the power to impose unwanted treatments on consumers.

No prices

The NHS does not use prices in the way a free market would. Green argues that this means that there is no way to evaluate how much people want a particular health care service. Furthermore the lack of prices means that the suppliers have no way of knowing what services to produce and in what quantities. The result is rationing. Neither of these problems would occur in a free market. As Green says, prices provide a way for consumers to compare "the cost of health care with other desirable things, from consumer durables to the education of children. They also send signals to suppliers about the quantity and quality of care being demanded." This allows producers "to judge how many facilities of various types to provide."

Uncertainty and imperfect information

Health care is a market where changes in technology are occuring all the time. How can we decided whether a new way of treating a medical condition should be used or how widely it should be used? In the NHS the planners, the 'experts', decide for us. Green argues that the market provides a much better way of answering these questions. He says that it is best to allow many people to try out alternatives in the hope of learning from their experience. This means that the 'best' answer emerges from a process of trial and error by a large number of people.

Power to impose unwanted treatments

If we let the experts make decisions for us then we can find that they impose treatments on us against our will. Green cites the example of NHS childbirth services. He argues that "from the 1950s to the 1970s ... under the guise of science in the service of saving life, medical power was used to induce births to fit the convenience of medical employees". As a result there were more complications and clinical damage. He also states that "Many mothers have reported that during those years they were pressurised into accepting dubious medical advice".

Conclusion

Green concludes "A competitive market is not a technical invention which allows pre-defined objectives to be met, but a system which allows scope for human ingenuity to design and redesign ways of improving our lives. It is based on the assumption that we are constantly learning. In particular, it rests on the belief that no authorities can set themselves up in advance on the basis of their training or expertise as the ones who should inevitably have the power of decision."