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Wednesday, December 03, 2008

Can Wal-Mart save U.S. healthcare?

A great article by Chris Brown for the Mises Institute on the U.S. healthcare system. Brown correctly points out that in America we DO NOT have a free market in the health care industry. In fact, one of the most startling facts in the article is mentioned in this paragraph:

"...the US government accounted for over 45% of all US healthcare expenditures in 2006; it spends almost 20% of GDP on healthcare; indeed, it spends more per capita than any other OECD country, including those with socialist, government-funded healthcare. In short, this is not a free market."

Did you hear that Canada? The U.S. government spends more per person on health care than you! You'll have to increase your spending, lest ye be outdone by the coldhearted "free market" U.S.! (Notice thick sarcasm)

The truth is our health care industry in America is a mess of regulations, subsidies, taxes, and bureaucracy. It is a managed cartel. Industry players have lobbied hard to get into monopoly positions and exclude competition. Fortunately for consumers, you just can't keep those pesky entrepreneurs down. Brown describes how Wal-Mart is leading the way in offering cheap, quick, quality health care to more and more consumers, despite all the government obstacles and industry insiders seeking to limit the provision of care to themselves.

"Wal-Mart now offers walk-in, inexpensive healthcare services by leasing store space to private health clinics. This service, combined with an in-store pharmacy that offers $4 prescriptions, will offer these services to millions of people, and there is no requirement to have health insurance. Consider this: Wal-Mart's $4 prescription program has saved customers over $1 billion dollars since its inception. Prices are a flat fee of around $45 per visit, and are well advertised, i.e., there is no guess work, and price transparency exists. Contrast this with a typical doctor's visit where you might not know what you are paying until three months later."

See where serving the customer gets you with the big government loving cartels and monopolies:

"...some physicians are (correctly) worried since they will have to struggle to compete with Wal-Mart's healthcare. Most physicians earn their revenue from "quick" visits — the "simpler" the illness, the quicker the visit — which means more customers, and more revenue. Wal-Mart will now be treating those patients and receiving revenue from customers, which formerly would have gone to physicians. Similarly, the AMA cartel could receive a "prescription" from Wal-Mart on learning how to foster innovation, as opposed to stagnation, to maintain relevance. Other organizations, such as the American Academy of Pediatrics, instead of attempting to compete, intransigently and stubbornly cling to their antediluvian practices by merely writing position papers opposing retail clinics such as Wal-Mart. "

None of this is because Wal-Mart is benevolent and the cartels are greedy. Both parties are self interested (ALL parties are self interested...that means you too). But as Adam Smith so deftly explained in The Wealth of Nations some 232 years ago, competition is the only way to keep our economic self-interest in check, and indeed, in a free-market each person's self interest is led, "As if by an invisible hand" to the benefit of everyone.

Wal-Mart is helping more and more people (particularly those with low incomes) get health care because they want to be more profitable and be better than their competition. Freedom leads them to offer what their customers want. Customers are the only ones with the dollars they seek, and to get those dollars they must please the customers - customers are their master.

The cartels and government sanctioned monopolies on the other hand will seek to beat their competition not by pleasing consumers of their services, but by pleasing their masters - government.

If you want better health care (or better anything), don't let government become the master of the industry. It's a lot better for you when you're the master.

In February, Western Standard general manager Kalim Kassam argued that Wal-Mart founder Sam Walton deserves the Nobel Peace Prize.

Posted by Isaac Morehouse on December 3, 2008 in Economic freedom | Permalink

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Comments

BTW - you Canadians do realize the data revealed above severely limits your bragging rights about how much more socialist your country is than mine.

Who's fighting for liberty in the more hostile environment now! What's that? You're government spends how much per person on health care? That's what I thought. Complain about how socialist your country is when you can keep up with the massive government in mine! Ha!

Posted by: Isaac Morehouse | 2008-12-03 9:07:12 AM

its about time.

Posted by: lovilla | 2008-12-03 9:59:57 AM

Geez, that Wal-Mart smiley face has never looked more disconcerting :-)

Posted by: Terrence Watson | 2008-12-03 12:09:38 PM

Competition drives the market. The government controls it. Health care may be over-regulated now, but I hate to see what it will be like under the pending new administration. Free markets are exactly that--free. Within the confines of current regulatory restrictions from state to state, healthcare providers, insurance companies and others in the medical community must navigate a host of laws to make money.

Everyone knows the basics of Economics 101. When a business does not make money, it goes out of business. As the health care industry struggles to find consistency, profitability, transparency, and functionality in an ever-increasing suffocating government sanctioned legislative morass, Americans suffer in the mean time with costs that have spiraled ever upward to pay for those who choose to have "free" health care. Americans deserve the privilege to have multiple options for health care. Competition drives price. When their is a monopoly, everyone pays more, including taxpayers who must bear the cost. Universal health care is not the answer.

Companies like Wal-Mart understand that cheaper is sometimes better. And consumers understand that keeping more of their money is better than giving it away to the government or to health care providers who charge too much.

Posted by: MarkR | 2008-12-03 2:22:50 PM

Isn't the invisible hand of the free market what Alan Greenspan was depending on? http://www.nytimes.com/2008/10/24/business/economy/24panel.html

Regulation in and of itself is not a bad thing. I am sure we are all happy that there are drug and food regulations.

The real question in healthcare isn't competition. Do you really decide based on the lowest price for a doctor when your children are sick? Access is the most important one thing for healthcare.

You can slag Canada and the rest of the world all you want, statistically they live longer and more healthy than the U.S.

Posted by: Tyrrell Cornwall | 2008-12-08 10:05:04 AM

Maybe Tyrrell, but it has nothing to do with our socialist system.

And yes, sometimes you do decide on the cheapest doctor, rather than the best. But atleast you get access to a qualified physician.

Canada has shown that great doctors leave a socialist health care system. The doctor I had as a kid went on to be a Floridian surgeon.

Your kids are left with nothing but the cheapest doctors, because all the good ones have left the country. If you look at Soviet Socialism, everyone either jumped the fence or became alcoholics. Read Atlas Shrugged.

Posted by: Mudflap | 2008-12-08 11:03:20 AM

Your 8-months pregnant girlfriend starts bleeding, you're going to take her to Wal-Mart, right?

You loose a finger in some industrial machine, and Wal-Mart will sow it back? Oh, but you were talking about cheap medicine, let's talk about it then. Cheap medicine is sold to stupid people in need of a placebo since they just won't drink glasses of water and go to bed early to help themselves. 4$ for diabetes-control pills, high blood pressure regulators? Good for you if this is the case... but I've seen americans in remote areas who seemingly did not have a 'Mart nearby; they were all waiting for some health-care help helicopters to lend and volunteers to set "clinic camps" so that they could see a doctor, a dentist, an optician... the founder of the organisation said: "My volunteers and me use to work in third-world countries... we realized we were just as needed here in the poorest parts of America".

Posted by: Elsa | 2008-12-09 8:27:16 AM

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