Abstract

Healthcare is not like other commodities. Central features of healthcare undermine the benefits of a free market. A free market in healthcare fails to exhibit the same virtues as markets in other goods and services. Proponents of free markets in healthcare often argue for their position based on efficiency, moral hazard, and innovation. I will address these arguments in turn to show that each one relies on unstable assumptions and unstated definitions. According to the first argument, competitive free markets are efficient, so a free market in healthcare would be efficient; I demonstrate that free markets in healthcare are not competitive and thus do not promote efficiency. The second arguments states that in a healthcare free market, patients must pay for medical services, so will not use more healthcare than they need; I point out that on a medical definition of “appropriate use of healthcare,” a free market fails to solve the problem of overuse and may introduce a problem of underuse. The third argument asserts that through competitive pressure and profit-based motivations, free markets foster innovation; I will argue that the on a free market, companies can only generate profitable innovations, which may leave research deficiencies in crucial areas of healthcare. The way in which healthcare is distributed impacts the lives of the people who must access medical services: ostensibly everyone at some time or another. This project seeks to carefully examine and question the assumptions that underlie arguments in favor of a free market in healthcare in the hopes that a considered, informed debate can shape a better healthcare system.