Why Can't Everything Be Free? - Econlib (2024)

But collecting tolls used to be very costly. (It is less so nowadays.)

Jack Givens

Feb 9 2022 at 10:18am

Should D and S be swapped? No. The labels are correct.

John hare

Feb 9 2022 at 10:34am

Giving people whatever they want, free of charge, is extremely wasteful, because it leads people to consume products they barely appreciate.

Reminds me of a Thomas Paine quote—what we obtain too cheap, we esteem too lightly.
https://www.goodreads.com/quotes/36116-what-we-obtain-too-cheap-we-esteem-too-lightly-it

Josh S

Feb 9 2022 at 12:52pm

“Free” healthcare seems a bit more complicated than that. Personally I would not use any more healthcare if it was free. Everyone I know would rather not see a doctor or take any more medicine if they didn’t have to. I’m sure there are some people who overuse healthcare but it’s not clear to me how much more they would do it if it was free, and if such a cost is greater than the massive waste of the current US system.

Despite having very good healthcare benefits from my employers I’ve had to spend an inordinate amount of time managing it. When my twins were born they spent several weeks int the NICU. While I’m happy with the outcome, my partner and I spent literally hours a day for months dealing with the resulting paperwork. We could dispute out-of-network rates for nurses because we had no choice in who the hospital assigned, but we had to do it individually for every bill, for every shift, for every nurse. The hospital also assigned a specific person to work with us, who again must have spent hours per day helpful us. So in addition to paying for the insurance, and maxing out our out-of-pocket expenses, we also had to spend most of our “free time” on healthcare overhead while also working full time and handling two infants. My partner and I are well educated with extensive math and business experience. I can’t imagine how most people without those skills deal with stuff like this.

Is it unreasonable that I am jealous of every other developed country in the world where I could have avoided all that headache? And while this is just the most egregious example, there’s not a month that goes buy that I have to dispute or reconcile some insurance claim.

I have to believe there’s a more efficient way to handle healthcare in this country. Getting worse value while spending more than other countries seems like a poor outcome for having more of a free market solution.

It seems debatable that the US has a more free market healthcare system than most developed countries. The paperwork is largely due to the unnecessary extent to which healthcare provision is mediated through insurance, itself an artifact of state subsidization or mandate.
Other countries save money mainly through more stringent rationing, which doesn’t have adverse outcome effects because so much of healthcare is waste anyway. It seems doubtful that the same American electorate that insists on such extensive subsidies for nominally privately provided healthcare is going to tolerate strict rationing under healthcare socialism. Looking at much more Medicare spends per patient compared to what other countries pay per patient in the same group doesn’t seem consistent with the thesis that the main reason healthcare is more expensive here is because it isn’t as socialized.

Alan Goldhammer

Feb 9 2022 at 5:55pm

Bob

Feb 10 2022 at 8:21am

Jose Pablo

Feb 10 2022 at 9:17am

To avoid this massive waste, you need death panels and such.

I’m all for death panels but we’re failing at getting death panels we want say that would cut medicare spending in half, so how about alternatively for to give medicare recipients better incentives how about we try at age 65 the Government funds a health saving account with $30k, then at 70 years old they get to keep what is left if anything in the account, but if they go over Medicare will pay for all of the overage, then again at 70 fund their health saving account with another $30k for and then at 75 years old they get to keep what is left. Etc. until death.

David Goldhill claimed, one out of five 90 year olds will have surgery on the year of their death, when no surgery is recommended for someone over 90 years old. If their estates could keep the money they might not get the surgery.
It could also give people an incentive to seek treatment outside the USA where it is cheaper and or maybe go with Direct Primary Care.

David Seltzer

Feb 10 2022 at 7:01pm

Daniel B

Feb 11 2022 at 3:21am

Human beings love the image of giving everyone what they need, free of charge. Demagogues capitalize on this love. That’s probably why education and health spending are so bloated; giving everyone all they want is folly, but this folly sounds ever so sweet. To discover that “Gratis is not great!” is crucial for economic literacy.

Amen. “Free” can be quite expensive – including for the recipient! Socialized healthcare systems are a classic example of that (a very good primer on their problems is Thomas Sowell’s chapter on medical care in Applied Economics). There’s been quite a few examples of waste due to subsidies (“gratis” or free pricing is the equivalent of a 100% subsidy), including in medical care.

“After Canada’s Quebec province created its own government health plan back in the 1970s, telephone consultations went down, office visits went up and the time per visit went down. In other words, medical conditions which neither the doctor nor the patient previously thought serious enough to require an office visit, before price controls, now took up more time by both the patient (in travel time) and the doctor (in the office), thereby reducing the time available to people who had more serious conditions.” Sowell, Thomas. Applied Economics (pp. 55-56). Basic Books. Kindle Edition. I’m not aware of any medical revolution that discovered it was “necessary” for people to go to the office more, rather than continuing with telephone consultations. But I am aware of a price “revolution” (the politically lowered prices) that would cause such behavior!

‘Excessive prescriptions were reported as “routine” under China’s government-provided medical care and patients there “leave the dispensary with bags, rather than bottles, full of pills.’ China has subsequently moved away from government-provided medical care.” Sowell, Thomas. Applied Economics (pp. 59-60). Basic Books. Kindle Edition. Price ceilings caused more usage/hoarding of pills than would otherwise occur!

“Economists have observed the effects of insurance policy changes on the demand for health care. One experiment asked a group of California Medicaid beneficiaries to pay $1 for their first two office visits each month, while a similar group continued to receive completely free service. This modest charge reduced office visits by 8 percent.4 Other studies have found that even small changes in time cost can have an effect. For example, when the health facility at one college was moved so that it took 20 minutes rather than five to ten to walk there, student visits fell by nearly 40 percent.5 Whether the health services forgone in these cases were necessary remains an open question, but surely the behavior of the potential patients was not dominated by their health needs.” Rhoads, Steven E.. The Economist’s View of the World (p. 32). Cambridge University Press. Kindle Edition. The college facility is a particularly blunt example. If 10 to 15 minutes extra time is enough to deter you from getting medical appointments, your health is probably not in any serious danger.

“[Economist Michael] Cooper noted that both demand and need tend to grow in line with provision. Doctors react to any expansion in supply by realigning their conception of need. Thus, one study of acute care hospitals found that both admissions and length of stay increased with bed availability. It could not discover a level of bed provision that would have fully satiated doctors’ demands.12” Rhoads, Steven E.. The Economist’s View of the World (p. 34). Cambridge University Press. Kindle Edition.

When younger, I was such a patient, and I would frequently see a sports medicine doctor and a physical therapist about my tennis elbow. They would subject me to electrical stimulation and therapeutic ultrasound therapies. I was never sure that either did anything to get me back on the court any sooner. But I loved tennis, and it was worth $10 a visit (my co-pay) if it might speed up the natural healing process. I would never have paid the full cost of the treatment. My fundamental health was never at issue. Rhoads, Steven E.. The Economist’s View of the World (p. 35). Cambridge University Press. Kindle Edition. A very blunt example of the third-party payer problem!

Even such “needed” things as food and electricity are not immune:

‘When people try to quantify a country’s “need” for this or that product or service, they are ignoring the fact that there is no fixed or objective “need.” Seldom, if ever, is there a fixed quantity demanded. For example, communal living in an Israeli kibbutz was based on its members’ collectively producing and supplying each other with goods and services, without resort to money or prices. However, supplying electricity and food without charging prices led to a situation where people often did not bother to turn off electric lights during the day and members would bring friends from outside the kibbutz to join them for meals. But, after the kibbutz began to charge prices for electricity and food, there was a sharp drop in the consumption of both.{33} In short, there was no fixed quantity of “need” or demand for food or electricity, despite how indispensable both might be.’ Sowell, Thomas. Basic Economics (p. 28). Basic Books. Kindle Edition.

The above list is far from exhaustive. But hopefully I persuaded you that Bryan’s analysis about the wastefulness of gratis pricing is correct.

mark

Feb 21 2022 at 8:38am

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