(2001-12-30) Friedman Healthcare

Milton Friedman on HealthCare spending. If the tax exemption for employer-provided medical care and Medicare and Medicaid had never been enacted, the insurance market for medical care would probably have developed as other insurance markets have. The typical form of medical insurance would have been Catastrophic insurance (i.e., insurance with a very High Deductible).

In terms of holding down cost, one-payer (Single Payer) directly administered government systems, such as exist in Canada and Great Britain, have a real advantage over our mixed system. As the direct purchaser of all or nearly all medical services, they are in a monopoly position in hiring physicians and can hold down their remuneration, so that physicians earn much less in those countries than in the United States. In addition, they can ration care more directly--at the cost of long waiting lists and much dissatisfaction.

Medical savings accounts (Health Savings Account-s) offer one way to resolve the growing financial and administrative problems of Medicare and Medicaid. It seems clear from private experience that a program along these lines would be less expensive and bureaucratic than the current system and more satisfactory to the participants. In effect, it would be a way to voucherize Medicare and Medicaid.