Um, economists have known for 45 years — ever since Kenneth Arrow’s seminal paper — that the standard competitive market model just doesn’t work for health care: adverse selection and moral hazard are so central to the enterprise that nobody, nobody expects free-market principles to be enough. To act all wide-eyed and innocent about these problems at this late date is either remarkably ignorant or simply disingenuous.When it comes to most markets, it seems to me that the most expensive things result from "add ons" which are usually non-essential. For example, leather seats in a car with built-in DVD players. Or a 120-Hz processor speed on a giant LCD-TV. Or buying organic vegetables. With health care market dynamics, it's the most essential things that are most expensive, like a heart transplant and cancer surgery.
The market has obviously not solved the major problems with health care in our country, and while some would blame ambiguous "government" for this, Medicaid/Medicare have tiny administrative costs in comparison to traditional insurers and pay out far less for most procedures, which keeps their costs down rather than passing the buck to the consumer.
