How to Cure Health Care

By Milton Friedman

The United States spends a mind-boggling percentage of its GDP on a health care system that virtually everyone agrees is a disaster. Is there any way out of this mess? There is—and Hoover fellow Milton Friedman has found it. This article was written by the late Milton Friedman but is as relevant now as when it was originally publishing in 2001.

Rapid technological advances have occurred repeatedly since the Industrial Revolution—in agriculture, steam engines, railroads, telephones, electricity, automobiles, radio, television, and, most recently, computers and telecommunication. The other two features seem unique to medicine. It is true that spending initially increased after nonmedical technical advances, but the fraction of national income spent did not increase dramatically after the initial phase of widespread acceptance. On the contrary, technological development lowered cost, so that the fraction of national income spent on food, transportation, communication, and much more has gone down, releasing resources to produce new products or services. Similarly, there seems no counterpart in these other areas to the rising dissatisfaction with the delivery of medical care. (link)

Comment

In this article, Milton Friedman advocates reprivatizing medical care by eliminating most third-party payment, and restoring the role of insurance to providing protection against major medical catastrophes. He advocates repealing the tax exemption of employer-provided medical care among other changes. We have become so accustomed to employer-provided medical care that we regard it as part of the natural order, says Friedman. Yet, it is thoroughly illogical, he argues. Anyone who is interested in the health care debate should read and consider these arguments.

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