Public goods, those goods that are consumed without direct perceived cost to the end-user, have no incentive to prevent inefficient and excessive consumption.
Thanks for the ECON 101 refresher. Now let’s move on to some junior level class material. Healthcare isn’t a comparable market to the market for shoes and cars. Let’s imagine that you have health insurance and are diagnosed with cancer. Your provider won’t approve a treatment that could save your life — can you switch to another provider? Of course not, YOU HAVE CANCER and you’ll never be approved. Health care insurance simply does not work. Health care insurance companies have a direct incentive not to provide care. They can get away with this because the time interval between the consumer’s choice and the consumer’s actual consumption of the service may be a decade or even more. Consumers can visit for the sniffles in the meantime and those claims are paid because they are cheap, giving the illusion that the service is actually working. By the time the consumer actually needs a large payment for catastrophic illness, they are trapped and cannot choose another provider. If the provider denies care, the consumer can’t do anything. They could try to sue, but the provider will have much greater access to legal resources (read: money) and will likely prevail. In an open market, the providers which cheat and deny the most claims can quickly overrun providers that operate fairly.
None of these systems are perfect, but government-run services remove the profit motive. The point about the size of the US market is a good one. It would be very expensive here, but we are already spending the money via insurance premiums and taxes.
