Reply To: THE CHURCH AND THE MARKET(Woods 171) – Healthcare a victim of its own success?


M. Rothbard would probably want to mention the Flexner Report – among the first national intrusions into health care, which led to the empowerment of the AMA (mostly at the State level) to, in essence, license medical schools, and they immediately closed about half (and sharply limited the number of new ones they later authorized), in order to decrease the supply of new doctors and thus, in time, drive up prices.

The Flexner Report also led to the situation where the AMA was empowered by the government as a trade association to decide what procedures had to be done by Doctors and what could be left to Nurses and the like, and naturally they made decisions so as to force more procedures to require a Doctor, again driving up costs.

Then later of course one gets the whole tax-deduction-for-businesses-during-a-time-of-price-controls things, which further distorts the health care market, leading to subsequent government interventions, which follow essentially the pattern outlined by Mises in his critique of interventionism (probably – and this is just a SWAG – among the 10 books Dr. Gutzman would want people to have read).

The Flexner Report/AMA situation, btw, is a good counter-argument to the people you sometimes run across who think that we’d all be better off if we reoriented our economy along the lines of a modernized version of the medieval guild system.