Milton Friedman Speaks: The Economics of Medical Care (B1234) – Full Video
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Milton Friedman Speaks: The Economics of Medical Care (B1234) – Full Video


Reality – captured in user friendly symbols and processed for understanding. ♪ Music ♪ The Idea Channel I’m very glad to introduce our speaker, Milton Friedman as a friend. Milton, the floor is yours. (applause) Thank you, Bill. I’m going to talk about the economics of medical care. This is an area in which, as we all know, there has been a trend toward ever greater government involvement. Chairman Keating referred essentially to that trend in his comments. One step in this area inevitably leads to another. We have had an expansion of government involvement in the spending of money; Medicare, Medicaid funds, expenditures by the Department of Health, Education, and Welfare for other medical purposes have been growing by leaps and bounds. They have gone from a very tiny portion of total national expenditures on medical care to a substantial portion. The spending for the provision of medical care inevitably leads to control over the fees that are charged for medical care. And it should. If government is going to spend money, it ought to be concerned with what it pays for what it gets. Control over fees inevitably leads to control over the practices that are followed… over the behavior of the medical personnel. And if this trend continues, it inevitably leads to completely socialized medicine. I believe that this trend, including many of the steps that have already been taken, is very much against the interests of patients, of physicians, and of other health care personnel. And in the brief time I have available today, I want to explain why I believe the trend is so much against their interest, why it has occurred, and what if anything can be done about it. The trend toward increasing government involvement in health care is not an isolated phenomenon; it is not restricted to health care. It is part of a general trend in our society toward replacing voluntary free-market arrangements by government control and regulation. It is a trend that is happening all over; it has happened in one industry after another. There is nothing special in this respect about the move to replacing private voluntary medical arrangements with compulsory governmental arrangements. This movement in the medical care field is not special in another sense. In industry after industry, producers who protest most strongly their belief in free markets have fostered and helped produce government takeover, government regulation, government control. The oldest historical case was in the railroad industry, where the railroad entrepreneurs helped to foster upon us the Interstate Commerce Commission and all that followed. The same thing has been true in every other area. Most recently, the steel industry, which talked so loudly of its belief in free enterprise, has been strongly in favor of government restrictions on imports, in favor of tariffs and the like. In medicine, this same process has been at work. Indeed I would say that it is particularly true in medicine. A large part of the pressure for socialized medicine in the United States, in my opinion, and I may say this is not merely opinion; it is based on a considerable examination of the evidence, a large part of the pressure has derived from the policies which have been followed over the decades by the American Medical Association, policies which were adopted in the name of improving medical care, policies which I have no doubt that the leaders of medicine regarded as desirable for improving medical care, but policies which have in practice had the effect of restricting entry into medicine, holding down both the quantity and the quality of medical care, and inhibiting the most efficient modes of providing and distributing medical care. There has been great progress in the provision of medical care in the United States; it has been a great achievement, but it’s been an achievement despite many of the best efforts of the American Medical Association, not because of it. This is a particularly appropriate place to illustrate my point, because the Mayo Clinic is a shining example of how medical care might have developed in the United States, if it had not been for the power of organized medicine. The Mayo Clinic started, as you all know, in the late part of the nineteenth century or the early part of the twentieth century; the exact dating is a question of dispute. But the important point is that it started before 1910. 1910 was the year in which there appeared the famous Flexner Report, Abraham Flexner’s report on American medical schools, which provided the basis for an enormous expansion in the power and the control which organized medicine was able to exercise over medical education and over medical practice. That power was used effectively in the 1920s, in the 1930s and later, to hamper at every turn the kind of group practice that Mayo Clinic is so successful at. I venture to predict that if the brothers Mayo had tried to organize the clinic and its practice as they did in the 1920s or 30s, I doubt very much that anything comparable to the Mayo Clinic could ever have developed or been achieved. If you look at the numerous examples around the country of similar attempts, a few managed to survive… the Ruth Kluse Clinic. Many of you know about the case of Washington Group Health which brought an antitrust suit against the American Medical Association, which it won. Very few occasions have groups of physicians who wished to practice jointly, and particularly in a slightly different arrangement than Mayo’s with prepaid care, they had enormous difficulty in getting established because of the concerted opposition of the American Medical Association. This is not the place or the time to explain why organized medicine took this approach. It was because of certain features of individual practice that no longer are important, in particular the sliding scale which has disappeared with the emergence of insurance on a wide scale. But whatever the reason, the effects are clear. In my opinion, if the American Medical Association had not exercised the monopoly power which it did over a long period of time, American medicine would have developed very differently than it in fact has. It would have developed, in my opinion, primarily through organizations such as the Mayo Clinic, through joint teams of hospitals and physicians. And I believe that that would have provided more adequate, more inexpensive, and higher quality medical care to the American people. To begin with, a greater involvement of government in medicine may seem to serve the interests of at least the purveyors of medical care by providing an additional source of finance. This is the honey that has led persons in industry after industry to support and promote governmental involvement which has reacted ultimately against them. I have been impressed again and again with how often businessmen, leaders in various areas- who are very farsighted when it comes to their own activities and concerns within their enterprises, are very shortsighted when it comes to the area of public policy and allow themselves to be led by small advantages to foster and favor policies which ultimately redound very much to their disadvantage. In the medical care, the initial inducement is that here is a new source of money. And presumably, this is why organized medicine has been schizophrenic about the trend toward government involvement. It has, on the one hand, tended to protest against the move toward socialized medicine. It has, on the other hand, engaged in activities which have promoted that development- most recently by a commission established by the American Medical Association on the costs of medical care, which it would be very hard to describe as a balanced commission. But although initially it might appear as if the purveyors of medical care could get additional resources by tapping the governmental till, that is a transitory phenomenon. When the government is taking over any activity, there is more money available. But what typically happens is, once the government has taken it over, the situation changes. There are no more votes to be gotten by taking it over some more. You have to move on to new fields and take over new areas in order to get some new votes. And the result of that is that those areas already taken over get starved. And instead of there being more resources available, there are fewer. The most obvious example, the most striking example is Great Britain. As you know, national medicine, socialized medicine was introduced in Britain immediately after World War II. It is now some thirty years old. There have been a number of careful studies made of the total amount of money now being spent in Britain on medical care, and the amount you might have expected to be spent if you still had an essentially voluntary private system- estimates made by seeing what the relationship was before the war between income and expenditures on medical care, estimates made by seeing what fraction of income people in other countries spend on medical care. These estimates show in no uncertain terms that you would be having a larger total sum of funds devoted to medical care in Great Britain today, if you did not have a state system of the provision of medicine. In addition to the fact that the ultimate result of a government takeover is less resources, you invariably get lower quality and a lower quantity of medical care. The experience of the United Kingdom is again clear. I am going to cite from a study that was made by a British physician, Dr. Max Gammon, who spent five years studying the British Health Service. He wrote a report in December 1976 on the public provision for medical care in Great Britain, and I quote: “[National Health Service] brought centralized state financing and control of delivery to virtually all medical services in the country. The voluntary system of financing and delivery of medical care which had been developed in Britain over the preceding 200 years was almost entirely eliminated. The existing compulsory system was reorganized and made practically universal.” He goes on: “No new hospitals were in fact built in Britain during the first thirteen years of the National Health Service and there are now, in 1976, fewer hospital beds in Britain than in July 1948 when the National Health Service took over.” And I might add, of the hospital beds which there are now in Britain, two-thirds are in hospitals that were built before 1900 by private medicine and by private activity. Mr. Gammon, in a rather amusing way, developed what he called a theory of bureaucratic displacement. He argued that, whenever you have any organization taken over by a bureaucracy like a government, what tends to happen is that input goes up and output goes down, that useless work tends to displace useful work, in a further extension of Parkinson’s Laws. And he illustrated with hospital service in the United Kingdom. He took the eight-year period from 1965 to 1973. In that eight-year period the hospital staff, the number of people went up 28 percent. Incidentally, administrative and clerical help went up 41 percent. But what about output? What about what they were producing? Input was up. Well, he measured output by the average number of beds occupied daily. It turned out that the average number of beds occupied daily went down by 11 percent. And he hastened to go on to explain that the decline in the average number of beds occupied was not from want of patients; that at all times, there was a waiting list in the neighborhood of 600,000 people waiting for hospital beds. I don’t know how many of you know the scandals in Britain about the waiting period for what is regarded as optional or postponable surgery including, for example, bypass operations for heart problems. There are stories of people who waited three years to have a bypass operation because that could be postponed. Indeed some of them managed to die before the operation was performed. But 600,000 people on the waiting list- and for more obviously postponable operations, the wait may be much longer than three years. Well, Britain is one case. I might add also that you know physicians have been fleeing Britain when they could. The number of physicians annually emigrating from Great Britain to other countries is about one-third the number of physicians being graduated each year from their medical schools. As you also know, the process is inexorably moving in Britain. The National Health Service in Britain permitted private practice to exist alongside state practice, but to a very limited extent. There is now strong pressure and movement to try to eliminate private practice altogether, and make it compulsory that all practice be in the socialized sector. On the other side of this, there is growing up a voluntary health insurance arrangement with nursing homes and the like to supplement the inadequate governmental provision. Let me turn to Sweden. I quote from a report by Dr. Gunnar Biork, in Minnesota I should be able to pronounce a Swedish name, but it takes more than physical connection. He is a professor of medicine at the Karolinska Institute, he is the head of the department of medicine at a major hospital in Stockholm, he formerly was, and maybe still is, a physician to the king of Sweden. He gave a paper in 1976 at the University of Chicago on “How to Be a Clinician in a Socialist Country,” and I quote from his paper: “It is obvious that the existence of a competing free market constitutes a continuous threat to the operation of a socialist public service, however heavily subsidized by taxpayers’ money. The element of quality that derives from patients’ personal preference for and confidence in certain doctors cannot easily be done away with so as long as people are willing to pay for a free choice of physicians. To do away with such opportunities, therefore, has become a new goal of Swedish health care politicians. . . The introduction of these various regulatory processes has resulted in a cancerous growth in the numbers of medical administrators at all levels of incompetence. The Board of Welfare has recently issued a 60-page book trying to describe how to calculate the number of physicians needed to cover the necessary staff of any one clinical department. The book is a fascinating monument over the total absurdity into which legislators, administrators and trade-union representatives have finally brought a previously simple and efficient machinery. The setting in which medicine has been practiced during thousands of years has been one in which the patient has been the client and employer of the physician. Today the State, in one manifestation or the other, claims to be the employer and, thus, the one to prescribe the conditions under which the physician has to carry out his work. These conditions may not, and will eventually not be restricted to working hours, salaries and certified drugs; they may invade the whole territory of the patient-physician relationship. If the battle of today is not fought and not won, there will be no battle to fight tomorrow.” Coming back to the United States, I need not tell the people in this room what has been happening in American medicine. I’ve already mentioned the growth of Medicaid and Medicare, but you all know about PSR’s and HMO’s and about the proposed lid to be placed on hospital costs. This morning’s newspaper carried a story that President Carter was planning to introduce into congress a bill for national health insurance sometime in the near future. The argument is being made that all of this is necessary because there has somehow been a terrible rise in hospital costs which the American people either cannot afford, or which can somehow be eliminated, by wise government bureaucrats. Most of these stories always refer, always deal with the benefits that will be received and say nothing about who is going to pay the costs. There is only one source from which the costs can be paid, and that is the American people. The only question is whether they are going to be mediated through bureaucrats with a substantial discount being taken off for cash, or whether they are going to be spent directly by people on their own behalf. So far as the rise in hospital costs, part of it is undesirable and unnecessary. Part of the rise in hospital costs has been a result of the expansion of governmental spending on Medicare and Medicaid, with the result of the many scandals that we have had in this area and with upward pressure on prices. But in the main, the rise in hospital costs reflects primarily the decisions on the part of millions of American citizens about what they want to buy. It reflects one of the great American innovations, the spread of voluntary private hospital and health insurance among the population at large. The major reason for the rise in the cost per day of hospital care is not a rise in prices in excess of inflation- not at all. The major reason is an increase in the number and the variety, and complexity of the procedures that are being used, of the tests that are being made, of the services that are being rendered to the American citizen. The cost of hospital care has been going up for exactly the same reason that the amount of money being spent on automobiles went up during the 1920s and 1930s… because, in the main, the public at large has wanted to buy more medical care and the market has been responding to their demands. The costs have not been rising primarily because hospitals are inefficient. I have no doubt they are, but they’ve been inefficient all along. There’s been no great increase in their inefficiency. The costs of medical care have not been rising because physicians are grasping. Of course, physicians are grasping- so are all of us; we’re all of us greedy- but they have not become more grasping and more greedy. No, the main reason for the rise in costs is because there has been pressure to expand services and provide a different variety. Now maybe customers have been silly. Maybe they’ve been foolish and wasting their money in various directions. But I think one of the freedoms we still ought to preserve in this country is the freedom for people to be foolish with their own money. Now the question is: what is the answer? In the first place, is there any role for government in the medical care field at all? In my opinion, there is no special role for government in the medical care field with the exception of the public health activities of government, where there is a special problem. But I’m now talking about private medical care, about personal medical care or individuals: I believe there is no special role for government in the medical care field at all. That there is the same role for government in this area as there is in every other field. And indeed, I started out by emphasizing what has been happening in medicine does not derive from anything special to medicine other than the activities of the AMA. It’s been applying all across the board. It’s been part of the general trend, whereby it will take another ten days before people in the United States can stop working to pay the expenses of government, and can start to work to pay their own expenses. What is the role of government in the medical care field, as in other fields? To enforce laws against fraud and deception; to help people who are in dire distress. There is an argument to be made about the fact that some people may not be able, on some cases of emergencies, to stand very large, major medical bills, just as some people may be in dire distress because they lose their homes with a flood or a hurricane. Some people may be in dire distress because they become disabled or otherwise. Insofar as the government has programs to assist people in dire distress, it ought to include people in dire medical distress. But I think there is no other special role for ordinary medical care, there is no case for government financing at all. The costs of ordinary medical care are well within the means of the average American family. And the problem of sometimes costs being large and sometimes small is currently readily handled through the availability of private insurance arrangements. Eighty percent of all hospital bills today are being paid through third-party payments on insurance. I have no doubt that those insurance arrangements could be improved. I have no doubt that they will. This is a field in which innovation is still going on. I myself believe it would be desirable to have greater major medical coverage, to have larger deductibles, more co-insurance arrangements, and other devices. Those are details; they can and will be improved. But insurance enables every family in the United States, except those who may have to be on the public purse for other reasons, to provide for its own medical care. Let me point out that, although the private expenditure on medical care has been growing as a percent of income, as people have become more affluent and have wanted to spend more of their money on medical care, yet total expenditures on medical care is less than two-thirds as much as total expenditures on housing, is less than three-quarters as much as total expenditures on automobiles. To put the comparison another way, the people of the United States spend as much on making themselves unhealthy, by purchasing cigarettes and alcohol on which the medical evidence is overwhelming that that’s a way to increase your medical bills, not reduce them. I’m not objecting to people doing this, because people ought to be free to hurt themselves as well as to help themselves, so long as they do it at their own expense. But the American people are spending on tobacco and alcohol a sum of money each year which is 40 percent as much as they are spending on medical care in total. So we are not talking about sums that are beyond the capacity of the individual family at all. In my opinion, the major problems which we now have in medicine are the result of government involvement, not an excuse for additional government involvement. And in my opinion, the right cure would be all the way: no government regulation, no government subsidization, and take the point which will shock most of you- and yet which is equally important, no licensure of physicians. That point is included because of the necessity of reducing and eliminating the monopoly power of the American Medical Association. That monopoly power has derived almost entirely from the fact that the practice of medicine is an activity which can be engaged in by only those who have licenses from government. And the control over that licensure procedure is what has enabled the American Medical Association to exercise its monopoly power for these many decades. I realize that this is a shocking statement to most of you. I realize that in the few minutes at my disposal I cannot persuade you of it. I only suggest to you that it is not a random, casual comment which is not based on considerable evidence, considerable examination of the effects of this procedure. You will find a full discussion, a full case for this argument- I hate to advertise myself… (laughter) you know, we hate it but we love it–in a book, which I wrote with the assistance of my wife some sixteen years ago, called Capitalism and Freedom. In which there is a chapter on licensure of occupations in which I discuss such things as the licensure of beauticians, morticians, professional wrestlers, and the like. But there’s no point knocking over straw men. The strongest case in favor of licensure is in the field of medicine, and therefore I examined in detail that case and found it wanting. And I only want to suggest one thing to you, and particularly to the physicians who are in this room. If I say to you, “Do you favor the kind of monopolistic practices which the American Medical Association has followed over the past forty, fifty years?” I suspect that most of the physicians would say, “No, I oppose them.” If I say to them, “Are you in favor of permitting the unlicensed practice of medicine?” I suspect most of the physicians would say, “No, I’m not in favor of that. I am opposed to it.” I just urge on them that they had better choose which of those propositions they want to believe. They cannot believe both, because to believe both is to say that two and two make five. If we continue with the licensure of medical practice, then either government or organized medicine is going to have monopoly power in the field. You cannot have a free competitive medical field; you cannot have an open field and an elimination of these monopolistic restrictions unless you eliminate the power of government at that crucial element. I don’t expect to persuade you of it. I only want to suggest to you that it is not really as crack-brained and thoughtless an idea as it might as first appear to you to be; that on the contrary, in my opinion, it would provide for better medical care, more widely available, at lower cost for the bulk of the people; and that it would be the only effective way of preventing what seems to be a floodtide toward the complete socialization of medicine. We are facing drastic problems. They will not lend themselves- I guess I have to use medical analogies- they will not lend themselves to Band-Aid solutions. We have to look at the source and the cause of our difficulties. Again, this problem does not stand alone. It stands as part of the general problem that this nation faces, and that is whether we are going to continue down the road to a completely collectivist society in every area, as we have been going for the past forty years, or whether we are going to take thought and halt that trend. I believe that the public at large, in many areas is beginning to be more sophisticated about what can be accomplished through government, and that public opinion is there to back us. I say to people who say we have to have government medicine in there, “Would you mind first telling me which of the other great reforms of government have achieved their objectives? I take it you mean the federal housing program has solved the problem of housing for the low-income groups. I take it you mean that the federal welfare program has solved the problems of indigence and dependence, that federal urban renewal and reconstruction programs have solved the problem of urban blight.” People, after all, are catching on. So I think it is not entirely hopeless that we can stop this march and turn it back. Thank you. (applause) Dr. Friedman, concerning your non-controversial comments, that there’s no place for government in private medicine, what are your views on the regulatory powers of the FDA and the work that they are trying to do? Well, you have a great many heart specialists in this room, I think… or some. I think if you ask them, they will tell you that there are some excellent beta blockers which are available in Great Britain, in Canada, and in the rest of the world- but cannot be sold in this country because of FDA regulations. I have seen estimates from reputable physicians that the availability of those beta blockers would save roughly ten thousand lives a year. I believe the FDA, as it has been operating, has done vastly more harm than good. I have no doubt that it has prevented some bad drugs from coming on the market. But in compensation for this, it has also prevented some very good drugs from coming on the market. It has made the cost of discovering and developing new drugs… it has increased it enormously. It has driven medical research out of this country and into other countries. So I think the FDA has been an unmitigated disaster over the past twenty years. Yes sir? Dr. Friedman, I think many of us would agree with you about national health insurance, but, looking at it from a pragmatic standpoint, what do you think the possibilities are here within the next two years? Of national health insurance? Yes. Well, I don’t think they are very good, I’m glad to say. But they are not very good for a reason which is not, unfortunately, a desirable reason. The prospects are not very good simply because of the budgetary pressures. The government budget has been rising out of hand; it’s going to be $500 billion estimated for next year. Here we are in the fourth year of an expansion with a deficit of over $50 billion looming, the various national health insurance plans that have been proposed would involve very large expenditures, $30-40-50-60-70 billion–you can get any number you want. As a result, in the immediate future I do not see any prospects of the enactment of national health. Moreover, there is no… in my opinion, there is no widespread public pressure for national health. You know, people are always saying government does these things because of an overwhelming public demand. Nonsense… the demand has to be drummed up and developed the way in which Madison Avenue develops a campaign for a new toothpaste. There is no public demand for national health insurance. Of course, everybody would like to have somebody else pay his medical bills for him, but people aren’t that foolish and they recognize that if you have a national health system they are, one way or another, going to have to pay the bills. And so I do not believe there is any very great public demand for it. But nonetheless, there is great pressure for it, and the pressure is deriving from various special groups that have special interests to play, including the medical profession. There is pressure on the medical profession because they want to get more money, and instead of there being a principled opposition on the part of the medical profession to the idea of national health insurance, of socialized medicine- let’s not call it national health insurance. It’s not national health insurance. There is nothing national about it; it’s for individual people. There is no health about it because it will make medical care less good; it will make the health of the American people worse. And there is no insurance about it because it’s simply a government payout, government subsidization. But there has been, so far as I can see, a diminishing resistance by the medical profession itself against national health insurance- certainly by organized medicine. There are a small number of fringe organizations of physicians that are strongly opposed to national health insurance, socialized medicine- I’m going to stop using the word…to socialized medicine and they have been producing material and so on, but it seems to me that it is past time for the profession as a whole to look ahead and see what’s coming, and take much more effective action than they have- not to cooperate with it, not to think that you are going to be able to ride that tide. You may ride it for a time, but sooner or later, you are going to be on the bottom instead of on the top. But nonetheless, I think you have a period of time in which to do it because of the budgetary restraints and the pressures of inflation. Yes sir? Dr. Friedman, I’m fascinated by your question, or your statement that licensure is something that has had a harmful effect, especially in the area of medicine. I think this probably comes as a bit of a shocker to most of us. How do you answer the particular problem which relates to control, say, of quackery, of inadequately trained individuals who are dealing with situations where vital decisions of course don’t have the option for the normal slow process, of people getting education and finding out? What goes on during that particular period and do you worry about that? Sure… you should worry about that. Let me ask you first a very simple question. How many people do you know who pick their physician by opening the Yellow Pages, taking all the licensed physicians, and taking a pin and sticking it in? Quite a number I would suspect might. Maybe… I don’t know very many who do. My point is that having a license is no assurance of the ability to practice medicine. A man who was licensed thirty years ago may be thoroughly incompetent now. So licensure is no assurance of quality. In the next place, we have lots of other assurances of quality. The fact that a man may offer himself as a physician doesn’t mean that he can misrepresent his training. If I hang out a shingle saying I’m a graduate of the Harvard Medical School when I’m not, then I should be sued for fraud and misrepresentation. So that there’s nothing about the absence of licensure that makes it unnecessary for people to be able to demonstrate their capacities. And indeed, you would be more inclined under that kind of system to look at what an individual’s qualifications were. We don’t require licensure for lots of skilled professions. We don’t require licensure in most states for an architect, yet very few architects are able to practice successfully without having good training. In the next place, the way in which we… and this is why I linked this discussion to the Mayo Clinic, the way in which most of us get assurance of quality about anything is not because we directly can judge. If I go buy a shirt at the store, I can’t judge the quality of a shirt. If I buy an automobile, I can’t judge the quality of the automobile. We get our assurance from the middle man: from the department store which stands in back of the shirt and which has a strong incentive to provide me with good shirts; from the dealer who wants to stay in business for a long time selling cars… has an incentive to provide assurance of quality. People who come to Mayo get their assurance of quality from the fact that the Mayo Clinic has a very strong incentive to choose able, well-trained physicians. In the absence of licensure and the restrictions on entry that accompanied it, you would have had a much greater development of hospital group practice of this kind which would have provided a very much more effective technique of selection, of quality of medicine. Next, the fact that you have had licensure has made it much more difficult over decades to eliminate low-quality practice. As you know, in recent years you have had a spate of medical malpractice suits. One of the main reasons why you did not have many more of them earlier was because the American Medical Association had a concerted policy of making it extremely difficult. Physicians who were willing to testify in such cases found that they lost their hospital credentials. Why is licensure so essential? Because it is the key to the power of organized medicine. Without it, they would have no power to do harm. They would have lots of power to do good, but no power to do harm. Why is that the case? Because the key to the control of medicine starts with who is admitted to practice. Now you cannot do it at the stage of licensure itself. If a man has gotten through medical school, if he has interned and so on, it is going to be very hard ultimately to deny him a license; he’s going to take the exam over and over again. If you want to control entry- and don’t make any mistake about this; the evidence is overwhelming that there was a deliberate policy on the part of the medical association in the 1930s to keep down the number of physicians; that policy has changed in recent years for various reasons, but it was a policy for a long time. The most effective way to do it is before people start going into medicine. And licensure was the key to this because the licensure laws in almost every state, as result of the pressure of organized medicine, required that nobody may be licensed who is not a graduate of an approved medical school. And by some strange accident, the list of approved schools in every state is identical with the list of schools approved by the Council on Medical Education and Hospitals of the American Medical Association. And I can go down a long line and you will discover every time you look at this that the key element is licensure. Now moreover, licensure is critical to preventing the unauthorized practice of medicine. You and I know, and many of us know, that there are many medical practices which can perfectly well be carried out by people who do not have the full training, people who are medical technicians. There has been some increasing use of them in recent years, but one of the main factors that has prevented a more effective use of medical technicians, a more effective use of physicians, has been the definition of what is medical practice and what is unauthorized. You started me on a subject on which I could go a long time, but perhaps I’ve said enough to suggest that it isn’t quite as simple as it may seem at the outset, that a label of good housekeeping is not the same thing. Yes ma’am? Dr. Friedman, you mentioned that 80 percent of the people in the country are covered by private insurance plans. I am curious as what your proposal would be to cover those who presently are not covered and those truly who cannot afford at this point, because they are below the so-called poverty level. They are not in organized labor; they are not a member of a large corporation which provides such a plan for its employees. I said before I do not believe you ought to have any special program for medicine at all. I believe- I have long been in favor of substituting for our present whole set of welfare arrangements a comprehensive negative income tax which would provide to individuals below a level a sum of money which would assure that they would be able to maintain a particular level. There is no reason why a part of that sum of money could not be spent on the purchase of the same kind of medical insurance everybody else has. I have long been opposed, and I think you should be opposed, to giving special sums of money to people for housing and another sum for food and another sum for clothing and another sum for medical care. The problem of poverty is money, and we ought to have a program under which we assure a minimum level of income and then let people spend it the way they want. Absolutely. Good answer. Thank you.

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7 thoughts on “Milton Friedman Speaks: The Economics of Medical Care (B1234) – Full Video

  1. This is an interesting historical take on the health care system, circa 1978. There were already calls for an expanded national system for health care during this time, with Ted Kennedy the leading advocate. Until the ACA, there was no significant policy adopted in this direction. I wonder if Mr. Friedman maintains the same views after nearly 40 more years of a private insurance-based system? He states in this speech that health care is very much affordable by the average American family – this appears to be far less true now than it was then. More importantly, the number of low-income people who cannot afford health care has grown significantly as a percentage of the population. How can a free market solve these problems? Would removing government regulations such as doctor licensing (or the AMA in general), as he suggests here, reverse this trend?

  2. Our Healthcare system has been purposely set up to fail and lead to full socialization. Once the state controls healthcare, they can weaponize it against dissidents just like the USSR did. Also, the more reliant on the state people become, the less likely they are to rise up and challenge the state when the state becomes totalitarian.

  3. Prices only know two things: Supply and Demand. To reduce prices you must either reduce the demand for services or increase the supply of services. Medical care needs more supply but the AMA isn't into that. They want less Dr's not more.

  4. Do you see what Friedman did here? He went into the belly of the best and told them exactly what they didn't want to hear.

  5. Greed & government doesn’t mix becoz overtime it will become corrupt or rapacious ( crony capitalism) . With competitive capitalism, Greed in health care should be able to compete in the market, especially the cure for cancer, for lower prices & better treatment.

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