How many times have you heard that introducing more market forces into health care would lead to stronger competition, lower prices, and better quality and availability of services? There is no shortage of articles and books making that case.
But then there is real life, and real life sometimes produces remarkable experiments. Veterinary care is one of them. At the same time and in the same place, we have one highly regulated system—human health care—and another governed purely by the market—veterinary medicine. Both systems use the same drugs and the same technologies. Veterinarians require less extensive training, so their services should be cheaper.
Based on everything taught in economics departments and written in economics textbooks, veterinary care ought to be dramatically cheaper. People should even have an incentive to use veterinary services and products because they are more affordable. So what does real life tell us?
Consider an MRI. A health insurance company pays between 7,000 and 9,000 crowns for one. Bring in your cat, and you will pay 25,000. The difference is that health insurers keep an eye on purchases of MRI machines, so the available capacity is reasonably well utilized. In veterinary medicine, the market decides.
Is MRI some bizarre exception? Not at all. There are plenty of procedures for which the free-market veterinary price is higher. Perhaps the most striking examples are laboratory analyses of blood and urine. For exactly the same procedure, the free-market veterinary price is typically three to five times higher.
Keep that in mind the next time someone enthusiastically tells you about the benefits of markets in health care. And all that remains is to congratulate our American friends for successfully defending their health care system against socialism.