Under-Appreciated Benefits of Markets

By Robert Nelson, MD

Honest price-transparent markets allow value propositions to surface and to be discovered.

Contrary to the outcries of many academics, intellectuals and utopian collectivist, free markets don’t create wide-spread abuses or anarchy in peaceful law-abiding Societies. The anti-market narrative attempts to impune the term “free” in free-markets by equating it with lawlessness and all manner of fraudulent activity; rather than acknowledging that “free” means maximal freedom from unnecessary economic distortions. One only has to look at the litany of government scandals (VA comes to mind) to conclude that vice is not intrinsic to, or a consequence of, the exercise of free commerce, but rather a malevolent side of human behavior.

Markets not only provide a functional platform for innovation and creative destruction, but can help suppress waste, fraud and abuse by aligning incentives such that mutually beneficial outcomes are the rule, not the exception. Markets that are willing to operate in the light of transparency are in stark contrast to systems where avarice and other human foibles seek cover behind complex non-transparent systems or within unaccountable bureaucratic hierarchies.

In healthcare, the behemoth we call the 3rd party payment apparatus (and regulatory morass that supports it) often creates an environment which, unlike a more transparent market-oriented approach, allows bad behavior to go unchecked longer.

To the extent that we view market transparency, and all the downstream benefits that result from full disclosure, as the best chance of uncovering AND discouraging human vice, then many of the bad actors and bad behavior will be found out more readily. This approach benefits all stakeholders in healthcare.

Also, transparent pricing & markets naturally lends to transparency in quality measures, and thus better value propositions.

We should embrace changes which incorporate as many intrinsic disincentives to bad behavior as possible, as well as maximize the correct incentives – which helps healthy & sustainable endeavors to thrive.