More health care back and forth

A friend wrote to me: "In a free market system there is too much room for deception, as long as profit drives these companies than people will get screwed. People shouldn't have to scramble for their lives when they get sick."

My response:

In a free market system, there is actually very little room for "deception". First of all, if an insurance company violated a contract, the customer should sue. That's what our common law system is designed to take care of. Second, if the insurance company is really deceiving their customers, eventually, those customers will catch on and they will leave to go to a competitor who is providing better value, better service and has made an effort to protect its reputation by doing right by its customers. The company that is deceiving their customers will be put out of business unless they change their ways. That is market discipline. It's incredibly powerful, but has been inhibited in health care because of the government created, cartel-like system we have now.

On the other hand, when the government screws people, there is no accountability. People cannot leave and go elsewhere. People cannot opt out. The government doesn't have to make a profit, and it doesn't have to worry about attracting customers. There is no market discipline. They can just put competitors out of business by charging an artificially low price, by regulating their competitors to death, or by forcing people into their system. They can screw people over and over again without any consequences.

So it's actually the exact opposite. The more we get away from a free market system, the more people will get screwed. The more we have a truly free market system, the more insurance companies and health care providers will have to be responsive to the customer.