I am often asked if the free market can work in health care. My quick reply is: That is the only thing that works. At least, it is the only thing that works well.

Show me a health care market where there is no Blue Cross, no Medicare and no employer. I’ll bet it’s a market that works a lot like the markets for other goods and services.

In Overcharged: Why Americans Pay Too Much for Health Care (Cato: 2018), law professors Charles Silver and David Hyman make this same point in spades.

After several decades of trying everything from managed care to value-based purchasing, employers need to sit up and take note. The authors say the only thing that really holds down costs is giving money to the employees and letting them buy their own health care. “There is no health care cost crisis in the retail sector,” they write, and there “never has been.”

The most striking examples to start with are the markets for cosmetic and LASIK surgery – two areas where third party payers have never been involved. In both fields there is price transparency and price competition. Patients never wonder what they are going to pay. A package price covers doctor, nurse, anesthetist, the facility and anything else that might be involved. There is no $100 aspirin tablet showing up as a surprise on the final bill.