Book Review: The Regulation of Medical Care: Is the Price Too High? by John C. Goodman

(CATO Institute, 224 2nd Street, S.E., Washington, D.C., 20003), 1980
135 pages • $5.00 paperback

Dr. Goodman, assistant professor of economics and Director of the Center for Health Policy Research at the University of Dallas, contends that most of the failures we encounter in the delivery of health care are not due to failure of the free market but are, to the contrary, the result of governmental interventions, requirements, prohibitions, and regulations with respect to medical practice.

Dr. Goodman, in point blank fashion, accompanied by persuasive documentation, places much of the blame for this state of affairs on organized medicine which, according to him, has “for over 100 years, sought and obtained special privileges from government.” Dr. Goodman’s book is not an indictment of the medical vocation itself, but is a stinging indictment of what he sees as medicine’s long and extensive involvement with government to restrict free competition in the market place in the interest of medical care provisioners.

Goodman traces the history of the American Medical Association from its initiation in 1847 as a scarcely veiled cartel through the 1910 Flexner Report which was widely utilized by state legislatures as a rationale for drastically limiting the supply of physicians.

Goodman follows with a discus-sign of the purpose of licensing, restrictions on advertising, and restrictions on price competition. He questions the efficacy of the licensure mechanism to promote medical care quality, challenges the breadth of medical school education (such as the limited knowledge of non-naturopathic physicians as to the healing power of nutrition) and indicates that the free market has a more equitable answer as to the providing of health care than is to be obtained by the decisions of groups and committees whose underlying objective is served by restrictive licensing.

Government, instead of using its leverage to remove the many legal obstacles which have kept a genuine free market from working in the medical care arena, acted during the Nixon administration to impose additional exemptions, privileges, and subsidies in the form of “health maintenance organizations.” HMOs, Goodman feels, represent triumphs of “managerial, legal, political, financial, marketing and negotiating skill” which may well be laying the groundwork for a federally regulated health care marketplace.

Although organized medicine and its allies have resisted the more extreme proposals for comprehensive national health insurance, there is no assurance they will continue to do so. Goodman detects a disturbing recent trend among providers of health care services, the recognition that socialized medicine under their control and on their behalf will give them unlimited access to utilize a controlled system in their interest. “Many within the health care industry want to shape and mold national health insurance proposals to fit their own economic interests rather than oppose them outright,” the author states. He adds that “As they have in so many other countries, the producers of health care may soon become the architects of national health insurance in the United States.”

Goodman’s opinion is that the burden of protecting our health care nonsystem from further governmental intrusions will probably fall squarely on the shoulders of the general public and that if socialized medicine is ultimately turned back it will be patients, not practitioners, who will be primarily responsible.

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