Milton Friedman on Medicine and health care
The major defect of our present system is that employees, most of them, are spending in practice more on medical care than they would if they had their free choice. They’re getting something for free—supposedly for free—that somebody else is paying for.
Context. From a November 2005 interview with Peter Robinson, conducted for the World Health Congress and printed in the Hoover Digest as “How to Cure Health Care.” Just before, he says that if employer-paid medical care lost its tax exemption, employers could pay the money as higher wages and employees could decide how much of it to spend on medical care.
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Milton Friedman, “How to Cure Health Care” (Interview by Peter Robinson for the World Health Congress, November 21, 2005; printed in Hoover Digest 2006 No. 4, 2005). https://miltonfriedman.org/quotes/employees-spend-more-on-medical-care-than-free-choice-2005
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He also said
There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. … Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government.
Context. From David Asman’s May 15, 2004 interview with him, published by Fox News. Earlier in the conversation he had argued that education and medicine share one problem, third-party payment: someone gets a service from someone else who is paid by a third party; he then blamed that for medicine’s complications.
Interview with David AsmanInterview, 2004, Fox News, May 15, 2004; transcript published by Fox News as “‘Your World’ Interview With Economist Milton Friedman”Checked against the sourceRead the sourceThe high cost and inequitable character of our medical care system are the direct result of our steady movement toward reliance on third-party payment. A cure requires reversing course, reprivatizing medical care by eliminating most third-party payment, and restoring the role of insurance to providing protection against major medical catastrophes.
Context. From an article on why American spending on medical care rose so fast after World War II, which he traces to third-party payment: the tax exemption of employer-provided care and the enactment of Medicare and Medicaid in 1965. This opens his conclusion, which goes on to medical savings accounts and, as “a more radical reform,” catastrophic insurance for every family.
How to Cure Health CareColumn, 2001, Hoover Digest 2001 No. 3; a shorter version of his essay in The Public Interest, Winter 2001Checked against the sourceRead the sourceIn my opinion, the strongest argument for free enterprise is that it prevents anybody from having too much power, whether that person is a government official, a trade union official, or a business executive. It forces them to put up or shut up. They either have to deliver the goods, produce something that people are willing to pay for, or willing to buy, or else they have to go into a different business.
Context. In the panel discussion that closes the episode, after saying he is pro-free enterprise rather than pro-business. These are the last words of the discussion.
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