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Milton Friedman on Medicine and health care

We spend more per capita on medicine and health care by far than any other country. The major increase has come since 1965. And that’s because in 1965 the United States enacted Medicare and Medicaid. And that was a stimulus to greater spending.

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.” Asked why the share of national income spent on health care rises in every industrial country. He answers that people grow richer and live longer and that medical care is a good people spend more on as they do, but that the rise has been far greater in the United States.

How to Cure Health Care
Interview, 2005, Interview by Peter Robinson for the World Health Congress, November 21, 2005; printed in Hoover Digest 2006 No. 4
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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/medicare-medicaid-1965-stimulus-greater-spending-2005

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He also said

  1. I do not believe there is any case whatsoever for government’s financing ordinary medical care of a private patient. The cost of financing ordinary medical care is well within the means of ordinary families in most of our countries. Certainly so far as the more expensive, unusual forms of medical care the appropriate method of financing those is insurance just as that is the appropriate mechanism for financing other large risks.

    Context. From a talk to physicians, published in Private Practice in July 1981, on the trend toward government control of medicine and the prospects for reversing it. Directly after allowing a role for government in helping people in dire distress. He goes on to say that insurance is the appropriate way to finance the more expensive, unusual forms of care.

    The Market and Human Freedom
    Speech, 1981, Private Practice (July 1981); reprinted in the Congressional Record, Extensions of Remarks, September 9, 1981, pp. 19996 to 19997, introduced by Representative Larry McDonald of Georgia as “Professor Friedman’s recent article on this subject” in “Private Practice magazine for July 1981”, Congressional Record, September 9, 1981, p. 19997
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  2. 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.

    How to Cure Health Care
    Interview, 2005, Interview by Peter Robinson for the World Health Congress, November 21, 2005; printed in Hoover Digest 2006 No. 4
    Checked against the sourceRead the transcript
  3. The 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 Care
    Column, 2001, Hoover Digest 2001 No. 3; a shorter version of his essay in The Public Interest, Winter 2001
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