State-provided services are never ‘free’
State-funded services, like healthcare, are paid for by people, even if those services cost nothing at the point of consumption. In healthcare, as for any business, money builds sufficient trust to motivate professionals to assist complete strangers. One way or another, caregiver salaries, medicines etc. need to be paid for, assuming patients continue to seek quality care. We, the citizens of that society, pay via taxes, inflation and reduced competition. As with most such methods requiring coercion, there are unintended (occasionally intended) sub-optimal consequences.
The power of businesses competing to serve us
Like any monopoly, when the state is the only provider of a service, the lack of alternative choices means less incentive to compete to attract customers. Competition naturally results in businesses offering higher quality services at lower costs, otherwise they lose out to more attractive offerings. The result is ever improving value for money.
Example of the iPhone
When the first iPhone was produced in 2007, Apple sold it for $599 with 8GB of storage. A new iPhone 13 can be bought in 2024 for the same price ($599) but comes with 16X more storage, 2X longer battery life, 6X more mega-pixels in the camera and many more improvements. When adjusted for inflation the superior iPhone 13 is 40% cheaper too! Apple had to offer improvements to quality and cost given the strong competition from Samsung, Google, Huawei and others. These rapid improvements that we consumers benefitted from required no intervention via government.
Meanwhile, have we seen a 40% improvement in healthcare costs with radically improved service? Unfortunately not. Healthcare costs in the US are 60% higher and the service improvements are less pronounced.
Conclusion
We can confidently say that services provided by the state monopoly are much more expensive than those provided by the ‘free-choice’ economy.
