Milton Friedman – Health Care in a Free Market



dr. Freeman concerning your comments your non-controversial comments that there's no place for government in private medicine what are your views on the regulatory powers of the FDA and the work that they're trying to do uh well you have a great many heart specialists in this room I think or some I think if you ask them they will tell you that there are some excellent beta blockers which are available in Great Britain in Canada and the rest of the world which cannot be sold in this country because of FDA regulation I have seen estimates from reputable physicians that the availability of those beta blockers would save roughly 10,000 lives a year I believe the FDA as it has been operating has been it has has done vastly more harm than good I have no doubt that it has prevented some bad drugs from coming on the market but in compensation for this it has also prevented some very good drugs from coming on the market it has made the cost of discovering and developing new drugs it has increased it enormous Lee it has driven medical research out of this country and into other countries so I think the FDA has been an unmitigated disaster over the past 20 years yes I freedom I'm fascinated by your question or your statement that licensure is something that has been a harmful effect in especially in the area of medicine I think this probably comes as a bit of a shocker to most of us what do you answer the particular problem which relates to control say of quackery of inadequately trained individuals who are dealing with situations where vital decisions most don't have the option for the normal slow process of people getting education finding out what goes on during that particular period and how do you worry about that sure you should worry about that let me ask you first a very simple question how many people do you know who pick their physician by opening the Yellow Pages taking all the licensed physicians taking a pin and sticking it in something quite a number I would suspect might know maybe I don't know very many of those my point is that having a license is no assurance of the ability to practice medicine a man was licensed thirty years ago he may be thoroughly incompetent now so licensures no assurance of quality in the next place we have lots of other assurances equality the fact that a man may offer himself as a physician doesn't mean that he can mess misrepresent his training if I hang out a shingle saying I am a graduate of the Harvard Medical School when I am NOT well then I ought to be sent to jail and I should be sued for fraud misrepresentation so that there's nothing about the absence of licensure that makes it unnecessary for people to be able to demonstrate their capacities and indeed you would be more inclined under that kind of a system to look at what an individual's qualifications were we don't require licensure for lots of skilled profession we don't require licensure in most states for an architect yet very few Peaks are able to practice successfully without having good training in the next place the way in which you mean most of us and this is why I linked this discussion to the Mayo Clinic the way in which we most of us get assurance of quality about anything it's not because we directly can judge if I go buy a shirt at the store I can't judge the quality of a shirt if I buy an automobile I can't judge the quality of the automobile we get our assurance from the middleman from the department store which stands in back of the shirt and which has a strong incentive to provide me with good shirts from the dealer who wants to stay in business for a long time selling card has an incentive to provide a assurance of quality people who come to mayo's get their assurance of quality from the fact that Mayo Clinic has needs very strong incentive to choose able well-trained physicians in the absence of the reach of licensure and the restriction on entries that accompanied it you would have had a much greater development of hospital group practice of this kind which would have provided a very much more effective technique of selection of quality of medicine next the fact that you have had licensure has made it less and much more difficult over decades to eliminate low quality practice as you know only in recent years you have had a spate of medical malpractice suits one of the main reasons why you didn't have many more of them earlier was because the American Medical Association had a concerted policy of making it extremely difficult physicians who were willing to testify in such cases found that they lost their hospital credentials now you come why is licensure so essential because it is a key to the power of organized medicine without it they would have no power to do harm they would have lots of power to do good but no power to do harm why is that the key because the key to the control of medicine starts with who has admitted to practice now you cannot do it at the stage of licensure itself if a man has gotten through Medical School if he is interned and so on it's going to be very hard ultimately to deny him a license he's going to take the exam over and over again if you want to control entry and don't make any mistake about this the evidence is overwhelming that there was a deliberate policy on the part of the Medical Association in the 1930s to keep down the number of physicians that policy has changed in recent years for various reasons but it was a policy for a long time the most effective way to do it is to before people start going into medical schools and licensure was a key to this because the licensure laws in almost every state as a result of the of the pressure of the organized medicine require that nobody may be licensed who is not a graduate of an approved medical school and by some strange accident the list of approved schools in every state is identical with the list of schools approved by the Council on medical education and hospitals of the American Medical Association and I can go down the line along London and you will discover every time you look at this that the key element is licensure now more known licensure is critical to preventing the unauthorized practice of medicine you and I know and many of us know that there are many medical practices which can perfectly well be carried out by people who do not have the full training people who are medical technicians there has been some increasing use of them in recent years but one of the main factors that has prevented a more effective use of medical technicians more effective use of the physician has been the definition of what is medical practice and what is unauthorized you've started me on a subject on which I could go a long time but perhaps I've said enough to suggest that it isn't quite as simple as it may seem at the outside now the label of Good Housekeeping is not the same thing yes ma'am dr. Friedman you mentioned that 80% of the people in the country are covered by private insurance plans I'm curious as what your proposal would be to cover those who presently are not covered and those who truly cannot afford at this point because they are below the so-called poverty level they are not in organized labor they are not a member of a large corporation which provides such a plan for its employees I I said before I do not believe you ought to have any special program for medicine at all I believe I have long been in favor of substituting for our present whole set of welfare arrangements a comprehensive negative income tax which would provide to individuals below a level a sum of money which would assure that they would have be able to maintain a particular level there is no reason why part of that sum of money can not be spent on the purchase of the same kind of medical insurance everybody else it I have long been opposed and I think you should be opposed to giving special sums of money for people for housing and another sum for food and another sum for clothing and another sum for medical care we ought to give people the problem of poverty is money and we ought to have a program under which we assure a minimum level of income of spending and then let people spend it the way they want absolutely good answer thank you you

30 comments

  1. Friedman is a quack, it is the drug industry that lobbied for blocking pharmaceutical products from Europe. Free market my ass. This is the pharmaceutical industry protecting their profit margins. What a fool. He thinks he knows when I fact he knows not at all.

  2. Time and time again, history shows markets are not rational. Markets do not excel at all ventures in all sectors. Milt always refers to the wonderful 19 th century, as if the vast expansion and emerging market with abundance of resources that was America owed all to free markets and then completely ignores where that led- monopolies, corruption, and the gilded age. Not interested in going back to that. A balance must be struck between people and profits, the sooner we except that, the better.

  3. Its worth remembering that Friedman was considered somewhat of a fool in his ideas of liberalism by the great economist of the early century. Subsequent history after he became fashionable and his theories were tried by every western country in the world in the last 30 years proved how wrong he was in his belief you could leave the market to itself.

  4. He's not entirely correct by today's standards. Licences now require continuing education in order to renew.

  5. ¿es mago?"el problema de la pobreza es el dinero "
    , que mediante un milagro se convierte en valor.!
    ¡menuda teología mercanchifle!

  6. Friedman is a great mind but ideas are just that even socialism superficially sounds good so Friedman I believe at times is just mind tripping . Capitalist have shown that they have to be monitored or they will abuse the market. Monitored does not mean that the Gov't runs everything but like a referee makes sure the rules are followed. Humans are flawed and selfish greedy without scruples or morals so sometimes a so called solution sounds good but does not work.

  7. Profit over patients. This is what happens when INSURANCE takes over a wholesome industry like healthcare.

    www.myhealthinsuranceclaim.com.au

    Today it’s me, tomorrow it could be you.

  8. I wonder if Milton would have any comment today on his beloved free market capitalism? I mean, it's working it's own problems out SO WELL, don't you think?

  9. Too bad we can't ask MF about the health care market in the USA in recent years. Most of his thoughts are just idiotic. Lives in a bubble.

    Look here to see where the "free market" has taken us in the health care industry: https://www.youtube.com/watch?v=gXBPKE28UF0

  10. I respect Friedman's mind, but this is sheer rhetorical comfort food for libertarians and free marketers. For one thing, it's dated by forty years, hence more than seven out of nine minutes devoted to federal regulation inhibiting products from general circulation — never mind the cost (and/or profit in the way of US licensers/distributors) that might be involved, and passed on to consumers. He gives barely a minute to the question of the uninsured, which MF, via jiujitsu, turns into a referendum on "welfare." It's ironic that he argues (to genial laughter) that "the program of welfare is money": fast forward forty years and how much "money" health care costs everybody, including even people who are "not a member of a large organization." (A lot of those people and their organizations are holding on to their plans by their fingernails.) Most of the people in this room no doubt were waiting for a Reagan to come and make things right. How wrong they were.

  11. He didn't answer the question about the importance of licensing for medical practitioners and FDA to prevent malpractice. He just circled around the topic and pointed out the flaws in the FDA and licensing system. Of course, you will find flaws in everything if you look hard enough. But that doesn't undermine their importance in keeping us safe.

  12. He’s absolutely correct. The UK is suffering greatly under a costly state controlled health system

  13. 0:25 Thoughts on FDA?
    1:33 Licensing?
    2:35 License is no assurance of quality
    7:20 "The label of good housekeeping is not the same thing"

  14. the argument is all over the place. These countries he mentioned also have regulation.. so its hardly a reason to remove regulation on medicin. The issue is clearly those who want to make sure no lives are lost in a free system, and those who think the potential to save life is more important. Which is more important isn't exactly very clear. But the poor do seem to lose in such a system.

  15. I'm sure many healthcare providers would be incentivized to provide good service, but then again there are situations where you need to gamble for your business to survive. So if you on other hand might fail the business and the other hand you can buy cheap labor which isn't exactly up to medical standards to keep the business alive, there certainly can be situations where the economic incentives actually work against the clients or create way too high risks for them concerning their health. Licencing makes sure that there is basic minimum of knowledge, the medical schools aren't easy, they filter the people.

    In addition to that, it would enable exploitation of the idiots by using the name medicine for homeopathy etc. licenced physicians create at least some kind of barrier which is easily understood by people.

  16. So one fella makes 100,000 and the other nothing. Then along comes Ocasio-Cortez and decides that there must be a cutoff for poor at 50,00 and simply uses force/violence/aggression to take it from the productive fella and transfer it to the "poor" fella after first taking a nice slice for herself. And doing the math finally the"poor" fella approaches the productive fella re about equal, the producer working and the poor fella and Ocasio-Cortez sitting on their fat asses sipping mint juleps and laughing at the misery of that poor working stiff, the entrepreneur, while that do no work at all. The negative income tax is just another attempt to make people about the same, it is an old commie/socialist game and it bothers me that of all people Friedman seems to have missed it. What am I missing here?

  17. I like Friedman but he is wrong on the negative income tax because it relies on sanctioning the government to use force to loot other people to subsidize the difference between a poor wage and some other wage. Oh, and BTW, wages are not income, notwithstanding opinions or beliefs to the contrary. Read the case law, Merchant's Loan and Trust vs. Smietanka 1895 and The Corporation Excise Tax Act of 1909. The courts and law make it clear that income is profits or gains. Wages were never defined as profits or gains. Profits or gains are business descriptions of their activities.

    http://mitsloan.mit.edu/newsroom/articles/negative-income-tax-explained/

    Excerpt:
    For instance, if the income cutoff was set at $40,000, and the negative income tax percentage was 50 percent, someone who made $20,000 would receive $10,000 from the government. If they made $35,000, they would receive $2,500 from the government. (This is different from a universal basic income in which everyone, regardless of income level, receives the same amount of money.)

    The negative income tax makes those who don't benefit from it mere stinkin' slaves to the government/masters and overseers/judges/enforcers an brings them closer to the cutoff line whereby they descend to the poor side.

  18. Licenses don't prevent people from making bad decisions while they are driving their cars or other vehicles.

  19. Can someone clarify something for me? Did he end that video in favor of a Universal Basic Income, or at least some version of it?

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