Healthcare Independence

With a little luck and much pluck, Americans in 2026 will be allowed to opt to return to the government healthcare policies of 1776.

When Americans claimed independence from Britain, they were free to choose their own healthcare providers (HCPs) on the basis of their reputation. Despite vast advances in communication technology over the last quarter millennium, the median patient then knew far more about their HCPs than the median patient does today.

Some HCPs then held licenses but good apothecaries/pharmacists, barbers/dentists, internists, midwives, and surgeons saw their reputations and revenues wax, regardless of licensure, while bad ones struggled until they improved or found occupations more amenable to their talents.

When good HCPs erred, they reduced or eliminated fees, which came directly from the pockets of their patients. Good HCPs also adjusted their fees to accord with their patients’ “station” or wealth.

Overcharging would have broken the sacred Hippocratic Oath to do no harm and would also harm the HCPs themselves in a highly competitive market. No “certificates of need” or “scope of practice” restrictions then segmented the market for healthcare services. Cognizant of the importance of their reputations, HCPs freely referred patients to those better equipped to ameliorate specific maladies. Moreover, patients who lost faith in an HCP could jump to another without worrying if they were “in network” or not.

Vaccinations there were but, outside of the military, no mandates to take them. Medications and medical devices were also used on a strictly voluntary basis. If a certain snake oil made some people feel better, they bought more and told their friends. If it didn’t, they told their friends that too. Caveat emptor, but rest assured that the purveyor of outright poisons suffered dearly.

Although some Americans then lived into their 80s and 90s for a small fraction of today’s medical expenses, overall life expectancy was then lower, entirely due to ignorance, not the incentives of HCPs. Americans drank alcohol to avoid the often feces-infected water. Many other early American hygiene habits, even in hospitals, rightfully repulse us today.

In the late nineteenth and early twentieth centuries, safer municipal water supplies and medical equipment sterilization extended American lives more than any HCP, medicine, or hospital did until the antibiotics revolution of the 1940s. To this day, the best way to live long is to avoid getting, or immediately treating, cholera, dysentery, influenza, measles and other childhood diseases, the plague, rabies, smallpox, syphilis, tuberculosis, typhoid, or typhus.

As Sean Masaki Flynn showed in The Cure that Works (2019), if the U.S. federal government had stayed on its original policy course and left healthcare to market forces, Americans today would enjoy health outcomes similar to those of Singapore, which adopted the original U.S. system. They would live longer, healthier lives for about a quarter of what they currently pay and no one would suffer from a lack of access. Instead, policy changes made during the long New Deal tied health insurance to employment and healthcare to third party payers, both of which mangled incentives and created the dying, dysfunctional system presently in place.

Moreover, if healthcare policies had not changed so dramatically in the 1930s and 1940s, U.S. taxpayers would not be forced to fund huge bureaucratic research machines of dubious merit or efficiency. Life insurers would fund most medical research, just as they did before the New Deal, and they would almost certainly do a better job than the government because they have much stronger incentives to do so.

Due to large unfunded promises to pay superannuated Americans life annuities and health insurance, the incentive of the U.S. government is for Americans to die the day they begin to collect Medicare and Social Security. (This is not a conspiratorial or empirical claim, just an elucidation of the government’s incentive structure for the last 90 years.) Life insurers, by contrast, face strong incentives to help their insureds to live long, healthy lives because they don’t pay until the insured dies.

The median American two and a half centuries ago better understood basic economic concepts than the median American today does. Back then, fear and hatred of monopolies helped to spur revolution. Today, too many Americans fear and hate competition. Their heads swim with too many falsehoods inculcated by government-run or -controlled educational monopolies to debunk in short compass.

Thankfully, policymakers do not have to force Americans to accept the healthcare policies of the Founders, all they have to do is to allow them the choice to stick with the failed nostrums of the long New Deal or to return to the freedom of healthcare independence. They will soon learn which is better.