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The Idea Channel I'm very glad to introduce our speaker, Milton Friedman as a friend. Milton, the floor is yours. (applause)Thank you, Bill. I'm going to talk about the economics of medical care. This is an area in which, as we all know, there has been a trend toward ever greater government involvement.
Chairman K eating referred essentially to that trend in his comments. One step in this area inevitably leads to another. We have had an expansion of government involvement in the spending of money; Medicare, Medicaid funds, expenditures by the Department of Health, Education, and Welfare for other medical purposes have been growing by leaps and bounds. They have gone from a very tiny portion of total national expenditures on medical care to a substantial portion. The spending for the provision of medical care inevitably leads to control over the fees that are charged for medical care. And it should. If government is going to spend money, it ought to be concerned with what it pays for what it gets. Control over fees inevitably leads to control over the practices that are followed. . . over the behavior of the medical personnel. And if this trend continues, it inevitably leads to completely socialized medicine.
I believe that this trend, including many of the steps that have already been taken, is very much against the interests of patients, of physicians, and of other health care personnel. And in the brief time I have available today, I want to explain why I believe the trend is so much against their interest, why it has occurred, and what if anything can be done about it. The trend toward increasing government involvement in health care is not an isolated phenomenon; it is not restricted to health care. It is part of a general trend in our society toward replacing voluntary free-market arrangements by government control and regulation. It is a trend that is happening allover; it has happened in one industry after another. There is nothing special in this respect about the move to replacing private voluntary medical arrangements with compulsory governmental arrangements. This movement in the medical care field is not special in another sense. In industry after industry, producers who protest most strongly their belief in free markets have fostered and helped produce government takeover, government regulation, government control. The oldest historical case was in the railroad industry, where the railroad entrepreneurs helped to foster upon us the Interstate Commerce Commission and all that followed.
The same thing has been true in every other area. Most recently, the steel industry, which talked so loudly of its belief in free enterprise, has been strongly in favor of government restrictions on imports, in favor of tariffs and the like. In medicine, this same process has been at work. Indeed I would say that it is particularly true in medicine. A large part of the pressure for socialized medicine in the United States, in my opinion, and I may say this is not merely opinion; it is based on considerable examination of the evidence, a large part of the pressure has derived from the policies which have been followed over the decades by the American Medical Association, policies which were adopted in the name of improving medical care, policies which I have no doubt that the leaders of medicine regarded as desirable for improving medical care, but policies which have in practice had the effect of restricting entry into medicine, holding down both the quantity and the quality of medical care, and inhibiting the most efficient modes of providing and distributing medical care.
There has been great progress in the provision of medical care in the United States; it has been a great achievement, but it's been an achievement despite many of the best efforts of the American Medical Association, not because of it. This is a particularly appropriate place to illustrate my point, because the Myoclonic is a shining example of how medical care might have developed in the United States, if it had not been for the power of organized medicine.
The Mayo Clinic started, as you all know, in the late part of the nineteenth century or the early part of the twentieth century; the exact dating is a question of dispute. But the important point is that it started before 1910. 1910 was the year in which there appeared the famous Flexner Report, Abraham Flexner's report on American medical schools, which provided the basis for an enormous expansion in the power and the control which organized medicine was able to exercise over medical education and over medical practice. That power was used effectively in the 1920 s, in the 1930 s and later, to hamper at every turn the kind of group practice that Mayo Clinic is so successful at. I venture to predict that if the brothers Mayo had tried to organize the clinic and its practice as they did in the 1920 s or 30 s, I doubt very much that anything comparable to the Mayo Clinic could ever have developed or been achieved.
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