Given the free market, why is American health care so expensive and inefficient?

This is a great question. The real answer is Adverse Selection and Profit. First, and most important is Adverse Selection. This is the process that Insurance Companies use to determine the premiums that everyone will pay based on their risk. This is the primary reason that Health Care is expensive and why people say that they were declined. Sick people pay more than well people. Profit is the real problem. Insurance companies understand the costs of doing business and that is why they allow for duplicate procedures and medical billing costs. They decline most of the costs and shift it to the consumer. As things become more computerized the duplicate billing and procedures are slowing. However, fraud in the system has to be mitigated. This system of insurance grew out of need of sailors families. When a sailor went to sea, sometimes he wouldn't come back. Money was collected on every voyage to pay the family if he didn't come back. If he did come back the "insurance" company kept the money. This evolved into our health care system and recently auto repair insurance. Inefficiencies in our health care system started with regulations enforced by states and privacy laws. (A person may get the same test twice by 2 different doctors because of a privacy law which doesn't allow a doctor to share information with another doctor). The current expensive and inefficient system works for more than 85% of Americans. About 5% of people in the US would choose not to have insurance unless it was made mandatory. Currently a single person can get a good policy for less than $200 per month and a family can get coverage for about double that. That is affordable for some but not all people. If you eliminate state regulations and fraud then you can reduce the cost of insurance. But you can reduce cost the most by eliminating profit. The problem is that this is America and we are Capitalist.

There is no free market in health care, not even close. Almost everybody takes what employer is offering. Take or lose 35% tax deduction. This is not free by any means, when one particiapant is subsidized and the other is not how is it free market? And in additon unions enter this market as privileged participants too, using the power of arbitrations to impose thier terms. More freedom you have when you are being robbed in a dark alley, there at least you can fight back and then claim self-defense.

There is no free market. The AMA is actually the equivalent of the medieval guilds which existed in Europe who controlled entrance so as to create a monopoly. Of course if people went back to consuming natural foods and taking exercise there would be less need for the medical profession. An ounce of prevention is worth a pound of cure.

I believe that the basic principle is that profits must unavoidably compete against care. (Note that I say "profits", not "costs.") The argument that health care costs and inefficiencies are caused by "too many" government rules and regulations, or a lack of a supposed "free" market, is absurd in the extreme. People who make this claim are obviously not students of history, if they're not liars. The last 20-25 years have seen countless rules intended to protect patients and insurance policy holders, being quietly written off. This is, in fact, the very argument that insurance companies have used to justify their sponsorship of the erosion of the rule of law. "if only the government would stop meddling in our business, we could provide better and cheaper insurance coverage for everybody...." Meanwhile, insurers' legal and contractual obligations to patients have steadily gone downhill, while insurance rates for all but the most healthy policy holders, as well as insurance company profits, have skyrocketed. So, the reduction in regulation and oversight has actually had the opposite effect of what the insurance companies claimed would happen. It not really a case of too much regulation, but not enough, or regulation that is tilted in favor of business interests. To illustrate this fact, Medicare and Medicaid have so-called "medical loss ratios" of 96-98%. In other words, 4-2% overhead costs. These days, the average private insurance company has around an 80% medical loss ratio, in other words 20% overhead. In fact, insurance companies that have loss ratios higher than this tend to have a hard time attracting investors and raising capital; they're often bought out by bigger, more "profitable" companies. But this mostly addresses the question of insurance. Another reason the "free the market" claim doesn't hold water, is that needing medical attention isn't the same as, for example, shopping at a grocery store. Even if you don't like the care you're getting, for many people you can't just simply go to a different doctor or a new hospital or insurance company. So, purveyors of medical services have an unfair competitive advantage over consumers in the current system; consumer needs outweigh their ability to make choices. Also, pharmaceutical companies, and the medical service industry that caters to hospitals, is another field that has seen explosive growth and increasing profits in the last two decades, a trend which shows no sign of stopping in the near future. It seems that the only people that are actually losing money on heath care are hospitals, patients, and the government. This leads me to deduce that these industries also may have a hand in convoluted, inconsistent, contrary, and wasteful practices at hospitals. (Though I'm sure they are far from the only culprit.) For example, many hospitals have the unbelievable policy of refusing to disclose costs to patients. There IS something to be said against privacy laws here in the USA. Keeping secrets from your doctors is a habit which can easily be lethal. Yet in effect this is what current privacy laws encourage. There has to be a better way. A better way to make sure caregivers share the most information possible, while at the same time protecting that information from any other parties who might have conflicted interests, e.g. private insurance companies. Another problem, I think, is than many hospitals rely too much on the individual judgment and expertise of doctors, while being loath to implement default medical best practices based on statistical studies. Hope this makes sense.

Lack of competition and price off-set. Lack of competition is self expanitory, the price off-set is due to regulation. Medicare and Medicaid payments from the govt are either super late or lower then what the market determines, and thus the off-set from the market price to the allowed amount (govt. intervention) is passed on to the normal consumer. Also, hospitals regularly treat illegals and others not able to pay, and that cost is passed on to the normal consumer as well....which causes an increase in prices. Those are the two main reasons.

Decades of government interference perhaps.

There isn't free market in medical care. The AMA, medicare, medicaid, insurance through your employer...these are all creations of government intervention that have made the system worse off. Right now the government spends 45% of the money in healthcare. The government spends more per person than any other country. That is NOT a free market.

Lack of competition is the primary cause. More doctors would greatly reduce the prices. Another problem is unpaid medical bills. Hospitals have to provide care regardless of anything and many people do not pay their bills.

the free market is why American health care so expensive and inefficient... a given...