Education, Healthcare and Free-Markets

I am for free-markets. Through my lived experiences and some reading, I have realized the amazing effectiveness of the invisible hand of markets. I believe that free-market competition unleashes the best among its stakeholders. There is a constant stream of feedback to the producer. The feedback is customer voting with pockets. I cannot think of any more honest and precise form of feedback.

But most of the world doesn’t share my conviction about free-markets. It frustrates me when some problems fester despite a good free-market solution staring me in the face. Sometimes I doubt my conviction. Is my bias blindsiding me? Is there a gap in my core conviction? Or my thinking is fine but the devil is in the implementation details? I seek to clarify my thoughts by writing this article and seeking feedback on the same. 

In this article, I intend to lay down a couple of such convictions of mine, along with proofs (unfortunately anecdotal) and my residual self-doubts: 

1. Free markets to deliver education 
2. Free markets to deliver healthcare 

Free markets to deliver education:

Conviction:

Today in India, education is sought to run on a non-profit basis. The government institutions are obviously non-profit. The private institutions, theoretically, are not supposed to make profits. The helpless institutes thus try to make some profit through the side-channels of selling books/uniforms/transport. Such surreptitious behaviour of the schools is a direct result of the government's non-profit restriction.

I want a different scenario. I want to legalize profit-making in education. There should be no ceiling price. I want as close to laissez-faire as possible in the education sector. Let the students/parents and schools/colleges figure out the optimum price point. More profit-seekers can freely join the supply side without the need to hide profits surreptitiously under other expenses. I believe it will deliver better learning outcomes. There is a valid concern about the poor being left out. That can be solved by the society funding the poor-family-students with education vouchers. I prefer society working through voluntary charity. But in case that is not sufficient, I will allow the government (very grudgingly though) to step in with education vouchers.

Proof:

Wherever private schools have operated, parents (even poor ones) have moved their children to these schools, despite having to pay higher costs. I trust the judgment of paying customers. People are loathe to send their children to government schools despite those schools being free.

My desired type of private education does exist in India under the umbrella of retail private tuitions and corporate tutorial homes. I have experienced the superior quality and teaching intensity of these private tuitions/institutes. It is common practice in some quarters to look down upon the rigour and grind of teaching practices of these tuition classes, which is unfortunate. 

Niggling self-doubt:

I do not know of any country which has let the private sector operate freely in the education sector. I do not know of any country which is funding education vouchers and letting the private sector deliver the education. Everywhere the teacher's unions are a formidable entity. Why? Is every country on the planet making the same mistake? Or am I missing some reasoning?

Free markets to deliver healthcare 

Conviction:

Healthcare (with some exceptions) is best served by free-markets. Every patient has an incentive to cure herself. The patient will seek to find the best doctor at the cheapest price and pay for the service. With free markets in healthcare, the cost of treatment will come down and become affordable. Unfortunately, the free market in healthcare is mostly absent in all the countries of the world. India is no exception. The private hospitals and nursing homes are burdened with red tape and too many regulations. I wish for a true free market (not the existing pseudo version) in healthcare.

Exceptions can be made for epidemics and infectious diseases. An infected person needs to be restrained from getting into public places. For some communicable diseases, some disciplines need to be enforced on an individual for the greater good. For example not keeping stagnant water in balconies to prevent dengue, not smoking in a public space, etc. I am okay with the government using tax money to handle these exceptions.

For people who are too poor to afford healthcare (despite costs being driven down by markets), there is scope for society to do charity. Just like in the case of education, I prefer society to work through voluntary charity. In case it is not sufficient, the government may step in.

Proof: 

India has one of the best (and cheapest) healthcare systems for outpatient purposes in its cities. I claim so based on my personal experience in the US, Israel and India. In Indian cities, you can consult the best doctors for 1000-2000 rupees (Bangalore rates in 2023). There is a perfect free market here. There are many doctors. There are many patients. There are almost no restrictions for a doctor to set up a consultation clinic. Anybody can set up a clinic with a suitable medical degree. Word-of-mouth referrals among customers/patients lead to a ranking of doctors. The wheels come off whenever surgery is involved. That is where we hear the horror stories.

Niggling self-doubt: 

Why has no country solved the issue perfectly? The US is problematic with prohibitive costs. One cannot afford without insurance. UK with its NHS has long wait lists. So my conviction that the market solves all problems may not be true. But I want a solution where free-markets are allowed to operate in most (if not all) cases of healthcare.

In matters of public policy, these convictions and doubts shape my journey of continuous exploration and understanding.

(Written for Takshashila's #WriteToWin contest. Got appreciated for the submission as well. Thanks Takshashila.)