A recent article in the health policy literature asks, "What should a country spend on healthcare?"¹ The author notes the wide range in per capita health expenditures around the globe, and wonders whether any of the approaches commonly used to address this question can determine a "correct" level of spending. Some researchers, for example, rely on a peer approach, in which they investigate how much similar countries spend on their health. Others analyze the question in terms of political economy, the production function, or the budgeting process. Ultimately, the results of these studies end up in the public policy arena and reports published by the United Nations and World Health Organization.

This dilemma could only exist in the context of state-run healthcare. Under capitalism, individuals consume goods and service in accordance with their own means, needs, and desires, to the maximization of their overall happiness and well-being. If an individual deems it desirable to spend more on his health or the health of someone he values, then he makes that investment independent of whether others think he should be spending more or less.

As a matter of economizing, nobody (including researchers and politicians) can be closer to each decision or have better information than the individual himself. As a matter of political rights, no justification can be given for inserting the state between Economic Man and his doctor. On what basis, then, can anyone prescribe how much to spend? There is none.

In a free society—or even in a society in which the government were to interfere with healthcare substantially less than it currently does—there would be no need to even hold such a discussion. Consider any semi-free market such as consumer electronics, books, or travel. There is no great controversy over whether individuals spend too much or too little on televisions, are reading wastefully, or are taking too many vacations. People manage these consumption decisions without the help of the government. This is true for even essentials such as food and clothing, and healthcare would be no different.

The high cost of healthcare in the United States is an issue of supreme importance, but debating over aggregate expenditure levels as an end in itself is no solution. Government institutions exist to protect the right of individuals to act on their rational preferences as they see fit, not to make these decisions for us.

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¹ Savedoff, W. What should a country spend on healthcare? Health Affairs 26, no. 4 (2007): 962-970

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