Center for Modern Health Director: “Healthcare has drifted” from free market principles

Jared Rhoads, executive director of the Center for Modern Health, said the U.S. healthcare system has moved away from free market dynamics, pointing to structural and cultural factors that limit competition and pricing transparency.

“There’s a deeper kind of mindset issue,” Rhoads said, arguing that many providers “are just not set up to even think about prices and like posting actual, you know, market oriented prices.” He added that they are “not even like thinking about competing with one another in that way.”

Rhoads said health savings accounts are part of the policy debate, but argued that limited reforms around them would not by themselves transform the system. “Will it really like reform healthcare fundamentally? I don’t, I don’t think so,” he said. “I wish we could just say, hey, let’s, let’s um, you know, bang on that drum a little bit, tweak that policy, make it better.”

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He said one obstacle is the assumption that markets do not work in healthcare.

“You hear this idea a lot,” Rhoads said, referring to the claim that “healthcare is different.” He argued that while some aspects of healthcare differ from other sectors, “it’s not, I don’t think it’s a, a difference in, in kind. It’s a difference in degree.”

Rhoads also said policymakers and institutions have over-relied on insurance as the default mechanism for paying for care. “There’s this, this idea that just more coverage. More coverage, that’s the solution,” he said. But he argued that “not everything is, uh, you know, ought to be paid for by insurance,” adding that “the cost of everything tends to go up when you, uh, make it covered by insurance.”

Asked about the historical separation between healthcare and the free market, Rhoads said the change happened gradually. “It’s sort of, um, gradually and in fits and phases,” he said. He said older models of one-on-one care and direct payment gave way over time to a system shaped more by institutional and cultural expectations that healthcare should be “supplied to or, or provided to you.”

Rhoads also said administrative complexity has raised costs for providers and patients alike. Discussing billing and compliance burdens, he said practices are forced to deal with “all these different kinds of, you know, systems and billing and kinds of, uh, practices and everything, and all these details that, that you have to follow,” which “does add to the, to the, to the cost of it all.”

As an alternative, Rhoads pointed to cash-pay and direct-pay models. “Part of the reason that like you can get a better than average price, um, at a cash only place is because it’s a very simple transaction,” he said. “They can just focus on the medicine. They don’t have to focus on all these other things.”

Rhoads leads the Center for Modern Health, a policy organization focused on healthcare reform and free market principles. He said the group aims to combine detailed policy work with broader efforts to shift how healthcare is understood. “I really think the two of those need to come together,” he said.