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South Africa’s healthcare under threat 51
health-care providers will be at the complete mercy of the health
bureaucracy.
Planning and prices
South Africa’s health planners are instructed by the new laws and
regulations to ignore demand, prices, and the wishes of patients.
But, if prices are interfered with, or a market is not allowed to
function, there is no way of reconciling supply with consumer
demand.
The market and prices make the discovery process possible that
allows people to utilise more facts than any other known system.
By means of prices we constantly discover new facts that improve
our adaptation to the ever-changing circumstances of the world in
which we live. (Hayek, 1976)
In the absence of prices determined in a competitive market,
economic calculation becomes not merely difficult, but impossible
(Von Mises, 1990). To overcome this problem in the former communist
countries, economic planners had to copy prices set on world
markets. When one considers that central planners in the Soviet
Union had to fix 24 million 7 prices, and had to keep adjusting them,
relative to all other prices, as conditions changed, one realises that
central planning did not just happen to fail, it was impossible for it
to succeed.
In a market economy the task of “fixing” prices is undertaken by
hundreds of millions of people individually keeping track of the relatively
few prices they need to know for their own decision-making.
In a health-care system under political and bureaucratic domination,
price controls are invariably introduced, supposedly to make
care affordable and to contain costs. This obliterates the very price
information system that would allow health-care resources to be
utilised most efficiently. By ignoring prices, politicians, health-care
planners and policy makers have no means of knowing what the
optimal allocation of health resources should be and the fact that