Trust is an important lubricant of a social system. It is extremely efficient; it saves a lot of trouble to have a fair degree of reliance on other p… - Kenneth Arrow

Various medical groups are continually putting out advice as to health-inducing behavior (diet, exercise, and so forth). Individuals who follow this advice will reduce their demand for medical services. An extreme version is the campaign of the American Dental Association for fluoridation of water, a measure designed to reduce cavities and so the demand for dental services.
There is also a logical problem. How does the relatively small group of physicians acquire power? In a democratic system, political power derives from numbers or from wealth. While physicians are certainly relatively well off, they do not have the concentration of wealth of many industries. Their power, it seems to me, is derived from moral authority. It is derived from the same professional respect that we are trying to explain. Indeed, when the American Medical Association came into conflict with either the retired or with the business interests that bought medical plans, the weakness of its power base quickly became apparent.

Social theories are also social facts. Whatever explanatory value the “Marxist” or “conservative” models may have, they surely cannot be regarded as established with any degree of firmness. Yet excessive confidence in one or the other may have serious consequences. If “conservatives” believe too strongly that any move to socialism undermines democracy, then they may indeed act in accordance with the “Marxist” model, and vice versa. (Robert Merton long ago alerted us to “self-confirming” and “self-denying” social theories; here we have a pair of rival theories which are “other-confirming.”)

May I remark, especially for the benefit of economists, that consideration of the medical care market and of the insurance situation represents not only an application of economic principles but also a reconsideration of some of the principles that we take for granted.