5 ms·

Probably too late to really contribute, but either way - I feel like health is a degenerate case of free markets. In any free market, the price is set by the c

Probably too late to really contribute, but either way - I feel like health is a degenerate case of free markets. In any free market, the price is set by the consumers assessing their utility for the goods or services purchased. In cases of pencils, productivity software, energy, raw materials, etc, consumers compare the methods of resolving the need, or at baseline the cost of not addressing the need. In healthcare, there are lots of situations where the cost is X dollars vs literal death. Of course, death is not an acceptable alternative, so an acceptable X ends up being very, very high for the treatment. Most people would pay their life savings to treat themselves of any life-threatoning ailment. I honestly believe that free markets setting prices is good for most industries, but I cannot see it working in situations where the benefit categorically supercedes any amount of money. It seems like we need to either rethink IP law surrounding healthcare, or have a monopsony (single payer or something else) setting prices. This is a hard thing for me to resolve, as somebody who normally likes a libertarian approach.

metafunctor 10y ago
This is called “price inelasticity”. When you have to choose between probable death and, well, not dying, you are willing to pay almost any price.
- XJOKOLAT 10y ago
  Only because supply has been fixed - and not by unavoidable factors. In this case, it appears that supply has been artificially fixed by IP laws (which is obviously morally questionable situation in the health sector).
throwawayReply 10y ago
Just as worrying are the non-lethal ailments where people are forced to choose between X and "not-dying" and a substantial number of people will underestimate the effect that struggling on sick has on them and choose that over going hungry. The healthcare system in the U.S. means that I consider the United States of America a second-world / not-fully-developed country: it doesn't belong in the first-world alongside those countries which look after their sick.
isolli 10y ago
You can add decision making under uncertainty and information asymmetry to the list of reasons why free markets in health care fail.
nickff 10y ago
The choice in a free market is not between one specific product and non-consumption, it is between that product and all alternatives (including non-consumption). If the choice was always between one specific product and non-consumption, bottled water would be very expensive (since water is second only to oxygen in necessity for survival). If there are no good alternatives, we should first ask why that is, before confiscating property or rights from that supplier or provider. I would contend that the healthcare industry has been poorly (over-) regulated, and that government interventions have limited supply of critical goods and services, thus increasing prices and decreasing quality.
- metafunctor 10y ago
  Consumer choice is, indeed, the underpinning of the free market. What is preventing other companies to come to market with cheaper versions of the EpiPen? Why are there no cheaper alternatives?
  - nickff 10y ago
    I believe there are three alternatives: Epipen, Adrenaclick, and Twinject. The FDA does not allow pharmacists to substitute one for the other at the pharmacy, and many (doctors and patients) opt for the best-known brand.
    - metafunctor 10y ago
      A-ha! This is new information to me. Why are EpiPen substitutes not allowed? Are the products that different?
      - DashRattlesnake 10y ago
        > Why are EpiPen substitutes not allowed? My understanding is if the prescription says "EpiPen" (or any non-generic drug brand name) the pharmacist must provide an EpiPen (or the brand-name drug). If the prescription says "epinephrine auto injector" or "EpiPen or generic," then the substitution is allowed. > Are the products that different? IIRC, they all the current alternatives deliver the same medicine, but they use different injector mechanisms to do so. I think the last alternative withdrew from the US market for some reason, because their mechanism wasn't as reliable with dosing. IIRC, EpiPen's mechanism is apparently off-patent, so a true generic could enter the market if approved.
davej 10y ago
This is presumably a large part of the reason for health insurance and public health cover (medicaid in the US). This causes a principal-agent relationship where the decisions are made by health insurance companies (the 'agent') rather than the person who needs them (the 'principal'). This, of course, has it's own set of issues.
tuna-piano 10y ago
I am two days away from death right now, and there's one product that stands between me and death, but yet that product (water) is abundant and cheap- even though it is priority #1 in my life. I'd literally spend my entire net worth, and go into debt to get just a glass of it if need be. Price is not representitive of value. It's why diamonds cost more than water. For certain things, I'd expect cheap prices in healthcare- if the market is allowed to function (i.e. Patents, regulation, etc are not in the way). For others, high prices could actually be beneficial. Profits in an industry attract additional investment. When photo apps get bought for a billion, more people want to make photo apps. Recently, specialty drugs for rare diseases started charging enormous prices. Do you think that led to more or fewer specialty drugs being developed? In fact, there's been a boom in specialty drug development, which wouldn't have happened without the profits- but are saving many lives. Fix prices, and you'll fix innovation to today's level. Allow profits, and the system will continue to magically improve.

metafunctor 10y ago

This is called “price inelasticity”. When you have to choose between probable death and, well, not dying, you are willing to pay almost any price.

XJOKOLAT 10y ago
Only because supply has been fixed - and not by unavoidable factors. In this case, it appears that supply has been artificially fixed by IP laws (which is obviously morally questionable situation in the health sector).

throwawayReply 10y ago

Just as worrying are the non-lethal ailments where people are forced to choose between X and "not-dying" and a substantial number of people will underestimate the effect that struggling on sick has on them and choose that over going hungry. The healthcare system in the U.S. means that I consider the United States of America a second-world / not-fully-developed country: it doesn't belong in the first-world alongside those countries which look after their sick.

isolli 10y ago

You can add decision making under uncertainty and information asymmetry to the list of reasons why free markets in health care fail.

nickff 10y ago

The choice in a free market is not between one specific product and non-consumption, it is between that product and all alternatives (including non-consumption). If the choice was always between one specific product and non-consumption, bottled water would be very expensive (since water is second only to oxygen in necessity for survival). If there are no good alternatives, we should first ask why that is, before confiscating property or rights from that supplier or provider. I would contend that the healthcare industry has been poorly (over-) regulated, and that government interventions have limited supply of critical goods and services, thus increasing prices and decreasing quality.

metafunctor 10y ago
Consumer choice is, indeed, the underpinning of the free market. What is preventing other companies to come to market with cheaper versions of the EpiPen? Why are there no cheaper alternatives?
- nickff 10y ago
  I believe there are three alternatives: Epipen, Adrenaclick, and Twinject. The FDA does not allow pharmacists to substitute one for the other at the pharmacy, and many (doctors and patients) opt for the best-known brand.
  - metafunctor 10y ago
    A-ha! This is new information to me. Why are EpiPen substitutes not allowed? Are the products that different?
    - DashRattlesnake 10y ago
      > Why are EpiPen substitutes not allowed? My understanding is if the prescription says "EpiPen" (or any non-generic drug brand name) the pharmacist must provide an EpiPen (or the brand-name drug). If the prescription says "epinephrine auto injector" or "EpiPen or generic," then the substitution is allowed. > Are the products that different? IIRC, they all the current alternatives deliver the same medicine, but they use different injector mechanisms to do so. I think the last alternative withdrew from the US market for some reason, because their mechanism wasn't as reliable with dosing. IIRC, EpiPen's mechanism is apparently off-patent, so a true generic could enter the market if approved.

davej 10y ago

This is presumably a large part of the reason for health insurance and public health cover (medicaid in the US). This causes a principal-agent relationship where the decisions are made by health insurance companies (the 'agent') rather than the person who needs them (the 'principal'). This, of course, has it's own set of issues.

tuna-piano 10y ago

I am two days away from death right now, and there's one product that stands between me and death, but yet that product (water) is abundant and cheap- even though it is priority #1 in my life. I'd literally spend my entire net worth, and go into debt to get just a glass of it if need be. Price is not representitive of value. It's why diamonds cost more than water. For certain things, I'd expect cheap prices in healthcare- if the market is allowed to function (i.e. Patents, regulation, etc are not in the way). For others, high prices could actually be beneficial. Profits in an industry attract additional investment. When photo apps get bought for a billion, more people want to make photo apps. Recently, specialty drugs for rare diseases started charging enormous prices. Do you think that led to more or fewer specialty drugs being developed? In fact, there's been a boom in specialty drug development, which wouldn't have happened without the profits- but are saving many lives. Fix prices, and you'll fix innovation to today's level. Allow profits, and the system will continue to magically improve.