4 ms·

Regulations can put pressure on prices (and if you look at epipens in particular, part of the regulations allowing the increase of their price have nothing to d

by dv_dt 9y ago

Regulations can put pressure on prices (and if you look at epipens in particular, part of the regulations allowing the increase of their price have nothing to do with monopoly and a lot to do with getting policy placed into areas where organizations are required to keep an epipen on hand by regulation...). But in terms of overall effect, one can't ignore other nations which pay much lower prices for healthcare with both regulation for drug patents, as well as regulation on drug prices. That combination manages to deliver better care at lower costs than the US (we pay on average double per capita). So I don't think one can generically fault "regulation" for a poorly performing health market in the US.

alexanderstears 9y ago
So I don't think one can generically fault "regulation" for a poorly performing health market in the US. You're absolutely right, however, I do think the worst parts of our medical system exist as consequences of regulation. The mandate that emergency rooms treat anyone who enters is onerous and there's no free lunch, paying customers are stuck with the bill. The licencing system isn't optimal for cost effective care. There's a lot to be desired for people who favor supply side solutions to expensive problems.
- dv_dt 9y ago
  > The mandate that emergency rooms treat anyone who enters is onerous and there's no free lunch, paying customers are stuck with the bill. I don't think that's onerous, I think that is a minimal, and admittedly imperfect, expression of our societal intent that people shouldn't die unnecessarily in emergency rooms - either from lack of being able to pay; nor from a practical standpoint, lack or delay of on-hand proof of ability to pay. Removing those regulations would cause all sorts of other problems. Someone arrives in an ambulance near-death, if I lack morals then one level of maximized extraction price is to have those patients commit to pay a value that represents the earning potential for that person for the rest of their life. They have to agree before getting admitted. Even more profitable, if I judge that person as having a well connected social network, I can charge even more because I know their friends and colleagues would chip in to save them... I'm not sure how a competitive market with no regulation changes the worst case for this transaction - if someone is near death then moving on to another emergency room is out of the question. I see universal healthcare with a shared cost-pool as the lowest overhead way to provide for our social moral desires (but then I'm not in fear of the regulation with may be needed to implement that policy). Insurace with a shared risk pool is a technically workable, but adds even more overhead, and ends up a more expensive way to do the same thing... but again regulations are involved (and fixing very flawed ones at that).
  - AnthonyMouse 9y ago
    > Someone arrives in an ambulance near-death, if I lack morals then one level of maximized extraction price is to have those patients commit to pay a value that represents the earning potential for that person for the rest of their life. They have to agree before getting admitted. Actual markets don't work that way. If you could actually make that much money then someone would open a competing emergency room right across the street, let everyone know that they charge $1 less and take all the business. Then the first emergency room would charge $2 less to take it back, until they're both charging reasonable prices. It's the same reason you don't have to sign your life away to buy food even though you would die without it. The problem in the US is that the regulations on the market for medical services work almost the exact opposite of that. There is no price transparency at all so you have no idea which facilities are more expensive. And if someone wants to open a competing facility, they have to get a Certificate of Need proving that the existing facilities don't have enough capacity. Even though having enough capacity doesn't preclude charging outrageous prices in the absence of competition. > I see universal healthcare with a shared cost-pool as the lowest overhead way to provide for our social moral desires (but then I'm not in fear of the regulation with may be needed to implement that policy). The existing US system is pure corruption. It's heavily regulated but the regulations are a result of regulatory capture by insurance companies (who want higher costs because higher costs means more vig), and all the industries the insurance money pays for like pharma. The result is that medicine in the US is outrageously expensive. But the expense doesn't go away even with universal coverage unless you fix the regulations, and if you did that then people would be able to afford medicine out of pocket without insurance.
    - dv_dt 9y ago
      > Actual markets don't work that way. Isn't that exactly what's happening in slower motion with the incredible price hikes in many drugs such as insulin? And you assume that the neighborhood can sustain two emergency rooms - a second competitor isn't going to arise if the setup costs are high and the competitor can't undercut and survive the competition phase. This is exactly why there aren't multiple competitors to residential ISPs, because after the risk and costs are factored in setting up overcapacity for a market isn't a good investment. Further if you look at the drug markets, sufficient cost and time barriers exist and allow even makers of generic drugs (with no patent monopolies) to charge inhuman rates for drugs. And generally investors are not going to back efforts to fund a head-to-head competitive slugfest when the market of users for a given drug is basically of fixed size. Again building overcapacity is generally avoided in these markets because of the high entry barriers. https://www.nytimes.com/2017/04/14/business/lannett-drug-price-hike-bedrosian.html https://www.nytimes.com/2017/04/14/business/lannett-drug-pri...
- conanbatt 9y ago
  I concur. The argument that healthcare in the US is broken because its a market almost triggers me. It has profound regulations that affect its market behavior.
jeffbax 9y ago
"So I don't think one can generically fault 'regulation' for a poorly performing health market in the US." Well articulated counterpoint: http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-drugs-vs-chairs/ http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-dr... Also, we live in a country where most places they don't even allow opening a new hospital without the permission of surrounding hospitals, and all of the recent healthcare regulations have encouraged a seriously problematic consolidation just like the big banks. As an industry, healthcare is so over-regulated it isn't even funny. The good news is that drug prices are still generally falling outside of big examples like Daraprim and Epipens and there are fairly effective solutions to the spikes we could have if the FDA would get onto more reciprocity with other nations: http://marginalrevolution.com/marginalrevolution/2016/02/the-good-news-on-generic-drugs.html http://marginalrevolution.com/marginalrevolution/2016/02/the... Also relevant, the US Cost disease: http://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ http://slatestarcodex.com/2017/02/09/considerations-on-cost-...
- dv_dt 9y ago
  I don't find that first link well argued at all: because corporations have achieved some degree of regulatory capture from the FDA, we need to eliminate regulations and let those same corporations run completely rampant and somehow that will result in better performance? That makes no sense to me. Also, the comparison there in the drug vs the chair market there is poor too. The key difference between manufacturing drugs and chairs (as in the example), is that anyone could enter the chair making with one guys who has had high school woodshop. Manufacturing a drug has a much much higher bar...
  - alexanderstears 9y ago
    I don't find that first link well argued at all: because corporations have achieved some degree of regulatory capture from the FDA, we need to eliminate regulations and let those same corporations run completely rampant and somehow that will result in better performance? That makes no sense to me. If that's what you got from SSC's cost disease article, you might have some bias in your framework.

by dv_dt 9y ago

alexanderstears 9y ago

So I don't think one can generically fault "regulation" for a poorly performing health market in the US. You're absolutely right, however, I do think the worst parts of our medical system exist as consequences of regulation. The mandate that emergency rooms treat anyone who enters is onerous and there's no free lunch, paying customers are stuck with the bill. The licencing system isn't optimal for cost effective care. There's a lot to be desired for people who favor supply side solutions to expensive problems.

dv_dt 9y ago
> The mandate that emergency rooms treat anyone who enters is onerous and there's no free lunch, paying customers are stuck with the bill. I don't think that's onerous, I think that is a minimal, and admittedly imperfect, expression of our societal intent that people shouldn't die unnecessarily in emergency rooms - either from lack of being able to pay; nor from a practical standpoint, lack or delay of on-hand proof of ability to pay. Removing those regulations would cause all sorts of other problems. Someone arrives in an ambulance near-death, if I lack morals then one level of maximized extraction price is to have those patients commit to pay a value that represents the earning potential for that person for the rest of their life. They have to agree before getting admitted. Even more profitable, if I judge that person as having a well connected social network, I can charge even more because I know their friends and colleagues would chip in to save them... I'm not sure how a competitive market with no regulation changes the worst case for this transaction - if someone is near death then moving on to another emergency room is out of the question. I see universal healthcare with a shared cost-pool as the lowest overhead way to provide for our social moral desires (but then I'm not in fear of the regulation with may be needed to implement that policy). Insurace with a shared risk pool is a technically workable, but adds even more overhead, and ends up a more expensive way to do the same thing... but again regulations are involved (and fixing very flawed ones at that).
- AnthonyMouse 9y ago
  > Someone arrives in an ambulance near-death, if I lack morals then one level of maximized extraction price is to have those patients commit to pay a value that represents the earning potential for that person for the rest of their life. They have to agree before getting admitted. Actual markets don't work that way. If you could actually make that much money then someone would open a competing emergency room right across the street, let everyone know that they charge $1 less and take all the business. Then the first emergency room would charge $2 less to take it back, until they're both charging reasonable prices. It's the same reason you don't have to sign your life away to buy food even though you would die without it. The problem in the US is that the regulations on the market for medical services work almost the exact opposite of that. There is no price transparency at all so you have no idea which facilities are more expensive. And if someone wants to open a competing facility, they have to get a Certificate of Need proving that the existing facilities don't have enough capacity. Even though having enough capacity doesn't preclude charging outrageous prices in the absence of competition. > I see universal healthcare with a shared cost-pool as the lowest overhead way to provide for our social moral desires (but then I'm not in fear of the regulation with may be needed to implement that policy). The existing US system is pure corruption. It's heavily regulated but the regulations are a result of regulatory capture by insurance companies (who want higher costs because higher costs means more vig), and all the industries the insurance money pays for like pharma. The result is that medicine in the US is outrageously expensive. But the expense doesn't go away even with universal coverage unless you fix the regulations, and if you did that then people would be able to afford medicine out of pocket without insurance.
  - dv_dt 9y ago
    > Actual markets don't work that way. Isn't that exactly what's happening in slower motion with the incredible price hikes in many drugs such as insulin? And you assume that the neighborhood can sustain two emergency rooms - a second competitor isn't going to arise if the setup costs are high and the competitor can't undercut and survive the competition phase. This is exactly why there aren't multiple competitors to residential ISPs, because after the risk and costs are factored in setting up overcapacity for a market isn't a good investment. Further if you look at the drug markets, sufficient cost and time barriers exist and allow even makers of generic drugs (with no patent monopolies) to charge inhuman rates for drugs. And generally investors are not going to back efforts to fund a head-to-head competitive slugfest when the market of users for a given drug is basically of fixed size. Again building overcapacity is generally avoided in these markets because of the high entry barriers. https://www.nytimes.com/2017/04/14/business/lannett-drug-price-hike-bedrosian.html https://www.nytimes.com/2017/04/14/business/lannett-drug-pri...
conanbatt 9y ago
I concur. The argument that healthcare in the US is broken because its a market almost triggers me. It has profound regulations that affect its market behavior.

jeffbax 9y ago

"So I don't think one can generically fault 'regulation' for a poorly performing health market in the US." Well articulated counterpoint: http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-drugs-vs-chairs/ http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-dr... Also, we live in a country where most places they don't even allow opening a new hospital without the permission of surrounding hospitals, and all of the recent healthcare regulations have encouraged a seriously problematic consolidation just like the big banks. As an industry, healthcare is so over-regulated it isn't even funny. The good news is that drug prices are still generally falling outside of big examples like Daraprim and Epipens and there are fairly effective solutions to the spikes we could have if the FDA would get onto more reciprocity with other nations: http://marginalrevolution.com/marginalrevolution/2016/02/the-good-news-on-generic-drugs.html http://marginalrevolution.com/marginalrevolution/2016/02/the... Also relevant, the US Cost disease: http://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ http://slatestarcodex.com/2017/02/09/considerations-on-cost-...

dv_dt 9y ago
I don't find that first link well argued at all: because corporations have achieved some degree of regulatory capture from the FDA, we need to eliminate regulations and let those same corporations run completely rampant and somehow that will result in better performance? That makes no sense to me. Also, the comparison there in the drug vs the chair market there is poor too. The key difference between manufacturing drugs and chairs (as in the example), is that anyone could enter the chair making with one guys who has had high school woodshop. Manufacturing a drug has a much much higher bar...
- alexanderstears 9y ago
  I don't find that first link well argued at all: because corporations have achieved some degree of regulatory capture from the FDA, we need to eliminate regulations and let those same corporations run completely rampant and somehow that will result in better performance? That makes no sense to me. If that's what you got from SSC's cost disease article, you might have some bias in your framework.