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> "The US spends more on healthcare because the prices are higher!" > Um, okay. Duh. A better question to ask would be: Why are prices not falling? It's an ex

> "The US spends more on healthcare because the prices are higher!" > Um, okay. Duh. A better question to ask would be: Why are prices not falling? It's an excellent observation, and it begs your excellent question. Unfortunately, we can't get to an excellent answer. The US is ideologically incapable of acknowledging that "market failure" exists.

monkeyprojects 9y ago
Health care is the absolute prime example of a Veblen good as people are willing to pay for perceived quality. After all would you prefer the heart surgeon who charges $5000 or the one who can charge $25000
- epmaybe 9y ago
  Seems like a bad example. All board certified cardiothoracic surgeons have to report their mortality rates from procedures (there are problems with that, but one could easily look this up). Not to mention most work for a hospital and therefore have a fixed salary. On top of this, most healthcare consumers in America are directed by their insurance provider as to who they can even go to for these sort of procedures.
  - monkeyprojects 9y ago
    I'm in the UK not the US. The example is actually a friend who has watched his private practice (1 day a week) expand as he tried to reduce demand by increasing his rates.
    - epmaybe 9y ago
      Oh, I see. I figured you were talking about the US due to the article. Your friend works one day a week?? That's awesome.
      - monkeyprojects 9y ago
        4 days NHS (the day job), 1 day private practice. That's typical for Consultants in the UK...
        epmaybe 9y ago
        After I posted the comment I figured that was the case.
  - DrScump 9y ago
    Mortality rate is a poor metric. First, it "penalizes" doctors/hospitals that take on the most severe cases. There is no objective metric for "we saved X people who would have died at an average facility." Do you want a metric that would encourage a doctor/hospital to deny an aggressive procedure for fear of taking a hit in its mortality metrics? Secondly, it ignores ongoing quality of life. A cardiac surgery can have a later death that does not count in its mortality rate, even if it was due to a complication caused by, or significantly contributed to, by inferior medicine.
    - epmaybe 9y ago
      Oh, I'm in agreement, and should have made my point about this more clear. The reason I brought it up at all is that there are other external factors that influence a patients decision, or lack thereof, in choosing a CT surgeon for their non urgent (or emergency I guess, but there's even less choice there) procedure.
  - FireBeyond 9y ago
    > Not to mention most work for a hospital and therefore have a fixed salary. Unless you have knowledge to the contrary, I'd dispute this. Most physicians, and specialists in hospitals in at least the Pacific North West are NOT hospital employees. This is how you can get into ridiculous situations where your hospital is "in network", but your provider is not (because of course, you get a choice on the physician you are assigned at a hospital, especially in ED...).
- roenxi 9y ago
  You'd probably find most people would go with the $5,000 guy. We're not talking Drunk Eddie suddenly being allowed to practice as a surgeon, the $5k guy will still have standards and steady hands. The risk differential is probably not worth a cheap car.
  - jacobush 9y ago
    Especially if you can only borrow 5k
  - vidarh 9y ago
    A concrete example: Private health insurance in the UK is cheap, because it excludes a lot of the basics - you use the NHS for that, and only call your private insurer if you e.g. need a specialist or if you can't get an appointment with your GP. Yet only 10% opt for it, because the NHS is generally good enough. And of those 10% a lot only have it because it's offered as a mostly free perk by their employer. But I do think that there is a segment - part of those 10% who opt for private insurance - that will always pay extra to get "the best" whether or not there is a major difference.
- misja111 9y ago
  This. I moved to Switzerland a while ago and noticed that they are suffering from the same issue: Switzerland is one of the richest countries in Europe and just like the US, they are also faced with health care costs that are completely getting out of hand. Another example is day care for children, which is also disproportionally expensive here. Both are cases when people just don't want to cut on money, they want to have the best option for their health or their children, the costs are only a secondary consideration. Which means that the health care market has not much of a competition on prices and as a result everything that is health related is expensive. Even basic things like nutrition supplements are around 5 times more expensive than in other European countries.
- dxhdr 9y ago
  > Health care is the absolute prime example of a Veblen good "Veblen Good: A good for which demand increases as the price increases, because of its exclusive nature and appeal as a status symbol." I'm not following. Heart surgery demand is based on having a heart problem. Taking a step back, health care encompasses more than just picking a heart surgeon. Most practitioners won't tell you the dollar price of a service beforehand even if you ask. Standard behavior is to go see whoever is covered by your insurance.
  - fireflash38 9y ago
    > Standard behavior is to go see whoever is covered by your insurance. Standard behavior is to see the best provider covered by your insurance. It's a small textual difference, but a massive actual difference (and what makes it a Veblen good).
    - deleted 9y ago
      [deleted]
- trco 9y ago
  Well, unfortunately both surgeons charge the same, which is the maximum what your insurance pays. Capitalism doesn't work here.
b6 9y ago
Are we having a market failure, or a failure to have a market?
- rectang 9y ago
  I'm content with either framing. Both can be fixed through deliberate construction of a market using regulation. But in the US, we don't acknowledge that we are already regulating, and we are wholly ideologically committed to the notion that "regulation" is bad.
snomad 9y ago
Things like Lasik, Invisialign, and plastic surgery prove the market can work in healthcare. They are relatively affordable and good service is easy to find. I will admit that these may work because they fall into the area of human vanity, and our current image obsessed society may be driving that behavior. But then, doesn't that hint the total healthcare market could work with similar market adhering dynamics as in Lasik (its easy to get a quote and find a competent doctor) and a long run advertising campaign, a la brushing teeth back in the day, to get people to have regular checkups rather than ER visits.
- maxerickson 9y ago
  Elective procedures (that may have cheaper substitutes) are not all that likely to inform how other services will be priced. To capture a wide market, Lasik can only be so much more expensive than glasses or contacts. Also, for medical care it turns out that healthy people don't benefit much from regular checkups. That way of stating it is a little tautological, but people lacking conditions that need management get little benefit from scheduled checkups.
  - rectang 9y ago
    I would argue that it is not difficult to construct a functioning market for elective procedures. For elective procedures not covered by insurance, the consumer has time and motivation to educate themselves about alternatives. For elective procedures covered by "insurance", the insurer has the option not to provide such coverage. Competitive pressures can work as they do in the rest of the economy. The harder question is how to construct a market for non-elective procedures, such as emergency care. Consumer choice doesn't work under those circumstances. We have a market failure. How do we solve it?
- rectang 9y ago
  Possibly. I thought the top answer in the Uber-as-ambulance discussion offered a lot of insight as to how the current system is a market failure: https://news.ycombinator.com/item?id=16007246 https://news.ycombinator.com/item?id=16007246 >> I don't have the time or expertise to do the months of legalese and calculus it would take me to understand my insurance policy, so I have no idea how much an ambulance ride would have cost me. $0? $400? $15000? None of those numbers would surprise me. As best I can tell, insurance companies throw a dart to decide whether you're covered or not, and then the healthcare provider makes up some insane number if you aren't. >> The Uber got me to the hospital faster than an ambulance would have, for less than $10, and I knew it would cost less than $10. It would be interesting to have a conversation about how you deliberately construct a sane ambulance market (liability, dispatch, predictable pricing, proper competition) to handle a wider range of emergencies. But in the US, I don't expect such a reasonable conversation. I expect to be bludgeoned to death with the word "deregulation", as if the only control we have is a a single dial to turn "regulation" up or down. You never get to zero "regulation". "Deregulation" is always selective and another form of market interference -- and like any market constraint, selective deregulation will always favor certain players. So, can we have a conversation about constructing a market? It's the US. I'm not getting my hopes up.

monkeyprojects 9y ago

Health care is the absolute prime example of a Veblen good as people are willing to pay for perceived quality. After all would you prefer the heart surgeon who charges $5000 or the one who can charge $25000

epmaybe 9y ago
Seems like a bad example. All board certified cardiothoracic surgeons have to report their mortality rates from procedures (there are problems with that, but one could easily look this up). Not to mention most work for a hospital and therefore have a fixed salary. On top of this, most healthcare consumers in America are directed by their insurance provider as to who they can even go to for these sort of procedures.
- monkeyprojects 9y ago
  I'm in the UK not the US. The example is actually a friend who has watched his private practice (1 day a week) expand as he tried to reduce demand by increasing his rates.
  - epmaybe 9y ago
    Oh, I see. I figured you were talking about the US due to the article. Your friend works one day a week?? That's awesome.
    - monkeyprojects 9y ago
      4 days NHS (the day job), 1 day private practice. That's typical for Consultants in the UK...
      - epmaybe 9y ago
        After I posted the comment I figured that was the case.
- DrScump 9y ago
  Mortality rate is a poor metric. First, it "penalizes" doctors/hospitals that take on the most severe cases. There is no objective metric for "we saved X people who would have died at an average facility." Do you want a metric that would encourage a doctor/hospital to deny an aggressive procedure for fear of taking a hit in its mortality metrics? Secondly, it ignores ongoing quality of life. A cardiac surgery can have a later death that does not count in its mortality rate, even if it was due to a complication caused by, or significantly contributed to, by inferior medicine.
  - epmaybe 9y ago
    Oh, I'm in agreement, and should have made my point about this more clear. The reason I brought it up at all is that there are other external factors that influence a patients decision, or lack thereof, in choosing a CT surgeon for their non urgent (or emergency I guess, but there's even less choice there) procedure.
- FireBeyond 9y ago
  > Not to mention most work for a hospital and therefore have a fixed salary. Unless you have knowledge to the contrary, I'd dispute this. Most physicians, and specialists in hospitals in at least the Pacific North West are NOT hospital employees. This is how you can get into ridiculous situations where your hospital is "in network", but your provider is not (because of course, you get a choice on the physician you are assigned at a hospital, especially in ED...).
roenxi 9y ago
You'd probably find most people would go with the $5,000 guy. We're not talking Drunk Eddie suddenly being allowed to practice as a surgeon, the $5k guy will still have standards and steady hands. The risk differential is probably not worth a cheap car.
- jacobush 9y ago
  Especially if you can only borrow 5k
- vidarh 9y ago
  A concrete example: Private health insurance in the UK is cheap, because it excludes a lot of the basics - you use the NHS for that, and only call your private insurer if you e.g. need a specialist or if you can't get an appointment with your GP. Yet only 10% opt for it, because the NHS is generally good enough. And of those 10% a lot only have it because it's offered as a mostly free perk by their employer. But I do think that there is a segment - part of those 10% who opt for private insurance - that will always pay extra to get "the best" whether or not there is a major difference.
misja111 9y ago
This. I moved to Switzerland a while ago and noticed that they are suffering from the same issue: Switzerland is one of the richest countries in Europe and just like the US, they are also faced with health care costs that are completely getting out of hand. Another example is day care for children, which is also disproportionally expensive here. Both are cases when people just don't want to cut on money, they want to have the best option for their health or their children, the costs are only a secondary consideration. Which means that the health care market has not much of a competition on prices and as a result everything that is health related is expensive. Even basic things like nutrition supplements are around 5 times more expensive than in other European countries.
dxhdr 9y ago
> Health care is the absolute prime example of a Veblen good "Veblen Good: A good for which demand increases as the price increases, because of its exclusive nature and appeal as a status symbol." I'm not following. Heart surgery demand is based on having a heart problem. Taking a step back, health care encompasses more than just picking a heart surgeon. Most practitioners won't tell you the dollar price of a service beforehand even if you ask. Standard behavior is to go see whoever is covered by your insurance.
- fireflash38 9y ago
  > Standard behavior is to go see whoever is covered by your insurance. Standard behavior is to see the best provider covered by your insurance. It's a small textual difference, but a massive actual difference (and what makes it a Veblen good).
  - deleted 9y ago
    [deleted]
trco 9y ago
Well, unfortunately both surgeons charge the same, which is the maximum what your insurance pays. Capitalism doesn't work here.

b6 9y ago

Are we having a market failure, or a failure to have a market?

rectang 9y ago
I'm content with either framing. Both can be fixed through deliberate construction of a market using regulation. But in the US, we don't acknowledge that we are already regulating, and we are wholly ideologically committed to the notion that "regulation" is bad.

snomad 9y ago

Things like Lasik, Invisialign, and plastic surgery prove the market can work in healthcare. They are relatively affordable and good service is easy to find. I will admit that these may work because they fall into the area of human vanity, and our current image obsessed society may be driving that behavior. But then, doesn't that hint the total healthcare market could work with similar market adhering dynamics as in Lasik (its easy to get a quote and find a competent doctor) and a long run advertising campaign, a la brushing teeth back in the day, to get people to have regular checkups rather than ER visits.

maxerickson 9y ago
Elective procedures (that may have cheaper substitutes) are not all that likely to inform how other services will be priced. To capture a wide market, Lasik can only be so much more expensive than glasses or contacts. Also, for medical care it turns out that healthy people don't benefit much from regular checkups. That way of stating it is a little tautological, but people lacking conditions that need management get little benefit from scheduled checkups.
- rectang 9y ago
  I would argue that it is not difficult to construct a functioning market for elective procedures. For elective procedures not covered by insurance, the consumer has time and motivation to educate themselves about alternatives. For elective procedures covered by "insurance", the insurer has the option not to provide such coverage. Competitive pressures can work as they do in the rest of the economy. The harder question is how to construct a market for non-elective procedures, such as emergency care. Consumer choice doesn't work under those circumstances. We have a market failure. How do we solve it?
rectang 9y ago
Possibly. I thought the top answer in the Uber-as-ambulance discussion offered a lot of insight as to how the current system is a market failure: https://news.ycombinator.com/item?id=16007246 https://news.ycombinator.com/item?id=16007246 >> I don't have the time or expertise to do the months of legalese and calculus it would take me to understand my insurance policy, so I have no idea how much an ambulance ride would have cost me. $0? $400? $15000? None of those numbers would surprise me. As best I can tell, insurance companies throw a dart to decide whether you're covered or not, and then the healthcare provider makes up some insane number if you aren't. >> The Uber got me to the hospital faster than an ambulance would have, for less than $10, and I knew it would cost less than $10. It would be interesting to have a conversation about how you deliberately construct a sane ambulance market (liability, dispatch, predictable pricing, proper competition) to handle a wider range of emergencies. But in the US, I don't expect such a reasonable conversation. I expect to be bludgeoned to death with the word "deregulation", as if the only control we have is a a single dial to turn "regulation" up or down. You never get to zero "regulation". "Deregulation" is always selective and another form of market interference -- and like any market constraint, selective deregulation will always favor certain players. So, can we have a conversation about constructing a market? It's the US. I'm not getting my hopes up.