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You son has broken his arm. The doctors in your town will only take cash. One of the doctors charges $50 to set the broken arm. The other doctor charges $500.

You son has broken his arm. The doctors in your town will only take cash. One of the doctors charges $50 to set the broken arm. The other doctor charges $500. Which one are you going to take your child to? Most likely, the $500 one. Because going to the bargain basement doctor is not something you do when dealing with medical issues if there is absolutely any way to afford it. It creates what I call 'reverse capitalism.' You can only draw more customers by charging the highest price in the area. If your customers stop even being the ones footing the bill, it accelerates to a patently insane level. That makes footing peoples insurance bills a ludicrous and idiotic business to get into. Unless, of course, you've got protection from the government or special considerations where antitrust laws do not apply to you so you can engage in price-fixing, intimidation, and other tactics. Made to compete fairly, medical insurance companies would be out of business overnight because it's a downright stupid business to begin with.

conanbatt 9y ago
I don't think thats true. There is a price bias, but thats not the only quality signal for medical care. There's reviews, facility and installations, reputation, etc. People are price sensitive regarding their own life and their children's. You can find how much they value things with "revealed preferences", an economists principle. Its a bigger problem that as a consumer you don't have to or face the decision of choosing by price, eliminating marketing mechanics from healthcare.
- SpikeDad 9y ago
  "Little Billy - would you mind biting on a bullet for an hour while I check Yelp and online reviews to find the cheapest doctor to set your broken arm." ...said no one ever.
  - conanbatt 9y ago
    "No time to look for the closest hospital, we need to drive straight to the one I know thats 1h away, lets go". Also, most care is not urgent care.
  - Pokepokalypse 9y ago
    Pre Obamacare, the son of a friend of mine broke his collarbone skateboarding. His parents decided he should just tough it out, because they couldn't afford to take him to the ER. We tried to intervene by offering them money, but they refused to take it. We got their church to intervene, after 3 days. Very fortunately, xrays showed it was a minor fracture, no surgery needed. But that poor kid.
lostlogin 9y ago
> If your customers stop even being the ones footing the bill, it accelerates to a patently insane level. The customers are the tax payers in many countries, and the bills there are much lower than in the US. Yes, those systems have problems, but this one is on a much smaller scale.
crpatino 9y ago
> Which one are you going to take your child to? Most likely, the $500 one. To some degree, yes. Notice also that if your are has only two doctors, there will be plenty of people for whom a $500 bill would be cause of financial disruption. And the cheap doctor is going to notice that people see such price as a synonim of bad quality, so both doctors will likely move towards the center and end up charging $150 vs $350 instead. In more populated areas, the same effect creates a sort of consensus about what a "fair price" should be, corrected by prestige, seniority etc. Individual doctors deviate from that "fair price" based on their ability/willingness to provide more "value added" paraservices. Eventually, they end up serving different market segments. p.s. This is informed speculation on my part, from the child of a pediatrician in Mexico, where public healtcare, US-style private insurance, and cash based practice coexist on a day to day basis.

conanbatt 9y ago

I don't think thats true. There is a price bias, but thats not the only quality signal for medical care. There's reviews, facility and installations, reputation, etc. People are price sensitive regarding their own life and their children's. You can find how much they value things with "revealed preferences", an economists principle. Its a bigger problem that as a consumer you don't have to or face the decision of choosing by price, eliminating marketing mechanics from healthcare.

SpikeDad 9y ago
"Little Billy - would you mind biting on a bullet for an hour while I check Yelp and online reviews to find the cheapest doctor to set your broken arm." ...said no one ever.
- conanbatt 9y ago
  "No time to look for the closest hospital, we need to drive straight to the one I know thats 1h away, lets go". Also, most care is not urgent care.
- Pokepokalypse 9y ago
  Pre Obamacare, the son of a friend of mine broke his collarbone skateboarding. His parents decided he should just tough it out, because they couldn't afford to take him to the ER. We tried to intervene by offering them money, but they refused to take it. We got their church to intervene, after 3 days. Very fortunately, xrays showed it was a minor fracture, no surgery needed. But that poor kid.

lostlogin 9y ago

> If your customers stop even being the ones footing the bill, it accelerates to a patently insane level. The customers are the tax payers in many countries, and the bills there are much lower than in the US. Yes, those systems have problems, but this one is on a much smaller scale.

crpatino 9y ago

> Which one are you going to take your child to? Most likely, the $500 one. To some degree, yes. Notice also that if your are has only two doctors, there will be plenty of people for whom a $500 bill would be cause of financial disruption. And the cheap doctor is going to notice that people see such price as a synonim of bad quality, so both doctors will likely move towards the center and end up charging $150 vs $350 instead. In more populated areas, the same effect creates a sort of consensus about what a "fair price" should be, corrected by prestige, seniority etc. Individual doctors deviate from that "fair price" based on their ability/willingness to provide more "value added" paraservices. Eventually, they end up serving different market segments. p.s. This is informed speculation on my part, from the child of a pediatrician in Mexico, where public healtcare, US-style private insurance, and cash based practice coexist on a day to day basis.