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The free market does not work in all situations. There's a reason why our healthcare is an absolute disaster compared to any other first world country, why our

The free market does not work in all situations. There's a reason why our healthcare is an absolute disaster compared to any other first world country, why our college is far more expensive, why our drugs cost more etc And it ain't because of cost control. Every time we loosen the reins a bit and let the 'free market' take the wheels, we see things get a lot worse for Americans as a whole. Especially when you have giant companies controlling the market entirely, like with ISPs.

bhupy 8y ago
Healthcare in America is one of the least free markets in the country. https://www.vox.com/policy-and-politics/2018/7/31/17629526/mri-cost-certificate-of-need-north-carolina-lawsuit https://www.vox.com/policy-and-politics/2018/7/31/17629526/m...
- fzeroracer 8y ago
  I don't see a statistic or actual citation there other than an issue with potentially out of date laws. How are you quantifying American Healthcare as being one of the least free markets? And how does it compare to other countries? I don't see anyone ever actually quantify how 'free' a market is; people only ever argue that if a market is not working therefore it's not free enough, which means we must make it free. At what point are we going to stop and realize sometimes it just doesn't work? Especially for issues that result in the death of Americans?
  - bhupy 8y ago
    Sure - in America, healthcare is far from a free market because: 1) We don’t pay our own healthcare bills, we pay for our healthcare through insurance. As a result, there isn’t a pricing system in place, much like there is for other critical goods and services with price-inelastic demand like food and housing. This is caused by regulations that require employers to provide health insurance for their employees, and most recently the mandate that requires individuals to purchase insurance. We’ve essentially forced a world in which insurance is the only way one can pay for healthcare. 2) Our healthcare supply is artificially limited, which forces higher up prices. The MRI “certificate of need” is one such example, there are countless others. Medical licensure, in general, drives up the price to see just a primary care physician. In the US, just becoming a basic physician that prescribes antibiotics takes at least 8 years of expensive schooling. As a result, doctors in America earn more than their counterparts in every other country (adjusted for PPP)[1]. There are a couple solutions that the market can bring about. One of them is to get rid of the employer mandate. The fact that I have to worry about losing my insurance if I get fired or leave my job is totally bonkers. I don’t have to worry about that at all with my car insurance, it’s a cheap monthly premium that adds on to my cost of living, just like my monthly food expenses or my shelter expenses (read: rent). The reason why non-employer provided healthcare is more expensive is that the pool of people buying that type of insurance is much smaller than the pool of people that are happily receiving their employer-provided health insurance. If every single one of these employees participated in the same insurance market as those that are either unemployed or self-employed, premiums can come down. The other solution is cut out insurance for most healthcare. We don’t use car insurance to pay for oil changes and servicing, we only use it to pay for catastrophic accidents. Absent the regulations we have today, the market might look the same for healthcare: you pay out of pocket for basic healthcare like going to the doctor when you’re sick or other preventative care (sort of like an oil change for your body). Insurance might kick in when you get cancer or heart disease. I come from India, where it costs about Rs. 500 out of pocket to see a good doctor that has an MBBS. This is the price of a movie ticket, in India. The concept of using insurance to pay for such care is unheard of. In America, paying for a general checkup, without insurance, can cost $300 out of pocket - absolutely absurd. Singapore is a great example of a country that has a largely market driven healthcare system. Unless you’re poor, you pay out of pocket for all healthcare, in a private market. The government steps in and pays for healthcare for poor people, and for catastrophic care (think: universal high deductible healthcare plans). [1] https://economix.blogs.nytimes.com/2009/07/15/how-much-do-doctors-in-other-countries-make/ https://economix.blogs.nytimes.com/2009/07/15/how-much-do-do...
    - StreamBright 8y ago
      Exactly this. In Germany the private insurance is actually cheaper than the public one, you can purchase private on the top of public and so on. As a result of a much freer market the prices are much lower.
      - denzil_correa 8y ago
        > In Germany the private insurance is actually cheaper than the public one Well, the public insurance is a percentage of your income. The private one is based on many opaque factors. Private cheaper than public would be a more than a stretch without appropriate qualifiers.
        StreamBright 8y ago
        Sure, in my situation this is the case. I am not sure about others or how much percentage of the population has the same situation.
      - mamon 8y ago
        And what exactly does this private insurance cover? In Poland private healthcare is fine for healthy young people that occasionally catch a cold, or have their ankle sprinkled, because it saves a lot of wait time. Treating any serious illness (think heart attack, cancer, diabeties, etc.) is either insanely expensive or not covered at all by private insurers, so public health care is your only chance here.
    - fzeroracer 8y ago
      I asked for an actual quantifier of how much of a 'free market' something is. That's the whole crux of my debate: In attempt to make something more of a 'free market' we cut regulations, which ends up hurting people and which companies take advantage of. Then prices go up, we assume the free market is not free enough, so we cut more regulations. Repeat until people are dying. A great example of such an issue is one where it was literally impossible for my parents to get any sort of healthcare because it was deemed that they had a pre-existing condition. No insurance provider would bother with them. And for a lot of Americans paying anything for out of pocket care is impossible. My parents couldn't afford a movie ticket due to the poverty they're in, let alone the price of generic drugs for the myriad of medical issues they're going through. You keep bringing up the example of Singapore which works...but they also have a public option. We're not even to that point yet and making some of these radical changes without care to the poorest of Americans will lead to disaster.
  - zoomablemind 8y ago
    In a simple example of a free market a consumer could select a provider based on prices they advertize. With the exisitng and prevalaent fee-for-service healthcare this 'fee' is not the price. It's different even functionally, where the 'price' is what's expected to be advertized upfront, the 'fee' is what gets billed afterwards. Has anyone tried to ask a doctor's office or a hospital if they could refer you to a price-list for the range of services they provide? If you're lucky, you'd be referred to Medicare regulated pricing, yet it's not even a baseline. I'm not even going into the 'flavors' of the fees formuated to different insurers, ??patients. While there're rationalizations for such pricing approach, by itself it limits consumer's ability to be an active agent in free market. In healthcare the consumer is treated more like a resource.
noetic_techy 8y ago
Except for Singapore: https://www.nytimes.com/2017/10/02/upshot/what-makes-singapores-health-care-so-cheap.html https://www.nytimes.com/2017/10/02/upshot/what-makes-singapo...
- fzeroracer 8y ago
  If you read the article, Singapore is far from a 'free market' and easily has more government oversight than here in America. They actually have public and private options competing for benefits, regulating salaries and hospitals and more. If you were to argue for a public option to health insurance or more regulations against hospitals, you'd be called a crazy socialist here.
- denzil_correa 8y ago
  Doesn't seem like it. > Initially, Singapore let hospitals compete more, believing that the free market would bring down costs. But when hospitals competed, they did so by buying new technology, offering expensive services, paying more for doctors, decreasing services to lower-class wards, and focusing more on A-class wards. This led to increased spending.
  - sct202 8y ago
    Sounds just like the US healthcare and education systems.
  - tathougies 8y ago
    hmm... increased spending does not mean higher costs. It could mean higher costs, or it could mean flat or declining costs and a lower profit margin, which is a good thing.
leekyle333 8y ago
It is interesting to me that the three areas main areas in America that have become exponentially more expensive are healthcare, construction, and education. It's curious that they have the most government control.
- clay_the_ripper 8y ago
  Could you explain to me how the government control of those things had lead to price increases? Specifically? I hear this a lot but have never heard an explaination and I am genuinely curious of the reasoning
  - javagram 8y ago
    College administration costs have been expanding rapidly over the previous decades. Part of that could be attributed to federal mandates, e.g. everything to do with investigating/achieving Title IX compliance is the result of government regulation and probably wouldn’t exist in an unrestricted free market. Accreditation is also related to government and can require colleges spend money on things they might not have 50 years ago. I suspect the biggest cost driver is federally-backed student loans though. When you’re paying with what seems like free money it’s a lot harder to control costs. If students run out of money and drop out of your school, that’s a bigger driver to keep costs down.
  - gwright 8y ago
    One data point on public works construction, the Davis-Bacon act and "prevailing wages". https://www.forbes.com/sites/timworstall/2016/08/31/union-wages-increase-construction-costs-by-20-abolish-davis-bacon/#173fa964406e https://www.forbes.com/sites/timworstall/2016/08/31/union-wa...
  - codeddesign 8y ago
    It’s pretty simple. Both regulation and guarantees reduce competition in certain elements. Example: colleges no longer have to compete on pricing because students no longer have to save to go to college. The loans are easy to get and colleges are guaranteed on payment. Due to this, pricing competition because much less of a concern for colleges.
kansface 8y ago
> The free market does not work in all situations. Sure, but you did not enumerate a single free market. I'd wager the US healthcare industry is far and away the most regulated market in the entire world. We know that regulation protects the big players at the expense of their would be competition and drives up profits. Colleges are hardly any better, and ISPs are nearly all monopolies granted by municipalities in exchange for kick backs of various sorts. The government has interfered with every industry in this list via direct/indirect regulation, grants, guaranteed loans, or tax incentives. Lets go ahead and throw in housing in our list, too.
- fzeroracer 8y ago
  Can you prove that the US healthcare industry is more regulated than countries like say, Germany or Canada? Because it would be incredibly hard to believe that somehow America is more regulated than countries that have more direct control over their healthcare.
  - kryogen1c 8y ago
    I think that's exactly the point: direct control and heavy regulation are two different things. This in-between fairyland with artificial barriers to entry on the frontend but no control on the back end is what's creating these captive markets where old companies to do almost anything because new companies can't join the market.
    - chillacy 8y ago
      To add to that point, because the government guarantees things that it has no control over, it means the businesses in these industries have the best risk/reward ratio possible: no risk for unlimited upside, because the risk is taken care of by taxpayers.
- mcguire 8y ago
  An unregulated healthcare market, complete with all the benefits of the free market, was the rule in the US until the Pure Good and Drug Act of 1906. It's history is... entertaining.
exabrial 8y ago
Our healthcare system is not a free market. Insurance companies are forbidden to discriminate premiums on the #1 killer in America: obesity.
Spooky23 8y ago
Healthcare is not a free market. It’s a collection of cartels with price controls. Things like healthcare networks were illegal before the Supreme Court redefined monopoly, and are now swallowing up healthcare delivery. CVS essentially controls drug distribution. The AMA is a trade guild that restricts the supply of doctors. A radiologist makes $1M a year because there are only a limited number of new ones minted each year. ISPs are dangerous but nothing close to as awful as healthcare.
- brownbat 8y ago
  > The AMA is a trade guild that restricts the supply of doctors. Technically the supply of doctors is throttled by residency programs, the numbers of which are determined by an incredibly weird dance between Congress and hospitals. Your point stands, but just noting that simple monopolistic graft would be far more rational than how this actually works.
  - rayiner 8y ago
    It’s not that “incredibly weird.” Medicare doesn’t reimburse for residents unless a teaching physician is also present. Because that dramatically limits hospitals’ incentives to train physicians, Medicare pays hospitals a certain amount to support training residents. To limit how much is paid under that program, the number of residents Medicare will pay for is capped. It’s not irrational, but an example of how a series of government interventions, each seemingly rational on its own and aimed at reducing costs, can end up creating a systematic problem.
    - brownbat 8y ago
      You're skipping past the congressional funding negotiations that set up those rules, and the motivations of hospitals to create the conditions supporting either funded or unfunded slots. Sure, we can slice off portions of this process and explain the decisions of individuals, but there are so many players with motivations independent of the outcome it's not a clean line.
tathougies 8y ago
I can understand the argument you're trying to make, but it's incredibly sloppy to call the healthcare system we have in America 'the free market'.

bhupy 8y ago

Healthcare in America is one of the least free markets in the country. https://www.vox.com/policy-and-politics/2018/7/31/17629526/mri-cost-certificate-of-need-north-carolina-lawsuit https://www.vox.com/policy-and-politics/2018/7/31/17629526/m...

fzeroracer 8y ago
I don't see a statistic or actual citation there other than an issue with potentially out of date laws. How are you quantifying American Healthcare as being one of the least free markets? And how does it compare to other countries? I don't see anyone ever actually quantify how 'free' a market is; people only ever argue that if a market is not working therefore it's not free enough, which means we must make it free. At what point are we going to stop and realize sometimes it just doesn't work? Especially for issues that result in the death of Americans?
- bhupy 8y ago
  Sure - in America, healthcare is far from a free market because: 1) We don’t pay our own healthcare bills, we pay for our healthcare through insurance. As a result, there isn’t a pricing system in place, much like there is for other critical goods and services with price-inelastic demand like food and housing. This is caused by regulations that require employers to provide health insurance for their employees, and most recently the mandate that requires individuals to purchase insurance. We’ve essentially forced a world in which insurance is the only way one can pay for healthcare. 2) Our healthcare supply is artificially limited, which forces higher up prices. The MRI “certificate of need” is one such example, there are countless others. Medical licensure, in general, drives up the price to see just a primary care physician. In the US, just becoming a basic physician that prescribes antibiotics takes at least 8 years of expensive schooling. As a result, doctors in America earn more than their counterparts in every other country (adjusted for PPP)[1]. There are a couple solutions that the market can bring about. One of them is to get rid of the employer mandate. The fact that I have to worry about losing my insurance if I get fired or leave my job is totally bonkers. I don’t have to worry about that at all with my car insurance, it’s a cheap monthly premium that adds on to my cost of living, just like my monthly food expenses or my shelter expenses (read: rent). The reason why non-employer provided healthcare is more expensive is that the pool of people buying that type of insurance is much smaller than the pool of people that are happily receiving their employer-provided health insurance. If every single one of these employees participated in the same insurance market as those that are either unemployed or self-employed, premiums can come down. The other solution is cut out insurance for most healthcare. We don’t use car insurance to pay for oil changes and servicing, we only use it to pay for catastrophic accidents. Absent the regulations we have today, the market might look the same for healthcare: you pay out of pocket for basic healthcare like going to the doctor when you’re sick or other preventative care (sort of like an oil change for your body). Insurance might kick in when you get cancer or heart disease. I come from India, where it costs about Rs. 500 out of pocket to see a good doctor that has an MBBS. This is the price of a movie ticket, in India. The concept of using insurance to pay for such care is unheard of. In America, paying for a general checkup, without insurance, can cost $300 out of pocket - absolutely absurd. Singapore is a great example of a country that has a largely market driven healthcare system. Unless you’re poor, you pay out of pocket for all healthcare, in a private market. The government steps in and pays for healthcare for poor people, and for catastrophic care (think: universal high deductible healthcare plans). [1] https://economix.blogs.nytimes.com/2009/07/15/how-much-do-doctors-in-other-countries-make/ https://economix.blogs.nytimes.com/2009/07/15/how-much-do-do...
  - StreamBright 8y ago
    Exactly this. In Germany the private insurance is actually cheaper than the public one, you can purchase private on the top of public and so on. As a result of a much freer market the prices are much lower.
    - denzil_correa 8y ago
      > In Germany the private insurance is actually cheaper than the public one Well, the public insurance is a percentage of your income. The private one is based on many opaque factors. Private cheaper than public would be a more than a stretch without appropriate qualifiers.
      - StreamBright 8y ago
        Sure, in my situation this is the case. I am not sure about others or how much percentage of the population has the same situation.
    - mamon 8y ago
      And what exactly does this private insurance cover? In Poland private healthcare is fine for healthy young people that occasionally catch a cold, or have their ankle sprinkled, because it saves a lot of wait time. Treating any serious illness (think heart attack, cancer, diabeties, etc.) is either insanely expensive or not covered at all by private insurers, so public health care is your only chance here.
  - fzeroracer 8y ago
    I asked for an actual quantifier of how much of a 'free market' something is. That's the whole crux of my debate: In attempt to make something more of a 'free market' we cut regulations, which ends up hurting people and which companies take advantage of. Then prices go up, we assume the free market is not free enough, so we cut more regulations. Repeat until people are dying. A great example of such an issue is one where it was literally impossible for my parents to get any sort of healthcare because it was deemed that they had a pre-existing condition. No insurance provider would bother with them. And for a lot of Americans paying anything for out of pocket care is impossible. My parents couldn't afford a movie ticket due to the poverty they're in, let alone the price of generic drugs for the myriad of medical issues they're going through. You keep bringing up the example of Singapore which works...but they also have a public option. We're not even to that point yet and making some of these radical changes without care to the poorest of Americans will lead to disaster.
- zoomablemind 8y ago
  In a simple example of a free market a consumer could select a provider based on prices they advertize. With the exisitng and prevalaent fee-for-service healthcare this 'fee' is not the price. It's different even functionally, where the 'price' is what's expected to be advertized upfront, the 'fee' is what gets billed afterwards. Has anyone tried to ask a doctor's office or a hospital if they could refer you to a price-list for the range of services they provide? If you're lucky, you'd be referred to Medicare regulated pricing, yet it's not even a baseline. I'm not even going into the 'flavors' of the fees formuated to different insurers, ??patients. While there're rationalizations for such pricing approach, by itself it limits consumer's ability to be an active agent in free market. In healthcare the consumer is treated more like a resource.

noetic_techy 8y ago

Except for Singapore: https://www.nytimes.com/2017/10/02/upshot/what-makes-singapores-health-care-so-cheap.html https://www.nytimes.com/2017/10/02/upshot/what-makes-singapo...

fzeroracer 8y ago
If you read the article, Singapore is far from a 'free market' and easily has more government oversight than here in America. They actually have public and private options competing for benefits, regulating salaries and hospitals and more. If you were to argue for a public option to health insurance or more regulations against hospitals, you'd be called a crazy socialist here.
denzil_correa 8y ago
Doesn't seem like it. > Initially, Singapore let hospitals compete more, believing that the free market would bring down costs. But when hospitals competed, they did so by buying new technology, offering expensive services, paying more for doctors, decreasing services to lower-class wards, and focusing more on A-class wards. This led to increased spending.
- sct202 8y ago
  Sounds just like the US healthcare and education systems.
- tathougies 8y ago
  hmm... increased spending does not mean higher costs. It could mean higher costs, or it could mean flat or declining costs and a lower profit margin, which is a good thing.

leekyle333 8y ago

It is interesting to me that the three areas main areas in America that have become exponentially more expensive are healthcare, construction, and education. It's curious that they have the most government control.

clay_the_ripper 8y ago
Could you explain to me how the government control of those things had lead to price increases? Specifically? I hear this a lot but have never heard an explaination and I am genuinely curious of the reasoning
- javagram 8y ago
  College administration costs have been expanding rapidly over the previous decades. Part of that could be attributed to federal mandates, e.g. everything to do with investigating/achieving Title IX compliance is the result of government regulation and probably wouldn’t exist in an unrestricted free market. Accreditation is also related to government and can require colleges spend money on things they might not have 50 years ago. I suspect the biggest cost driver is federally-backed student loans though. When you’re paying with what seems like free money it’s a lot harder to control costs. If students run out of money and drop out of your school, that’s a bigger driver to keep costs down.
- gwright 8y ago
  One data point on public works construction, the Davis-Bacon act and "prevailing wages". https://www.forbes.com/sites/timworstall/2016/08/31/union-wages-increase-construction-costs-by-20-abolish-davis-bacon/#173fa964406e https://www.forbes.com/sites/timworstall/2016/08/31/union-wa...
- codeddesign 8y ago
  It’s pretty simple. Both regulation and guarantees reduce competition in certain elements. Example: colleges no longer have to compete on pricing because students no longer have to save to go to college. The loans are easy to get and colleges are guaranteed on payment. Due to this, pricing competition because much less of a concern for colleges.

kansface 8y ago

> The free market does not work in all situations. Sure, but you did not enumerate a single free market. I'd wager the US healthcare industry is far and away the most regulated market in the entire world. We know that regulation protects the big players at the expense of their would be competition and drives up profits. Colleges are hardly any better, and ISPs are nearly all monopolies granted by municipalities in exchange for kick backs of various sorts. The government has interfered with every industry in this list via direct/indirect regulation, grants, guaranteed loans, or tax incentives. Lets go ahead and throw in housing in our list, too.

fzeroracer 8y ago
Can you prove that the US healthcare industry is more regulated than countries like say, Germany or Canada? Because it would be incredibly hard to believe that somehow America is more regulated than countries that have more direct control over their healthcare.
- kryogen1c 8y ago
  I think that's exactly the point: direct control and heavy regulation are two different things. This in-between fairyland with artificial barriers to entry on the frontend but no control on the back end is what's creating these captive markets where old companies to do almost anything because new companies can't join the market.
  - chillacy 8y ago
    To add to that point, because the government guarantees things that it has no control over, it means the businesses in these industries have the best risk/reward ratio possible: no risk for unlimited upside, because the risk is taken care of by taxpayers.
mcguire 8y ago
An unregulated healthcare market, complete with all the benefits of the free market, was the rule in the US until the Pure Good and Drug Act of 1906. It's history is... entertaining.

exabrial 8y ago

Our healthcare system is not a free market. Insurance companies are forbidden to discriminate premiums on the #1 killer in America: obesity.

Spooky23 8y ago

Healthcare is not a free market. It’s a collection of cartels with price controls. Things like healthcare networks were illegal before the Supreme Court redefined monopoly, and are now swallowing up healthcare delivery. CVS essentially controls drug distribution. The AMA is a trade guild that restricts the supply of doctors. A radiologist makes $1M a year because there are only a limited number of new ones minted each year. ISPs are dangerous but nothing close to as awful as healthcare.

brownbat 8y ago
> The AMA is a trade guild that restricts the supply of doctors. Technically the supply of doctors is throttled by residency programs, the numbers of which are determined by an incredibly weird dance between Congress and hospitals. Your point stands, but just noting that simple monopolistic graft would be far more rational than how this actually works.
- rayiner 8y ago
  It’s not that “incredibly weird.” Medicare doesn’t reimburse for residents unless a teaching physician is also present. Because that dramatically limits hospitals’ incentives to train physicians, Medicare pays hospitals a certain amount to support training residents. To limit how much is paid under that program, the number of residents Medicare will pay for is capped. It’s not irrational, but an example of how a series of government interventions, each seemingly rational on its own and aimed at reducing costs, can end up creating a systematic problem.
  - brownbat 8y ago
    You're skipping past the congressional funding negotiations that set up those rules, and the motivations of hospitals to create the conditions supporting either funded or unfunded slots. Sure, we can slice off portions of this process and explain the decisions of individuals, but there are so many players with motivations independent of the outcome it's not a clean line.

tathougies 8y ago

I can understand the argument you're trying to make, but it's incredibly sloppy to call the healthcare system we have in America 'the free market'.