5 ms·

That’s certainly an option, but the meta-question is: which mechanism can produce health/pharma goods and services at lower costs and higher quality, markets or

by bhupy 7y ago

That’s certainly an option, but the meta-question is: which mechanism can produce health/pharma goods and services at lower costs and higher quality, markets or government allocation? If the answer is the latter, then why aren’t we replicating that mechanism across other essential goods like food and clothing?

gruez 7y ago
>then why aren’t we replicating that mechanism across other essential goods like food and clothing? maybe because the competition doesn't work as well in healthcare sector? or that there isn't a whole scheme of inflated prices that insurance companies negotiate down to, but uninsured people are forced to pay?
- bhupy 7y ago
  If that's the case, then why are we seeing Wal-Mart attempting to compete in the healthcare sector with what seem to be competitive prices? Doesn't seem to be limited to just Wal-Mart either. An Oklahoma City Hospital began posting its prices online and started a bidding war[1]. The hospital lobby seems to be overwhelmingly opposed to price transparency out of fear that it will lower prices[2], and there are Yelp-like directories that are beginning to provide price transparency allowing for competitive rates like $79 MRI's[3]. [1] https://kfor.com/news/okc-hospital-posting-surgery-prices-online/ https://kfor.com/news/okc-hospital-posting-surgery-prices-on... [2] https://www.healthcaredive.com/news/hospitals-pledge-to-fight-trump-admin-price-transparency-plan-in-court/567474/ https://www.healthcaredive.com/news/hospitals-pledge-to-figh... [3] https://www.kansascity.com/news/business/health-care/article230388494.html https://www.kansascity.com/news/business/health-care/article...
  - gruez 7y ago
    >If that's the case, then why are we seeing Wal-Mart attempting to compete in the healthcare sector with what seem to be competitive prices? And it only took decades of skyrocketing healthcare costs (and probably margins) for walmart to enter the space. How many more decades (if ever) until prices drop down to level in line with other developed nations?
    - bhupy 7y ago
      > And it only took decades of skyrocketing healthcare costs (and probably margins) for walmart to enter the space. How many more decades (if ever) until prices drop down to level in line with other developed nations? Was this a natural consequence of the market, or are there other explanations for why such a delay came to pass?
      - gruez 7y ago
        Why is this question relevant? Let's say the reason was that walmart thinks their core competency is supply chain management, healthcare isn't part of that, and they only entered because the healthcare industry gravy train has reached insanely high levels that they simply could not refuse, what then? Should our response to this crisis be to wait until a megacorp comes by and saves the day?
        bhupy 7y ago
        This question is extremely relevant, because it can help us evaluate all policy options. The current status quo in the US Healthcare system was not some crazy accident of the market, rather it was the inevitable result of a series of policies passed at state, local, and federal levels over the past half century. The fact that health insurance isn’t portable, and is rather tied to employment is a consequence of the WW2 era wage ceilings imposed on private corporations, followed by the tax benefits enjoyed by employers that provide group insurance, followed then by the mandate on employers to provide health insurance. This is in contrast with other countries that employ private insurance, like the Netherlands and Switzerland, where insurance is tied to the individual, not the employer. The lack of price transparency logically follows from the fact that patients never really care how much their treatments cost, since employer sponsored insurance covers everything anyway. Large corporations are less price sensitive than individuals, which exacerbates the price inflation over decades. Certificate of need laws, where local hospitals get to decide if a new, competing hospital can open, and the residency system requiring 10+ years of schooling to practice resulted in inevitable supply constraints. Medicare, which provides healthcare for free for the elderly, removed the most engaged buyers from the market, suffocating the price discovery mechanism. Not only that, the elderly tend to be the richest people in the country - those above the age of 55 account for 73% of wealth in America. Boomers are disproportionately rich, and yet they also enjoy some of the most generous welfare on top of that. There are number of ways to approach solving this problem. One way is to add yet another band-aid on top of the system, burn down the system entirely, or identify the root causes and disentangle them from the system. This is the political question.
  - sib 7y ago
    Walmart actually made a big difference in the health market years ago when they introduced the $4 prescription program, something like 300 pharmaceuticals that are available for $4. Even for people with health insurance this is lower than many insurance providers' co-pay pricing.
- karatestomp 7y ago
  Clothing is a wildly different market. Imagine if the only way to get clothes were through a bespoke tailor, in person. No other way. And you often had—had—to get a very specific kind of jacket or whatever, no option to sub some other article, or else you or your kid dies or lives in pain or something. That’s healthcare. If clothes worked that way that market would suck, too.
  - bhupy 7y ago
    > If clothes worked that way that market would suck, too. Yup! Food too[1]. On the other hand, the idea that healthcare HAS to work like that is definitely debatable. [1] https://fee.org/articles/imagine-if-we-paid-for-food-like-we-do-healthcare/ https://fee.org/articles/imagine-if-we-paid-for-food-like-we...
- coredog64 7y ago
  Explain France and Switzerland then. Both use market mechanisms for delivering outpatient care. Or are these not European nations with universal healthcare?
saystupidthings 7y ago
Because republicans
rmrfrmrf 7y ago
Market prices are currently set based on 1-3x multipliers of Medicare reimbursement, so by definition the government already handles health care at lower costs. Commodifying health care has proven to be disastrous in the US because it's, in practice, impossible to "shop around" — not even including cases where the "customer" is unconscious or in a life-threatening situation where "shopping" would be ridiculous, the profit models of health care centers are forcing many to close, leaving people with few choices in their immediate area, exacerbated by the "network" coverage model of insurance companies where you may not even be able to go to certain hospitals or doctor's offices. Interestingly, though, improvements in supply chain management are making it possible to centrally-plan commodities like clothing. Multinational companies like Wal-Mart and Amazon are doing this already, in fact.
- bhupy 7y ago
  > Market prices are currently set based on 1-3x multipliers of Medicare reimbursement, so by definition the government already handles health care at lower costs. I work in insurance, and I can tell you right now that $25 for a cleaning (per this article) is significantly lower than the amount for a cleaning (procedure code D1110) set by Medicare/Medicaid. You can look it up yourself by visiting the FAIR Health code lookup tool (https://www.fairhealthconsumer.org/dental/results https://www.fairhealthconsumer.org/dental/results), and setting the ZIP code to that of Carlton, GA (location of the Wal-Mart clinic), 30627. The average allowed amount is $64. > Commodifying health care has proven to be disastrous in the US because it's, in practice, impossible to "shop around" — not even including cases where the "customer" is unconscious or in a life-threatening situation where "shopping" would be ridiculous, the profit models of health care centers are forcing many to close, leaving people with few choices in their immediate area, exacerbated by the "network" coverage model of insurance companies where you may not even be able to go to certain hospitals or doctor's offices. Ignoring emergency health services (which is the minority of health spending), I'm not sure that we have enough information to irrefutably prove that preventable and planned care cannot be successfully commodified. A common theory around why we haven't been able to commodify healthcare in the US is due to a lack of price transparency, and the fact that employer sponsored health insurance removes the price sensitivity from buyers[1][2]. > Interestingly, though, improvements in supply chain management are making it possible to centrally-plan commodities like clothing. Multinational companies like Wal-Mart and Amazon are doing this already, in fact. They aren't centrally planned, though — they are subject to market competition (see: DHL, UPS, FedEx, FlexPort, Maersk, etc). Their ability to be major "central planners" by controlling large parts of the supply chain is predicated on their ability to fend off market competition, and the moment they fail to do that, this manifests as a market opportunity for new competitors to take their place, wherever in the supply chain the large corporations fall short. [1] https://www.econtalk.org/keith-smith-on-free-market-health-care/ https://www.econtalk.org/keith-smith-on-free-market-health-c... [2] https://kfor.com/news/okc-hospital-posting-surgery-prices-online/ https://kfor.com/news/okc-hospital-posting-surgery-prices-on...
flukus 7y ago
> If the answer is the latter, then why aren’t we replicating that mechanism across other essential goods like food and clothing? We do/have. Water, electricity, phone services (and other communication), roads, child care and and whatever else the romans have done for us have all had successful government implementations. Food and clothing typically haven't been included in this list because choice is more important for them and the market does a good job at providing them, but even there I think there's room for a government foodbank/clothes bank style option.
- bhupy 7y ago
  > Water, electricity, phone services (and other communication), roads These are all natural monopolies due to the limitations of public infrastructure. Such natural monopolies don't necessarily exist for goods/services like food, clothing, and medicine (most notably, over-the-counter generic medicine). Communication is largely left to the market, rather than government coordination/pricing. > but even there I think there's room for a government foodbank/clothes bank style option. Either that, or just providing the poor with money to buy food at market-rates, i.e. food stamps.
- karatestomp 7y ago
  Notably, food and to some extent clothing (textiles) have been very much the concern of the state, or of the way the state’s organized. What’s changed is that both got way the hell cheaper to make and we settled on some good, more-or-less stable regulations and systems of management to keep things from getting too nutty too fast.
jtolmar 7y ago
Some relevant questions are whether the demand is elastic and how difficult to compare and/or fungible the product is. Medical care is inelastic (without it you die) and difficult to compare (you don't get to try the same surgery with two different providers). Food is inelastic (even more so), and easy to compare, but many foods are very fungible (your supermarket will let you choose red white or yellow onions, but not which farm your onions come from). Demand for clothing is more elastic (you need it but you can probably wait for a sale), and it's easy to compare the items.
- bhupy 7y ago
  Excellent point. Medical care can be difficult to compare, but is that necessarily true across ALL medical care? There exists a high degree of fungibility in most preventive care: routine treatments like annual physicals, bloodwork, antibiotic prescription, flu shots, diagnostic imaging, etc. The next question is: is there the same degree of fungibility for more major care, like tonsillectomies and appendectomies? Perhaps brain surgery and oncology is less fungible — but they are also perfect candidates for insurance coverage since they're catastrophic.
  - cdspub 7y ago
    Same is true for food. I also wonder how affinity analysis can be applied to medical care. And - can the question of market vs government allocation be analyzed using "baskets"?
- jwbwater 7y ago
  Most healthcare is not for life threatening illness. The bigger problem in healthcare in the US is that consumers almost never know how much a service will cost beforehand.
Causality1 7y ago
A "pure" competitive market would, but we don't have that and we're not going to get it. Eliminate insurance "networks", force hospitals to publish price lists and give the same price to every patient, make the medical statistics of every hospital and provider publicly accessible, and costs will plummet. As of now we have a hybrid system that combines the worst of both methods.
- Double_a_92 7y ago
  > give the same price to every patient I think that's the key point. That would give insurances much more leverage to negotiate lower prices for everyone. Even other smaller insurances would profit... which would increase competition between the insurances... which would lower insurance costs for the people.
Spooky23 7y ago
If the answer is the former, why are we using the same insurance companies and systems to manage Medicare and Medicaid?
mulmen 7y ago
Limiting the question to price and quality but ignoring availability might (I don’t know) favor markets and definitely ignores an (arguably) basic obligation of government but not markets.
- bhupy 7y ago
  I’d argue that the basic obligation of the government is welfare, at its core. Everything else is an implementation detail in service of that. If the (regulated) market can bring down equilibrium prices to the minimum, then the government’s role could be to provide health stamps or cash to those in need, similar to food stamps (which can arguably be reformed).
  - mulmen 7y ago
    I think that’s a fair expectation of government. It may be that the market can deliver care at the lowest cost but what if the market delivers that lower cost by limiting supply? Say they don’t offer service in some areas or limit some procedures?
    - bhupy 7y ago
      Then the next question is: historically, which systems of resource allocation have been able to successfully avoid supply shortages of the thing in question, markets or government allocation?

by bhupy 7y ago

gruez 7y ago

>then why aren’t we replicating that mechanism across other essential goods like food and clothing? maybe because the competition doesn't work as well in healthcare sector? or that there isn't a whole scheme of inflated prices that insurance companies negotiate down to, but uninsured people are forced to pay?

bhupy 7y ago
If that's the case, then why are we seeing Wal-Mart attempting to compete in the healthcare sector with what seem to be competitive prices? Doesn't seem to be limited to just Wal-Mart either. An Oklahoma City Hospital began posting its prices online and started a bidding war[1]. The hospital lobby seems to be overwhelmingly opposed to price transparency out of fear that it will lower prices[2], and there are Yelp-like directories that are beginning to provide price transparency allowing for competitive rates like $79 MRI's[3]. [1] https://kfor.com/news/okc-hospital-posting-surgery-prices-online/ https://kfor.com/news/okc-hospital-posting-surgery-prices-on... [2] https://www.healthcaredive.com/news/hospitals-pledge-to-fight-trump-admin-price-transparency-plan-in-court/567474/ https://www.healthcaredive.com/news/hospitals-pledge-to-figh... [3] https://www.kansascity.com/news/business/health-care/article230388494.html https://www.kansascity.com/news/business/health-care/article...
- gruez 7y ago
  >If that's the case, then why are we seeing Wal-Mart attempting to compete in the healthcare sector with what seem to be competitive prices? And it only took decades of skyrocketing healthcare costs (and probably margins) for walmart to enter the space. How many more decades (if ever) until prices drop down to level in line with other developed nations?
  - bhupy 7y ago
    > And it only took decades of skyrocketing healthcare costs (and probably margins) for walmart to enter the space. How many more decades (if ever) until prices drop down to level in line with other developed nations? Was this a natural consequence of the market, or are there other explanations for why such a delay came to pass?
    - gruez 7y ago
      Why is this question relevant? Let's say the reason was that walmart thinks their core competency is supply chain management, healthcare isn't part of that, and they only entered because the healthcare industry gravy train has reached insanely high levels that they simply could not refuse, what then? Should our response to this crisis be to wait until a megacorp comes by and saves the day?
      - bhupy 7y ago
        This question is extremely relevant, because it can help us evaluate all policy options. The current status quo in the US Healthcare system was not some crazy accident of the market, rather it was the inevitable result of a series of policies passed at state, local, and federal levels over the past half century. The fact that health insurance isn’t portable, and is rather tied to employment is a consequence of the WW2 era wage ceilings imposed on private corporations, followed by the tax benefits enjoyed by employers that provide group insurance, followed then by the mandate on employers to provide health insurance. This is in contrast with other countries that employ private insurance, like the Netherlands and Switzerland, where insurance is tied to the individual, not the employer. The lack of price transparency logically follows from the fact that patients never really care how much their treatments cost, since employer sponsored insurance covers everything anyway. Large corporations are less price sensitive than individuals, which exacerbates the price inflation over decades. Certificate of need laws, where local hospitals get to decide if a new, competing hospital can open, and the residency system requiring 10+ years of schooling to practice resulted in inevitable supply constraints. Medicare, which provides healthcare for free for the elderly, removed the most engaged buyers from the market, suffocating the price discovery mechanism. Not only that, the elderly tend to be the richest people in the country - those above the age of 55 account for 73% of wealth in America. Boomers are disproportionately rich, and yet they also enjoy some of the most generous welfare on top of that. There are number of ways to approach solving this problem. One way is to add yet another band-aid on top of the system, burn down the system entirely, or identify the root causes and disentangle them from the system. This is the political question.
- sib 7y ago
  Walmart actually made a big difference in the health market years ago when they introduced the $4 prescription program, something like 300 pharmaceuticals that are available for $4. Even for people with health insurance this is lower than many insurance providers' co-pay pricing.
karatestomp 7y ago
Clothing is a wildly different market. Imagine if the only way to get clothes were through a bespoke tailor, in person. No other way. And you often had—had—to get a very specific kind of jacket or whatever, no option to sub some other article, or else you or your kid dies or lives in pain or something. That’s healthcare. If clothes worked that way that market would suck, too.
- bhupy 7y ago
  > If clothes worked that way that market would suck, too. Yup! Food too[1]. On the other hand, the idea that healthcare HAS to work like that is definitely debatable. [1] https://fee.org/articles/imagine-if-we-paid-for-food-like-we-do-healthcare/ https://fee.org/articles/imagine-if-we-paid-for-food-like-we...
coredog64 7y ago
Explain France and Switzerland then. Both use market mechanisms for delivering outpatient care. Or are these not European nations with universal healthcare?

saystupidthings 7y ago

Because republicans

rmrfrmrf 7y ago

Market prices are currently set based on 1-3x multipliers of Medicare reimbursement, so by definition the government already handles health care at lower costs. Commodifying health care has proven to be disastrous in the US because it's, in practice, impossible to "shop around" — not even including cases where the "customer" is unconscious or in a life-threatening situation where "shopping" would be ridiculous, the profit models of health care centers are forcing many to close, leaving people with few choices in their immediate area, exacerbated by the "network" coverage model of insurance companies where you may not even be able to go to certain hospitals or doctor's offices. Interestingly, though, improvements in supply chain management are making it possible to centrally-plan commodities like clothing. Multinational companies like Wal-Mart and Amazon are doing this already, in fact.

bhupy 7y ago
> Market prices are currently set based on 1-3x multipliers of Medicare reimbursement, so by definition the government already handles health care at lower costs. I work in insurance, and I can tell you right now that $25 for a cleaning (per this article) is significantly lower than the amount for a cleaning (procedure code D1110) set by Medicare/Medicaid. You can look it up yourself by visiting the FAIR Health code lookup tool (https://www.fairhealthconsumer.org/dental/results https://www.fairhealthconsumer.org/dental/results), and setting the ZIP code to that of Carlton, GA (location of the Wal-Mart clinic), 30627. The average allowed amount is $64. > Commodifying health care has proven to be disastrous in the US because it's, in practice, impossible to "shop around" — not even including cases where the "customer" is unconscious or in a life-threatening situation where "shopping" would be ridiculous, the profit models of health care centers are forcing many to close, leaving people with few choices in their immediate area, exacerbated by the "network" coverage model of insurance companies where you may not even be able to go to certain hospitals or doctor's offices. Ignoring emergency health services (which is the minority of health spending), I'm not sure that we have enough information to irrefutably prove that preventable and planned care cannot be successfully commodified. A common theory around why we haven't been able to commodify healthcare in the US is due to a lack of price transparency, and the fact that employer sponsored health insurance removes the price sensitivity from buyers[1][2]. > Interestingly, though, improvements in supply chain management are making it possible to centrally-plan commodities like clothing. Multinational companies like Wal-Mart and Amazon are doing this already, in fact. They aren't centrally planned, though — they are subject to market competition (see: DHL, UPS, FedEx, FlexPort, Maersk, etc). Their ability to be major "central planners" by controlling large parts of the supply chain is predicated on their ability to fend off market competition, and the moment they fail to do that, this manifests as a market opportunity for new competitors to take their place, wherever in the supply chain the large corporations fall short. [1] https://www.econtalk.org/keith-smith-on-free-market-health-care/ https://www.econtalk.org/keith-smith-on-free-market-health-c... [2] https://kfor.com/news/okc-hospital-posting-surgery-prices-online/ https://kfor.com/news/okc-hospital-posting-surgery-prices-on...

flukus 7y ago

> If the answer is the latter, then why aren’t we replicating that mechanism across other essential goods like food and clothing? We do/have. Water, electricity, phone services (and other communication), roads, child care and and whatever else the romans have done for us have all had successful government implementations. Food and clothing typically haven't been included in this list because choice is more important for them and the market does a good job at providing them, but even there I think there's room for a government foodbank/clothes bank style option.

bhupy 7y ago
> Water, electricity, phone services (and other communication), roads These are all natural monopolies due to the limitations of public infrastructure. Such natural monopolies don't necessarily exist for goods/services like food, clothing, and medicine (most notably, over-the-counter generic medicine). Communication is largely left to the market, rather than government coordination/pricing. > but even there I think there's room for a government foodbank/clothes bank style option. Either that, or just providing the poor with money to buy food at market-rates, i.e. food stamps.
karatestomp 7y ago
Notably, food and to some extent clothing (textiles) have been very much the concern of the state, or of the way the state’s organized. What’s changed is that both got way the hell cheaper to make and we settled on some good, more-or-less stable regulations and systems of management to keep things from getting too nutty too fast.

jtolmar 7y ago

Some relevant questions are whether the demand is elastic and how difficult to compare and/or fungible the product is. Medical care is inelastic (without it you die) and difficult to compare (you don't get to try the same surgery with two different providers). Food is inelastic (even more so), and easy to compare, but many foods are very fungible (your supermarket will let you choose red white or yellow onions, but not which farm your onions come from). Demand for clothing is more elastic (you need it but you can probably wait for a sale), and it's easy to compare the items.

bhupy 7y ago
Excellent point. Medical care can be difficult to compare, but is that necessarily true across ALL medical care? There exists a high degree of fungibility in most preventive care: routine treatments like annual physicals, bloodwork, antibiotic prescription, flu shots, diagnostic imaging, etc. The next question is: is there the same degree of fungibility for more major care, like tonsillectomies and appendectomies? Perhaps brain surgery and oncology is less fungible — but they are also perfect candidates for insurance coverage since they're catastrophic.
- cdspub 7y ago
  Same is true for food. I also wonder how affinity analysis can be applied to medical care. And - can the question of market vs government allocation be analyzed using "baskets"?
jwbwater 7y ago
Most healthcare is not for life threatening illness. The bigger problem in healthcare in the US is that consumers almost never know how much a service will cost beforehand.

Causality1 7y ago

A "pure" competitive market would, but we don't have that and we're not going to get it. Eliminate insurance "networks", force hospitals to publish price lists and give the same price to every patient, make the medical statistics of every hospital and provider publicly accessible, and costs will plummet. As of now we have a hybrid system that combines the worst of both methods.

Double_a_92 7y ago
> give the same price to every patient I think that's the key point. That would give insurances much more leverage to negotiate lower prices for everyone. Even other smaller insurances would profit... which would increase competition between the insurances... which would lower insurance costs for the people.

Spooky23 7y ago

If the answer is the former, why are we using the same insurance companies and systems to manage Medicare and Medicaid?

mulmen 7y ago

Limiting the question to price and quality but ignoring availability might (I don’t know) favor markets and definitely ignores an (arguably) basic obligation of government but not markets.

bhupy 7y ago
I’d argue that the basic obligation of the government is welfare, at its core. Everything else is an implementation detail in service of that. If the (regulated) market can bring down equilibrium prices to the minimum, then the government’s role could be to provide health stamps or cash to those in need, similar to food stamps (which can arguably be reformed).
- mulmen 7y ago
  I think that’s a fair expectation of government. It may be that the market can deliver care at the lowest cost but what if the market delivers that lower cost by limiting supply? Say they don’t offer service in some areas or limit some procedures?
  - bhupy 7y ago
    Then the next question is: historically, which systems of resource allocation have been able to successfully avoid supply shortages of the thing in question, markets or government allocation?