6 ms·

It is interesting to draw a comparison with food. Practically speaking we can't go 24 hours without food, it is essential. Most people are totally dependent on

by roenxi 3y ago

It is interesting to draw a comparison with food. Practically speaking we can't go 24 hours without food, it is essential. Most people are totally dependent on others to provide their food; look at any city - the population density is too high for people to grow their own food. The food providers have no inherent incentive to make food cheap. It is totally against their interests. A shallow look at the situation suggests food providers should be able to squeeze people until all the money goes to farmers. But that isn't what happens, food is actually absurdly cheap and available given how important it is and how much needs to happen to produce it. The situation with insurers is similar. If there was a real market that people could enter, competitive pressure would force them to be cheap. If the market was, hypothetically, choked by regulation then they'd be in a great position to charge absurd prices. Market incentives are odd beasts. It is technically against the interests of the insurers to negotiate lower prices - unless they are competing with other insurers. Then it is in their interests to offer fair prices. (if it isn't clear, I think I'm agreeing with you)

hx8 3y ago
I think there are a couple of pitfalls in looking at healthcare as a free market. * People often have to make uninformed decisions or have decisions made for them in an emergency. This naturally puts them at an economic disadvantage in the market place. We consider it unfair because it's the sick, injured that are disadvantaged. * We have strict regulations about ensuring access to health care. People aren't turned away in an emergency. Sick people aren't treated differently for insurance. There are thousands of other regulations we do that shape the 'free' market. * Food is far from a free market, although it might look that way from the consumer standpoint. The government helps in both ensuring a strong supply with farm bills and giving $114B/yr in SNAP on the consumption side.
- roenxi 3y ago
  1. I suspect the vast majority of engagement (and, spending) with the medical industry is non-emergency care. At least not emergency care required in the next hour or so. There are edge cases, but even considering most of what I've seen going to the emergency room there has been time to choose which hospital to head for. Basically I think this is over-weighting the importance of emergency care. I don't have any stats on hand, but people entering the hospital system at ultra-short-notice is quite rare in my experience compared to having a bit of time to think. Most healthcare engagement seems to be for planned consultation, planned surgeries, emergencies but with hours to spare and then urgent emergencies. In about that order of frequency, and heavily weighted towards the first few cases. 2. People are more than capable of figuring out which of two options are cheaper. The ability of consumers to reject goods over tiny price differentials is legendary. 3. If people aren't up for the challenge of figuring out what to do in an emergency, then in a fair market you'd probably find the insurer starts to step in and assist. If the insurer has to compete for business, they have a very strong incentive to make sure their customers get good and cost-effective care. 4. And on food markets; those are distortions to the market, not limits on it's freedom. A free market can be distorted with subsidies and it is still free. The important factors are whether new providers can enter the market and whether they are allowed to compete on price and service quality.
  - rincebrain 3y ago
    re 2) People will reject more expensive options if and only if they have the time and energy to reach the point where they know what the price differential is. Almost no medical practices in the US will tell you what the price is until after you've had the service there, and that price might even vary across multiple trips depending on how your insurance processed the claim _that_ time. (Ask me how I know.) So you would need to schedule appointments and have the entire medical procedure done multiple times to have any price visibility, and even then, there's lots of nonsense around things like doctors operating in hospitals but billing separately, which completely obfuscates the end cost to someone. People can and will choose the cheaper option, but I personally, as someone who has limited time, cannot afford to go through totalling all the bills for having the same procedure done twice every time, with all the months of back and forth for setting up being a new patient, scheduling things, being lied to about the doctor being available for the consult, showing up and having the staff gaslighting everyone about how it's not a problem on their end, everyone angrily waiting in the waiting room clearly got their appointments wrong, even if you have the reminders written by the staff at your pre-actually-seeing-the-doctor visit in hand showing their system is wrong... It's incredibly exhausting and involved to visit a new doctor for even the most trivial things. Most people cannot afford the time commitment to do that multiple times even if the procedure is something where it's not a one-off or urgent.
    - roenxi 3y ago
      Yeah. It is a comment talking about treating healthcare as a free market. The US doesn't treat healthcare as a free market, so none of the predictions or observations in that comment apply to the US. The US seems to have some sort of racket going on in healthcare. What I've heard about their regulation makes sense if interpreted as a fairly basic system built by lobbyists to extract money from people, using emotional blackmail to break up political opposition. Otherwise it seems a bit silly.
      - p_l 3y ago
        "Healthcare can't be a free market" is an assertion rooted in sound logic going back at least to Adam Smith. Making it more transparent won't change it.
- nonethewiser 3y ago
  Yet prices would come down if insurance companies actually had to compete.
- rapatel0 3y ago
  I’ve never understood The concept of competition in insurance. Fundamentally it’s about pooling funds to average out risk. We had this nonsensical system where we socially subsidize the most expensive (Medicare) and privatize lower risk. It literally makes no sense. Alternatively is we simply pooled assets and introduced competition into care delivery, health maintenance, and care quality I expect that the system would be more efficient and effective.
  - AnthonyMouse 3y ago
    > We had this nonsensical system where we socially subsidize the most expensive (Medicare) and privatize lower risk. It literally makes no sense. If older poor people had to pay the true market price for health insurance that takes age into account they couldn't afford it. If insurers weren't allowed to take age into account then younger people wouldn't buy health insurance for that price. > Alternatively is we simply pooled assets and introduced competition into care delivery, health maintenance, and care quality I expect that the system would be more efficient and effective. What incentive is there for the patient to choose lower prices if the insurance is paying for everything? What incentive does the insurer have to prevent claims fraud or keep administrative overhead in check if they can just pass on the cost in premiums and no one has any other option?
  - alistairSH 3y ago
    Alternatively is we simply pooled assets and introduced competition into care delivery, health maintenance, and care quality I expect that the system would be more efficient and effective. That’s effectively what much of the rest of the wealthy world does via some form of socialized/nationalized system.
    - rapatel0 3y ago
      > That’s effectively what much of the rest of the wealthy world does via some form of socialized/nationalized system. While these systems can be more efficient, the rest of the world isn't amazing either. Nationalized systems do much more central planning for healthcare delivery, so they have almost non-existent customer service culture. You generally have no direct control over who your doctor or when procedures are scheduled. Furthermore, the concept of preventative care is nascent. Yearly physical? Nope. Routine Bloodwork? What is that? You only see the doctor when something is going wrong and you often wait weeks to months. (unless you pay for private health insurance). I literally know of someone with cancer treatment follow up that they needed to hammer the phone lines to get scheduled. Finally, most international healthcare is effectively subsidized by the US healthcare consumer. Firstly, the majority of global research funding in healthcare comes from the US. Secondly, US consumer (forcibly) pays 5x to 100x what international systems pay for procedures, medicine, technology. As a result, almost every major technological innovation in med device or pharma is either produced in the US or delivered first to the US market by foreign companies. Nationalized systems do much more central planning for healthcare delivery. This results in a byzantine bureaucratic nightmare where most innovation goes to die. International healthcare systems effectively delegate the implementation risk to the US and wait to see (sometimes decades). Note: In my experience, the healthcare workers and administrators all are trying to do the right thing and working really hard, but the systems they operate in are generally broken. Bottomline, there is no free lunch, everything sucks.
ClumsyPilot 3y ago
> If there was a real market that people could enter, competitive pressure would force them to be cheap. If the market was, hypothetically, choked by regulation then they'd be in a great position to charge absurd prices. This is a fabrication - a free market with large capital investment requirement tends towards a monopoly. Economists call These places natural monopolies. We had them in oil and in railways before regulation. This doesn’t happen in food because anyone can grow a cucumber in their yard. But that’s not gonna cut it for surgeries. And on top of that you get charlatans, snake oil salesmen, homeopathy, treating people with magnets.
- roenxi 3y ago
  Large capital investment? What large capital investment? Most of my doctor appointments are done by eye. Surgery needs more than a knife, but not that much more than a knife. Even expensive machines in hospitals are probably not that expensive; they certainly aren't large. A lot of them would cost single digit millions; ie, be far too cheap to allow monopolies to form. I looked up MRI machines for reference and apparently they can be picked up for around a million dollars. We aren't talking about expensive kit here.
  - TheOtherHobbes 3y ago
    Surgery requires a sterilised filtered room, anaesthesia equipment, monitoring of all kinds, and in many cases specialised tools. It costs >$100m to build a hospital, and then you have staffing, maintenance, IT, and other costs. It's not at all a trivial cost of entry. General practitioner offices are much cheaper, but typically you'll still find an ECG machine, IT systems with subscription access to industry databases and insurance applications, and possibly some on-prem blood testing. All of that on top of property costs. And student fee payments. The student fees and insurance access costs are largely profiteering and could be eliminated or hugely reduced. The property costs are the result of poor macro policy, but doctors are still on the hook for that. The rest is unavoidable capex.
    - roenxi 3y ago
mlsu 3y ago
I completely agree, but even further: health insurance is itself a silly thing. Insurance is for: - costly things - that happen rarely - in an unpredictable way These are characteristics of things that are well suited to insurance. Healthcare -- the type of routine healthcare that makes up the vast majority of spending -- exhibits literally none of these qualities. Most healthcare expenditure is: - not costly. An Advil is not costly. 30 mins of some stupid doctor's time is not inherently costly. An MRI is not costly. Medical office space is not costly. - totally predictable (eye exams, checkups, scheduled visits, hell even big operations like a heart transplant or C-section are rarely done "in the moment." Usually you can see them coming. The hospital can definitely see them coming; they know exactly how long a gastric bypass or a c-section takes, how much equipment and staff they need, etc. - not rare; most people visit a doctor at least yearly. That's on par with buying xmas gifts! Only a small fraction of healthcare spending should happen through insurance -- insurance should be for things where you travel in an ambulance to the hospital and that's it. PCPs should compete individual to individual on quality of service, price, etc. Hospitals should compete hospital by hospital on quality of care, facilities, scheduling, bedside manner etc. Rx should be decoupled completely from insurance. Why do I choose Humalog over Novolog? Not for any medical reason! It's because I need to have insurance to buy one or the other. Why do I need insurance to buy a pill? Because I need insurance to see the doc. Why do I need insurance to see a doc? No good f%@#$ reason. Drop it. Insurance is for when I need surgery NOW for I have no idea what, and I cannot make any kind of choice about it. It should cost $100 a year for a healthy 20yo adult and $400 a year for a healthy 60yo adult. None of this shit makes sense to have insurance mandated. None of it. I should be able to walk into any doc's office without insurance and pay a flat cash fee, posted on a big bulletin board outside that says $20 per 15 mins. If I don't like it, I should be able to LEAVE and go across the street!
- AnthonyMouse 3y ago
  > insurance should be for things where you travel in an ambulance to the hospital and that's it. There is another major class of things you want to insure against, and it's the big one. Chronic conditions. You get diagnosed with diabetes. It's costly and it happens rarely in an unpredictable way. You don't know if you're going to get diabetes, or cancer, or something else, so you insure against it instead of being bankrupted by the long-term treatment. And then the insurance covers your annual checkup for free because they want to catch things early before they progress.
ffgjgf1 3y ago
> If the market was, hypothetically, choked by regulation then they'd be in a great position to charge absurd prices. There are countries in Europe like the Netherlands and Switzerland where the healthcare systems are almost entirely private (much more so than in the US, since there are no Medicaid/Medicare equivalents). Yet their markets are chocked fully of regulation while being able to maintain low prices (compared to the US) and very good outcomes.
- AnthonyMouse 3y ago
  One of you is talking about the regulations where doctors who purposely poison people go to jail. The other is talking about the regulations where the incumbents in an industry get a veto on whether someone new can enter the market.
- markus92 3y ago
  I don't know about Switzerland but Dutch insurers are all non-profits though (except one, that has never once paid out dividends). They have a strong incentive to keep costs down. Hospitals are all non-profits, too.

by roenxi 3y ago

hx8 3y ago

I think there are a couple of pitfalls in looking at healthcare as a free market. * People often have to make uninformed decisions or have decisions made for them in an emergency. This naturally puts them at an economic disadvantage in the market place. We consider it unfair because it's the sick, injured that are disadvantaged. * We have strict regulations about ensuring access to health care. People aren't turned away in an emergency. Sick people aren't treated differently for insurance. There are thousands of other regulations we do that shape the 'free' market. * Food is far from a free market, although it might look that way from the consumer standpoint. The government helps in both ensuring a strong supply with farm bills and giving $114B/yr in SNAP on the consumption side.

roenxi 3y ago
1. I suspect the vast majority of engagement (and, spending) with the medical industry is non-emergency care. At least not emergency care required in the next hour or so. There are edge cases, but even considering most of what I've seen going to the emergency room there has been time to choose which hospital to head for. Basically I think this is over-weighting the importance of emergency care. I don't have any stats on hand, but people entering the hospital system at ultra-short-notice is quite rare in my experience compared to having a bit of time to think. Most healthcare engagement seems to be for planned consultation, planned surgeries, emergencies but with hours to spare and then urgent emergencies. In about that order of frequency, and heavily weighted towards the first few cases. 2. People are more than capable of figuring out which of two options are cheaper. The ability of consumers to reject goods over tiny price differentials is legendary. 3. If people aren't up for the challenge of figuring out what to do in an emergency, then in a fair market you'd probably find the insurer starts to step in and assist. If the insurer has to compete for business, they have a very strong incentive to make sure their customers get good and cost-effective care. 4. And on food markets; those are distortions to the market, not limits on it's freedom. A free market can be distorted with subsidies and it is still free. The important factors are whether new providers can enter the market and whether they are allowed to compete on price and service quality.
- rincebrain 3y ago
  re 2) People will reject more expensive options if and only if they have the time and energy to reach the point where they know what the price differential is. Almost no medical practices in the US will tell you what the price is until after you've had the service there, and that price might even vary across multiple trips depending on how your insurance processed the claim _that_ time. (Ask me how I know.) So you would need to schedule appointments and have the entire medical procedure done multiple times to have any price visibility, and even then, there's lots of nonsense around things like doctors operating in hospitals but billing separately, which completely obfuscates the end cost to someone. People can and will choose the cheaper option, but I personally, as someone who has limited time, cannot afford to go through totalling all the bills for having the same procedure done twice every time, with all the months of back and forth for setting up being a new patient, scheduling things, being lied to about the doctor being available for the consult, showing up and having the staff gaslighting everyone about how it's not a problem on their end, everyone angrily waiting in the waiting room clearly got their appointments wrong, even if you have the reminders written by the staff at your pre-actually-seeing-the-doctor visit in hand showing their system is wrong... It's incredibly exhausting and involved to visit a new doctor for even the most trivial things. Most people cannot afford the time commitment to do that multiple times even if the procedure is something where it's not a one-off or urgent.
  - roenxi 3y ago
    Yeah. It is a comment talking about treating healthcare as a free market. The US doesn't treat healthcare as a free market, so none of the predictions or observations in that comment apply to the US. The US seems to have some sort of racket going on in healthcare. What I've heard about their regulation makes sense if interpreted as a fairly basic system built by lobbyists to extract money from people, using emotional blackmail to break up political opposition. Otherwise it seems a bit silly.
    - p_l 3y ago
      "Healthcare can't be a free market" is an assertion rooted in sound logic going back at least to Adam Smith. Making it more transparent won't change it.
nonethewiser 3y ago
Yet prices would come down if insurance companies actually had to compete.
rapatel0 3y ago
I’ve never understood The concept of competition in insurance. Fundamentally it’s about pooling funds to average out risk. We had this nonsensical system where we socially subsidize the most expensive (Medicare) and privatize lower risk. It literally makes no sense. Alternatively is we simply pooled assets and introduced competition into care delivery, health maintenance, and care quality I expect that the system would be more efficient and effective.
- AnthonyMouse 3y ago
  > We had this nonsensical system where we socially subsidize the most expensive (Medicare) and privatize lower risk. It literally makes no sense. If older poor people had to pay the true market price for health insurance that takes age into account they couldn't afford it. If insurers weren't allowed to take age into account then younger people wouldn't buy health insurance for that price. > Alternatively is we simply pooled assets and introduced competition into care delivery, health maintenance, and care quality I expect that the system would be more efficient and effective. What incentive is there for the patient to choose lower prices if the insurance is paying for everything? What incentive does the insurer have to prevent claims fraud or keep administrative overhead in check if they can just pass on the cost in premiums and no one has any other option?
- alistairSH 3y ago
  Alternatively is we simply pooled assets and introduced competition into care delivery, health maintenance, and care quality I expect that the system would be more efficient and effective. That’s effectively what much of the rest of the wealthy world does via some form of socialized/nationalized system.
  - rapatel0 3y ago
    > That’s effectively what much of the rest of the wealthy world does via some form of socialized/nationalized system. While these systems can be more efficient, the rest of the world isn't amazing either. Nationalized systems do much more central planning for healthcare delivery, so they have almost non-existent customer service culture. You generally have no direct control over who your doctor or when procedures are scheduled. Furthermore, the concept of preventative care is nascent. Yearly physical? Nope. Routine Bloodwork? What is that? You only see the doctor when something is going wrong and you often wait weeks to months. (unless you pay for private health insurance). I literally know of someone with cancer treatment follow up that they needed to hammer the phone lines to get scheduled. Finally, most international healthcare is effectively subsidized by the US healthcare consumer. Firstly, the majority of global research funding in healthcare comes from the US. Secondly, US consumer (forcibly) pays 5x to 100x what international systems pay for procedures, medicine, technology. As a result, almost every major technological innovation in med device or pharma is either produced in the US or delivered first to the US market by foreign companies. Nationalized systems do much more central planning for healthcare delivery. This results in a byzantine bureaucratic nightmare where most innovation goes to die. International healthcare systems effectively delegate the implementation risk to the US and wait to see (sometimes decades). Note: In my experience, the healthcare workers and administrators all are trying to do the right thing and working really hard, but the systems they operate in are generally broken. Bottomline, there is no free lunch, everything sucks.

ClumsyPilot 3y ago

> If there was a real market that people could enter, competitive pressure would force them to be cheap. If the market was, hypothetically, choked by regulation then they'd be in a great position to charge absurd prices. This is a fabrication - a free market with large capital investment requirement tends towards a monopoly. Economists call These places natural monopolies. We had them in oil and in railways before regulation. This doesn’t happen in food because anyone can grow a cucumber in their yard. But that’s not gonna cut it for surgeries. And on top of that you get charlatans, snake oil salesmen, homeopathy, treating people with magnets.

roenxi 3y ago
Large capital investment? What large capital investment? Most of my doctor appointments are done by eye. Surgery needs more than a knife, but not that much more than a knife. Even expensive machines in hospitals are probably not that expensive; they certainly aren't large. A lot of them would cost single digit millions; ie, be far too cheap to allow monopolies to form. I looked up MRI machines for reference and apparently they can be picked up for around a million dollars. We aren't talking about expensive kit here.
- TheOtherHobbes 3y ago
  Surgery requires a sterilised filtered room, anaesthesia equipment, monitoring of all kinds, and in many cases specialised tools. It costs >$100m to build a hospital, and then you have staffing, maintenance, IT, and other costs. It's not at all a trivial cost of entry. General practitioner offices are much cheaper, but typically you'll still find an ECG machine, IT systems with subscription access to industry databases and insurance applications, and possibly some on-prem blood testing. All of that on top of property costs. And student fee payments. The student fees and insurance access costs are largely profiteering and could be eliminated or hugely reduced. The property costs are the result of poor macro policy, but doctors are still on the hook for that. The rest is unavoidable capex.
  - roenxi 3y ago

mlsu 3y ago

I completely agree, but even further: health insurance is itself a silly thing. Insurance is for: - costly things - that happen rarely - in an unpredictable way These are characteristics of things that are well suited to insurance. Healthcare -- the type of routine healthcare that makes up the vast majority of spending -- exhibits literally none of these qualities. Most healthcare expenditure is: - not costly. An Advil is not costly. 30 mins of some stupid doctor's time is not inherently costly. An MRI is not costly. Medical office space is not costly. - totally predictable (eye exams, checkups, scheduled visits, hell even big operations like a heart transplant or C-section are rarely done "in the moment." Usually you can see them coming. The hospital can definitely see them coming; they know exactly how long a gastric bypass or a c-section takes, how much equipment and staff they need, etc. - not rare; most people visit a doctor at least yearly. That's on par with buying xmas gifts! Only a small fraction of healthcare spending should happen through insurance -- insurance should be for things where you travel in an ambulance to the hospital and that's it. PCPs should compete individual to individual on quality of service, price, etc. Hospitals should compete hospital by hospital on quality of care, facilities, scheduling, bedside manner etc. Rx should be decoupled completely from insurance. Why do I choose Humalog over Novolog? Not for any medical reason! It's because I need to have insurance to buy one or the other. Why do I need insurance to buy a pill? Because I need insurance to see the doc. Why do I need insurance to see a doc? No good f%@#$ reason. Drop it. Insurance is for when I need surgery NOW for I have no idea what, and I cannot make any kind of choice about it. It should cost $100 a year for a healthy 20yo adult and $400 a year for a healthy 60yo adult. None of this shit makes sense to have insurance mandated. None of it. I should be able to walk into any doc's office without insurance and pay a flat cash fee, posted on a big bulletin board outside that says $20 per 15 mins. If I don't like it, I should be able to LEAVE and go across the street!

AnthonyMouse 3y ago
> insurance should be for things where you travel in an ambulance to the hospital and that's it. There is another major class of things you want to insure against, and it's the big one. Chronic conditions. You get diagnosed with diabetes. It's costly and it happens rarely in an unpredictable way. You don't know if you're going to get diabetes, or cancer, or something else, so you insure against it instead of being bankrupted by the long-term treatment. And then the insurance covers your annual checkup for free because they want to catch things early before they progress.

ffgjgf1 3y ago

> If the market was, hypothetically, choked by regulation then they'd be in a great position to charge absurd prices. There are countries in Europe like the Netherlands and Switzerland where the healthcare systems are almost entirely private (much more so than in the US, since there are no Medicaid/Medicare equivalents). Yet their markets are chocked fully of regulation while being able to maintain low prices (compared to the US) and very good outcomes.

AnthonyMouse 3y ago
One of you is talking about the regulations where doctors who purposely poison people go to jail. The other is talking about the regulations where the incumbents in an industry get a veto on whether someone new can enter the market.
markus92 3y ago
I don't know about Switzerland but Dutch insurers are all non-profits though (except one, that has never once paid out dividends). They have a strong incentive to keep costs down. Hospitals are all non-profits, too.