3 ms·

You basically can’t or it won't have the same effects because medicine doesn’t really follow the same dynamics as most other markets: the supplier (doctor) has

You basically can’t or it won't have the same effects because medicine doesn’t really follow the same dynamics as most other markets: the supplier (doctor) has an information asymmetry and thus makes most of the decisions, while the buyer (patient) is not usually the payer (insurance) so aren’t really incentivized to save. Kenneth Arrow famously analyzed the healthcare market and made the above insight: https://assets.aeaweb.org/asset-server/files/9442.pdf https://assets.aeaweb.org/asset-server/files/9442.pdf I know he was a Nobel Laureate but not sure if this is the work that won him the Nobel. Updated: I should qualify my statement by pointing out this is for the US healthcare system.

JumpCrisscross 1y ago
> the supplier (doctor) has an information asymmetry and thus makes most of the decisions, while the buyer (patient) is not usually the payer (insurance) so aren’t really incentivized to save Counterfactual: patients in India routinely shop around for second opinions and negotiate fees.
- hangonhn 1y ago
  Completely fair point. I should have prefaced my statement with US based healthcare system is structured this way. I don't know how the dynamics are in other countries -- though I do suspect it's similar in term of information asymmetry. I imagine doctors everywhere have some pretty advanced and specialized knowledge. I don't know enough about India to know how they overcome this issue or if they do or not.
elictronic 1y ago
He said free clinics.
- hangonhn 1y ago
  But then you're just shifting the cost somewhere else. The doctors aren't working for free. Someone is paying them. It's just not the patients in the case of free clinics. In addition, doctors aren't the only cost centers in health care either. Even if they're free, which is sort of already the case or fairly inexpensive for the insured in the US, the overall cost of healthcare will still be high. Plus if you want completely free clinics (everything from doctors to medicine, etc), then you're not talking about a market solution to the issue, which is completely fair too. No one said you have to use a free market solution for this problem. My point is that we can't expect a free market to solve this issue. It isn't as simple as supply and demand.
  - koolba 1y ago
    > It isn't as simple as supply and demand. It really is that simple. Giving people insurance without actually increasing the supply of doctors or clinics increases the number of people willing and able to seek treatment. It does nothing for lowering costs of said treatment. Per basic economics, that’s shifting the demand curve (i.e., increasing demand). With no changes to supply that leads to higher prices. So every time the government makes a new program or expands anny existing one that provides insurance coverage, costs for everyone will go up. In contrast, my proposal for explicitly bringing in doctors and creating clinics increases supply. People who would have gone to see a doctor elsewhere may now choose to go to this new free clinic. The demand curve itself would not change, though with the lower cost due to the supply curve shift you would have a larger overall market. This is clearly oversimplified. There’s some second order effects where if primary care market increases, you’ll need more X-rays and CAT scans. So there could be an increase in those prices. But that’s could be solved in the same way too.
    - pcai 1y ago
      I think you’re still missing the point - it’s NOT classic supply and demand because the mechanism by which that works is prices, and in many healthcare markets including the US — the buyer isn’t the payer, and shortages lead to rationing (via wait times) rather than increased prices, so often increasing supply doesn’t change prices even as it increases aggregate costs (because there’s still excess demand and rationing).
      - tptacek 1y ago
        For this argument to work you have to believe that decreasing the price of service delivery wouldn't decrease the price of health insurance. Provider costs dominate US national health expenditure, like it's not even close; it's not a full order of magnitude difference but it's close to one.
        hangonhn 1y ago
        But part of the provider cost is driven by the availability of money to pay, which is part of the reason why drug costs are so much higher than in the US. For example, the doctor has no strong incentive to prescribe less costly drugs since they don't pay. The patient don't know any better and aren't the payers either. The insurance has some control over what they will pay for and how much but except for some cutting edge treatments, it is very hard for them to say no. This is part of the reason why insulin in the US is so expensive and why drug companies advertise to doctors and patients, etc. I think in countries where the health care costs aren't as astronomically high as the US there is some form of government intervention to distort the market. And the original post is more or less arguing for a market distortion that doesn't rely on simple price signals to bring costs under control. But that is very different than what has happened in Denver's housing market.
maxerickson 1y ago
Fixing a severe shortage is actually likely to have some impact. For instance, if there's a lot more doctors, the payer may be able to negotiate lower prices. We already have insurance mechanisms that drive patients to the providers that the insurer has negotiated with...
yyyk 1y ago
It's even worse. This isn't a simply supply-demand curve. Supply here often increases demand (patients live more and longer; They need more care).

JumpCrisscross 1y ago

> the supplier (doctor) has an information asymmetry and thus makes most of the decisions, while the buyer (patient) is not usually the payer (insurance) so aren’t really incentivized to save Counterfactual: patients in India routinely shop around for second opinions and negotiate fees.

hangonhn 1y ago
Completely fair point. I should have prefaced my statement with US based healthcare system is structured this way. I don't know how the dynamics are in other countries -- though I do suspect it's similar in term of information asymmetry. I imagine doctors everywhere have some pretty advanced and specialized knowledge. I don't know enough about India to know how they overcome this issue or if they do or not.

elictronic 1y ago

He said free clinics.

hangonhn 1y ago
But then you're just shifting the cost somewhere else. The doctors aren't working for free. Someone is paying them. It's just not the patients in the case of free clinics. In addition, doctors aren't the only cost centers in health care either. Even if they're free, which is sort of already the case or fairly inexpensive for the insured in the US, the overall cost of healthcare will still be high. Plus if you want completely free clinics (everything from doctors to medicine, etc), then you're not talking about a market solution to the issue, which is completely fair too. No one said you have to use a free market solution for this problem. My point is that we can't expect a free market to solve this issue. It isn't as simple as supply and demand.
- koolba 1y ago
  > It isn't as simple as supply and demand. It really is that simple. Giving people insurance without actually increasing the supply of doctors or clinics increases the number of people willing and able to seek treatment. It does nothing for lowering costs of said treatment. Per basic economics, that’s shifting the demand curve (i.e., increasing demand). With no changes to supply that leads to higher prices. So every time the government makes a new program or expands anny existing one that provides insurance coverage, costs for everyone will go up. In contrast, my proposal for explicitly bringing in doctors and creating clinics increases supply. People who would have gone to see a doctor elsewhere may now choose to go to this new free clinic. The demand curve itself would not change, though with the lower cost due to the supply curve shift you would have a larger overall market. This is clearly oversimplified. There’s some second order effects where if primary care market increases, you’ll need more X-rays and CAT scans. So there could be an increase in those prices. But that’s could be solved in the same way too.
  - pcai 1y ago
    I think you’re still missing the point - it’s NOT classic supply and demand because the mechanism by which that works is prices, and in many healthcare markets including the US — the buyer isn’t the payer, and shortages lead to rationing (via wait times) rather than increased prices, so often increasing supply doesn’t change prices even as it increases aggregate costs (because there’s still excess demand and rationing).
    - tptacek 1y ago
      For this argument to work you have to believe that decreasing the price of service delivery wouldn't decrease the price of health insurance. Provider costs dominate US national health expenditure, like it's not even close; it's not a full order of magnitude difference but it's close to one.
      - hangonhn 1y ago
        But part of the provider cost is driven by the availability of money to pay, which is part of the reason why drug costs are so much higher than in the US. For example, the doctor has no strong incentive to prescribe less costly drugs since they don't pay. The patient don't know any better and aren't the payers either. The insurance has some control over what they will pay for and how much but except for some cutting edge treatments, it is very hard for them to say no. This is part of the reason why insulin in the US is so expensive and why drug companies advertise to doctors and patients, etc. I think in countries where the health care costs aren't as astronomically high as the US there is some form of government intervention to distort the market. And the original post is more or less arguing for a market distortion that doesn't rely on simple price signals to bring costs under control. But that is very different than what has happened in Denver's housing market.

maxerickson 1y ago

Fixing a severe shortage is actually likely to have some impact. For instance, if there's a lot more doctors, the payer may be able to negotiate lower prices. We already have insurance mechanisms that drive patients to the providers that the insurer has negotiated with...

yyyk 1y ago

It's even worse. This isn't a simply supply-demand curve. Supply here often increases demand (patients live more and longer; They need more care).