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I think you need to first state what you're trying to accomplish. Is lower prices an end unto itself? if so, I doubt that you will get it from the "free market

I think you need to first state what you're trying to accomplish. Is lower prices an end unto itself? if so, I doubt that you will get it from the "free market." It's too inefficient. When you slip and break your leg, you can't take your time shopping around for the lowest price care. You can't buy a lung transplant when it's cheap, save it, and use it when you need it. Some people simply want people to pay their own way for ideological reasons. I can understand that without agreeing with it.

bmmayer1 14y ago
Insurance is a really terrible way to pay for any commodity. If I paid a fixed price to go to the grocery store every month and get everything I needed off the shelves, the grocery store would go bankrupt. Obviously, insurance works for event that are unlikely, as a way to mitigate risk. But everyone dies eventually. Everyone will need healthcare. Because of the nature of insurance, it drives up prices, it misaligns incentives, and our particular mode of insurance--subsidized employer-provided insurance--has the added injury of forcing people to stay in their jobs for the sake of their health and limiting mobility. Yet, not only do we accept insurance as the best way to pay for healthcare today, we just doubled down on it with Obamacare, requiring people who previously weren't in the insurance market to participate. My solution is to let healthcare be another commodity, like food, where there is widespread competition and choice, and thus lower prices and more transparency. With your example, it's not like someone makes a choice in emergency care right now either. But at least you could establish a relationship with a hospital ahead of time. How about an app that lets you join a hospital network for emergencies? What about an annuity plan that lets you save up for a lung transplant ahead of time if/when you need it? I don't know what health entrepreneurs would come up with. But there are solutions out there that will never be tried as long as insurance companies have a stranglehold on the health industry.
jacoblyles 14y ago
You seem to know a lot about the US health insurance market. What percentage of US health spending is driven by this sort of emergency care? Or is this all theoretical hot wind?
- raganwald 14y ago
  What is theoretical about an article describing how health insurance actually works in an actual country from someone who has actually lived there for nearly all of his actual life? And I didn't mention the word "US." You did.
DigitalJack 14y ago
Calling the "free market" inefficient is the most absurd thing I've heard in at least a week. "Free Markets" clearly aren't the answer for everything, but they are when efficiency is the primary goal. Laws and regulations aren't there to promote efficiency. They are there, ideally, to promote safety. In my experience, the overlap of safety and efficiency is vanishingly small. Would that it were not. In every situation, we need some balance of efficiency and safety. Yes, it's true, when you are having a heart attack, you probably don't want to spend time shopping around. That is exactly what "insurance" is for. When you have a cold and you go to the doctor, that is a waste of a limited resource (the doctor's time specifically). If you as a consumer had to bear the full brunt of the cost of seeing a doctor for non-catastrophic issues, you'd think twice about going over a cold. That doctor would then be able to take on more patients because their time wouldn't be wasted on trivial things. This is more efficient. The flip side, is that the expense of the doctor's office dealing with insurance companies would absolutely be reduced. That's an immediate cost reduction. The demand for arbitrary doctor services would be reduced (by virtue of everyone with a sniffle not immediately heading to the doctor). Simultaneously, doctor's would be able to reach more patients at a lower cost. Prices for everyday type treatment would go down. When you disconnect the scarcity of a resource from its price, you wreak havoc on the system. The way we (in the US) use health insurance, it's more like "prepaid medical services" than what insurance was meant for. The problem is that you have disconnected the scarcity of the doctor's time and service with the price of that service. It artificially inflates demand on that doctor's time, because hell, you've already paid the premium this month, if you don't go see the doctor for a cold, you are wasting money. And that's true. You have wasted money, but going to the doctor for that cold just wastes their time, so now you've doubled down on waste and inefficiency.
- sets13 14y ago
  I wont respond to the rest of your response, but it has been pretty clearly demonstrated by people smarter than you or I (at least in their respective professions) that free markets aren't always the most efficient solution to a problem, particularly when the desired solution is not just to come up with a price that is profitable for for the seller. http://www.basiceconomics.info/market-failures-and-externalities.php http://www.basiceconomics.info/market-failures-and-externali...

bmmayer1 14y ago

Insurance is a really terrible way to pay for any commodity. If I paid a fixed price to go to the grocery store every month and get everything I needed off the shelves, the grocery store would go bankrupt. Obviously, insurance works for event that are unlikely, as a way to mitigate risk. But everyone dies eventually. Everyone will need healthcare. Because of the nature of insurance, it drives up prices, it misaligns incentives, and our particular mode of insurance--subsidized employer-provided insurance--has the added injury of forcing people to stay in their jobs for the sake of their health and limiting mobility. Yet, not only do we accept insurance as the best way to pay for healthcare today, we just doubled down on it with Obamacare, requiring people who previously weren't in the insurance market to participate. My solution is to let healthcare be another commodity, like food, where there is widespread competition and choice, and thus lower prices and more transparency. With your example, it's not like someone makes a choice in emergency care right now either. But at least you could establish a relationship with a hospital ahead of time. How about an app that lets you join a hospital network for emergencies? What about an annuity plan that lets you save up for a lung transplant ahead of time if/when you need it? I don't know what health entrepreneurs would come up with. But there are solutions out there that will never be tried as long as insurance companies have a stranglehold on the health industry.

jacoblyles 14y ago

You seem to know a lot about the US health insurance market. What percentage of US health spending is driven by this sort of emergency care? Or is this all theoretical hot wind?

raganwald 14y ago
What is theoretical about an article describing how health insurance actually works in an actual country from someone who has actually lived there for nearly all of his actual life? And I didn't mention the word "US." You did.

DigitalJack 14y ago

Calling the "free market" inefficient is the most absurd thing I've heard in at least a week. "Free Markets" clearly aren't the answer for everything, but they are when efficiency is the primary goal. Laws and regulations aren't there to promote efficiency. They are there, ideally, to promote safety. In my experience, the overlap of safety and efficiency is vanishingly small. Would that it were not. In every situation, we need some balance of efficiency and safety. Yes, it's true, when you are having a heart attack, you probably don't want to spend time shopping around. That is exactly what "insurance" is for. When you have a cold and you go to the doctor, that is a waste of a limited resource (the doctor's time specifically). If you as a consumer had to bear the full brunt of the cost of seeing a doctor for non-catastrophic issues, you'd think twice about going over a cold. That doctor would then be able to take on more patients because their time wouldn't be wasted on trivial things. This is more efficient. The flip side, is that the expense of the doctor's office dealing with insurance companies would absolutely be reduced. That's an immediate cost reduction. The demand for arbitrary doctor services would be reduced (by virtue of everyone with a sniffle not immediately heading to the doctor). Simultaneously, doctor's would be able to reach more patients at a lower cost. Prices for everyday type treatment would go down. When you disconnect the scarcity of a resource from its price, you wreak havoc on the system. The way we (in the US) use health insurance, it's more like "prepaid medical services" than what insurance was meant for. The problem is that you have disconnected the scarcity of the doctor's time and service with the price of that service. It artificially inflates demand on that doctor's time, because hell, you've already paid the premium this month, if you don't go see the doctor for a cold, you are wasting money. And that's true. You have wasted money, but going to the doctor for that cold just wastes their time, so now you've doubled down on waste and inefficiency.

sets13 14y ago
I wont respond to the rest of your response, but it has been pretty clearly demonstrated by people smarter than you or I (at least in their respective professions) that free markets aren't always the most efficient solution to a problem, particularly when the desired solution is not just to come up with a price that is profitable for for the seller. http://www.basiceconomics.info/market-failures-and-externalities.php http://www.basiceconomics.info/market-failures-and-externali...