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It's always in the seller's interest to create a complex and opaque system of pricing, especially when the buyer doesn't even pay for the services. This is why
by DanielBMarkham 13y ago
It's always in the seller's interest to create a complex and opaque system of pricing, especially when the buyer doesn't even pay for the services. This is why free markets aren't the answer to everything. It's free and open markets that drive efficiency out of any process.
The problem here is one of incentives. If I promise to pay you for mowing your neighbor's lawn, and he rarely reviews what you're doing and I rarely check with him, suddenly mowing the lawn gets really complicated and expensive. If, on the other hand, you walk next door and solicit the neighbor to mow his lawn, suddenly it's a very simple transaction. The difference is one of incentives. If the goal is to provide mowed lawns, the neighbor is the guy responsible. If the goal is to provide a rationale for writing a check? Heck, I got all kinds of easy rationales handy. I can play this game all day.
It should be illegal for anybody to pay a medical bill except for the person receiving treatment. If you want universal coverage, that's fine: pay the patient and have the patient pay the hospital and doctor. Once you begin to incentivize other players besides the patient, you're going to create a mess. I'd also recommend completely unbundling hospital services. Patients should be able to buy materials and services on the open market -- and keep the savings they make doing so. Hospitals should provide clean, sterile rooms for independent specialists to work, not form a pricing cabal controlling anything that happens inside the walls and incentivized to game the system.
- dopamean 13y ago> This is why free markets aren't the answer to everything. Perhaps I've misunderstood you here but in my opinion the way healthcare works is sort of the opposite of a free market and if a free marketplace for health services were allowed to exist then things like $500 bags of saline solution wouldn't exist.
- thrownaway2424 13y agoIt is not possible to have a "free market" in health care because the "customers" are often on the brink of death, or not even conscious.
- tapp 13y agoI've heard this statement used frequently to shut down debates re using market dynamics to improve the healthcare system in this country. However, the substantial majority of healthcare services provisioned are non-emergency. It is absolutely possible for us to have a freer market in those services (Lasik procedures are just one frequently cited example) and IMO that would be a huge improvement over the current Frankenstein system we have today.
- Fomite 13y agoThe counter to this argument is the following: - The U.S. is some sort of ungodly hybrid system, a muddling of free market and tightly regulated ideas, and has very bad outcomes for the amount of money we spent. - Everyone else has gone away from a market system, more toward a regulated system, and experienced better outcomes. It's possible that also walking away from the other end of the market and relying on the invisible hand to administer your IV will work, but it's not a notion supported by much data - it's a free marketeer leap of faith, and it's in an industry where many of the assumptions needed for a free market (information symmetry comes to mind immediately) don't exist.
- shalmanese 13y agoMany enterprise sales markets are as free as can be but you frequently see the exact equivalent of $500 bags of saline. The similarity in both cases is not the freedom of the market, it's that the purchaser and the consumer are not the same person.
- refurb 13y agoThis is it in a nutshell. The US system didn't become this way because the people involved thought it was a great idea, it became that way because of perverse incentives through which services are paid for. All you need to do is look at how providers act and you can tell what they make money on and what they don't. Why do you think nearly all hospitals have emergency departments? It's not because they are providing a service to the population, it's because it's a great source of profit. Same thing with cardiac centers.
- mahyarm 13y agoI've noticed convoluted pricing happens in these industries for consumers: - Airfare - Cell phones - Many telecom services - Banking & finance - Healthcare - Lawyers? - Accountants? One common pattern they have is they're prone to monopoly effects either through regulation or network effects.