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This particular invisible hand has been hamstrung by malignant forces. Notably, the payer in a typical healthcare transaction is not the same as the recipient,

• nsxwolf 13y ago
  Just imagine what a hamburger would cost if you could only purchase them through some kind of hamburger insurance. You would hand over a small copayment and get your burger. Months later, you would receive a really confusing looking Explanation of Benefits from your burger insurance provider with multiple pages of line items - full of really high prices for pickles, pickle slicing fees, etc... ending with an "Amount You May Owe Provider" that would be many times more than we pay for hamburgers on our current free market system. We'd then demand a huge law be passed that would slightly decrease out of pocket costs for some, increase them for others, and force everyone to buy burgercare. And when it caused even more problems, we'd throw up our hands and finally adopt a single payer burger system. In the end, we'd have long forgotten and laugh at anyone who suggested that burgers were once far cheaper, and that it was therefore a lot easier to buy a burger for someone who couldn't afford one.
  • tdfx 13y ago
    But then again, nuclear medicine devices were never on the dollar menu.
    • novalis78 13y ago
      Hm... who used to be able to afford cars? Cell phones? when they initially hit the market. I remember last year going to a radiologist, for my wife's ultrasound. The machine looked like a desktop, I thought pretty cool, the thing gets smaller. I asked how much it cost. The nurse said it they bought it for 50k USD. I almost fell off the chair. Year 2013 - an ultrasound for 50k. Sounded like progress backwards. Obviously, there are incentives at work that raise the price in health care, and less forces that would let them fall. Great example is that recent article in the NYT about the 5 artificial hip manufacturers in the US that basically run a cartel.
      • vacri 13y ago
        You make it sound like an ultrasound setup is a bulk consumer device. They very much aren't. They're quite low turnover items, and require significant specialist knowledge across a couple of fields to make. They're not consumables - if you sell one, it could be in service for 5, 10, 20 years. $50k for this kind of lasting professional tool isn't that much. I'd say $50 might be a touch high for this kind of thing, but not by much, and depending on the model, not at all. I used to work at a place that made medical electronics, and the idea that 'because smartphones that are churned out by the million only cost half a grand, every other electronic item should be similarly cheap' is just wearying.
        • novalis78 13y ago
          If there would truly be an enormous price pressure on hospitals and clinics driven by a free market setup, I am pretty sure they would turn around and talk to said equipment manufacturer: Hey, we know you are selling us a desktop with an audio card. We are pretty sure you can still survive if you reduce your $50k profit and sell us the same equipment for 20k or 10k. Then, said equipment manufacturer, would have to increase volume by starting to sell it to developing markets (what a novel idea) or find ways to produce it cheaper etc etc... but I get it - these are daily considerations of entire industries that the medical sector does not need to be concerned about. What if we tried and see where this would lead though? Right now, I think, we have a pretty good idea how a healthcare system looks like when it is run without any price incentive or cost assessment.
• mncolinlee 13y ago
  > "People of my persuasion often make the case that if automobile insurance worked the same as health insurance, and we used insurance to pay for oil changes, the price of oil changes would shoot up wildly. Reason being that you would no longer care what it costs." If it results in selling more bus passes and electric cars, we should do it. Unfortunately, we do not want to limit access to health care in the same way as health is needed to maintain a stable labor base. How would a single payer system work with oil changes? We don't have to guess. Many places have single payer health and auto insurance. Large companies provide single payer benefits to their employees on much better terms then normal. Having only a single payer means prices can be dictated and adjusted as society demands to balance profit with affordable access to services.
• rprospero 13y ago
  I like that car analogy, because it also helps demonstrate the other way in which health insurance is fundamentally broken with respect to other insurances. With car insurance, if someone wrecks my car, I get a check for the repair bill and the transaction is complete. However, if car insurance ran like health insurance, the insurance company would pay for a rental vehicle and leave my car totaled. If I ever drop my insurance, they'd take away my rental car and leave me with just the old wreck. There's no plan to make me whole again. Granted, health insurance companies don't give out rental bodies. However, with other types of insurance, an adverse event (e.g. house fire, car accident) leads to an insurance payout that covers your loses. However, with health insurance, an adverse event (e.g. cancer diagnosis) just leads to a piecemeal payment of health expenses while you remain on their policy. If your policy ends, they don't have to pay for treatments on an event that occurred under their policy. If we really want health insurance to act like catastrophic insurance, then it really needs to act that way. If I get diagnosed with cancer, I shouldn't get treatments covered on an annual basis as long as I am a member. Instead, the actuaries should calculate an average lifetime cancer treatment cost and I should be sent that as a check. It's then my responsibility to pay for that treatment. This would be a far more economical system, but it requires that health insurance companies start paying for health expenses that are incurred under their policies, just like every other form of insurance.
  • tdfx 13y ago
    If your house burns down and you receive the check and don't spend it repairing your house, oh well. If you get cancer, get a check to cover the total expected cost of treatment, and don't spend it on treatment, the hospital can't refuse you treatment when you show up with serious symptoms. Plus I'm not sure I'd want to receive a check for the "average lifetime cancer treatment cost" because it would sure suck if you case was more complicated than the average case.
    • spikels 13y ago
      I don't think you understand how medical insurance works or how fire insurance works in most cases. With medical insurance you never receive payment without spending at least as much on the treatment and in most cases the payment is made directly to the provider. With fire insurance if you have a mortgage the payment is made to the lender who hold it until the repairs are made and many insurance policy require that the money be spent on repair or pay less if it is not spent on repairs. All of these rules and procedures are to reduce fraud and limit costs.
• sbov 13y ago
  Regardless of what you do people who are bleeding out in the middle of a street or who are delirious from fever won't be acting with price sensitivity.
  • travisp 13y ago
    I hear this argument brought up a lot, but the majority of situations are not this type of situation, and those are also not the things that cost the most (which are more things like extending an unconscious, never-to-recover terminally ill patient's life another 2 months). Even a large percentage of ER visits would likely see people acting with price sensitivity -- This is why in some places of the country you see Emergency Rooms advertising about how low their current wait time is. The wait time isn't really relevant to true emergencies (you get seen right away), but people without true emergencies don't want to wait. Financial cost is irrelevant (someone else is paying), but the cost to their time is relevant, and so people select emergency rooms (and urgent care clinics) where they will have to wait less. Hospitals are acting on the one thing that the patient cares about (sitting in a waiting room), since the other (price) doesn't matter. For the really expensive things, like end of life care, governments with universal healthcare systems are the ones that act with price sensitivity and ration this care and refuse in some cases to pay for the most expensive treatments. For example, the UK has the National Institute for Health and Clinical Excellence (NICE), which set a maximum of about $47,000 per quality-adjusted year gained. What we refuse to do in the US is allow patients to make a choice like that (instead, we mandate that insurance cover far more in health care expenses, driving up the cost of that insurance). As a comparison, the US sets it supposedly to about $50,000 per QALY, but in practice it tends to be far more, with some regulation-required treatments requiring as much as $500,000 per quality adjusted year (some heart pumps, and kidney dialysis being another very expensive example).
    • superuser2 13y ago
      If your child's leg is broken at a soccer game after close of business, it is not a "true emergency" because she is not going to die. But you are not going to leave her in the most significant pain she has ever experienced with a bone poking out through her skin until the urgent care clinic opens tomorrow morning. How long she should suffer before getting treatment definitely doesn't have anything to do with your disposable income. Some people might agree with you that poor adults deserve whatever the market gives them (I won't) but how are you going to hold people's kids responsible for having parents who are too price-sensitive to get them timely medical treatment?
• abalone 13y ago
  Oil changes are a very poor analogy for health care. First, the argument that insurance disrupts market pricing is wrong. Car insurance does cover car repairs and the car repair market is quite competitive, since insurers are heavily invested in managing prices. The problem here is not insurance. It's that health care is a poor fit for free market dynamics. In order for markets to function, consumers need to have the ability to comparison shop. That core requirement is often severely constrained in the health care "market". One reason is urgency. A great deal of the most expensive health care offers no opportunity for the consumer to comparison shop whatsoever, because it's an emergency situation. You're wheeled in unconscious on a gurney. Even for non-emergency care, like cancer treatment, it's often urgent. Another reason is capital requirements. Doctors and hospitals are extremely expensive to create. In order for markets to function there need to be multiple options to choose from. But the capital requirements of doing so with expensive specialities like oncology significantly retard competition. There is a reason why every other industrialized country in the western world coordinates health care via a single-payer government instead of the free market. And usually with better public health outcomes. Markets are not always the best solution. Consider the fire department "market". We actually tried that once in the U.S., a long time ago. Houses would pick their own fire company, which competed with one another. You'd affix an emblem on the front of your house with the company you subscribed to. It was something out of a 20th century Libertarian fantasy. Not so great a solution for fighting fires though.
  • Guvante 13y ago
    > Car insurance does cover car repairs and the car repair market is quite competitive, since insurers are heavily invested in managing prices. Are you really sure? It seems to me that functional changes are competitive but aesthetic changes are not. I wonder if that is because the primary buyer of aesthetic fixes is car insurance companies, while more functional fixes are financed by consumers directly. > That core requirement is often severely constrained in the health care "market". I am curious why you go off on emergency service, when the bigger elephant is the inability to price. Ask any physician how much it will cost you on a high deductible plan to have anything done. If you are lucky they might be able to figure out an office visit, but usually they don't know and won't tell you anything about more complex procedures. Since the person who chooses to have the procedure doesn't pay, we have not attempted to keep the ability to predict prices. Even if you could comparison shop, you aren't comparing real prices. > And usually with better public health outcomes. Except single payer doesn't solve any of the problems that we are discussing here. The only thing it solves is the silly system of marking up "standard" rates to make contracts more attractive resulting in impossibly high prices for uninsured people.
• jellicle 13y ago
  That's a fine bit of conservative nonsense you just regurgitated, coming to the conclusion that the problem the U.S. is suffering from is "too much health care", and therefore the solution is to reduce access to healthcare and insurance. It rests on the assumption that patients get frivolous medical procedures (open heart surgery for you! and open heart surgery for you! and open heart surgery for you!) because they may not pay full price for them, a claim which, like the teapot orbiting the sun directly opposite the Earth, has never been observed in real life. In actuality, healthcare is a well known example of a market failure - there cannot be a normal market in healthcare ever, because definitionally, your health is worth an infinite amount of money to you (how much would you pay not to be a slave? how much would you pay not to have your hands and feet chopped off?). Further, healthcare prices are unpredictable. How much does a gall bladder surgery cost? Did I mention that the patient got a flesh-eating bacterial infection as a result of the surgery? That's true and will always be true even if prices were posted at the door, which they are not. The solution - which has been discovered by every advanced nation on Earth except the U.S. - is having the government strongly involved in paying for healthcare, insuring across the entire population to even out costs and making sure that, e.g., medical device manufacturers can't gouge the unknowing public. Monopsony powers nicely counteract the inherent power imbalance that healthcare providers normally have over the sick, and everything works just fine, costing each of those nations less to cover their entire nation than the U.S. currently spends to cover a small segment of its population.
  • derefr 13y ago
    > definitionally, your health is worth an infinite amount of money to you (how much would you pay not to be a slave? how much would you pay not to have your hands and feet chopped off?). That is not how you measure preferences, at all. Try "what likelihood of having your hands and feet chopped off would you trade for not being a slave?" Probabilities are fungible in a way dollars aren't.
    • michaelt 13y ago
      It depends on what part of healthcare you're thinking of, and what stage of the process you're at. If you're wheeled into ER with a knife in your chest, you don't have a fungible probability of needing healthcare. You're going to be buying the knife-removal service whether it costs $100 or $100,000. You may be unconscious. Obviously at the other extreme of choice is purely elective surgery, like breast enhancement. Lots of choice there - if you don't like one doctor's prices you can shop around or skip the surgery all together. In between are situations where treatment is required but isn't urgent, or where the problem is minor and you can live with it/use off the shelf treatments, or where there are various types of surgery available. A lot of the time when there are multiple options with complicated trade-offs, that's exactly where it would be nice to have a friendly, trustworthy doctor who can give you some unbiased guidance. How exactly to bring all the incentives into alignment and make them fair, over the entire continuum of choice and accepting that the people who need the healthcare aren't themselves experts - that's the hard part.
• warfangle 13y ago
  What happens to people who cannot afford to purchase care in this hypothetical situation, or who become financially devastated by a (semi)permanent condition requiring expensive care and/or technology? I have a hard time comparing seven years oncological torture to having your oil changed, you see.
• rhizome 13y ago
  This particular invisible hand has been hamstrung by malignant forces. Thanks for saying this, it's fits in well with my sense that Capitalism (and Communism, and so on), like all -isms, is faith-based. People say the same thing about religious texts, that televangelists are reading it wrong, or that screwy evangelicals are taking the wrong parts too seriously, or a serial killer on a mission from God didn't pay attention to some other part. The problem is that the framework can be so radically misinterpreted, and this is a fundamental design flaw. It just so happens that Capitalism is the Western world's state religion. Now we see that Adam Smith actually has myriad of hands, and they all have to be working properly for the system to work as intended. Never anything about the hand itself, only its steerer, or that we are experiencing the fruit of a poisoned tree.