9 ms·

Welcome to the joys of a market based approach to healthcare when there is inelastic demand.

by travem 13y ago

iambateman 13y ago
That sentence has tons of insight on the problem of health care. Thanks. As an aside, is there not some elasticity to medical care? People demand more health care for small problems when the price is lower.
- Bognar 13y ago
  Small problems are not the majority of gross medical sales. Most of the revenue comes from expensive life-saving operations that one might argue are very inelastic.
- bowlofpetunias 13y ago
  And who can judge if those small problems aren't symptoms of a much bigger problem? A problem that can only be effectively treated if it is caught early enough?
- malandrew 13y ago
  Hopefully under such a scenario they would be requesting preventative care, which is almost always cheaper than corrective care.
- jes5199 13y ago
  what I've heard is: in places with single-payer health systems, health care for small problems, while it superficially looks wasteful, pays off in preventing big-problems early, enough of the time, that it functions as an investment rather than an expense.
  - mjn 13y ago
    That's the general assumption, yes, though there's some debate over it. Denmark is currently discussing instituting modest co-pays for some non-emergency visits (currently there are no fees whatsoever, besides your tax contribution). The main debate is over whether this will actually save money or not, all things considered. Evidence doesn't seem to be very strong either way.
- noonespecial 13y ago
  The biggest problem is that there are both elastic and inelastic sections of the healthcare market which we have been trying unsuccessfully to treat as if they were the same. We need a payment conduit/tax structure for the elastic portion and something that actually behaves like insurance for the inelastic. The system we have now does neither well at all.
  - krupan 13y ago
    Very well said! This is getting a bit off topic from the original article but in the broader debate on what to do about healthcare you have explained something that many people seem to misunderstand.
  - iambateman 13y ago
    I posted this online, and wanted to get your feedback: --- Really serious medical conditions are inelastic. If you have cancer, you will seek treatment, regardless of the expense. The difference between $10,000 and $500,000 is not a factor when your life is on the line. In an inelastic situation, the market-based approach is silly (or even bad). Medical providers & insurance companies will move toward providing care at inflated prices. And the left says: "Health care is a human right." And they're right. BUT! this is important. Less serious medical conditions are much more elastic. If the price is $15, maybe you'll go to the doctor for a hurt collar bone. If the price is $750, you wouldn't. I didn't. And the right says: "we can't provide unlimited health care to everyone, it's too expensive." And they're right. But we don't _need_ to provide unlimited health care for everyone. Care in a life-threatening situation (cancer, stroke, heart attack) should be considered a human right and subsidized by society. Care in any other situation should be considered "elective" and be subject to market conditions. What do you think? -- Edit: there IS an upper bound to how much someone can pay for health care, obviously. But it's high.
    - frio 13y ago
      The problem with this approach is that preventative care is the best care. It might cost someone $100/month to take some pills -- or cost the state $10k+ when they have a life-threatening episode of whatever ails them. If the price of the preventative care is too expensive, and there's light at the end of the tunnel (so long as you survive your critical episode, I guess), then there's an incentive to just wait it out until it gets so bad it's free. I live in New Zealand, and I have Ulcerative Colitis. We have a public/private system somewhere along the lines you propose (although a little more forgiving), and are really quite lucky: * There's a strong tendency for doctors to work both publicly and privately. They'll put in time at the public facilities, but those facilities are generally pretty highly loaded -- turnarounds can be slow. If you've got the money, you can see most privately (that's generally not overly expensive). * Thanks to a Government agency known as Pharmac, we bulk buy all our drugs -- so, I pay $5/prescription (prescriptions can last up to 3 months), instead of $120+/prescription. For someone with a chronic condition like myself, this is fantastic. It also works out cheaper for the Government too: we have the market power to negotiate much better deals from pharma companies. * If you do get into a critical state, the public system will provide care. Alternatively, if you've got insurance, you can go private (but private care for critical stuff -- where surgery/non-Pharmac drugs are required -- is generally prohibitively expensive). * Elective/preventative care is also available publicly. This means you're in a queue ("we'll get around to it sometime in the next year"), but does mean you're able to maintain a higher quality of life. Medicine is hard: reconciling care with expenses is a moral quagmire. There are absolutely inefficiencies in the NZ system, but I've come to really respect it.
- derleth 13y ago
  > As an aside, is there not some elasticity to medical care? Trivially true if you define 'medical care' to include cosmetic procedures, which then gets you into case-by-case debates on whether this or that orthodontic or dermatological procedure is 'cosmetic' or required to live a normal life. Which then gets into debates about what pressures society places on people to have a certain look, and just how much social damage is done to someone who has a visible port wine stain, for example. There's also a certain elasticity of demand for preventative care and palliative care as well. For example, flu shots and pseudoephedrine: Most of us here are not going to die of the flu, and most of us aren't around people who can die of the flu and cannot get vaccinated. Similarly, most of us here can get through a cold without taking symptomatic treatment for it. So there's a certain elasticity there, depending on the person. But giving flu shots to everyone is likely a lot less expensive than losing even a single person to a serious flu infection. A similar case can be made regarding cheap pseudoephedrine versus losing some productivity to feeling like crap without the pills.
  - Domenic_S 13y ago
    > But giving flu shots to everyone is likely a lot less expensive than losing even a single person to a serious flu infection. Wait, what?
    - YokoZar 13y ago
      I paid 15 dollars retail for a flu shot today. The estimated actuarial price of a human life is approximately 10 million dollars. (http://en.wikipedia.org/wiki/Value_of_life http://en.wikipedia.org/wiki/Value_of_life) So in principle flu shots like mine are "worth it" if it has a greater than 15 in 10 million chance of saving a life -- either mine or someone I might infect. So, yes, for the price of a single life we could immunize about 600 thousand people. That's probably enough for herd immunity in an entire population for some region (like an entire state). Such a measure is bound to save more than one life.
    - derleth 13y ago
      By "everyone" I meant "in a company", and "losing" to mean "down for a whole week, at least". I should have worded that a lot better. My apologies. If you're paying someone minimum wage, and they're a profit center for the company, their productivity over the week a flu would take them down is worth a lot more to you than a single flu shot. Extrapolate that to a whole department, which is likely to be lost because the flu is so contagious, and you're looking at a potential loss which is a lot more expensive than a department's worth of flu shots.

Welcome to the joys of a market based approach to healthcare when there is inelastic demand.

by travem 13y ago

Welcome to the joys of a market based approach to healthcare when there is inelastic demand.

That sentence has tons of insight on the problem of health care. Thanks. As an aside, is there not some elasticity to medical care? People demand more health care for small problems when the price is lower.

Bognar 13y ago
Small problems are not the majority of gross medical sales. Most of the revenue comes from expensive life-saving operations that one might argue are very inelastic.
bowlofpetunias 13y ago
And who can judge if those small problems aren't symptoms of a much bigger problem? A problem that can only be effectively treated if it is caught early enough?
malandrew 13y ago
Hopefully under such a scenario they would be requesting preventative care, which is almost always cheaper than corrective care.
jes5199 13y ago
what I've heard is: in places with single-payer health systems, health care for small problems, while it superficially looks wasteful, pays off in preventing big-problems early, enough of the time, that it functions as an investment rather than an expense.
- mjn 13y ago
  That's the general assumption, yes, though there's some debate over it. Denmark is currently discussing instituting modest co-pays for some non-emergency visits (currently there are no fees whatsoever, besides your tax contribution). The main debate is over whether this will actually save money or not, all things considered. Evidence doesn't seem to be very strong either way.
noonespecial 13y ago
The biggest problem is that there are both elastic and inelastic sections of the healthcare market which we have been trying unsuccessfully to treat as if they were the same. We need a payment conduit/tax structure for the elastic portion and something that actually behaves like insurance for the inelastic. The system we have now does neither well at all.
- krupan 13y ago
  Very well said! This is getting a bit off topic from the original article but in the broader debate on what to do about healthcare you have explained something that many people seem to misunderstand.
- iambateman 13y ago
  I posted this online, and wanted to get your feedback: --- Really serious medical conditions are inelastic. If you have cancer, you will seek treatment, regardless of the expense. The difference between $10,000 and $500,000 is not a factor when your life is on the line. In an inelastic situation, the market-based approach is silly (or even bad). Medical providers & insurance companies will move toward providing care at inflated prices. And the left says: "Health care is a human right." And they're right. BUT! this is important. Less serious medical conditions are much more elastic. If the price is $15, maybe you'll go to the doctor for a hurt collar bone. If the price is $750, you wouldn't. I didn't. And the right says: "we can't provide unlimited health care to everyone, it's too expensive." And they're right. But we don't _need_ to provide unlimited health care for everyone. Care in a life-threatening situation (cancer, stroke, heart attack) should be considered a human right and subsidized by society. Care in any other situation should be considered "elective" and be subject to market conditions. What do you think? -- Edit: there IS an upper bound to how much someone can pay for health care, obviously. But it's high.
  - frio 13y ago
    The problem with this approach is that preventative care is the best care. It might cost someone $100/month to take some pills -- or cost the state $10k+ when they have a life-threatening episode of whatever ails them. If the price of the preventative care is too expensive, and there's light at the end of the tunnel (so long as you survive your critical episode, I guess), then there's an incentive to just wait it out until it gets so bad it's free. I live in New Zealand, and I have Ulcerative Colitis. We have a public/private system somewhere along the lines you propose (although a little more forgiving), and are really quite lucky: * There's a strong tendency for doctors to work both publicly and privately. They'll put in time at the public facilities, but those facilities are generally pretty highly loaded -- turnarounds can be slow. If you've got the money, you can see most privately (that's generally not overly expensive). * Thanks to a Government agency known as Pharmac, we bulk buy all our drugs -- so, I pay $5/prescription (prescriptions can last up to 3 months), instead of $120+/prescription. For someone with a chronic condition like myself, this is fantastic. It also works out cheaper for the Government too: we have the market power to negotiate much better deals from pharma companies. * If you do get into a critical state, the public system will provide care. Alternatively, if you've got insurance, you can go private (but private care for critical stuff -- where surgery/non-Pharmac drugs are required -- is generally prohibitively expensive). * Elective/preventative care is also available publicly. This means you're in a queue ("we'll get around to it sometime in the next year"), but does mean you're able to maintain a higher quality of life. Medicine is hard: reconciling care with expenses is a moral quagmire. There are absolutely inefficiencies in the NZ system, but I've come to really respect it.
derleth 13y ago
> As an aside, is there not some elasticity to medical care? Trivially true if you define 'medical care' to include cosmetic procedures, which then gets you into case-by-case debates on whether this or that orthodontic or dermatological procedure is 'cosmetic' or required to live a normal life. Which then gets into debates about what pressures society places on people to have a certain look, and just how much social damage is done to someone who has a visible port wine stain, for example. There's also a certain elasticity of demand for preventative care and palliative care as well. For example, flu shots and pseudoephedrine: Most of us here are not going to die of the flu, and most of us aren't around people who can die of the flu and cannot get vaccinated. Similarly, most of us here can get through a cold without taking symptomatic treatment for it. So there's a certain elasticity there, depending on the person. But giving flu shots to everyone is likely a lot less expensive than losing even a single person to a serious flu infection. A similar case can be made regarding cheap pseudoephedrine versus losing some productivity to feeling like crap without the pills.
- Domenic_S 13y ago
  > But giving flu shots to everyone is likely a lot less expensive than losing even a single person to a serious flu infection. Wait, what?
  - YokoZar 13y ago
    I paid 15 dollars retail for a flu shot today. The estimated actuarial price of a human life is approximately 10 million dollars. (http://en.wikipedia.org/wiki/Value_of_life http://en.wikipedia.org/wiki/Value_of_life) So in principle flu shots like mine are "worth it" if it has a greater than 15 in 10 million chance of saving a life -- either mine or someone I might infect. So, yes, for the price of a single life we could immunize about 600 thousand people. That's probably enough for herd immunity in an entire population for some region (like an entire state). Such a measure is bound to save more than one life.
  - derleth 13y ago
    By "everyone" I meant "in a company", and "losing" to mean "down for a whole week, at least". I should have worded that a lot better. My apologies. If you're paying someone minimum wage, and they're a profit center for the company, their productivity over the week a flu would take them down is worth a lot more to you than a single flu shot. Extrapolate that to a whole department, which is likely to be lost because the flu is so contagious, and you're looking at a potential loss which is a lot more expensive than a department's worth of flu shots.