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2 - the disparity in prices shows that the free market just doesn't work for American Health Care This is not intended as an attack on you, just in case it mig

2 - the disparity in prices shows that the free market just doesn't work for American Health Care This is not intended as an attack on you, just in case it might sound that way, but: I wish people, when saying that "the market doesn't work for _____" would specify what their definition of "working" is. This is not a trivial issue! Markets are distributed systems that optimize economies for... the kind of behaviors that succeed in the market (in some respects resembling biological evolution, only less stupid and short-sighted). External forces and constraints on a market change the parameters that get optimized, sometimes in unpredictable ways, and there's no such thing as a market without external constraints warping it. Most of the time, when someone says "the market doesn't work" what they really mean is "I value parameters A, B, and C, but the market is not optimizing the economy to maximize those", but rarely do they indicate more than obliquely what those parameters might be. I agree (as do many people) that the current system is pretty terrible. But without specifying what it should be like, it's hard to talk about good ways to fix it.

andreyf 17y ago
Great point! In health insurance, markets should work to minimize administrative costs - to minimize the amount people have to pay to be insured (cost) and maximize benefits. Currently, the market incentives are to do the exact opposite, while innovating on customer confusion, public relations, and lobbying power in Washington.
stcredzero 17y ago
My sister just paid $2600 for an MRI. I just paid $860 for an MRI. Apparently, there are other places a few miles away where I could have paid $400 less for the same MRI. In Japan, the same MRI would cost $160.
- natrius 17y ago
  "In Japan, the same MRI would cost $160." The upfront cost would be $160, right? I'd prefer to subsidize healthcare for people who actually need help. You and I are probably around the same place economically speaking, so why don't both of us just pay for our own healthcare?
  - daniel-cussen 17y ago
    According to patio11, they are actually cheaper in Japan because of cheap-o machines.
    - patio11 17y ago
      That did not strike me as something I would say, so I checked on SearchYC and found who actually said it. http://news.ycombinator.com/item?id=794374 http://news.ycombinator.com/item?id=794374 My experience on healthcare in Japan is largely positive, except for the one time I really needed it. (And I lived through that, though it was a bit touch and go for a while.) Don't get me started on dental care, though. I had a business trip to Chicago recently and used the opportunity to drop by my parents' dentist for a long overdue routine cleaning. My conversation with them was almost comical: I kept offering to pay them money and they kept asking me how they could help me find a way to get insurance to pay for it. (It ended up costing about five times what my last cleaning in Japan did -- and would have been cheap at twice the price. Don't get me started on Japanese dentistry.)
      - daniel-cussen 17y ago
        My bad. That's not the quote, but I should have been more specific and quoted something other than a YC comment I vaguely remembered.
- jerf 17y ago
  How hard would it have been for your sister to go to the $400 place and pay $400? If the answer is "very", then you don't have a market. I consider the idea that the US has a free market in health care laughable. How "free market" something is is a continuum, not a binary distinction, but my ability to price discriminate or choose among competing insurance providers is effectively nil. I sometimes wonder how much of the problem could be fixed if we took the simple step of stopping making it virtually necessary to get health insurance from your employer for tax reasons and then just see what happens for a couple of years. (But naw, too simple, let's pass a 2000 page law.)
  - gcheong 17y ago
    Milton Friedman seemed to think it would be a good idea: http://www.hoover.org/publications/digest/3459466.html http://www.hoover.org/publications/digest/3459466.html
  - camccann 17y ago
    How "free market" something is is a continuum, not a binary distinction Even worse: it's a multi-dimensional continuum, where the function mapping points from the space "all possible markets" to the space "quality of the resulting health care system" is almost completely unknown, but probably has lots of local maxima and minima distributed throughout the space. The task we're faced with is "maximize the value of the quality function by making semi-blind guesses, while hopefully not landing in a very bad local minimum". I don't think they covered an algorithm for that one in my CS classes...
dstorrs 17y ago
First off, you've got a great point here, and I agree with just about all of it. But I do take exception to one point: > (in some respects [markets resemble] biological evolution, only less stupid and short-sighted) LESS short-sighted? When all of our markets are optimizing for 6- or even 3-month returns? When companies are structured in long-term suboptimal ways because you need to maximize profits for the short term to keep investors happy, or the people at the top get fired. cf the infamous quote from Citibank's former CEO, Chuck Prince: "While the music's playing, you've gotta dance." [This said in answer to being asked why he continued his investment strategy despite knowing it to be unsound.]
- camccann 17y ago
  LESS short-sighted? Quite so! I fear you overestimate biological evolution. Imagine a market with the same kind of behaviors you describe, only a million times larger, and where not only do markets fixate on 3-month returns, but if any executive tries to do otherwise he isn't just fired but summarily executed along with all his senior staff as a lesson to others. Oh, and management at all levels make Dilbert look optimistic: no one actually even knows how to maximize 3-month returns, or how to do anything at all in particular; they just stick with what they're currently doing and sometimes randomly try new ideas (and if 3-month returns don't improve, even for unrelated reasons, everyone involved is also executed). Oh, and sometimes the government introduces arbitrary new regulatory schemes with no reason or warning, and any companies that (by means of trying random new ideas) don't find a way to make decent 3-month returns also have all their senior staff executed. New companies get started semi-regularly, but they're managed just as incoherently. And the system has been running that way for untold millennia. That's evolution. A chronicle of blind stupidity and senseless mistakes, unfathomably vast, written in blood. Makes our silly human affairs look positively cheery in comparison, doesn't it?
  - rudin 17y ago
    The average life expectancy of a multinational corporation-Fortune 500 or its equivalent-is between 40 and 50 years and they have been around for 500 years or less (in their current form). Compare this with the time humans took to evolve. The vast time involved more than compensates for the slower rate of change.

andreyf 17y ago

Great point! In health insurance, markets should work to minimize administrative costs - to minimize the amount people have to pay to be insured (cost) and maximize benefits. Currently, the market incentives are to do the exact opposite, while innovating on customer confusion, public relations, and lobbying power in Washington.

stcredzero 17y ago

My sister just paid $2600 for an MRI. I just paid $860 for an MRI. Apparently, there are other places a few miles away where I could have paid $400 less for the same MRI. In Japan, the same MRI would cost $160.

natrius 17y ago
"In Japan, the same MRI would cost $160." The upfront cost would be $160, right? I'd prefer to subsidize healthcare for people who actually need help. You and I are probably around the same place economically speaking, so why don't both of us just pay for our own healthcare?
- daniel-cussen 17y ago
  According to patio11, they are actually cheaper in Japan because of cheap-o machines.
  - patio11 17y ago
    That did not strike me as something I would say, so I checked on SearchYC and found who actually said it. http://news.ycombinator.com/item?id=794374 http://news.ycombinator.com/item?id=794374 My experience on healthcare in Japan is largely positive, except for the one time I really needed it. (And I lived through that, though it was a bit touch and go for a while.) Don't get me started on dental care, though. I had a business trip to Chicago recently and used the opportunity to drop by my parents' dentist for a long overdue routine cleaning. My conversation with them was almost comical: I kept offering to pay them money and they kept asking me how they could help me find a way to get insurance to pay for it. (It ended up costing about five times what my last cleaning in Japan did -- and would have been cheap at twice the price. Don't get me started on Japanese dentistry.)
    - daniel-cussen 17y ago
      My bad. That's not the quote, but I should have been more specific and quoted something other than a YC comment I vaguely remembered.
jerf 17y ago
How hard would it have been for your sister to go to the $400 place and pay $400? If the answer is "very", then you don't have a market. I consider the idea that the US has a free market in health care laughable. How "free market" something is is a continuum, not a binary distinction, but my ability to price discriminate or choose among competing insurance providers is effectively nil. I sometimes wonder how much of the problem could be fixed if we took the simple step of stopping making it virtually necessary to get health insurance from your employer for tax reasons and then just see what happens for a couple of years. (But naw, too simple, let's pass a 2000 page law.)
- gcheong 17y ago
  Milton Friedman seemed to think it would be a good idea: http://www.hoover.org/publications/digest/3459466.html http://www.hoover.org/publications/digest/3459466.html
- camccann 17y ago
  How "free market" something is is a continuum, not a binary distinction Even worse: it's a multi-dimensional continuum, where the function mapping points from the space "all possible markets" to the space "quality of the resulting health care system" is almost completely unknown, but probably has lots of local maxima and minima distributed throughout the space. The task we're faced with is "maximize the value of the quality function by making semi-blind guesses, while hopefully not landing in a very bad local minimum". I don't think they covered an algorithm for that one in my CS classes...

dstorrs 17y ago

First off, you've got a great point here, and I agree with just about all of it. But I do take exception to one point: > (in some respects [markets resemble] biological evolution, only less stupid and short-sighted) LESS short-sighted? When all of our markets are optimizing for 6- or even 3-month returns? When companies are structured in long-term suboptimal ways because you need to maximize profits for the short term to keep investors happy, or the people at the top get fired. cf the infamous quote from Citibank's former CEO, Chuck Prince: "While the music's playing, you've gotta dance." [This said in answer to being asked why he continued his investment strategy despite knowing it to be unsound.]

camccann 17y ago
LESS short-sighted? Quite so! I fear you overestimate biological evolution. Imagine a market with the same kind of behaviors you describe, only a million times larger, and where not only do markets fixate on 3-month returns, but if any executive tries to do otherwise he isn't just fired but summarily executed along with all his senior staff as a lesson to others. Oh, and management at all levels make Dilbert look optimistic: no one actually even knows how to maximize 3-month returns, or how to do anything at all in particular; they just stick with what they're currently doing and sometimes randomly try new ideas (and if 3-month returns don't improve, even for unrelated reasons, everyone involved is also executed). Oh, and sometimes the government introduces arbitrary new regulatory schemes with no reason or warning, and any companies that (by means of trying random new ideas) don't find a way to make decent 3-month returns also have all their senior staff executed. New companies get started semi-regularly, but they're managed just as incoherently. And the system has been running that way for untold millennia. That's evolution. A chronicle of blind stupidity and senseless mistakes, unfathomably vast, written in blood. Makes our silly human affairs look positively cheery in comparison, doesn't it?
- rudin 17y ago
  The average life expectancy of a multinational corporation-Fortune 500 or its equivalent-is between 40 and 50 years and they have been around for 500 years or less (in their current form). Compare this with the time humans took to evolve. The vast time involved more than compensates for the slower rate of change.