Many in this thread are claiming that price fixing wouldn't occur in a "truly free" market. This is misty-eyed naivety.
In a completely deregulated free market, it is even more in the hospitals' interest to form a price-fixing cartel. Any new player in the market trying to set reasonable market prices could be excluded through market pressure tactics (eg, tell distributors don't sell to them or our cartel will no longer use you).
It seems to me that the parlous state of the US healthcare system is in fact a perfect demonstration of the dangers of a completely free market, and claims that "oh no it's not actually free enough" are merely handwaving.
Well you can hardly have a free market for healthcare in the first place. A functional market requires that consumers be vigilant and make good choices. That's hard enough without being sick or injured.
I like to think of myself as a free markets guy, but driving healthcare via the market seems like the worst, most cynical application of the concept possible.
> If consumers make bad choices, don't they eventually learn to make better choices?
Even if we assume that consumers will learn to make good choices, that would require that they understand their choice was a bad one.
This is an A-B-C problem (antecedent + behavior => consequence). The consumer must first recognize that a negative consequence has occurred, and then determine whether it was their behavior that was flawed (they made the wrong choice) or a flawed antecedent to that behavior (they'd made the right choice, had their assumed knowledge of the situation been accurate).
Consumers don't do this though. Studies have repeatedly proved this (e.g. the very large effect of marketing and advertising on selection of products of otherwise equal quality).
Consumers may make decisions that are non-harmful (i.e. they got about the same result but simply paid more) but they certainly do not make decisions that are optimal.
"If consumers make bad choices, don't they eventually learn to make better choices?" One of the assumptions buried in this is the idea that consumers have access to the information required to make such a choice.
Look at Apple's App Store. It restricts what developers can do (and charge) and it restricts what users can download (and where from). But, because the short-term benefits are good enough, many people do use it, to the detriment of the group.
Regulations usually prevent consumers from making any choice. Regulation can make consumers buy insurance for procedures they do not want, or even physically be able to have. Regulation made impossible to shop across state lines for insurance. Government rules force suppliers to sell services at set rates to one customer and not to another.
Health care stopped being a free market when government stepped in. Then it because burdened by politicians creating a system which favored whomever was giving them money and votes.
The sentence you're objecting to isn't claiming that US healthcare is a completely free market (which, as you note, would be an unbelievably ignorant view to hold... literally unbelievably). It's claiming that certain failures of the fairly-free US system already illustrate the sorts of failures that would plague a free(er) system.
You may or may not agree with that conclusion, but it's a far more plausible view for someone to hold than what you seem to have thought the original poster meant.
No, it is a comment about the idea that the failures come from it not being free enough.
Saying that something demonstrates the dangers of x by saying that the things that are wrong with it are features of it moving in the direction of x is not the same as saying that the thing is x.
I could say that something nearly catching fire and getting badly scorched is a perfect demonstration of the dangers of fire, but that would not mean that I think that the thing has actually caught fire, it just means that I am using a perfectly normal rhetorical device to describe that I think that the fire is a danger.
That also largely depends on if they are being wilfully obtuse, or lack the basic comprehension skills involved with recognising wider context beyond the level of single sentences, which seem to be the main two areas of confusion here so far.
So many unnecessary arguments crop up on this forum because of selective, incomplete reading of comments and misinterpretation.
If commenters took a minute to think about other potential meanings before going off on some misinformed rant it might make for a more productive debate.
"It seems to me that the parlous semi-free market state of the US healthcare system is in fact a perfect demonstration of the dangers we'd encounter if we moved to a completely free market. Claims that "oh no it's not actually free enough" are merely handwaving"
I think that (or something like it) would have been a much clearer approach.
You are very clearly, and unambiguously declaring that as long as there are six people somewhere in the world who misunderstand, then whoever made the original point is at fault for not making it universally easy to understand, and impossible to twist or edit to fit the prejudices of the reader?
At what point does the number of people who correctly understand it come into play? If 6 people don't get it, but 6 people do, is it still the fault of the author? What about 60, 600, 6000, 6bn?
Surely if only six people out of the entire population of the world misinterpret a point, and everyone else gets it, then it must be the due to the prejudices or poor comprehension skills of those six.
On the contrary, if a half-dozen different people don't misinterpret your point on a widely-read Internet forum, you probably didn't say anything worthwhile.
Again: that is a sentence you made up. You ignored the "it is even more" clause, which makes it clear that he believes the current market dynamics presage what would happen in a deregulated market. What's worse, in order to "object" to the sentence, you deliberately misquoted the comment and attributed your broken misquote to him.
How do you explain other free markets that obviously deliver quality products at low prices? I don't feel gouged when I buy a television, a cell phone or lumber at Home Depot.
Cell phones are a great example of the terrible results from supposedly free markets.
Plans are deliberately priced to be confusing to compare prices; plans are frequently updated to cause people to be stuck in win-optimal contracts; consumers are gouged on some items (see bizarre cost of sms in UK); and companies collude to defeat market mechanisms - see the use of area codes in auction bids as a method of communication when frequencies were auctioned off.
Do you have a cell phone? If the results of this particular market are so terrible, why does virtually everyone elect, of their own free will, to buy a cell phone?
They are not choosing freely, society pushes them to have a cell phone, and by definition there is no free choice of carriers because the government allocates the spectrum.
I think you're suggesting that unless a choice has no consequences, it's not a free choice.
So because in this day and age it's convenient to have a cell phone, the choice to do without one is not a free choice. And because one doesn't have an unlimited number of carriers to choose from, that choice is also not a free choice.
I'm using free choice in a different way, perhaps. To me, unless someone puts a gun to your head (so to speak), every choice you make is a free choice. That doesn't mean the choices are without consequences, or that they are necessarily good for you.
The point is that a cellphone is the best tool we have and that you are severely disadvantaged not only practically but also socially if you don't have one.
So you are free to not choose one but the consequences are huge to most people in fact to big.
It's not a rational choice as the free market philosophy claims, its a choice thats primed by whats considered desirable at any given time.
When you look at how much other devices cost that are comparable but are not mobile phones, then over a grand a year does seem excessive. Comparing the cost of a phone to a cray-2 is fairly meaningless. It would make more sense to compare it to a Raspberry-Pi.
What if structural separation and a wholesale bandwidth model could reduce that price? What if smart radios and eliminating bandwidth "ownership" could reduce it even more?
Those are examples of designed markets, even though there are accompanying technologies, as is the current mobile telephony business. Now guess who stands in the way of implementing those changes?
The nearly ubiquitous cell phone contract sucks and the operators certainly try to make things confusing but if someone really does want a cheap cell phone and plan they can be had for quite cheap and at not much inconvenience. Drive down to Walmart and you can pick up a $30 cell phone and start using a prepaid plan that costs $30/mo.
Most hospitals will not, however, tell you how much a procedure costs making shopping around for non-emergency procedures impossible. Combine that with the usual low deductible health insurance plans and you've driven out any incentive for the consumer to even attempt getting a good deal.
Free markets are a problem when there is a resource that can be monopolized (doctors / medical supplies) or when corporate goals are at direct odds to community interest (a deregulated BP despoiling the Gulf of Mexico because safety measures are expensive and fuck you.)
Home Depot would happily gouge you if they could form a cartel and gain enough control of the supply chain.
And not only would they happily gouge you, but they would then claim they have a duty to their shareholders to do so, as the law permits them to do it.
This is, after all, the reason we tend to avoid government monopolies if we can avoid it. It's not just that government is inefficient, it's that monopolies are inefficient, whether "private sector" or otherwise.
I'm in much agreement with your initial point (that free markets allow for price-fixing), but you're getting a lot of comments here because you overstate your case!
There's nothing peculiar about medical supplies that make them easy monopolized. Pharmaceuticals and medical devices (neither of which are the topic of the original post) enjoy patent protection, but there are often many out-of-patent substitutes available.
Doctors are limited, but that is primarily because the state makes it illegal to practice "medicine" without either being a doctor or being supervised by one. Much other scarcity stems from this one, e.g. limited insurance options because it's difficult to create a physician network.
There are absolutely free-market-advocates out there who would remedy price-fixing problem by allowing self-taught people practice medicine. That should increase enough market-entrants to break any cartels we see.
I'm not one of those advocates, because I see some sort of quality guarantees as helpful in this arena. But there are lots of aspects of the healthcare market that could benefit from more market-like behavior, whereas there are other aspects which could use less (i.e. more regulation). We need nuance in order to make progress.
But we want the state to regulate medical practitioners! Even if we support natural selection acting on humans, we don't want an ambulance to take us to a homeopathic healer or Christian scientist, we want them to take us to a licensed professional.
I agree! Apologies if I was confusing on that point. Though I do suspect the states should license more MDs and provide more ability for PAs & NPs to practice without direct supervision.
I do very much believe more consumer choice for non-urgent care would be helpful, i.e. lab choice, hospital choice, a menu of drug options (ratings, side effects, out of pocket cost). This is controversial for a number of reasons, but after considerable, I believe this would have significant positive impact on the overall efficiency of healthcare.
Emergency care has to be just a piece of the cost pie. People shop around for health care all the time, including for very expensive things like childbirth.
There was just a big NY Times article on the cost of childbirth. Turns out its extremely hard to shop around. Not only is it much more expensive in the US than in any other country to give birth, but, with a few exceptions, it's very difficult to get pricing information in advance. To quote:
>When she became pregnant, Ms. Martin called her local hospital inquiring about the price of maternity care; the finance office at first said it did not know, and then gave her a range of $4,000 to $45,000.
Plus when you "shop around" you still need to select a doctor's office which is close enough to be within viable range once the moment of delivery is at hand.
Even in the suburban areas I've lived in, for us that meant a "selection" of between 3-4 potential clinics, not exactly a very wide choice (and completely based on where I lived so it could very well have been that I would have been selecting from 4 of the worst clinics in the whole state).
On the billing side, I feel like there is a lot of inefficiency due to errors caused by complicated systems.
When my wife was pregnant, at some point we got billed several thousand dollars for a procedure the insurance company refused to cover. She called the insurance co., and they (I think) recoded the procedure to something that cost a couple of hundred dollars and was covered to boot.
It seemed like there was a bunch of new employees on both sides who were learning as they went (and pressing random buttons). So forget in advance, pricing was hard to find out even post facto ;)
So how do you bring your child back after you ended up picking a cheaper bad doctor who kills your child.
If you buy a bad TV you can return it and provide a bad review, so next time you shop from a better store. If you buy a car and it turns out to be a piece of shit, you just lost lots of money. It will take you years to recover and save for a better, but you still can.
You can't get your life back, you can't get your health back sometimes, you can't return your dead child back. That's the problem.
Do you link the expense with the quality? If bad doctors are out there its not up to the consumer to stop them, this is what regulatory bodies are for. basic public safety. Cost (in most places I have been - mostly within Australia, New Zealand and the UK) has little to do with the quality of the care.
Ralph Lauren jeans has plenty of competition and the customer is reasonably well informed:
* Do you want to pay a premium for brand value? Awesome, buy the Ralph Lauren (or Lucky, or whatever).
* Do you want something reasonably durable but cheaper? Buy Levis.
* Do you want something cheap but convenient? Buy something at Target or Walmart.
There are dozens of options and hundreds of styles and the end customer can try them on and decide what works for them.
When you are at the emergency room and are given treatment with no opportunity (and in most cases, ability) to compare the various treatment options, then, yes, you tend to expect the caregiver to not mark something up 10, 25, 100X.
> Ralph Lauren jeans has plenty of competition and the customer is reasonably well informed
This isn't true at all, not even from a standpoint of brand and marketing. Most people cannot tell the quality of a garment by comparing alike items. Most people are not aware of fashion trends outside of what they see for sale at stores in their price point.
Bullshit. As per TFA, all services that might conceivably be involved were explicitly charged as well. It is an accounting device in the sense of "Hollywood accounting", i.e. having the sole purpose of obfuscating actual costs while maximizing profits.
No, that's wrong. Mass-produced clothing is the direct opposite of a commodity.
A commodity would be silk, or cotton - the raw fabric used as base materials. What you then do with those materials to increase their value directly changes them from commodities into products.
Put another way - gold is a commodity, as is silver. Jewelry, however, is not. It can't be a commodity if the material has been changed into a diversified form to increase its value - it has to be raw in order to be a commodity.
No, it's not. Commodities are products with multiple sellers and minimal differentiation. You can only put Ralph Lauren clothes into that bucket by willfully ignoring the concept of differentiation. Meanwhile: there is literally no differentiation between different suppliers of IV saline; it's a standardized product.
When a brand label is reduced to "this is what we put on products our buyer/sourcer has obtained at the lowest cost", you no longer have a design element at work. Increasingly, brands don't designate manufacturer, but middleman (yes, there are exceptions, but they're increasingly, well, exceptional).
Some very high-end custom-designer fashions might be excluded, but if you're buying off-the-rack (or mail-order/online) clothing manufactured in mass, you're buying a commodity, in the sense of a largely undifferentiated item. The label is the _only_ item of distinction (and not even that when you're getting grey-market goods).
Incidentally, look up "commodity" in your dictionary, it doesn't mean what you think it does.
Exactly this. All markets are more or less "free" and the question is how to structure markets to deliver the greatest benefit.
Absolutists about free markets are at least being purposefully obtuse if they don't admit that they think vendors should win every advantage from irrationality, inelasticity, and information asymmetry, plus every transitory advantage as markets get dominated for a supposedly temporary interval and for supposedly salutary purposes.
The above, combined with a bias toward investor-owned enterprises over co-ops, customer-owned, and nonprofit enterprises is what brought us to a place where market liberalization only hardens the position of incumbents.
Two of the major things that are said to be features of free markets are deregulation and price transparency. The trouble is that deregulation and price transparency are often opposing forces.
Even if there were perfect competition, it doesn't matter much, people don't comparison shop for ERs. If you are having a heart attack, you're not in a position to compare prices at local hospitals.
Well, I think it would have to start somewhere. I'd be happy to be able to comparison shop for routine, non-emergency stuff...let's say dentists to start off with. I have a feeling that once you start chipping away at it, the outlying examples would get taken care of as well.
I think people already cross-shop dentists. When I had a root canal done I inquired at two places. And I'm not even very sensitive to it since I have dental insurance.
I would be nervous to do that. I trust my dentist, I know he does a good job, and is sensitive to my comfort, that's why I go there. I've been to a few terrible dentists before, and I've had to get dental work redone because it didn't last. Dentists seem to be so hit and miss. Doctors can be the same way, price isn't the only consideration.
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.
> 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.
Many 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.
- 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.
I'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.
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.
The problem with having healthcare under private enterprise is that these healthcare providers do not operate under the free market conditions we assume they do.
There is no "perfect information" allowing consumers to choose the cheapest price. As the article points out the pricing structure is very opaque. Not to mention the "consumers" want the best product regardless of cost, after all we are talking about their lives here.
Given the lack of free market conditions operating on these healthcare providers it is only logical that they would behave like the extortion rackets they are.
It is even worse than that. Lets say you want to open a medical facility that will lower costs. This will end up taking away business from other facilities where patients don't find the higher costs to provide value. In a free market, the new facility goes up, existing facilities have to compete, and consumers benefit.
In 35 states you can't do that. Existing facilities are protected, and you'll need to establish a certificate of need[1] showing that business won't be taken away from existing facilities. The somewhat tortured logic is that they would then have to charge remaining patients more which would raise costs for everyone so this is a cost saving measure.
Like many parts of US business it is good old fashioned protectionism, and not free markets.
There is never perfect information in any market. The continual problem with free market economics is that according to the definition, there has never been a free market anywhere in history. It is ideology with a thin veneer of mathematics.
They dont operate in a free market. Everything is closely regulated and the patient cannot compare costs. Companies which would like to provide lower costs services would not be allowed to advertise them.
I am of the firm belief that healthcare is one of the basic goods that should be provided by a government. Some may cry socialism and argue that free markets are more "efficient", but that assumes people shouldn't have equal right to basic healthcare services. It also ignores the fact that many of the generally accepted principals required for a functioning free market are difficult to achieve in healthcare. In an emergency situation, for example, buyers are likely constrained to the closest hospital, at which point that hospital become a monopoly for that particular buyer. When the the good on offer is survival, it's easy to see where problems might arise.
I live in a country that has been rated the freest economy on earth every year since 1995 [1]. Low taxes, small government, minimal regulation. So what does healthcare look like here for the average person? $13/day. Got a sore finger? $13/day. Intensive care? $13/day.
There is a significant parallel private system that offers all the luxuries and perks that a free market can provide (no waiting times, private rooms, choice of doctor etc.). But it competes with the public hospitals for buyers. In providing a competing alternative, I would speculate that the public system limits the type of monopolistic situations that can arise.
No system is perfect and clearly there are enormous differences between the US and elsewhere, but it's interesting to note that the "freest economy on earth" has universal public healthcare, in addition to a freely competing private system.
One of the big reasons for this problem is Medicare. The reimbursement that Medicare offers is often far less than it costs the hospital. Why does Medicare not cover the cost of a procedure? Usually because it did cover it in the past (to the point of generosity) and providers reacted by shifting their services to maximize the profits.
A good example is the infusion of drugs. Medicare pays ASP+4% (just cut from +6% due to sequestration). If you're a clinic that doesn't get a discount on their drugs (mostly community based clinics) you're often paying more for the drug than the gov't pays you (it's a net loss every time you prescribe the drug).
However, the gov't does pay a lot to infuse the drug. The result? Providers everywhere were starting their own infusion clinics and making a ton of money on it. The profit from infusion clinics would be used to offset the loss from the purchase of the drug. CMS clamped down on reimbursement for infusion services recently, but it's still a profit center.
This happens all the time in the US healthcare system.
So what do hospitals do? They jack up the price on every item they possibly can. Of course insurance companies know what is up, so they negotiate much better rates for all of the items. However, for those who are uninsured, they pay the charge master rate which is very inflated.
The problem with the US healthcare system is not that's a free market, because it isn't. The problem is that's not a free market and it's not a fully regulated market, it's something in between. So what happens is that some regulations are put in place, some of which cause certain procedures to be unprofitable, so providers simply shift those costs to the un-(or less) regulated prices.
The current sense of the term in which I use it now is capital-maximizing. If you have money, if you're capitalistic, you should be investing in what can make you the most money, or, if you're bought in to a system, you should be extracting the most "value" from it as possible.
I'm not using it as a political term, rather to describe our current, quarter-profit-maximization system driven by the stock market and public company board + CEO directives for how to run a company.
It's great for efficiently using capital to exploit existing innovations but it's really bad at things like investing in the public, social good of things like healthcare.
I have two active kids and am reasonably active myself. We have probably received medical treatment a dozen times in the last year, a combination of walk-in clinics, personal physicians and emergency room visits, depending on the circumstances. During these visits, the staff have used equipment, given procedures and prescribed medication and have rarely, if ever, inquired about my thoughts on treatment.
When my son jumped off the couch and cut the inside of his mouth open, I wasn't asked my opinion on treatment. And if I had been asked, I would have simply said "you're the physician, do what will make him better the fastest." The same would have gone for when I had pneumonia or had to get a tetanus shot after getting fishhooked while surfing. My goal is simple -- recover the best the fastest.
How does one legitimately comparison shop for a baby delivery? Imagine, for instance, Hospital A says their births average $20,000 and Hospital B says their births average $30,000. Which rational prospective parent chooses the $20,000 option?
Hospital care is not like buying a car, where most people can consider themselves educated enough to make a decision based on competing factors -- perhaps I'm willing to give up some handling for a lower price or I'm willing to sacrifice fuel economy for more power.
The average person knows nada about the medical practicalities of giving birth (or treating pneumonia, or even stitching gums) so they cannot make informed decisions about what are reasonable tradeoffs.
As other people have said, medical treatment is an inelastic need. Parents don't say "you know, I'm cool with 50% less effective treatment for my child at 50% of the cost" and people don't say "you know, 90% functionality of my leg will be just fine if you can bring this in at a discount."
So not only do you have a lack of informed customers, you have a lack of choice in outcomes. A free market solution for medicine is a fairy tale spun by people of certain social and political persuasions.
The article focuses on what can hardly be considered a complicated good: salt water. Medical grade saline is highly regulated, and must be one of the most commodity products that exist in the country today. (The article takes pains to establish this.) It takes minimal effort to understand what it is or to compare prices. And yet, as the article says, there is no functioning market for it.
For something like "set this broken bone" sure, it's difficult to talk about the price for this risk vs. that risk. But for the liters of saline used during the procedure? That ought to be trivial to analyze. Yet it is not.
But the need is still fundamentally inelastic. You're seriously ill from food poisoning and you've lost a lot of fluids. The ER nurse is about to stick an IV into you and wave your hand weakly and say "Wait, how much is that IV fluid you're putting in there?"
The nurse says $500.
Option 1) You say "no way, I can't pay that." The nurse shrugs and says "well, that's what it costs for IV solution here."
Option 2) You say "holy hell that seem expensive for a bag of salt water." The nurse shrugs and says "well, that's what it costs for IV solution here."
Option 3) You say "I'm really not comfortable paying that. What other treatment can I get?" The nurse shrugs and says "sir, this is the standard protocol for treating acute food poisoning. We put a saline solution into your arm via IV to replace your fluids. There is no alternate treatment. We're really busy in the ER, so I need to put this needle in your arm or get to another patient."
Now let's add a functioning market as you allude to:
Option 3, redux) You say "I'm really not comfortable paying that. What other treatment can I get?" The nurse says "well, we also have this other saline solution for a buck." You, reasonably, say "wait, what? Why is this other one 500 times cheaper than the first one?" The nurse shrugs and says "no idea, I don't make them. They both seem fine to me though." You, still being reasonable, say "then why is one so much more expensive than the other? Will the cheaper one do just as good a job as the expensive one?" The nurse shrugs her shoulders and says "look, I can't promise anything one way or the other. We default to the more expensive one but if you want the cheaper one, that's your choice. It's probably fine. Just sign this form that you're opting for the cheaper solution."
What does a rational person with zero context choose?
That depends on what the rational person can afford. When they're thinking "500$ means I don't make my house or car payment this month and I'm not certain how I'll feed my family", they may say "I'll take the 1$ bag", consequences-be-damned. And they're still a "rational" person.
You are equating higher cost with better quality. There usually is a correlation, but with US healthcare's opaqueness with prices, I wouldn't make that correlation.
Leaving aside that, people do in fact make medical decisions based on cost. For example, for angioplasty there are two options - a medicated stent and a non-medicated, regular stent. The medicated stent is more expensive than the normal one. When it came to choosing one for my father, I chose a medicated one only because I was paying through insurance. But many of the patients out here in India don't have insurance. In that case there is a definite probability that a lower cost one will be chosen. Another example is dialysis. The frequency at which people perform dialysis is directly related to cost and affordability.
It is not always a given that patients would go for the absolute best.
"How does one legitimately comparison shop for a baby delivery?"
How did you and your spouse decide on an ob/gyn when you were expecting your kids? How did you decide on a pediatrician after they were born? Would you be able to rate your experience with both/either after the fact (ie, did the experience live up to the reasons you chose them?)? Would it be possible to use such ratings along with costs to at least create some measure of efficacy for the specific providers or their hospitals/clinics? The outcome may not be a perfect solution, but it at least gives people some data points if they are interested in comparing doctors/clinics/hospitals for whatever their needs are.
My wife and I did pick the doctor (of 4 pediatricians) that was recommended to us by friends that had a good care and delivery experience.
BUT ... there is only one hospital here and all of the doctors are part of the same system. So, although we could "comparison shop" for our physician, this had no effect on what we would (potentially) pay.
A few things, specifically about the US health care system:
1) Unlike medical procedures, for dental procedures it's pretty easy to get price quotes from multiple dentists: they will tell you their sticker price if asked. They will also give you the procedure code so you can ask your dental insurance (if any) to what extent that's covered so you'll know what the actual price to you is. People will in fact comparison-shop for major dental procedures, based on cost, dentist reputation, etc.
2) The situation with emergency or time-sensitive procedures (pneumonia, tetanus shot, cut inside mouth) and scheduled non-emergency ones (hip replacement, say, or laser eye surgery) is a priori quite different. It is in fact possible to sanely price-shop for hip replacements if people are willing to tell you prices and there is reputational data available. Unfortunately the medical establishment works hard to prevent both. Laser eye surgery is a particularly interesting case, because there _is_ freely available price information there; you may want to look at what's happened to its price over time. Learning as much about such a procedure as people tend to know about buying cars is not actually all that hard: people don't know that much about cars and there really isn't that much to know about some of the fairly standardized scheduled procedures.
3) People do in fact do the "90% functionality at much lower cost is just fine" thing all the time, with glasses (e.g. buying reading glasses at CVS instead of getting a prescription pair), dental procedures, and some scheduled medical procedures. You're right that "50% less effective treatment at 50% of the cost" doesn't happen much, though. Instead you get 100% less effective lack of treatment at 0% of the cost....
4) Since you brought up baby deliveries.... Sorry, pet peeve. If a hospital is charging you $20000 for a low-risk birth with no complications (which they definitely do!), that's an excellent indicator of how broken the system is. If you shop around for how much that sort of thing costs with people who specialize in low-risk births (birth centers, midwives), you will discover that the typical price for birth plus prenatal visits with no complications in the US is in the $3-5k range. Of course such a setup will not do the various wholly unnecessary things that will be done in a typical hospital birth setting, nor will it be subject to typical hospital billing practices.
5) A good bit of care in the US is end-of-life care, where it is in fact quite possible to make price/time tradeoffs to some extent, as well as comfort/time ones (e.g. hospice vs aggressive cancer treatment that might prolong life for a few months) and people who are in a position to make that choice can in fact make it in an informed way.
In practice, what we call "medicine" is a bunch of separate services that have totally different economics, often being bundled together with completely opaque pricing put on top. For some of them, there is lack of informed customers and lack of choice in outcomes, as you say. For others one or both are present. And even today some parts of "medicine" (e.g. scheduled dental cleanings) work quite different from other parts (e.g. pediatric well-child checkups; try to get a price quote from a doctor for one of these!) for no particularly good reasons that I can see.
The "right" solution to this problem is unclear to me, unfortunately, because as you point out there is a fair amount of emergency medicine where a free market cannot possibly operate. A good example of such a thing is the total lack of any possibility of a free market in emergency ambulance transport, from the patient's point of view. We should stop our attempts at a fake free market in those areas, but we should also try to create actual free markets in medicine where possible. And for quite a few things I believe it is in fact possible.
And herein lies the true problem of medicine in America. We have the worst possible healthcare system. It is a privately run industry without any real competition. Almost anything would be better - either public healthcare or real competition. Instead, what we practice in America is an exercise in insanity played out on sick and injured.
I agree. When it comes to your or your family's health you will not go with "cheap" even if it is the same level or better service/outcome. This is why the entire system needs to first create a nice feedback loop. Right now there are no metrics on how well certain hospitals are doing that can drive patient selection.
Usually, the patient just ends up going to the specialist their primary care provider referred them to or the closest one home. Until the quality/outcome data is made public there is no hope in steering people to better hospitals/providers.
There are some attempts lately in freeing up this information but I guess only time will tell how effective they will become.
On the bright side, it will only take one good health insurance company (I am thinking more like the type of disruption that a "Virgin" like company may bring to the table) to start using this data and driving some meaningful change.
There was a really, really good (depressing) article I'd read about a year or two ago talking about how group purchasing organizations worked to influence the costs of devices.
The example case was a guy who'd developed an auto-retracting needle, and was screwed out of business by some major manufacturers pressuring hospitals not to buy it.
Free market decisions will work when the patient has a choice. For example, when going for an outpatient visit to a doctors office that is scheduled in advance. One could argue that the patient has time to review their choices, call different providers and come to a decision.
This is not the case when the patient is being urgently hospitalized. They are typically rushed to the closest medical center and are subject to the prices it charges and it's providers charge. Given that they have no choice, whatever system it is that leads to these high prices is unlikely to change - if you are forced to buy something from me, why wouldn't i charge you as much as i feel like for it?
The government could get involved and force hospitals to adhere to a certain fee schedule - but why should for profit institutions have to adhere to this? In a truly capitalistic society they really shouldn't. The best ways to deal with this is to maximize insurance coverage, which is one goal of the affordable care act, and then to really use it as insurance and not to pay for every possible medical service a patient may require. Insurance companies will negotiate reasonable rates for hospitalizations. And if it's really being used as insurance and not to cover regular outpatient services, premiums would remain low as well.
So would there still be stories of the $4 Tylenol tablet dispensed in the hospital? Probably - but in the grand scheme of things, it wouldn't matter as much.
After spending six months in the hospital for orthopedic care for my news it became very apparent that unless you had a negotiated rate with your HMO or were on Medicare, pricing was the wild west. If you could discern what the bills were for via the medical codes, you would become outraged by the overhead. The best part is that hospitals get to hide behind HIPAA as they gouge and steal.
And what about these web sites for thousands of dollars? I mean, if I can throw something together in 30 minutes using MS Paint and Wordpad, how ridiculous is it that a designer charges more than 20 USD per hour?
Ah, I see. It's only en vogue to complain if I don't know anything at all about the constraints of the domain and am pulling stuff out of my ass. My bad.
So this is by design isn't it? The fact that insurance covers everything and the hospitals do not have to eat up any costs begs for this to happen. If the majority of customers (patients) pay out of their pocket then the hospitals would be incetivized to make themselves attractive to patients. Else why the hell do they care? In fact they mark up prices multiple times to offset any unforeseen costs of eating up costs as well. There is no incentive in price transparency, no incentive to compete among hospitals. Honestly if you are covered then as an individual you don't care either. I am not sure what the solution is here.
Serious question: why do you think that hospitals don't have to eat costs?
It's a loaded question in the sense that I've been at various hospitals and they always talk about their budget shortfall which is in part due to non-reimbursed care provided to those who cannot pay and/or have no insurance. But it's also not a loaded question in the sense that I want to understand why people would think hospitals don't eat costs.
Oops, I was thinking something and typed something else entirely. I meant to say that since the insured pay for the uninsured (through marked up prices), the hospitals are incentivized to jack up prices.
Not to defend the costs or the state of the system, but the justification for the prices of medications in hospitals usually includes the time of the nurses, pharmacists, and techs that make the whole administration process happen safely.
Also, hospitals will bill whatever amount they can get reimbursed. Most insurance companies have contracts with hospitals where they only get a fraction of the billed amount. The rest is written off by the hospital. Uninsured patients can usually work out payment plans for lower amounts as well. That said, healthcare in the US is still pretty damn expensive.
I think there are 2 big factors that always seem to be missing from these investigations. The high costs offsets individuals who don't pay for their healthcare. Keep in mind that the hospital must treat anybody who walks in the door and they frequently do not get reimbursed by the government. Also keep in mind that the solution must be perfect when it physically cannot be. Because if there is a .0001 percent chance of failure, every doctor that treated the patient gets sued, the hospital gets sued for several million, the manufacturers gets sued, the middle man gets sued, heck the receptionists probably gets sued too. Think of the costs of insurance for every party involved. Obstetricians often pay $85,000 to as much as $200,000 for malpractice insurance. That's just the doctor.
Reduce the malpractice payouts and shield doctors like other countries do. Make the government absorb more of the costs for care. The price could probably be cut by 200 to 300 bucks.
1. Does the industry need a few Mannings and Snowdens?
2. How much progress in the world is stifled by powerful incumbents blocking competition? Taxi lobbyists tackling Uber, car industry impeding mass transit in LA decades ago, etc?
The TLDR is that an independent pharmacist treating AIDS patients got run out of business by price fixing competitors. He got the last laugh and sued on the behalf of the government and has so far collected $597M in awards (the government has collected over $3 billion).
The behavior of these (very large) firms was outrageous:
> For example, Abbott Laboratories (ABT) sold its antibiotic Vancomycin 1 GM FTV to customers for $4 a dose, according to a joint Justice Department and Ven-A-Care lawsuit. Abbott reported the cost to pricing publishers as $72.48 -- 18 times the actual amount, the lawsuit says.
This is likely going on for other types of drugs and then also in every other segment (medical devices/supplies being a biggy).
So if the manufacturer charges a dollar for the bag of saline, and the hospital marks it up a couple orders a magnitude, hospitals must be absolutely swimming in cash, right? Did I miss that part in the article?
What a baffling industry. Wish great things to any startup that tries to get through the bureaucratic/legal/insurance hurdles to take a crack at some of this.
With centuries of regulatory capture, powerful, politically-connected vested interests with huge war-chests, and a deck full of trump-cards like 'safety' they can play, they might need more than just good wishes.
They don't clarify though, the costs of running a sufficiently-advanced multiple-effect distiller, dealing with the FDA, WHO and whomever else forces them to... these costs could definitely add up, no?
What do you think the bar is for entering the market of providing water for injection? Who's there to make it costlier, maybe the insurance oligopoly can hold some of the blame for this as well...
They list the manufacturer sale price right there ($1.07 a liter). The manufacturer is the one who has to go through the certifications, capital costs, and part of the overhead. All the remaining cost (the remaining 89 dollars) is overhead from the hospital, middle distributors (if they exist) and the such.
The the majority of the cost of capital, dealing with regulation, and other "justified" increases is absorbed into the manufacturer sale price.
> Copy the health care system of any other rich country.
This is easier said than done. The link between socialism, still a profane political philosophy, and municipal health care is too strong—the time it would take to switch it over is be on the order of election cycles, not years. Granted, we are already on that road, but it's going to be a long time before any mainstream politician embraces it.
Absolutely not, and and "socialist" is not the same thing as "socialism" at any rate. The only people who hate the idea are the hardcore capitalists, most notably those who profit from the current regime (industrialists and drama-fed parasites like the media and politicians), but the fact remains that nationalized health care is a feature of pretty much every single country with a higher standard of living than the US.
I'm not sure why the overall size of the population is relevant here. If it works for countries with populations of 5 million (Norway), 63 million (UK), 82 million (Germany), and 126 million (Japan), I think it's completely reasonable to at least try it in a country of 319 million.
Ethnic homogeneity is also an issue. If you think that an arab living in france gets the same quality of healthcare as a european french person at the same poverty level, you're kidding yourself. Not that the US doesn't have these problems. Ultimately, different ethnicities get different diseases, too, so the bureaucrats in charge of deciding what gets covered and to what extent are basically institutionalizing racial privilege.
However, naive grass-is-greenerism is more of what I was railing against.
"If you think that an arab living in france gets the same quality of healthcare as a european french person at the same poverty level, you're kidding yourself."
Funnily enough, medic in French is an Arabic loanword, toubib.
Also, I am not sure how you think the French health system works, but at every level through it there are enough people of Arabic background in it that your idea of there being massive differences in health care for people of Arabic background in France seems unlikely. It is true that there will be instances of racism, however I think that you are pretty far off the mark here in general.
"Ultimately, different ethnicities get different diseases, too, so the bureaucrats in charge of deciding what gets covered and to what extent are basically institutionalizing racial privilege."
There is some variation in susceptibility to disease between different ethnicities, sure, but there is such a large and established Arabic population in France that it would make no sense for the health service to be acting in the way you are suggesting.
Also what particular diseases are you talking about? As far as I am aware there has been so much mixing between Arabic populations and European ones over history that the differences are not really all that great, especially when you look at the differences in care required anyway for two individuals from the same ethnic background.
At the end of the day, given that the French health system gets some of the best ratings in the world and that France also has a very large amount of people who are not of European ancestry, it would be very hard for there be a vast gulf in care based on the ancestry of such a sizeable percentage of the population, otherwise France simply would not hold those ratings.
Out of interest, how much time have you spent in France? I have been there a few times, some of my family have lived there for several years and I am currently sharing a house with someone French, who is not of European background.
As someone that spent quite a bit of time in French hospitals visiting relatives recently, I have no reason whatsoever to think access to care is limited in anyway whether on ethnic or socioeconomic background... Do you care to cite some sources?
That is absolutely false. All French citizens and even foreigners enrolled in the "securite sociale" scheme have access to the same facilities, procedures and doctors. There is no discrimination in the public service. Any claims to the contrary are at best unfamiliarity with the subject if not deliberate misinformation.
"The social inequalities in health have endured or even worsened comparatively throughout different social groups since the 1990s.... Health policies mainly promoting equal financial access to healthcare have little chance of abating health inequalities. "
You are severely misrepresenting that study as it is about the backgrounds of people who say they forgo healthcare on money grounds and pointing out that there are other factors other than whether someone can actually afford healthcare that affect whether people think they can afford healthcare.
It also appears to not look at ethnicity at all in that study.
It is basically saying that it isn't enough to make healthcare available, you also have to get people to use the service in other ways than mere affordability as even if something is affordable a lot of people will still not bother and claim that they think it will be unaffordable.
Results: After making adjustments for numerous individual socio-economic and health characteristics, we observed a higher occurrence of reported forgone healthcare among people who have had financial worries during adulthood, a life-course experience of physical, sexual or psychological abuse; who have experienced childhood difficulties; who have expressed a low degree of sickness orientation, a high worry/concern about and a low self-esteem
forget ethnicity for a moment (there is a separate biological argument that is not sociological in nature), although we know what 'socio-economic' is a codeword for. The point is that posters above are saying things like "There is no discrimination in the public service." I can say for sure there is no way that is possible. If there were no discrimination, then there would be no reason why people are systematically avoiding the healthcare system. One ostensible goal of the French system is to rid itself of healthcare inequality. In that aspect it has failed. The numbers show that. And it doesn't matter that, maybe, the problem is 'education' or whatever, because that's still all a part of the state system.
I happen to believe the french system is better than the US system (as the US system is right now) but I don't personally believe that it is fundamentally the best system or in any way fundamentally better than a free market system (to include medical charities). But what I think is completely misguided is to think that the French system is absolutely equitable, infallible, or transposable to the US.
forget ethnicity for a moment (there is a separate biological argument that is not sociological in nature), although we know what 'socio-economic' is a codeword for. The point is that posters above are saying things like "There is no discrimination in the public service."
You started with a comment about killing off 90% to achieve ethnic homogeneity and when pressed on the point said that the French health system can't possibly manage to treat poor people of Arabic extraction. Forgetting ethnicity for a moment would seem to be to remove the prior context that people were replying to.
Also, you then after saying to forget ethnicity start saying that we know socio-economic is a codeword, presumably meaning that you have no intention of leaving the subject of ethnicity.
Also you are claiming systematic avoidance of the French healthcare system and that it has failed in it's attempt to treat people fairly. Now, it obviously is not perfect, nothing is, however to paint that study as evidence of systematic avoidance and failure, rather than room for improvement seems churlish.
Failure is when you spend the most money, but still rank thirty eighth, rather than when you are the fourth biggest spender and rank first.
Personally I just think that you are an ideologue on this. Show me a country that gets good results from unregulated private medical care plus charities. Who builds the network of A&E departments in that case?
No doubt, the US medical system is a failure. It wasn't, 50 years ago. Nobody here is suggesting that medicine be completely unregulated. You bet I'm an ideologue on this, but so are you. Here is part of my point: The question of who pays is a moral one. Should a person who has huntington's, and will lead a highly productive life through the late 30s and chooses to die quickly (in lieu of dying slowly painfully), be forced to subsidize the life of a person who smokes through their youth and chooses to milk the system for expensive, extended life support through their 50s-100s? Who gets to make that call? Corner cases are important.
I am also not convinced that the French medical system is sustainable. We are getting a snapshot in time, and since no economy today is based on a system that doesn't borrow money on interest, (versus spending only what it takes in through taxes), kicking payments to the future could mask unsustainability, ultimately resulting in a spectacular collapse of the system. In other words, today's French citizens could be living in borrowed luxury that will absolutely slaughter tomorrow's. Again, this is not to say that the US system is sustainable (it obviously isn't).
Should a person who has huntington's, and will lead a highly productive life through the late 30s and chooses to die quickly (in lieu of dying slowly painfully), be forced to subsidize the life of a person who smokes through their youth and chooses to milk the system for expensive, extended life support through their 50s-100s?
Either of those people could get hit by a bus at age 20 and need life saving surgery and massive help learning to walk again. This isn't particularly about morals of ownership, this is about pragmatic ways of spreading risk.
I don't personally care what the political setup is and I think there are numerous ways to achieve spreading medical risk, but I have yet to see a country that is getting good results from just private industry plus charity.
If you think you know how it could work and that there would be an improvement in medical outcomes and general equitability from your plan over the other systems now in effect, then that is excellent news and you should detail it in an academic paper and tell the world.
However, given that you are stating that you are an ideologue on this, then you are starting with the answer you want to end up with and just trying to work out how to argue it.
If you want to say that is all I am doing as well, then fair enough, all I can say is that I am fairly certain that is not where I am coming from on this, while noting that you openly admit it.
I'm nowhere near having an answer, but pricing transparency needs to be a major part of the solution. I realize OPEC isn't exactly a popular entity, but I wonder whether a similar model might have some benefits here. Form a group comprised of representatives from interested parties tasked with establishing pricing for services rendered that is consistent across the entire nation. Perhaps allow regional adjustments based on cost-of-living deviations, or some other relevant metric - but cap how much those deviations can actually influence the price of care.
End the idiotic "billed rate" vs. the "negotiated rate" nonsense.
Include patient transportation in the equation. If singular pricing isn't attainable, a local hospital's care is too expensive, and the patient can receive similar care at an alternate location in a cost-effective way - cover the transportation cost under their insurance.
Tort reform. Liability insurance premiums for health care professionals is as crazy as the price for the care they provide. This is as big a problem as the price of a bag of saline.
I know these aren't the answers - but pricing of services is key to the problem, and the Affordable Care Act did little to get that under control beyond attempting to move more individuals under the umbrella of insurance and outside of emergency care.
What would happen if a hospital opened up that just had reasonable rates? It wouldn't make any deals with insurance companies other than to take payments. It posts all it's prices online and transparently for everyone to see. You can shop for treatments on their website. Could they make money this way?
the best solution is obviously some kind of public-private partnership, so that we can get the best parts of the public sector with the best parts of the private sector. There's no way we'll wind up with the worst parts of both.
Even if one is willing to accept them into one's general worldview... First principles - like "government is wasteful" - only go so far in the face of conflicting data. And there is a lot of it on the topic of healthcare systems.
The government is wasteful and inefficient, but it is not the most wasteful and inefficient system possible.
Politics is the art of figuring out when to burn the extra resources on the government method because all of the other available methods are even worse.
Well it's also nowhere near "public". For the most part we're talking about private hospitals and private insurance companies, the combination of which have failed to bring U.S. healthcare costs in line with the rest of the world.
Don't simply blame "regulation" either. Many industries are regulated, some heavily so, and still manage to produce companies that are profitable and efficiently deliver good products.
I don't think we'll see a real solution to the healthcare system in America until we stop treating it like it's just like any other industry.
at least all our patient data will be private. If we keep all of our private information in the hands of the HMOs and other corporations, the NSA might install a backdoor.
It's funny, because you seem to think that health care professionals, with their myriad Excel spreadsheets and mammoth stacks of Steelcase® file cabinets brimming with rainbow color-coordinated folders containing paper files seem to know the first thing about information security.
These are non-technical people, who went to school mostly for biology and chemistry, or for the lowly clerks, and secretaries in your doctor's office, maybe two years of community college, with an associates degree in communications maybe. On average, take a random sample of the people who do the paper work for the lofty, priest-like physicians. Ask them what AES is, or what a SHA hash is, or even what SSL and TLS are. I guarantee you, that you'll get a blank stare.
They know how to use the systems they're provided with, like they know how to open a bag of Oreo cookies. The doctors know how to pay IT professionals for services, like they know how to write a check, and know to procure electronic systems like they know how to make down payments on their Mercedes. You can be sure that they know how to shred all those e-mails that they print out and read over their morning coffee.
It's only as private insofar as no one is supposed to look. This protects people under the law, in that, as a rule, certain information is not to be used as criteria for making certain business decisions. But this is merely a bureaucratic honor system, and it doesn't mean that people aren't aware of things they aren't supposed to know about. The information itself, frequently, isn't particularly "secure" according to more strenuous information security standards. Your credit card transactions are safer than your HIPAA information by a longshot, but mostly because there really isn't any sort of criminal profit motive behind obtaining and using that sort of information.
You come down quite hard on healthcare professionals, with the comments about biology and chemistry being non-technical. Your comments about doctors also seem unrepresentative of what a modern doctor must actually know and accomplish in order to be a practicing physician.
Near the end of my father's life, he needed medical equipment at home. The equipment was provided by a company that has deals worked out with all the local hospitals.
The price for one oxygen condenser is covered after a victim(patient) pays for the device for around half a year.
Looking over some others I know, they are all going through this same company. Referred to them by each of their hospitals.
I cannot fully explain the scheme worked out from the hospitals, but I know it depends on having the often confused patient signing a bundle of documentation while he is being led out the door. I read over the documents and it seemed fair, I just had no time to research all that was needed. My father was in full legal control and he himself just simply followed through with what the hospital asked.
In a completely deregulated free market, it is even more in the hospitals' interest to form a price-fixing cartel. Any new player in the market trying to set reasonable market prices could be excluded through market pressure tactics (eg, tell distributors don't sell to them or our cartel will no longer use you).
It seems to me that the parlous state of the US healthcare system is in fact a perfect demonstration of the dangers of a completely free market, and claims that "oh no it's not actually free enough" are merely handwaving.