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Market failures of the current US healthcare system
Posted on 1/8/17 at 11:15 pm
Posted on 1/8/17 at 11:15 pm
This post popped up on my Facebook feed. Thoughts? Agree? Disagree?
quote:
The business of modern medicine sucks and is expensive because it is the one industry that inherently contains literally every single form of market failure all bundled together into a giant ball of broken cluster-poop. Can't wait to see what republicans come up with to 'fix' it and create a 'free' market!
Information Asymmetries: I have no idea what I'm buying both in terms of insurance, and in terms of treatments.
Non-competitive markets: Either my insurance won't let me go anywhere else, or the fact that the hospital I'm at has the only trauma ward in the city means I won't be going anywhere else no matter the cost or how much I like it.
Principle Agent Problems: Is my insurance covering this? Cool let's get the wheel chair with chrome rims. Oh it's not? I'll take the pointy crutches that might re-break my foot.
Externalities: Oh my insurance premium has to cover the guy in the next bed who smokes a pack a day and drinks 3X 2-liters of mountain dew every day?
Public Goods\free riders: Well sure your medication costs $2 to manufacture, but it wouldn't exist unless we charged $1,000 to recoup the capital costs of developing it!
Time inconsistent preferences: Healthy me, I don't want to spend a penny on medical care! Dying me, I demand access to the most advanced medical technology facilities that can possibly exist.
Bounded Rationality: Sure it costs $100,000 a week to keep Grampa in an irrecoverable coma of agony, but pulling the plug would be immoral!
Tragedy of the commons: Everyone has unlimited free healthcare forever? Thousands of Hobos just suddenly decided that they need millions in treatment hanging around at hospitals.
Contract failure: Did they really run all those tests or need to? They said they did, but nobody else will ever know!
General incentives misalignment: Pay doctors for well patients, and they won't take the very sick ones. Pay doctors for the work they do and they order too many tests. Pay doctors for satisfaction, and they give the patients the prescriptions they don't need and harm themselves with. And on...
Privacy: If we put everyone's medical records into one big computer and crunched all the data we could probably cure cancer, but that information is private!
Tyranny of small decisions: "Costs are out of control! We need procedures for everything to make sure nothing is wasted!" "But what if everyone doesn't need the same things all the time, and this could actually hurt them and result in complications?" "Quiet you!"
14
Posted on 1/8/17 at 11:19 pm to Street Hawk
I'm not a fan of Obamacare (albeit for different reasons than most of you) and I'm open minded as to what we should do to improve health care in this country but it does seem like those on the right think of health care the same way they do any other market type. The reality though is health care operates very differently for consumers than it does when they go to buy a new car or a new tv.
Posted on 1/8/17 at 11:43 pm to Draconian Sanctions
quote:
The reality though is health care operates very differently for consumers than it does when they go to buy a new car or a new tv.
Why? Healthcare is like anything else; It's a scarce resource that works best when it's efficiently allocated.
So, the question is; How is it most efficiently allocated?
The Use of Knowledge in Society
Posted on 1/8/17 at 11:47 pm to stuntman
quote:
Why?
Are you asking me how it's different? (Do I really need to explain why purchasing surgery and a new car are dramatically different?)
Or are you asking me why it's like this?
Posted on 1/8/17 at 11:54 pm to Draconian Sanctions
quote:I think a better way to phrase it would be "catastrophic healthcare operates differently than consumer markets".
Draconian Sanctions
Things like elective surgery, teeth cleanings, checkups, mild illness treatment (flu, common cold, food poisoning, earwax removal, wart removal) aren't as different as other markets.
Posted on 1/9/17 at 12:00 am to Draconian Sanctions
Yes. I'm asking why you think the healthcare industry is different from any other industry.
Prices/costs are real things w/ real consequences. Healthcare has all kinds of red tape that completely fricks up the price system in that market.
The "solution" is the same in health care as it is for every market; More people being able to make more decisions about where/when to spend/save their scarce resources.
Prices/costs are real things w/ real consequences. Healthcare has all kinds of red tape that completely fricks up the price system in that market.
The "solution" is the same in health care as it is for every market; More people being able to make more decisions about where/when to spend/save their scarce resources.
Posted on 1/9/17 at 12:01 am to Street Hawk
What are you talking about? The free market is perfect! Whether you live or die should be based on whether someone can make a profit from saving you!
Signed,
conservative america
Signed,
conservative america
Posted on 1/9/17 at 12:05 am to Tigerdev
quote:
What are you talking about? The free market is perfect! Whether you live or die should be based on whether someone can make a profit from saving you!
Signed,
conservative america
A free market would solve most of the problems, but we dont have a free market. We have a hybrid which is why it sucks.
Posted on 1/9/17 at 12:08 am to Draconian Sanctions
quote:
I'm not a fan of Obamacare (albeit for different reasons than most of you) and I'm open minded as to what we should do to improve health care in this country but it does seem like those on the right think of health care the same way they do any other market type. The reality though is health care operates very differently for consumers than it does when they go to buy a new car or a new tv.
I don't think the problem was Obama's goal, it was the simple greed of insurance companies who didn't want the new regulations to effect them at all. Obama can be faulted for underestimating/not seeing such a thing would happen.
I very much agree that healthcare shouldn't be treated like walking into a Best Buy, and its clearly why it was all shite BEFORE Obamacare. Problem is the people who got rich and deeply established themselves off of the old system want that system back.
Posted on 1/9/17 at 12:10 am to Tigerdev
quote:So doctors in the UK work for free?
The free market is perfect! Whether you live or die should be based on whether someone can make a profit from saving you
Posted on 1/9/17 at 12:12 am to Draconian Sanctions
quote:
The reality though is health care operates very differently for consumers than it does when they go to buy a new car or a new tv.
It really really really really doesn't. It operates the exact same way as everything else, unless it's fricked with. Then it operates the same way all government programs operate.
Posted on 1/9/17 at 12:13 am to Tigerdev
quote:
What are you talking about? The free market is perfect! Whether you live or die should be based on whether someone can make a profit from saving you!
You obviously want to have a serious conversation about economics. I'll bookmark this for later.
Posted on 1/9/17 at 12:18 am to HailHailtoMichigan!
quote:
I think a better way to phrase it would be "catastrophic healthcare operates differently than consumer markets".
I'm not sure what this means exactly, but I'm pretty sure I disagree with it.
Believing that a free market in the healthcare industry won't produce your version of ideal outcomes is not the same as noting a difference in that market's operating mechanics. The level of catastrophe involved is irrelevant.
This post was edited on 1/9/17 at 12:19 am
Posted on 1/9/17 at 12:19 am to MrCarton
The thing that annoys me about TigerDev's comment is that he completely misunderstands that profit has almost zero to do with high prices.
America has some of the most affordable goods in the world which are produced by companies with higher profit margins than healthcare and health insurance firms.
It's amazing to me that there are people out there that think it is a BAD THING when the purchase of something results in profit for a company, thus sending a signal that resources were used efficiently.
Then again, "public servants" (as tdev) calls them, aren't exactly exposed to such concepts in their own working lives.
America has some of the most affordable goods in the world which are produced by companies with higher profit margins than healthcare and health insurance firms.
It's amazing to me that there are people out there that think it is a BAD THING when the purchase of something results in profit for a company, thus sending a signal that resources were used efficiently.
Then again, "public servants" (as tdev) calls them, aren't exactly exposed to such concepts in their own working lives.
Posted on 1/9/17 at 12:23 am to MrCarton
Well when any non conservative post gets a response of "melt!" that is about all you guys deserve.
Posted on 1/9/17 at 12:27 am to HailHailtoMichigan!
So you are good with publicly funded healthcare? Welcome brother!!!
Posted on 1/9/17 at 12:30 am to HailHailtoMichigan!
quote:
The thing that annoys me about TigerDev's comment is that he completely misunderstands that profit has almost zero to do with high prices.
It's a protected industry. Look at the list of top lobbies
LINK
Posted on 1/9/17 at 12:31 am to Tigerdev
quote:it's not publicly funded when 10% of people pay 90% of the costs.
So you are good with publicly funded healthcare?
And no, I do not want my healthcare decisions being put in the hands of people who pay no price for being wrong, and who are given monopolistic control over the service
Posted on 1/9/17 at 12:31 am to RogerTheShrubber
quote:
free market would solve most of the problems, but we dont have a free market. We have a hybrid which is why it sucks.
Except history proves to us that the free market had failures within the health insurance market. Which is why we have the hybrid system. Funny how this fact gets over looked.
Posted on 1/9/17 at 12:32 am to CaptainBrannigan
quote:
Except history proves to us that the free market had failures within the health insurance market. Which is why we have the hybrid system. Funny how this fact gets over looked.
We've never had a free market within the health insurance market, or any medical market. Funny how this gets overlooked.
This post was edited on 1/9/17 at 12:33 am
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