One question that no one asks: why do we insist on paying for healthcare with insurance in the first place? Imagine a world where everyone paid for health expenses out of pocket, where there was competition and price transparency for all procedures which means much lower prices (instead of prices being driven up by government-subsidized plans), and most importantly, doctors had to answer to us as consumers instead of insurance companies?
I think you need to first state what you're trying to accomplish.
Is lower prices an end unto itself? if so, I doubt that you will get it from the "free market." It's too inefficient. When you slip and break your leg, you can't take your time shopping around for the lowest price care. You can't buy a lung transplant when it's cheap, save it, and use it when you need it.
Some people simply want people to pay their own way for ideological reasons. I can understand that without agreeing with it.
Calling the "free market" inefficient is the most absurd thing I've heard in at least a week.
"Free Markets" clearly aren't the answer for everything, but they are when efficiency is the primary goal. Laws and regulations aren't there to promote efficiency. They are there, ideally, to promote safety. In my experience, the overlap of safety and efficiency is vanishingly small. Would that it were not.
In every situation, we need some balance of efficiency and safety.
Yes, it's true, when you are having a heart attack, you probably don't want to spend time shopping around. That is exactly what "insurance" is for.
When you have a cold and you go to the doctor, that is a waste of a limited resource (the doctor's time specifically). If you as a consumer had to bear the full brunt of the cost of seeing a doctor for non-catastrophic issues, you'd think twice about going over a cold.
That doctor would then be able to take on more patients because their time wouldn't be wasted on trivial things. This is more efficient.
The flip side, is that the expense of the doctor's office dealing with insurance companies would absolutely be reduced. That's an immediate cost reduction. The demand for arbitrary doctor services would be reduced (by virtue of everyone with a sniffle not immediately heading to the doctor).
Simultaneously, doctor's would be able to reach more patients at a lower cost.
Prices for everyday type treatment would go down.
When you disconnect the scarcity of a resource from its price, you wreak havoc on the system. The way we (in the US) use health insurance, it's more like "prepaid medical services" than what insurance was meant for. The problem is that you have disconnected the scarcity of the doctor's time and service with the price of that service. It artificially inflates demand on that doctor's time, because hell, you've already paid the premium this month, if you don't go see the doctor for a cold, you are wasting money.
And that's true. You have wasted money, but going to the doctor for that cold just wastes their time, so now you've doubled down on waste and inefficiency.
I wont respond to the rest of your response, but it has been pretty clearly demonstrated by people smarter than you or I (at least in their respective professions) that free markets aren't always the most efficient solution to a problem, particularly when the desired solution is not just to come up with a price that is profitable for for the seller.
What has been clearly demonstrated is that free markets don't always reach the optimal solution. That is not the same as saying that governments can do better. In cases where there are market failures and/or externalities, very often there is no way to get to the optimal solution.
The real question is, which has worse failure modes, free markets or governments? I'm going to go with governments on that one.
I guess I would disagree with you on that. Given that the U.S. is basically the only first world country that still has private healthcare and it is typically rated somewhere between 15 and 40 world wide on most healthcare metrics, it seems like a number of countries have figured out a way to do public healthcare better... (and more cheaply)
But the real point is that all of those numbers have been increasing over time, and will continue to increase until the governments and countries collapse under the deadweight costs of centralized control. And on the way, we get to have laws bought by special interests and government regulations written by the companies that are supposed to be regulated.
I don't see any facts supporting your assertion that the countries will spontaneously collapse due to the size or spending of their governments... What I do see are a long list of countries with higher tax rates, budget surpluses or much smaller deficits than the USA, and much higher ranked healthcare systems (You point at Greece, I will point at Germany, Norway and Sweden. Let's just get that out of the way).
Let's leave it at this, I am not going to say that a public healthcare system (or a single payer system) is the only right way of doing things. What I will say is there are a lot of other countries out there that are able to provide a better health care system through that route while still remaining financially stable.
Maybe that is just not something that is in the cards for the USA though, maybe the trade off is that you have lower taxes, but a lower life expectancy if you are not wealthy.
I certainly am not going to pretend to know all the answers, but I do think refusing to learn from other countries because they are not doing it the "American" way (read: with a free market) would be a silly reason to accept having one of the worst healthcare systems in the first world.
I don't see any facts supporting your assertion that the countries will spontaneously collapse due to the size or spending of their governments...
Soviet Union.
they are not doing it the "American" way (read: with a free market)
The US does not have a free market in health care, and hasn't since at least World War II, when employers started providing health benefits to attract workers because they were unable to offer higher wages (wages were regulated by the government during the war). A free market would mean everyone sees all of the costs of the health care they receive, and weighs the costs against the expected benefits, and only buys health care for which the expected benefits exceed the costs. Nobody that participates in employer-provided health care (which is most workers in the US) does that; the only costs they see are their portion of the premiums and their copays, so they want whatever health care has a benefit to them that exceeds those costs.
The provider side of the US health care system is not a free market either; a person can't just decide to be a provider. Doctors, nurses, x-ray technicians, etc., etc., all have to be licensed by the government. That is supposed to help guarantee that they are competent, but it also helps to keep costs higher by restricting the supply of providers. (To some extent there are now private clinics trying to end-run around this for basic services like blood pressure or cholesterol screening; but they are limited, and mostly serve people who don't have employer-provided insurance.)
In short, the US health care system is not an example of a free market system that achieves less optimal outcomes than a government system; it's an example of a bastardized part-government part-private system that achieves less optimal outcomes (by some metrics--by others, for example wait times for critical surgeries, it achieves better outcomes) than a government system.
Ahh, "Soviet Union", the answer to every question about the evils of government. I take it that means you don't really want to discuss that point, as "Soviet Union" is hardly and answer, and as I pointed out nearly every other first world country has a "larger" government that the USA, and they are almost all in better financial shape too.
But we have come full circle, and as I mentioned in my first response free markets are not meant to create a solution for problems whose success is not defined by finding the "fair price" for something. In my books, solution that prevents people from being able to obtain/afford healthcare (and lets be clear, no matter how many "inefficiencies" you might eliminate through deregulation, there will always be a segment of the population that cannot afford to pay for healthcare, just like they cannot afford to pay for housing or food) will never be a success.
But this is all a moot discussion. The likelihood of the United States moving further to the left on healthcare is exponentially higher than the likelihood of the industry being deregulated to the point where you scenario starts to be able to realize real benefits. As-such, if a true "free market" healthcare system is not politically palatable for the country, then I think both of us, and the facts, are all in agreement that a single payer or public system would do a much better job than our current "bastardized part-government part-private" system.
You're probably right that a true free market health care system is not politically palatable, just like a true free market in any aspect of the economy is not politically palatable. That doesn't mean free markets don't work; it means they're not tried.
free markets are not meant to create a solution for problems whose success is not defined by finding the "fair price" for something
Your definition of a free market is too narrow. Free markets are applicable in any situation where there are scarce resources that need to be allocated. There may not be a "fair" price for health care, but it is certainly a scarce resource that needs to be allocated. There isn't a "fair" price for groceries, computers, etc., but the free market allocates them.
Sure it is. Consider: it took the Soviet Union more than 70 years to collapse. Someone who looked at the economic numbers of the Soviet Union in the 1920's, or even in the 1930's, might well have thought they were doing great. But they were trying to centrally manage something that's too complex and diverse to be centrally managed, and it caught up with them. Other countries are trying to do the same thing, and it's going to catch up with them as well. Or perhaps I should say "us" since I live in one of the countries (the US) that's doing this.
> "Free Markets" clearly aren't the answer for everything, but they are when efficiency is the primary goal. Laws and regulations aren't there to promote efficiency. They are there, ideally, to promote safety. In my experience, the overlap of safety and efficiency is vanishingly small. Would that it were not.
I always wonder if people remember the rolling brownouts caused by Enron in the chase for profit. De-regulation did nothing to help keep the lights on in California.
Insurance is a really terrible way to pay for any commodity. If I paid a fixed price to go to the grocery store every month and get everything I needed off the shelves, the grocery store would go bankrupt. Obviously, insurance works for event that are unlikely, as a way to mitigate risk. But everyone dies eventually. Everyone will need healthcare.
Because of the nature of insurance, it drives up prices, it misaligns incentives, and our particular mode of insurance--subsidized employer-provided insurance--has the added injury of forcing people to stay in their jobs for the sake of their health and limiting mobility.
Yet, not only do we accept insurance as the best way to pay for healthcare today, we just doubled down on it with Obamacare, requiring people who previously weren't in the insurance market to participate.
My solution is to let healthcare be another commodity, like food, where there is widespread competition and choice, and thus lower prices and more transparency.
With your example, it's not like someone makes a choice in emergency care right now either. But at least you could establish a relationship with a hospital ahead of time. How about an app that lets you join a hospital network for emergencies? What about an annuity plan that lets you save up for a lung transplant ahead of time if/when you need it? I don't know what health entrepreneurs would come up with. But there are solutions out there that will never be tried as long as insurance companies have a stranglehold on the health industry.
What is theoretical about an article describing how health insurance actually works in an actual country from someone who has actually lived there for nearly all of his actual life?
Because people are risk-averse. People would rather pay a little more for a lot less risk. Paying for healthcare out of pocket is incredibly risky. You never know if you're going to be diagnosed with cancer and have to drop $200,000 a year for treatments that will last the rest of your life.
I go to the GP and complain about my chronic backaches. Physical therapy doesn't work, so I need to talk to a neurosurgeon, whose time is worth about $500/hr.
After getting an MRI for $1,000 and paying a radiologist $1,250 to interpret it, it turns out that one of my disks are ruptured, and I am going to require a spinal fusion.
That's a 6-hour surgery that costs about $100k. I make $50k per year. Now what? Do I bankrupt my family, or persevere until I'm rendered paralyzed and on the dole, or buy insurance to cover this sort of event?
I think you're missing the point. The reason why it would cost you $100k is twofold: right now out of pocket expenses are deliberately much, much higher to compensate doctors and medical professionals for nonpayments, and medical professionals have no problem gouging their prices for the insurance companies, or using more-expensive-than necessary procedures for the benefit of patients (because after all, we have a massive principal agent problem). Not to mention that insurance encourages wasteful consumption, decimates competition, and misaligns incentives. And the fact that most people get insurance through their place of work such that they are less mobile and less able to negotiate higher pay just makes the situation more bitter.
My solution is to let the price of medicine float with demand and supply, like any other commodity, where it would lower in price with competition and neuter the influence of health insurance lobbyists.
Also, health is always going to be the sort of profession where the best treatment is too expensive for more people to afford. That's just a natural result of innovation. Every new technology--even those we take for granted today--were too expensive for most people to afford when they were introduced. The way that prices come down for these things is through demand and competition, not through government mandates, which provide no incentive to lower prices (another principal agent problem).
If medicine floated with the cost of supply and demand, then outbreaks and epidemics would be an ethical nightmare and a commercial blessing.
Medical supplies during epidemics always fail to match the huge spike in demand, so the price would rise exponentially. Medication providers would make a fortune while only the rich would receive medication.
Depending how much you want to bend toward conspiracy theories, it would almost be like incentivizing medication providers to cause huge outbreaks.
I've heard this argument before, and, while it seems logical enough, has anyone tried to estimate the cost of various procedures under this sort of system? I tend to believe that healthcare would still be too expensive for most people to afford, but I've never been able to find supporting estimates one way or the other.
> Imagine a world where everyone paid for health expenses out of pocket ...
Very good points. The argument can be made that the existence of health insurance is a major factor in the increase in medical costs over the years. After all, it's not Jane Doe who has to pay for the procedure, it's a large, anonymous insurance company. This reduces the motive to shop for the best deal or ask whether a procedure is actually worth it. It reduces the role of personal responsibility.
Because then anyone who gets unlucky dies from not being able to afford the exorbitant prices of catastrophic health care, which will never go down enough to be "affordable" to anyone who isn't rich.
We've had medical technology for longer than we've had either of those, and health care has gotten more expensive, not less. What does the price of commodity items have to do with the price of life saving services?
That's my point! Because we put so much effort into "fixing" healthcare we drive the price up instead of when we leave commodities like technology largely alone and happily watch the prices go down.
I would worry that a fair market value for healthcare would still be more than most people could afford. The question is, would it be less out of pocket or more than with insurance, which is probably a vague question and one I have no ability to attempt answering. Anecdotally, though, I've found that while the squeeze of my employer's health plan was difficult, having to pay the entire cost of my appendectomy would've been nigh impossible. I can only imagine how much my mother with COPD would have to pay out of pocket.
Everyone thinks that the market value of something will be more than they can afford. So they implement policies that are guaranteed to make the price higher.
Every commodity costs something. The best way to distribute a limited number of goods to a maximum number of people is a free market with a free price system. There will always be the poor who require charity to be taken care of. There will always be the rich who can afford the million-dollar life-saving procedure (but of course in time that procedure will get cheaper).
