It isn't profit-seeking what makes healthcare what it is. Its the incredibly burdensome regulation and restrictions.
If profit-seeking destroyed markets for profit, we would all be starving.
If profit-seeking destroyed markets for profit, we would all be starving.
Lots of real goods don't face that problem, but healthcare definitely does.
Food is a frequently repeated purchase with significant immediately-apparent utility and disutility, and so discovery of utilities is quick and the market reasonably efficient in terms of immediate utilities. (There are long-term utilities and disutilities that are less immediately experienced with consumption, and the food market is hardly efficient in terms of those.)
Healthcare products are infrequently purchased, and the relative utilities of different options are far from apparent. It's not at all similar to the aspects of the food market that can reasonably be described as relatively efficient.
Its true healthcare has less frequency so you cant be a sophisticated consumer: but its more frequent than a car, which is also a necessity in many cases, and the lack of sophistry does not make it an inefficient market.
Im not even sure healthcare is a special market, certainly not for infrequency, or because you must pay with your life (i.e. that you make a decision of life and death for resources). Not for restrictive application of labor (lawyers have that), not for the high costs of technology in its application (consumer tech? space exploration?).
I think at this point what makes the healthcare market unique is the common belief of the people that it is unique. It forces the consumer to consciously think of the cost of life, a question we are somehow bred all our lives to hate to ask, but that we answer every day unconsciously.
Economic utility is subjective; while it includes health effects, to be sure, it also includes things like the taste and other enjoyment factors. It absolutely is not the case that, were food a perfect example of rational choice, we would only be buying options that cost-effectively optimized healthiness.
> Its true healthcare has less frequency so you cant be a sophisticated consumer: but its more frequent than a car
“Healthcare” is a broad class of different products and services, many of which are far less frequently purchased than autos (if you buy open heart surgery more often than you buy a car, you are way out in a tail of frequency-of-purchase distribution of at least one of those items.)
OTOH, cars are also a market in which purchasers take a number of steps to counteract the low frequency. No one is test driving a variety of different surgerical interventions before choosing one.
Sure, I agree completely, but at least nominally the argument that healthcare is unique because its a necessity and it has irrational behaving actors is not qualitatively different than the food market.
> “Healthcare” is a broad class of different products and services, many of which are far less frequently purchased than autos (if you buy open heart surgery more often than you buy a car, you are way out in a tail of frequency-of-purchase distribution of at least one of those items.)
Thats as practical a segregation as saying that the people that buy the same model of a car the same year and with the same gas price tends to be 1 at most, hence almost no car purchases are ever repeated!
> OTOH, cars are also a market in which purchasers take a number of steps to counteract the low frequency. No one is test driving a variety of different surgerical interventions before choosing one.
Not really qualitative differences, just quantitative. Many car purchases are done without test drives (argentina doesnt do test drives often for example).
But again, even if you find some truly unique property of healthcare, which in this debate i don't recognize yet, i dont know how it will show that it should be private but public.
“Necessity” wasn't part of the argument, and the argument wasn't really of a qualitative difference so much as them being different degrees of the same issues (food is considerably regulated—even by the same agency involved in much healthcare regulation in the US—for many of the same reasons, though the degree of deviation from ideal market conditions is lesser than for healthcare.)
>If profit-seeking destroyed markets for profit, we would all be starving.
It depends on what you mean by 'destroy markets.' The market is functioning well in the sense that healthcare stocks keep going up. It's functioning poorly in the sense that it's the ill who have to die or go bankrupt to support it.
The road to hell is paved with good intentions.
> It depends on what you mean by 'destroy markets.' The market is functioning well in the sense that healthcare stocks keep going up. It's functioning poorly in the sense that it's the ill who have to die or go bankrupt to support it.
The measure of the health of a market is not the profits of the industry in it. A better rule of thumb would be how many people get serviced and at what relative cost. In that sense, the american healthcare market is very unhealthy.
Oh come on, this platitude applies to people saying 'less regulation' just as much as it does me.
>The measure of the health of a market is not the profits of the industry in it. A better rule of thumb would be how many people get serviced and at what relative cost. In that sense, the american healthcare market is very unhealthy.
Sure, but in that sense we can look around and see that healthcare markets are generally less healthy when they are (1) more private and (2) less regulated.
I didn't argue that regulations are good because there was a purpose to them nor its opposite. So it doesnt really apply to my stance so far.
> Sure, but in that sense we can look around and see that healthcare markets are generally less healthy when they are (1) more private and (2) less regulated.
I disagree with that statement, and I am sure that you will find examples of private markets that are more efficient than public markets, of the which you only need 1 to disprove the idea that public > private on health.
I mean 'the road to hell is paved' is just an argument against trying to do anything good, it's not exactly relevant.
>I disagree with that statement, and I am sure that you will find examples of private markets that are more efficient than public markets, of the which you only need 1 to disprove the idea that public > private on health.
Well no, because I'm speaking in general. But I'd love to know your example.
Instead of wasting time with examples that dont go for the core of your stance, can you share what would change your mind in the general?
Mine is that lightly regulated free healthcare markets will be efficient (though might not be equitable).
And what is 'efficient'? I think a major component of a well functioning healthcare system is that it's equitable. Our problem with healthcare is driven by the generalized problem of 'economization.' A rich person doesn't have some intrinsic quality that makes them more deserving of quality healthcare.
A healthcare system which is extremely efficient at treating the rich and letting the poor die isn't really what I'm looking for. Efficiency and equality must be balanced. What I'd say is that the US is pretty terrible at both and that's sad.
>Instead of wasting time with examples that don't go for the core of your stance, can you share what would change your mind in the general?
Some evidence that shows that mostly private healthcare systems generally function better than mostly public ones or some evidence that healthcare regulation in the US has led to worse outcomes and not better ones would at least give me a jumping point. But I'd also ask you to answer your own question here.
Right, inefficiency tends to harm both equitability and value/cost(loose efficiency definition), but the US market is not what it is because it is efficient or because it is equitable, which is a classic dichotomy of microeconomics.
> Some evidence that shows that mostly private healthcare systems generally function better than mostly public ones or some evidence that healthcare regulation in the US has led to worse outcomes and not better ones would at least give me a jumping point.
I see. So the challenge here is that we can only compare apples to oranges over and over again: we could try to see east germand and west germany, but for other reasons the economics were different. We can compare same country public and private like Germany and Argentina, and get to different conclusions (in germany, private is for the rich, in argentina, public is for the poor). We can compare England to the US, but how do you adjust for cultural and income differences?
For example, healthcare in the US was relatively very cheap 50 years ago, where it was still private. What happened in the middle?
Instead of looking so broadly at private vs public, its better i think to focus on why its expensive. And I can assure you that the top 5 reasons why healthcare in the us is expensive is due to government irresponsibilities. If the government cant even fix its own mistakes, how is it going to handle a much larger responsibility?
> But I'd also ask you to answer your own question here.
I did.
Well no... Inefficiency is totally independent of equitability.
>For example, healthcare in the US was relatively very cheap 50 years ago, where it was still private.
This increase in healthcare expenditure across time has happened in all western countries has it not?
>Instead of looking so broadly at private vs public, its better i think to focus on why its expensive.
Broadly looking at private vs public is a very good way to guide our focus to what makes our healthcare in the US so expensive.
>And I can assure you that the top 5 reasons why healthcare in the us is expensive is due to government irresponsibilities.
You mean how the government has failed to regulate more? How the government has failed to de-privatize certain portions of the American healthcare system? How the government has hamstringed public options (like Medicare) to prevent the american public from realizing how much cheaper the government can provide care than can a private system? Totally agreed!
>If the government cant even fix its own mistakes, how is it going to handle a much larger responsibility?
What are you talking about? Private healthcare companies make mistakes all the damn time. The reason we trust government is because we get a voice in it. If your point is that american government needs to be more democratic and responsive to the wishes of individuals and cut the crap when it comes to sponsorship by large insurance conglomerates then I'm all with you.
>I did.
Did I miss it? Maybe you could post it again here. I'm just looking for what could change your mind.
The reason why inefficiency is tied to equitability in the real world is because equitability is enforced, which means you spend resources to achieve it, and that is the successful case of enforcement. i.e. forcing everyone to take insurance to give coverage to the sickest can increase sickness because there is no economical consequence to unhealthiness.
> This increase in healthcare expenditure across time has happened in all western countries has it not?
No..if it had, we wouldnt be talking about a problem of healthcare in the US. Its grown disproportionately here. But the whole point is that 50-60 years ago, healthcare was cheap and it was private.
> You mean how the government has failed to regulate more? How the government has failed to de-privatize certain portions of the American healthcare system? How the government has hamstringed public options (like Medicare) to prevent the american public from realizing how much cheaper the government can provide care than can a private system? Totally agreed!
I will be more practical then. What do you think are the top 3 issues that make healthcare expensive? Concretely, not abstractly. What are the 3 things that if didn't happen, healthcare would be much cheaper, and I challenge that all 3 of them are the result of regulation. That is, the government made it expensive.
> Did I miss it? Maybe you could post it again here. I'm just looking for what could change your mind.
->
> what would change your mind in the general? > Mine is that lightly regulated free healthcare markets will be efficient (though might not be equitable).
Now you're switching around your causality. Earlier you said: "inefficiency tends to harm both equitability and value/cost"
So you don't believe that inefficiency causes equitability, just that equitability causes inefficiency?
>No..if it had, we wouldnt be talking about a problem of healthcare in the US. Its grown disproportionately here. But the whole point is that 50-60 years ago, healthcare was cheap and it was private.
So, in response to demographic changes across the western world (like an aging population) a bunch of countries made their systems more public and were able to keep costs down and the US has kept theirs more private and costs have ballooned. Maybe the answer is self-evident.
>I will be more practical then. What do you think are the top 3 issues that make healthcare expensive?
I think there is basically one cause: the existence of for-profit insurance companies. In a public system where government provided healthcare there would be a large monolithic body which could assert it's power to keep prices down. In a market with multiple insurance companies, they'll never have enough individual power to keep prices low. That's how the market is supposed to work by keeping power divided, it's just that healthcare is a terrible place for markets.
>Mine is that lightly regulated free healthcare markets will be efficient (though might not be equitable).
So to get you to change your mind that public systems are better than private equitability never comes into play? What is the point of efficiency if not to help people? If the point of efficiency is to help people then how is equitability not important?
I've had private insurance my entire life in a western country with free public healthcare. I have practical experience of the trade-offs of public vs private as a consumer and a tax-payer. The demographics changes hit my home country just like any other, but it didnt make public more efficient than private, nor more effective.
> I think there is basically one cause: the existence of for-profit insurance companies.
I have mentioned 2 counter examples: my home country (argentina) and historical US. You can also see Germany also has public/private mix systems. Health insurance companies actually have very low profit margins. Lower than the general market, lower than insurance companies, etc etc. They are not raking it in. The ones that are raking it in are providers.
> In a public system where government provided healthcare there would be a large monolithic body which could assert it's power to keep prices down. In a market with multiple insurance companies, they'll never have enough individual power to keep prices low. That's how the market is supposed to work by keeping power divided, it's just that healthcare is a terrible place for markets.
There is some contradiction in the previous statement (for profit) vs this one. You are arguing insurance companies cant negotiate prices down because they are not a monopoly, not because they are for profit. If there were only 1 insurer, they could definitely keep prices down, particularly the price of providers. But its hard to think a monopoly is the solution to a market problem.
Moreover, you say the state would have the power to drive prices down. This contradicts reality today, where Medicare by law cant negotiate prices. The government is eager to put itself a restriction on negotiating, and is politically unable to remove it. If it cant change medicare when its a fraction of the market, do you think it will change more when its 10 times its size?
The state can, in 24 hours, reduce healthcare prices by just removing economic consented bad regulation. Read what the healthcare economists say: allow free trade for drugs and doctor immigration and you solve such a massive part of the cost immediately. The government has full power today to solve those problems and it cant. Doesn't that make you lose any faith in the government's capacity to solve healthcare?
Do you remember the Obamacare website debacle? Do you think medicare will make a kickass insurance website?
...wait wait wait. How much experience do you have with the American system?
1) Information is not symmetric, contractual obligations are made before pricing information can be discovered (thereby compared and moving into market dynamics)
2) Services are requested under the duress of health problems without the ability to end the agreement.
Not everything is a free market.
Im not sure about the information asymmetry argument: insurance companies also lack lots of information. And some of that the patient knows and the insurance doesn't. (pre-existing conditions for example). Also, there's plenty of markets with information asymmetry that dont show the backwardness of US Health care.
> Services are requested under the duress of health problems without the ability to end the agreement.
That is the nature of any insurance market. You cant bargain with your fire insurance when your house is burning down. Well, not effectively, if you look at the richest man in old rome.
>> Services are requested under the duress of health problems without the ability to end the agreement.
>That is the nature of any insurance market.
I was actually thinking about when medical treatment is being received. Once you're under a hospitals care you're largely subject to their pricing for services (e.g. I can't choose to use the cheaper MRI machine down the street). There's a bundling of services at a healthcare provider that seems to contradict free market arguments as well, but I was mainly trying to get at the (effectively) binding agreement to use a particular facility once you are checked into it.
Edit: To be a little more concise, you agree to a particular payment structure for services without knowing what the cost of the services are or which services you'll be receiving when checking into a hospital, this opacity in hospital pricing also means that different parties are paying different rates for the same service at the discretion of the billing department.
Economists have a high degree of confidence that some of the rules that are restrictive of a free market account for sizable chunks of the cost: not being able to import pharma and immigrant restriction on doctors being quintessential.
Not being able to import pharma is denounced both by Bernie Sanders and Rand Paul (whereas the first wants to socialize medicine, and the latter remove regulations).
Doctor's immigration restrictions are large but also very hard to politically fight. Also the high cost and restrictions of medical licensing. Friedman was very unsuccessful in turning the public against them.
> I was actually thinking about when medical treatment is being received. Once you're under a hospitals care you're largely subject to their pricing for services (e.g. I can't choose to use the cheaper MRI machine down the street).
This applies only to emergency care: if you have cancer, for example, you have plenty of time to choose going to the cheaper chemo. And even a smaller fraction of emergency care: breaking a leg is painful but it does not incapacitate you to choose one hospital or the other: in fact, we do that all the time by picking which one is closest (choice that must indubitable be made in comparison to another option).
And after that, you have an insurable market, which means that you have all the time in the world to choose between options.
> you agree to a particular payment structure for services without knowing what the cost of the services are or which services you'll be receiving when checking into a hospital, this opacity in hospital pricing also means that different parties are paying different rates for the same service at the discretion of the billing department.
Same as car insurance, or mal practice insurance, or house fire insurance, or renters insurance. Not knowing what you will get is at the core of the insurance service models.
I see a struggle to find what makes heealthcare unique to falter in two regards: first, that finding that quality that makes healthcare a unique market does not show anything other than identity: it might be the quality found points to private healthcare instead of public. But also, the extreme difficulty to find a qualitative difference between health and other markets is due to the fact that it might actually not be qualitatively different at all.
Making it socialized does not mean it will be better. Coldly, see it as a different system with different consequences. Bringing it to the US: look at how much medicare costs today: 3.6% of gdp, servicing 56 million americans. If you extended medicare to the entire population at the same per capita, it would be 26% of GDP.
[1]: http://www.commonwealthfund.org/publications/issue-briefs/20...
It is beyond question that the healthcare market in the US is terrible, because its expensive and ineffective. That is out of discussion for any reasonable debate.
What is also out of debate are many reasons why is it so expensive today: restrictive immigration of doctors, importation restrictions on drugs, self imposed gov restrictions on bargaining, hospital building regulations, malpractice legal costs.
Government taking full control of the system fixes NONE of the problems listed above, which are by and large some of the biggest price drivers. It might make them worse, because all of the ones above are exclusively decisions of the government.
> you can't just apply the exact same per capita spending...
I agree, tho at the same time you cant expect the government to be more efficient as it increases its scope of scare. Economies of scale dont work for the government. 10x service might cost 50x. It should be clear however that its a reasonable order of magnitude: more than barely double digits. A 20% gdp cost on healthcare will come with cuts in service, I guarantee that.
It is already visible that medicare is not efficient.
So, again: the US as a whole, using a primarily market-based healthcare system, spends more money per capita for worse results than most other developed nations, most of which are using single-payer systems. Within the American healthcare system, there is a limited single-payer system that only covers a particularly high-risk patient population, and yet despite that patient population, runs more efficiently as an organization than the market alternatives. What evidence are you offering to make the argument that that limited single-payer system is actually more inefficient than the private alternatives?
[1]: http://www.politifact.com/truth-o-meter/statements/2017/sep/...
Medicare is an example of a government run healthcare service in the US. Its way more relevant to compare to Medicare than to compare with foreign countries health results. Its also revelant because single payer proposals in the US are basically expanding Medicare. So even if every single single-payer system in the world were efficient, if Medicare isnt, it wouldn't matter.
> Medicare spends significantly less (approximate 1.4%) on overhead costs, compared to private insurers that average around 12.4%.[1]
Sure, thats because it doesn't do price-fighting like private providers have to with insurance companies. It has the basic incentive to cede at every corner as an institution. But lets look at other reasons why healthcare is spending and how medicare solves them. How about pharma costs, doctor salary costs and legal costs. Is medicare cheaper on these other predominant reasons why healthcare is expensive?
You will find that Bernie sanders understands well that pharma is expensive because government restricts its importation. So if as an organization the government is strained to even bring drugs from abroad, a problem it has unique power and responsibility to solve today and no-one else can do except for 'retail smuggling', and we are supposed to put our entire faith into the same hands that cant solve that?
If you just eliminated restriction of drug importation, you would drop healthcare costs enormously in 24 hours. The only thing you have to do as a government, is to stop doing a thing. How simpler can it be.
The core idea here is that the debate of public vs private is a red herring. Healthcare is not expensive in the us because of private vs public. Its expensive for its own particular policies, which economists have consensus on and are hard to take on due to lobbying, or lack of public interest, or mere gubernamental complexity. The topic is presented as two black bentos, where you can only see the results in the faces of people eating them. But they really aren't. You can see what each has and why.
Your point about dentistry is interesting, although also mostly unsupported, and I'm having a difficult time finding good statistics about dental care, spending, and outcomes. Anecdotally, dental care in the United States is sharply linked to money; people with money have good/great teeth and excellent dental care, people without it frequently have major issues with their teeth. I don't know how that compares to other countries.