Wednesday, November 16, 2011

Free Markets and Health Care

In the debate over health insurance solutions, there seems to be a belief on the left that healthcare is somehow fundamentally different from other goods and services that we might purchase. Calivancouver had this to say in response to my suggestion that prices are dropping and quality rising for cosmetic surgery and vision correction.
Might I point out that those are not government-provided, nor should they be, because they are elective. You can shop around for boobjobs and lasik surgery, plan them in advance, and weight the costs and benefits like any other good.

You don't shop around for emergency surgery. You might not even be conscious.
WC points out that the insurance you purchase before the emergency room visit would be better off under free market conditions. But I would go further. All sorts of medical procedures are expensive but not unaffordably so and aren't performed under emergency conditions. In my own personal experience, I have had physical therapy and a steroid injection for neck pain that were definitely non-emergencies. If I was paying out of pocket, I would have had a wider choice of providers and would have shopped around on both price and quality. Why wouldn't free market pressure for those medical services produce improvements as well.

Frankly, I was appalled by the massive bureaucracy associated with the injection, for which I did not receive anesthesia. I literally came into contact with a dozen people besides the doctor who performed the procedure. It seemed that at least two of them were solely concerned with insurance and payment issues and another three were all about legal release forms and triple checking what I disclosed in terms of medical history, presumably so that the doctor wouldn't get sued.


  1. I wonder how many doctors will flee to Canada/Mexico to set up shop due to ObamaCare? I have heard up to 45% of doctors will consider leaving the field under ObamaCare.

  2. I did not mean to deny that free competition has no ability to lower costs. One of the great misjudgments of the last round of reform, in my opinion, was the refusal of congress to strip the health insurance industry of protection from anti-trust suits, and as with many regulatory schemes, I would be surprised if it didn't include previsions which effectively close the market to further entrants.

    But health care is not a normal good. When the price of steak goes up, I eat less steak. When the price of health care goes up, I, though my insurance, simply shell out more or go without heath care.

    The market is generally the greatest method to distribute resources because all participants weigh costs and benefits to maximize well-being, but when threatened with death, that sort of calculation goes out the window. The invisible hand no longer functions as it should and costs prices spiral out of control. They might not of in the olden days because either most medicine was or dubious value or because people just died

    You mention that many procedures are preformed under non-emergency conditions. This is true, but that's not where the money is. A huge percentage of health spending in this country is in the last 6 months of life. More is spent in emergencies. While not all procedures are emergency, the emergencies consumer disproportionate resources, and this drives up the cost of other procedures as well.

    You could have shopped around for your procedure, but you'd have to compete for that doctors time with the unconsciously lucrative patients

  3. And Doo Doo, We have single payer in Canada. Doctors make less. Oh, and my interaction with single payer healthcare has been largely positive

  4. If the price of physical therapy went up, I would have used fewer visits and done more research on what I could do at home and what my wife could do for me. But I still would have made some visits to learn the necessary information about good technique. But the competition would cause improvement in the delivery of that therapy over time.