We like to talk about healthcare like it's a free market but it's not. If I'm at the hospital I'm there for treatment. I'm not leaving until I get it, damn the cost. I will not consume less healthcare because the price is higher when the other option is death.
We need some price setting regulation to protect consumers from getting fleeced. When the hospital knows that I'm going to say yes, why not price every surgery at $100k?
We've tried letting the insurance companies regulate the price, but they've proven themselves incapable either because there are so many secrets making the market not fair or because they don't have an incentive. It is time to try something else. The government is our mechanism for regulation. Let's use it.
> We like to talk about healthcare like it's a free market but it's not.
Emergency medical care isn't.
But most other things are.
It should be possible to shop around for imaging and testing services. The regular "family doctor" is something families can (or at least should) be able to choose at will.
Heck people shop dentists all the time. They shop physical therapists, and even mental health providers.
If all the local X-Ray providers near me publish their prices online the fact is prices will drop, and that will likely carry over to what price is paid during emergency services as well. It will be hard to charge someone 5k for an X-Ray in the same imaging center that has a price of $120 listed on their website!
In Australia elective procedures on medicare are much more limited or not covered at all. A system can start by just covering the most essential and required care, then later expand to additional things.
My insurance company calls me after I schedule a service like lab/imaging to tell me of cheaper options. My doctors are attached to professional building at big local hospital chain, so I usually just go there because it’s easy, I know my way around, they are on same IT platform so I don’t have to chase down results, or long term they have all my medical history localized. Due to being attached to hospital though, cost of MRI for example is usually 10x versus competition. I still don’t care, because I have insurance and have no incentive to reduce the cost.
So if you want to make people price shop, it has to be coming out of their pockets for it to work. Dentists, PT, etc that you listed have much higher rates of cash/self pay.
You're describing inelasticity of demand, which has nothing to do with whether or not a market is free in the economic sense (that is, whether supplier competition and consumer substitution are possible). It's also incorrect to pretend that all healthcare goods have the same elasticity of demand, as well as to pretend that even emergency healthcare is perfectly inelastic.
The reason this matters is that we don't see the same problems in other inelastic markets - for example, automotive gasoline is highly inelastic (estimated to be at -0.02 - https://www.eia.gov/todayinenergy/detail.php?id=19191), but we don't have the same pricing pathology with it that we do with healthcare (emergency healthcare estimated to be at -0.04 - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5600717/). Therefore, we can't conclude that the problems are specifically due to inelasticity.
> You're describing inelasticity of demand, which has nothing to do with whether or not a market is free in the economic sense (that is, whether supplier competition and consumer substitution are possible)
Next time when a bone in broken in your body, go comparison shopping because it's a free market and you should get the best deal while your bones hang freely.
Health care is a special case not comparable with any other market.
> Next time when a bone in broken in your body, go comparison shopping because it's a free market and you should get the best deal while your bones hang freely.
Or already know the price of how much it costs to get a bone set at different local providers and make your pick ahead of time.
Why assume people aren't going to shop around until something happens? "Hey ambulance driver, my preferred clinic is such and such take me there please."
Would you keep a mental record of every service at hospitals? Seems like a gigantic waste of effort for everyone to have to know that a bone fracture is cheapest at hospital A, but C is best for head injuries.
Unless of course you aren't conscious enough to direct the ambulance driver at all.
> Seems like a gigantic waste of effort for everyone to have to know that a bone fracture is cheapest at hospital A, but C is best for head injuries.
Imagine a world where prices are openly advertised, and as a result they start to drop.
Take laser eye surgery as an example. Prices are insanely competitive! They have been going down for years, and equipment manufacturers have been hard at work making more reliable and cheaper to operate equipment that has less side effects!
We have a free market for literally curing blindness and it works really well.
Now take more urgent but not life threatening cases. Last couple times I broke something, it was of the "well that sucks and it is kind of swollen but whatever" type, and I got to choose where to get an X-Ray at.
That is a perfect case where open pricing would drive the market price down and save me money.
As another example, physical therapy prices are often advertised on the open market. So are therapeutic massage prices. Both are price competitive markets.
Sure life threatening emergencies will still be subject to price gouging, but if the entire medical system is running more efficiently then even emergency services may see a reduction in costs in places. Maybe not for the trauma center, but for the hospital stay outside the ICU, why not?
They’re really not very competitive. In my experience there were discounts offered to people with mild myopia to get them in. People who need glasses to drive or see a blackboard pay more. People with large pupils pay much more. I think it’s likely the prices are suggested and discounted by the machine manufacturers who own patents.
The nominal price of Lasik is trending slightly down at the same time that the technology and procedure is getting better. It's a pretty stark contrast to most of the rest of the medical industry, IMO.
I definitely would, why wouldn't you? Broken bones are urgent but usually not life threatening - in that situation I'd definitely take a few minutes to decide how exactly to handle the situation - call an ambulance, or have a friend drive me to the hospital? ER, urgent care, or GP? Lots of options with different trade-offs, even if cost wasn't one of them!
Urgent, life and death situations are obviously a special case but are also a pretty small percentage of medical care at least IME. My wife has had quite a bit of medical care over the last few years including having 3 kids and several unrelated, important but not immediately life or death surgeries. In every case we evaluated several options before picking a Dr and a hospital. We looked at price, recs from friends, distance from home, reviews, etc just like picking a restaurant or a new car. Even in the few urgent life/death ER visits we've had we still picked where to go, we just picked ahead of time - when we get a new insurance plan we usually glance through it to make sure we know what are the closest ERs and urgent cares that are covered, and if there are multiple options we'll pick a default. Again I don't know why someone wouldn't do that, even if our healthcare were free we'd still compare on other metrics.
Cost should play a role but I don't think it should ever cross your mind or need to be a decision you have to make.
In your anecdotal situation let's say you fell and broke your arm and are now sitting in the back of the ambulance when they ask that question. North or South hospital?
With your one good arm are will you load up a cost comparison of services between the hospitals, checking what the procedure might be if the break is impacted, if muscle tissue is torn or needs to be repaired surgically, what followups or cast removal costs, and building a spreadsheet of possible scenarios based on the underlying medical statistics combined with the risk factors of your incident? Ar you comparing that against hospital ratings for those departments and doctors and their success rates combined with education or training in line with best practices or regulations? Then are you compiling this data to make a decision based on which hospital is the most viable economically vs the standard of care for your suspected injury and reaching a decision?
Are you going to do this for every viable healthcare situation in advance so you're aware of updated costs at South or the new star surgeon hired at North hospital?
There's certainly a market for that analysis but I don't think it's analogous to real life. Most people are going to call 911, get in the ambulance if needed, and go to the closest hospital with capacity. The price, quality, and other checks need to happen at a higher level while still be transparent and open. Medicare has tools to solve this just like how the FDA us meant to resolve food safety questions and other governing bodies are there to regulate and enforce standards. Unfortunately it's not as simple libertarian as "North or South?"
This greatly ignores the reality that in a community, when prices are known, there's a collective understanding of which places (regardless of industry) are more expensive than others. And whether the cost difference are justified based on, again, collective experience.
So, no, of course no one is going to fire up the equivalent of GasBuddy when they're in an ambulance. You no doubt already know this, so why make such a ludicrous argument?
Because deputizing the government to negotiate down prices is a saner alternative to keeping costs of emergency services down given that the actual cost depends on so many factors that your analysis is extremely faulty.
The only substantially cheaper across the board hospitals are those people go to die in because they are profoundly incompetent and understaffed.
Which is a form of government regulation allowing punishment of poor/illegal performance. Medicare for all or a universal solution could enforce quality across all healthcare providers while simplifying negotiation not only as the federal government would be the only client to barter with but could make policy restricting costs or overhead in a careful manner.
There would definitely be an app created for all that in no time. We will be able to do all that stuff with one finger and your smartphone. With the exception of the well-off and rich, people who are living on a budget are certainly going to look up costs for non-emergency medical treatment.
It's semantics, but they're important when you're talking about economics. You're describing inelasticity of demand, which is to say that I need the good irrespective of the price (and it may mean irrespective of the geographic inefficiency).
In a free market, I can open a hospital across the street from your hospital and charge whatever I want for similar (or completely different) services. Presumably, our hospitals would also have a brand reputation: I know lots of folks who say "I'll never go to X HMO again, it's so much better at Y public hospital" and would gladly drive an extra mile or two with their broken arm kid if it means they're fairly certain they'll save a few grand (or more).
A similar example is that I'm halfway down a 200 mile highway, and I need gasoline. There could be one gas station, there could be five, but the fact that I'm allowed to open a gas station next to the sole one that exists means it's a free market. If the government says "there shall be one [or two, or ten]" gas stations here, or that "all gas stations here shall charge this rate", then it's less of a free market.
You may be trying to describe the concept of perfect competition[1]. If so, I'd agree with you that health care can almost never achieve perfect competition because perfect information becomes harder to obtain as situations become more expedient or dire.
You're right, healthcare as I am describing it is a perfectly inelastic service. I cannot think of any other example where someone would show me an absurd price and I'd still take like. Like $1M absurd. I'd rather push my car than buy gas at some point. The same cannot be said about my health. There is no point at which I'd rather just die.
The government needs to regulate markets like this.
If healthcare is perfectly inelastic and inelasticity is the dominant factor in pricing, shouldn't we expect all procedures cost $LIFE_SAVINGS each already? I'm not trying to be glib; my point is that a) healthcare is _not_ perfectly inelastic, and b) even in the presence of high inelasticity, we can observe that market forces can exert downwards pressure on pricing. I think that arguing for a remedy solely on the basis of elasticity is misguided and potentially ignores larger problems within the market.
Consider the example of food, in general. Demand for food is wildly inelastic - without it provided regularly, for your entire life, you _will_ die. If elasticity were the only consideration in pricing, we should expect food to be break-the-bank expensive, but it clearly isn't. What else is different between the healthcare and food markets?
(To be clear, I'm not defending the current state of our healthcare system. It's broken in a lot of ways, and is way more expensive than it needs to be. I'm just arguing against the idea that the cause of its dysfunction is inelasticity of demand.)
> If elasticity were the only consideration in pricing, we should expect food to be break-the-bank expensive, but it clearly isn't.
Because welfare (and subsidy) programs exist so people aren't desperate for food, just like people who are covered under medicaid are not desperate to pay for health services.
We need some price setting regulation to protect consumers from getting fleeced. When the hospital knows that I'm going to say yes, why not price every surgery at $100k?
We've tried letting the insurance companies regulate the price, but they've proven themselves incapable either because there are so many secrets making the market not fair or because they don't have an incentive. It is time to try something else. The government is our mechanism for regulation. Let's use it.