Profit seeking destroys markets with large externalities or where utility isn't readily discernable at low relative cost, and where for either or both of those reasons the rational choice model doesn't reasonably approximate actual behavior in the market.
Lots of real goods don't face that problem, but healthcare definitely does.
Whats the externality of providing healthcare, and in regards to the diffuseness of utility, food has the same problem and its a relatively very efficient market.
> in regards to the diffuseness of utility, food has the same problem and its a relatively very efficient market.
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.
I would argue that food escapes its measure of utility because otherwise, we would all be eating only the cheapest and healthiest option all the time, but our constant hunger also makes us purchase things against our long term interest. If so, you would expect the market to be really inefficient, but at least in terms of satisfying demand, its very hard to make money producing food.
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.
> I would argue that food escapes its measure of utility because otherwise, we would all be eating only the cheapest and healthiest option all the time
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.
> 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.
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.
You know those regulations are there for a reason right? Would you like to go back to the days where people are kicked off insurance for extremely dubious pre-existing conditions?
>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.
>You know those regulations are there for a reason right?
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.
> Oh come on, this platitude applies to people saying 'less regulation' just as much as it does me
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 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.
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.
Libertarian arguments only hold for free markets. Even eliminating all regulations and restrictions imposed by the government, healthcare does not become a free market for two reasons:
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.
I think we can agree that there are degrees of freedom in a market, and that the us healthcare market is far from a the freest possible version of healthcare.
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.
Definitely agree that there are degrees of freedom, I'm just not confident that a removal of regulations in the healthcare market would lead to a positive outcome (higher quality/less expensive healthcare).
>> 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.
> Definitely agree that there are degrees of freedom, I'm just not confident that a removal of regulations in the healthcare market would lead to a positive outcome (higher quality/less expensive healthcare).
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.
No, it is profit-seeking that created this cluster-fuck. It only seems to be a problem in third-world nations like the US; the rest of the world seems to be blissfully free of broken profit-seeking institutions that cannot talk to other profit-seeking institutions so that they can collectively figure out the least amount of healthcare they can provide to the patient (so that both can maintain their profit.)
I am from a partially socialist country that has free healthcare. I have had private healthcare, along with most of my socio-economic class, my entire life.
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.
Actually, the first world nations that have socialized healthcare systems experience better outcomes than the United States with less per capita spending.[1] Medicare as it is currently formulated is specifically targeted towards at-risk populations that have higher incidences of medical usage than the general population; you can't just apply the exact same per capita spending across the American population. 80 year-olds use more health care than 25 year-olds.
> Actually, the first world nations that have socialized healthcare systems experience better outcomes than the United States with less per capita spending
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.
The link I posted does suggest that economies of scale do, in fact, work for other governments, and that despite covering 100% of their population, they see significantly better efficiencies than our system does. If you're going to claim that economies of scale don't apply here, you're going to have to provide some evidence that contradicts the lower per capita spending/better outcomes we see in other systems.
I live in a "first world nation" and 10 years ago (before the global financial crisis even) public vs private healthcare meant the difference between leg amputation and implantation. The public system is only good for routine diagnosis and minor surgery. For everything else, care quality goes down the toilet. Not to mention on the effectively complete lack of dental care.
I'm not sure where you live and you're not providing any links or statistics to back this claim up, so it's difficult for me to respond to what you're trying to claim here. If you read the link I provided, you would see that they use cancer, heart disease, and diabetes mortality as a shorthand for patient outcomes in significant health events, and that while the US healthcare system ranks reasonably well in cancer treatment, it is significantly behind other developed nations in treating heart disease and diabetes. They also provide statistics regarding mortality rates in various populations, and the US lags other developed nations in basically all of those populations.
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.
Lots of real goods don't face that problem, but healthcare definitely does.