[dave48]

Hi, My name is David Belk and I wrote the website. I noticed a lot of traffic from here this Morning. I'd just like to say thank you and, are there any questions I can answer? I'm having a busy Morning but I'll be free in about an hour.

[guylhem]

One question : just how would you prioritize actions to turn heathcare into a real market, or as close to it as possible ?

I would go for:

1) full price transparency

2) making price discrimination illegal

3) attacking the information asymmetry by providing a free, subsidized first line triage

Whether treatment is taken or the patient decides to do without it, making sure tests and diagnosis are performed could help proper self regulation of consumption

It could also be made as a public service since it seems very close to a natural monopoly (due to the subadditivity of the cost function - see for ex http://www.clt.astate.edu/crbrown/eleven1.htm - having big labs to process blood test gives economy of scales but require high fixed costs)

It could therefore be politically defensible on grounds of efficient pricing (ie pricing at the marginal cost, which requires subsidizing for natural monopolies since average cost are above marginal costs), to avoid deadweight loss.

The first line triage could then provide full price transparency (diagnosis -> probabilistic DRG), from which the patient could either decide to "wait and see", or to browse a catalog of hospital offering services (DRG -> prices) knowing the price paid would be no different with or without insurance.

At that point, it might be possible to remove all price caps and floors, and let the market work.

So basically, we could get a working market on the treatment side.

Traditional monopoly and oligopoly management (watching the HHI before allowing fusions) could then keep it that way.

I'm a bit out of idea however to have integral pure and perfect competition, at least until we get user-operable "all-in-one diagnosis devices" (like Star Trek tricoders) to remove the information asymmetry.

My last rants on this topic were posted on http://news.ycombinator.com/item?id=5261137

[dave48]

Price transparency is good but, what's also missing in health care is value transparency. In other words, not only do most people (including most physicians) not know how much anything in health care really costs, they don't know how much anything should cost! The level of blindness in this business is truly unprecedented. What's also needed are a number of consumer protection laws that we take for granted in pretty much every other industry. Those alone would go a long way toward correcting many of the problems we have in health care.

[zaidf]

I have a question that I think about a lot and for most part, have not found an answer that makes logical sense.

Why do insurance companies play such hardball with compensating private practices or medical groups? It would seem like it is in the interest of insurance companies for private practices to flourish given that the same thing done at a hospital costs the insurance companies 3-6 times more money.

Most doctors that I ask this question suggest there is a conspiracy where insurance companies are in bed with hospital. Frankly, I don't buy it. I'm probably missing something and I'd love to hear someone's take who has thought about these issues deeply as you clearly have.

[dave48]

The insurance companies pay long after we see the patient and most of them play about the same games. So, either we don't take any insurance (which would drastically reduce most of our incomes) or we just learn to play their games.

For the record, my wife has gotten pretty good with the billing so I usually get paid for what I do. At first it was very painful because dealing with insurance companies has a steep learning curve in the beginning, but it's not so bad now.

It's still highly inefficient billing each insurance company for each separate patient I see just to collect the amount most people pay to fill the gas tank of their car but, that's hardly the worst problem with health care in this Country.

[zaidf]

Why do you think insurance companies play this game if it is not in their interest? I would think they would want private practices to flourish so their patients reduce use of hospitals and in the end, save the insurance company money.

[dave48]

Again, no doctor turns away a patient who has insurance that he takes. Insurance contracts are signed by doctors years in advance. Insurance companies learned long ago that they can get away with being obnoxious as long as they're not so obnoxious that doctors would drop them. They walk that line rather well.

[zaidf]

Got it, and I agree that insurance companies walk the line rather well in getting doctors to accept them.

But at a macro level, don't you think the insurance companies have failed themselves given rise in private practices closing shop or being bought out resulting in insurance companies needing to pay a lot more to hospitals?