3884

Yeah, free markets don’t work when there’s no elasticity in demand. I can opt out of getting a new TV this Christmas and be fine, I can’t do the same for treating a heart attack, taking insulin, etc. Free markets just aren’t going to work when people’s lives are literally on the line.

3885

This is the beginning and end of the discussion as far as I’m concerned. Health care, particularly emergency health care, is the figurative definition of being over a barrel. You have no bargaining power when you have minutes or hours to live without getting care.

Again, I’ll think it is crazy inefficiencies in the system when doctors stop making staggering amounts of money. And as much as they bitch about how their salaries have declined, the reality is, they still make crazy amounts of money. We give them a free pass that we don’t give to attorneys, etc. We need to either accept that they are just as greedy as anyone else, or do something about it. But this strange position they’ve managed to reach where they are saints of virtue, while pulling down hundreds of thousands if not millions of dollars for their services, is ridiculous.

My girlfriend just went to an ordinary doctor’s visit to have some swollen lymph nodes checked. The doctor felt her neck for about 5 minutes, then ordered an ultrasound (which was done the same day). Everything, fortunately, seems to be fine. The bill, however, will be at or over $500. This is with insurance coverage (because she’s not through her deductible).

She went in to the doctor for the “right” thing. This isn’t going into the emergency room for the sniffles - the doctor said they were swollen to where the ultrasound was a good idea, and she went in for a non-emergency appointment. I can understand how people can’t really justify going to the doctor for something that costs them such a large chunk of money. Yet at the same time, we rant about how people should be more proactive about going in early to prevent things from escalating.

Well news flash, they can’t, when they know it’s going to be a couple of car payments for something simple. God forbid they had actually found something requiring further testing or work.

3886

Yep, combine that $500 doctor’s visit with stories about the percentage of Americans who can’t handle an unexpected $400 expense and it becomes clear real fast why so many people put off medical care until it’s an (costly) emergency.

3887

I heartily endorse this remark. Well said!

3888

It is astounding that they are so accurately able to define one of the problems in healthcare pricing, yet propose a solution that is literally 100% wrong. Here are five areas where market failures can occur,4 of which are national across all healthcare, one is regional.

Parity of power
Parity of information
Pricing transparency
Time sensitivity
Local monopolies

Parity of power - is the transaction equally optional, or mandatory, for both parties? A buyer who will literally die has no power in negotiating.

Parity of information - can you independently verify what is being told, do you have the capacity to understand the situation? Another area where this issue famously occurs is car repair. Any situation where the issue is sufficiently complex to escape the understanding, or the symptoms too hard to detect with non specialist knowledge or tools, is prone to abuse.

Pricing transparency - the podcast covers one of the failures here. But the variability and non transparent nature of costs is a huge issue. Even something as routine as having a baby. Try and ask what it costs and the answer is basically ‘fuck you’ from hospitals. They won’t tell you charge master prices, and if they do they won’t tell you about all the little tack on items and line item pricing they will include. Like fraudulently including an epidural as a separate line item when you didn’t have one. Or $30 for a tylenol. Or $600 for a device you can buy for $50 on Amazon.

Time sensitivity - do you have time to research pricing, assuming you can even get the information? If you are having a heart attack the answer is no. And even if you do have information that one hospital is notably less costly for the treatment, you aren’t in a position to tell the ambulance driver ‘take me to the hospital 30 minutes away, not 10, they’re cheaper’. No, you’re going to the closest hospital like it or not.

Local monopolies - this can mostly be a rural or small town problem, as there may only be one provider for an hour in any direction. Not much you can do here.

These can all cause market failures. That medical care is so exposed on four of them means anyone proposing free markets as the answer is either woefully ill informed, a charlatan and liar, severely inserious about the issue, or stands to benefit financially from the abuse.

3889

That’s being generous imo. It’s a gun to your head, basically extortion with your life on the line.

No market can operate in that scenario. Which is well understood and why that sort of thing is normally illegal.

3890

Time-sensitive events like heart attacks and stroke are certainly dramatic, but they only account for a small fraction of medical spending. So I don’t think “But what about heart attacks?” is particularly important when deciding whether plan X would save money overall.

Just to make clear, I’m not saying that you should ignore clinical outcomes for heart attacks. Only that the potential cost savings is dwarfed by those in routine procedures, so it’s appropriate for cost cutters to focus their attention on routine procedures.

3891

It is a dramatic example, but far from the one time sensitive issue. What about 90% blockage on an artery? A broken bone? Chronic fatigue?

They don’t have the ‘treatment in the next hour or you die’, but all are time sensitive.

So please, it is a very real issue across medical treatment that drives prices higher.

3892

Or insulin.

3893

How does one price shop for medical care even when it isn’t time sensitive? Can one go on Amazon and compare rates for doctor office visits? When the doctor says you need an ultrasound, does the doctor give you a long list of options on where to go, which includes the price for the procedure in each location? My experience is that they do not.

3894

By time-sensitive, I mean that the patient can’t take 4-6 hours to ask questions and make an informed decision. They certainly have that much time if they have a broken bone or chronic fatigue. Possibly (though not necessarily) if they are considering angioplasty.

You can’t. So the criticisms about price opacity are perfectly valid. I just object to using “guy in ambulance with heart attack” as an archetype, because he is an edge case. He is the “family farm” equivalent for the health cost cutting debate.

Whereas “pregnant woman arranging a c-section” is a better archetype, and market-based approaches will fail for her too for the other reasons you and CraigM mentioned.

3895

Even far more common medical issues are not really possible to “shop around” for because of the way insurance works currently. Let’s say I injured my shoulder in a way that didn’t require surgery and now I need several weeks of physical therapy. My doctor gives me a referral to his preferred provider, but it’s $500 per visit (before insurance) and I’m worried that may cost too much even after benefits are applied. I could, in theory, shop around and see rates and availability from several different orthopedic physical therapy providers in my area, since I’m not going to die or lose my arm if I wait a few days to begin physical therapy. Except:

  • Many providers won’t even discuss rates over the phone.
  • Some of the providers may not be in my insurance network, meaning I either pay an increased amount or shoulder the entire cost myself (no pun intended).
  • Some providers may only accept referrals for new patients from doctors within specific networks or from specific hospitals/doctors.

The entire system is rigged against consumer comparison shopping even for medical needs that are non-life threatening. Any reasonable reform needs to start with an overhaul of both how insurance works and how provider pricing is structured. Make health insurance a “go anywhere” benefit to encourage market competition, and then create reasonable pricing structures for most medical procedures and services so that people know what they’re paying up front. Both are key steps to health care reform that actually benefits average people, not just another complicated clusterfuck that leaves most people paying 20% or more of their annual income to insurance and medical costs.

3896

But he’s not an edge case, really. Because even for other things, it’s not like you’re going to go shopping. Oh, you have badly swollen lymph nodes that could be anything from nothing to a nasty infection to cancer? Hold on, take 3-4 days to call around and get price quotes from various healthcare organizations (and in order to get quotes for much of it, you would have to be evaluated so they could even tell you what procedures you might need in the first place).

Even with non-“back of the ambulance” issues, time is more of the essence than to allow shopping for quotes like you would for getting your house painted or buying a car.

3897

“Time-sensitive” is an overly narrow way to view this issue; the real question from a market perspective is do you have the freedom to walk away from the deal at any time and also do you have the ability to make as rational a decision as possible based upon as perfect of information as possible and in health care that is rarely the case.

Although the narrow heart attack scenario is a relatively small part of total health care spending, the more broadly defined “major medical crisis” scenario is actually a quite sizable part of overall health care spending - hospitalization for critical care in particular is hugely expensive in the US, as is end of life care.

In addition to the timing constraints of a crisis scenario, there is also the issue of whether the health care consumer is in the right frame of mind to rationally make market decisions during most health care issues. For example, posts above referenced both broken bones and chronic fatigue syndrome. Neither of those is immediately life threatening and yet both can impair the patient’s ability to make a rational decision. Just imagine trying to price a major bone-reconstruction surgery with a broken ankle (either unmediated by meds or pumped full of opioids - neither situation is a good one for market rationality). Should I buy the ankle reconstruction with implanted screws, a full on ankle arthroplasty or just a 'scope to clean stuff out followed by months of casting and crutches? (Meanwhile, my ankle is fucking shattered to bits.)

And chronic fatigue can come with all kinds of co-morbidities like anxiety, depression, etc. that can render a rational decision very very difficult.

Last time I looked at the national figures on where our health care spending actually goes, roughly 3/4 (75%) was spent on major medical crises or end of life care (including hospitalization and non-elective surgery costs which are both insanely expensive) while only about 1/4 (25%) goes to elective procedures, routine medications, checkups and other care that would be amenable to at least some kind of consumer feedback. And even in the case of the more “elective” type care, much of that would necessarily involve making major economic decisions while sick, in pain, depressed, etc.

A purely market based approach is simply never going to work in health care due to the fundamental and inherent inelasticity of most health care (as measured by dollar value). There is a legitimate argument as to what level of governmental intervention is best with a meaningful debate between “moderately regulated with strong subsidies and strong consumer protections” versus “heavily regulated with major government intervention at multiple levels”, but there is simply no first world country that has a successful health care system without major governmental intervention to address the fundamental, underlying, unavoidable market imperfection of inelastic demand. Period.

3898

Right, like I said price opacity is a problem. But in theory, if you needed treatment X, you could go to a portal and immediately find out how much different providers would charge for that treatment. It’s true that there are currently lots of obstacles to any sort of practical implementation, but it’s not impossible.

As for your example, it’s not quite as complicated as you describe. Currently, if you have swollen lymph nodes then you will either see your primary care physician or go to the ER for a diagnosis. Then, depending on the diagnosis, you will be referred to some specialist for further management because neither the ER nor your PCP are willing to treat anything more complicated than a mild infection. So in theory, you could shop around for someone to diagnose your swollen nodes, and then if necessary shop around for the specialist who will treat them.

By the way, just because something is not impossible doesn’t mean that I think it’s a good idea.

3899

I was gonna post something like this, but @Sharpe did it faster and better. Well said!

I should also point out that much of what was being discussed in the podcast that I posted above was related to elective surgeries. Those tend to be much better candidates for free market ideas, though certainly I’d still say it’s not the ideal solution for much the same reason…it’s really hard to make rational economic decisions about your health when that very health is impacting your ability to reason.

3900

Nicely put! I’ve had similar thoughts in a rambling, disorganized way, but you did a great job of laying them all out.

3901

I don’t know about that. I don’t really have the freedom to walk away from my job. I don’t have the freedom to walk away from my mortgage. There are long-term consequences to decisions even in totally free markets.

You cannot consent to medical care unless you are capable of rationally weighing the costs and benefits. In many cases, this means that a surrogate is required to make medical decisions because the patient is impaired.

I think you are arguing that someone in pain is not capable of rationally weighing the costs and benefits. Normally, the pain should be relatively well controlled before any sort of treatment options are discussed. Doctors aren’t barbarians - pain management is critical! But if that were impossible, then discussion should take place with a family member or other surrogate who is more rational. Same is true of debilitating mental illness.

3902

I’ll be the first to say this idea is long shot. But after seeing how well Uber and Lyfte are working in Las Vegas, I’m thinking we have the wrong model.

Rather than having the poorly informed and as you say sometimes medicated consumer make sense of the ridiculous pricing.

Why not have the consumer put the information out there what he needs. Prostate removed, physical therapy for your broken angle. healthy baby delivered in 2 months and have doctors bid on the providing the service.

Maybe this goes direct to the patient or maybe indirectly via an insurance company or medicare specialist.

This would also require rewritting HIPA laws, and having a universal electronic patient record system, but the basic idea might work.

3903

You certainly do have the freedom to walk away at the “deal” stage: job offer, home purchase offer. At the point where you are making the binding economic decision you DO have the freedom to walk away. Whereas in health care, you often do not.