Unelected

[PKT_VOL]

He and everybody else in washington are beholden to the people who pay for them to get elected.

Yep, we need major campaign finance reform in the biggest way imaginable.

 

[volinbham]

That generally means paying one of two ways: Out of pocket or with an HSA. That brings up a whole new host of issues. To name a few:

- Health care is one of the few markets in which the price of services can frequently go up with innovation.

But why is that? I would argue it has much to do with the highly regulated nature of service provision. In a less regulated market, any number of HC providers could choose to go with the latest and greatest or stick with other proven yet less expensive treatments. We do see evidence that when HSA's are used and/or people are paying themselves they choose among options with similar quality outcomes but cheaper costs. Insurance coverage and mandates of care prevent a wide range of proven techniques from being used - there is no incentive and actual structural barriers preventing this.

- That market, like the one we've currently got, is still based on a fee for service system of exchange. That becomes an issue in cases with fixed, large levels of asymmetrical information; doctors almost always know more than patients. Doctors are incentivized to sell services beyond the point of diminished utility to the patient. Most health care practice is either emergency or urgent care, in which case shopping around isn't going to occur.

Again part of this resides in a virtual requirement for docs to use the latest and greatest. While information asymmetry will still exist there is no automatic function that says docs will always seek to sell services beyond the point of diminished utility. Again, some research on direct pay shows that docs reduce this based on both motivation to do what's best and affordable for the payer and it gets them direct payment without insurance hassles.

- The other issue that comes up with this kind of information asymmetry is an effective degree of the lemon market phenomenon.

Lastly, and this is a guess based on what I know prices of health services to roughly be and taking a cursory look at incomes and budgets of most people, my guess is that funding for both an HSA and catastrophic health insurance is likely well beyond the reach of the majority of Americans.

Depends on the last point - let them opt out of employee programs and put that money towards a catastrophic plan or the HSA and fund the other out of pocket. There's also the problem of ability to pay for it vs will to pay for it. We've pretty much told people they don't have to pay their own real costs of HC.

The fundamental point to me is that all the talk that HC is not a market or it's different so market mechanisms won't work is based on tweaking HC as it is now. We've created a system where market mechanisms struggle and we are going further down that path. That however doesn't mean the HC is fundamentally not amenable to market mechanisms or market-based solutions.

 

[PKT_VOL]

Depends on the last point - let them opt out of employee programs and put that money towards a catastrophic plan or the HSA and fund the other out of pocket. There's also the problem of ability to pay for it vs will to pay for it. We've pretty much told people they don't have to pay their own real costs of HC.

The fundamental point to me is that all the talk that HC is not a market or it's different so market mechanisms won't work is based on tweaking HC as it is now. We've created a system where market mechanisms struggle and we are going further down that path. That however doesn't mean the HC is fundamentally not amenable to market mechanisms or market-based solutions.

You dissected it in greater detail than I was willing to do. I agree. There is nothing fundamental about the medical market (in and of itself) that makes it immune to traditional economic mechanisms. Any phenomenon of that sort that is observed today is due to our policy failures and catawampus views towards healthcare in general (being that we are somehow entitled to the very best medical care for free).