I consider myself an economic libertarian. I prefer capitalistic solutions to centralized solutions.
Yesterday I participated in a brief discussion of health care reform. A financial expert started talking about the stimulus package being the first step to socialized medicine. As I considered my response, I realized that I had a simple answer – we do not have a free market possibility in medicine today.
I explained that we cannot charge more in medicine, even if we are in higher demand. Our prices and payments are fixed by Medicare and insurance companies.
I believe that many problems in health care stem from patients not having any direct involvement in financial decision making. I cannot make more money by spending more time with a patient, even when it is clinically indicated.
I doubt that we will get a free market reform in medicine, so I will have to be satisfied with a more rationale payment structure. We do need health care reform, but I am not sure how I would handle such reform.
{ 4 comments… read them below or add one }
Even if healthcare were to be allocated by the market, health would not be. But health is what people want to buy.
No free market currently. Medicare/Tricare/Medicaid fix their fees. Most insurance companies base their fees on Medicare or less. Patients have copays ranging from deductibles to $50. The percentange that patients pay increases, while the doctor’s fees have not even kept up with inflation or the cost of living for the last 10 years. Medical vaccine and other supply costs keep increasing, but reimbursement flatlines. Malpractice insurance and building insurance costs also keep increasing with this flatlined reimbursement. No other business could survive the current healthcare fee system. We already have socialism in medicine, as consumers simply think they have some choice in a dozen insurance companies’ plans that all pay within a dollar or two of each other for the same level of care. Charged amounts pretty much mean nothing when billing insurance companies. Balanced billing is outlawed. Basically doctors practice at the mercy of Medicare and the insurance companies.
I think the free market idea is a fantasy in health care because it rests on 3 false assumptions: (1) people have more or less transparent information about price and quality and (2) people are able to use this information to make rational decisions and (3) people are willing to tolerate the demands that the market puts on the purchaser to “shop around,” that to do (1) and (2).
I think the large majority of people don’t want to think about the price tag of care, they just want to be healthy. Nor are many consumers really trained to understand EBM enough to make rational decisions about quality – so they just go with their gut instinct “I trust Dr. X because I like him.”
I think if you talk to the average Joe out there, he really doesn’t think of health care as a “product” to be consumed, but more of a public good or necessity – a lot like education in fact.
I think mogi hit the nail on the head. A free market needs some baseline conditions to work – price and quality transparency, time to make a decision and the option not to buy or wait, a balance of supply and demand,etc.
I’m not sure these are even possible in health care. Many readers on this blog are aware of the difficulties in comparability when trying to track quality of care and the numerous ways this can be gamed by hospitals and docs. When you have appendicitis, you can’t “shop around” in most areas. There may only be one hospital in your area, so there is often no choice. There may only be one surgeon on call, and that’s who you get. There is little balance between supply and demand, when the market says it wants more physicians of a certain type there may be a 5-8 year lag due to how long it takes to train docs. There are numerous other examples.
I lean toward being a libertarian on many issues, but I have come to the conclusion that medicine doesn’t work in a free market. Most of the other OECD countries have already figured this out. They have taken a centralized approach and are getting better outcomes at 1/2 of our cost. Some things are best managed by a free market (e.g., computer manufacturing) and some are best managed by govt (e.g., police dept). I think health care belongs in the latter category.