It's the fact that options laid out on the table with unknowns can be preferable to people than no options, or fewer options.
The same dichotomy exists for crime vs agreements:
- You'll be compensated if a party to an agreement breaks a clause or costs you money (say they fail to provide $30k of goods to your business)
- But if someone steals your car, the government won't put $30k in your account for a new one.
The same loss occurred. The second case was totally unwarranted, yet the individual outcome is worse.
Why? Because doing it any other way would make things worse. People would lie about stolen goods, conduct insurance fraud, etc.
Unfortunately in some situations, things "which are worse" are a different category and don't have an answer with government intervention.
I understand your point and get that you didn't say this to argue with what I've said. I just want to emphasize that the situation here is different.
Here, though, we have a situation where people who are significantly harmed medically try and find malpractice even if none occurred, and juries are usually sympathetic. The consequence is medicine has become a much more defensive and adversarial system.
I'm sure that an effort to insure for morbidity from bad outcomes will cause fraud, but it might also save a lot of malpractice litigation costs and reduce the amount of resources spent on defensive medicine, too.
> It's the fact that options laid out on the table with unknowns can be preferable to people than no options, or fewer options.
Assuming you're talking about me, that's not exactly my point. I didn't intend to make any assertions about what patients or their families should or should not do, or in general any normative points (though I did use the word "justification", which I shouldn't have).
Rather, what I was saying is that businesses that aren't profitable cease to exist, and if the business's product is an experimental medical therapy that could end up killing a substantial fraction of its patients, the business might lose money when those patients' families sue the business. It's fairly predictable that a good fraction of experimental therapies will have this outcome, even if you don't know which ones in advance. Consequently, businesses that don't price it into their business model will, in most cases, go bankrupt after their first few successful therapies, making them unattractive for venture capital.
So the high price tag is somewhat predictable, whatever you may think of its moral status.
Separately, your comment seems to imply that damages on breach-of-contract and similar civil tort cases are paid to the plaintiff by the state rather than the defendant. That is not correct. They are paid by the defendant if they are paid at all. In the US, you can also file a civil tort case for conversion against someone who stole your car and get awarded damages in the same way.
I also find economic arguments like you make here generally convincing, arguing against this (that risk increases costs which must be priced in) would be similar to arguing against the Laffer curve. This is essentially close to my position, but different to the person I originally replied to.
I do have an optimistic bent that, through either ignorance, arrogance or risk-seeking, people actually over-risk on experimental therapies, for example, launching Biomed spin offs. Because the personal gain (curing a disease, helping people, or becoming popular) can be so high, it can motivate risk beyond other busiensses. This is probably where I most differ from you: I know many businesses which should not exist, have never turned over profit, and maybe never will. But a rich family, or the savings from a lifetime of earnings sometimes get put into these shots at success. It's not like they get cut once the net profit reaches 0. Same with local shops: A number of the local shops you can't understand running profitably survive because they have paid-off mortgages and only have stocks/staff/licensing to deal with. It makes little financial sense to run them over renting the shop to someone else for more profit, yet people do.
Perhaps this extra reason to stay invested/risk on Biomed is matched by the fraud in that industry, though (Hello Theranos).
Regards the later point, I understood that though my comment could have been phrased better. The meaning was "the government will force [as necessary by asset seizure or bankruptcy] the breach-of-contract party to pay you".
Ideally patients would be protected not only if someone made a mistake, but also if they were one of the unlucky people who got a bad outcome from a procedure that is normally beneficial.