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Comment by bmmayer1 | Hacker News Reader

"Take the examples of Lasik eye surgery or cosmetic surgery. These services are not covered by insurance. Providers compete on the basis of quality, outcomes and price. And prices have continually dropped as quality and services have improved—unlike the rest of health care."

Sadly, most people forget this. They think that healthcare is somehow immune from the laws of economics, that it is "special."

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I like this argument, too, but the common response is that Lasik and cosmetic surgeries are elective - voluntary improvements to your body that are a sort of luxury that lend themselves to competition (shopping around, taking your time). By contrast, a lot of expensive medical procedures are much more critical and time-sensitive (you could say the demand is much less elastic), which makes it a lot harder for competition to work (though more price transparency might help!), especially if as another comment says[0], "You get taken to a hospital out of your control, and they're allowed to decide what services to provide and as well as the price they're going to charge you..."

[0]https://news.ycombinator.com/item?id=6258953

What the commenter suggested is exactly the situation right now: the hospital sets the prices as astronomically high as possible because they can get away with it, because the patients aren't paying it. Don't you think introducing patient choice into the equation would put some downward pressure on prices? And certainly if it puts any downward pressure on prices, it's a better situation than we have now.

If you're having a heart attack, are you really in a position to negotiate on price? At all? I get that there might be some downward pressure, but what prevents the hospital from just laying an absurd bill on you after the procedure?

It's somewhat akin to emergency non-medical services - say, a tow truck, locksmith, or plumber. Many of these services cost quite a bit more than they should. Why? Because the people who need them are in no position to shop around.

The hope with a real free market is that you wouldn't have to negotiate in that situation, the prices would already be reasonable.

> The hope with a real free market is that you wouldn't have to negotiate in that situation, the prices would already be reasonable.

The theoretical efficiency of a real "real free market" depends on the ability to evaluate and choose options in a competitive market for purchasing goods and services based on perfect knowledge of the costs of and utility from each purchase.

There's a whole lot of reasons that a deregulated market for "purchasing treatment for a heart attack you are currently experiencing" is not likely to have the features that theoretically create efficiency in a "real free market".

Also, a heart attack is a rare event, and presumably one that would be covered by a real insurance policy.

> Don't you think introducing patient choice into the equation would put some downward pressure on prices?

If you could magically make healthcare look like an Econ 101 market where rational choice theory and perfect competition both were even remotely reasonable models of what was going on, sure.

But "patients don't pay directly for services" isn't even close to the only way that healthcare doesn't look like an Econ 101 market. Rational choice theory is a deeply and fundamentally flawed model to start with, but its a tolerable approximation of behavior in lots of important cases (mostly, classes of products which are frequently purchased and used and whose utilities are very clear upon use, allowing any misperceptions about expected utility to be resolved so that most purchase decisions are in fact made with reasonably strong information about costs and utilities.)

Look, the rest of the developed world does as good or better (by most measures) healthcare than the US at vastly lower cost (whether measured per capita or per GDP), and they don't do it by making patient pay directly for services. The whole idea that we have to resort to abstract Econ 101 theory to determine how to control prices in healthcare ignores the fact that the rest of the developed world exists.

The real point to them being elective luxuries is that the would-be consumer can actually walk away entirely. You needn't get lazik from anyone. The same can't be said of many/most medical procedures.

You can't research the market and just skip getting a knee replacement altogether, the way you could with lazik. To say nothing of more serious problems.

The consumer also can't entirely walk away from the food market. That doesn't make food prices go out of control.

Which would be a great point if not for the oversight, subsidies, reserves and incentives that affect staple foods.

The point is that consumers are still able to bid down prices despite having no choice but to participate in the market. Individual sellers still have to convince individual buyers to buy their products, and to do so they have to price their goods competitively. It doesn't matter that there is no alternative to participating in the food market because there are alternatives within the food market.

According to USDA in 2011 15% of US households suffered from food insecurity - for them they are already out of control.

And there are the other couple of billion people on the planet that cannot afford a dollar per day for a meal.

> 15% of US households suffered from food insecurity

...partly because of healthcare costs, which is the number one cause of bankruptcy in the US. You're making our point.

They're not out of control, those people just happen to be very poor. They haven't been going up like crazy like health care costs have.

If my breaks need replacing or my A/C goes out, I'm not going to use my car insurance to pay for that, because that would make the insurance really expensive, and create a similar price insensitivity. I don't see how that's different than getting knee surgery or whatever.

OTOH if I get in an accident where I'm not at fault (let's assume the other person didn't have insurance), I'll use my insurance to fix the car, because it's a sudden emergency with a high cost. I don't see how that's different than a heart attack or whatever.

I don't see why people conflate all medical care into one group. Routine care and emergency care are clearly separate.

Every time I hear how much Lasik surgery has improved, I'm gladder I haven't let those damned lasers anywhere near my eyes. :-)

For the hackernews spin, this trick works for software too - I learned it at my first job, where each client had a different stack and we had to evaluate lots of enterprisey vendors: look at the improvements. The same thing that makes vendors tell you their software will make you toast and find you dates makes them unable to resist crowing about the improvements from version to version. If you're choosing between two identical-looking products, go with the one whose recent release notes have things like "Fix problems when mixing Russian and Right-to-left scripts on EBCDIC systems" rather than, "Now includes support for backups!"

I'm glad I bit the bullet and got lasik last year. It beats the nonzero risk of eye infection every time I touch my eyes with contact lenses. These problems can cause vision loss and sometimes require eye removal: http://www.webmd.com/eye-health/news/20061010/lasik-surgery-...

I have some solid lenses made out of plastic, held in front of my eyes. "Non-contact Lenses", I suppose you'd call them. Or perhaps, "binocularettes"? Anyway, they're sort of like monocles, but attached to a little frame that fits around my ears and above my nose, keeping the lenses in place. A minor hassle but you soon get used to it.

Ask me on my death bed to be sure - but I'm pretty sure that the risk of eye removal from my non-contact lenses is pretty low. I much prefer it to the creaky old technology of actually putting things in your eye. Progress!

(I used to have some fashioned from pure glass, and they were pretty decent - much more resistant to scratches - but obviously glass comes with a risk of breakage and therefore shards of glass in your eyes. I have to admit that such a thing never actually happened while I had them, though.)

I mostly use the same "non-contact lenses" as you but have also used contact lenses for 35 years and not needed to have an eye removed.

Deliberately putting things in your eye does have one advantage, you can easily fish out any bits of grit that get in there by accident.

Many people will unabashedly say that they believe healthcare to be special. It's not uncommon to hear people say that they don't believe profit motive has any place in healthcare. I don't buy it. I don't see how healthcare is any more special than, say, food production (both are obviously vital to health), yet I think most people have come around to recognizing that profit motive is a spectacular way to organize the production and distribution of food.

People think profit is a dirty word, especially if it is made "helping people." But why is it bad to make money helping people and not bad to make money not helping others, like people who make millions from selling fast food or selling iPhone apps?

Of course healthcare is special, it's not a normal market because of extreme demand inelasticity. Food is special too, but it manages to function as a market because we have a food surplus, a plethora of replacement goods within the food category and it's much less specialized to produce.

This doesn't mean that people don't deserve to earn a living. The doctor in the article managed to find a way to make the man's procedure happen without taking a loss on it.

But it's an inaccurate simplification to consider healthcare a market like any other -- inaccurate simplifications hurt any system and that's why our current 'market' system has more bureaucratic red tape, higher prices and worse outcomes than actual socialist systems in the rest of the western economies.

Emergency medicine is inelastic and not conducive to price shopping and other research.

But, what percentage of medicine falls into that category?

For example, I currently have a shoulder injury. I'm meeting with an ortho specialist next week. And it will likely require surgery to correct.

So, while I "need" the surgery, there's no real hurry. I could take an extra week to meet with several providers and ask about pricing.

Of course, I won't do that, because my medical plan is paying the vast majority of the cost. I'll just get nickle-and-dimed with co-pays for the next 6 months.

As another example, I'm very likely going to be switching to a medication that costs $60,000/year for a variety of reasons.

It's slightly elective (my mother has the same issue, but has been okay) but highly probabilistic (my situation could be much worse if I don't take it). There are alternative medications, but they involve injections weekly or daily (which I've been doing), don't cost much less, and produce side effects that make it very difficult to work.

The kicker? The active ingredient is DMF, which I can buy in bulk for 1000x less. I've looked up the pricing, so I feel like I am applying some amount of analysis in determining that it's worth the cost. But it does feel like, even accounting for need to recover expenses of doing medical trials, this is a bit ridiculous.

Non-emergency medicine, also inelastic.

There's no hurry on your shoulder surgery, but there's also no point at which you say "Geez, at that price I'd rather not", like it's iMax tickets for Iron Man 3. Maybe there's a point at which you literally can't make it happen and are forced to live with it but it is not a Normal Good with Econ 101 supply/demand curves.

I guess that one could contend that our current f'd up situation is a random historical accident rather than a somewhat predictable outcome from treating an essential good as a market good. But you certainly can't claim it's a functioning market, for any definition of functioning or market.

What separates heathcare from a food is you know how hungry you are you have no idea what blood tests should be done. And the person ordering blood tests has no incentive to hold back as they make more money the more they do and can be suied if there to passive.

The RAND study clearly showed that much of the demand for healthcare is elastic.

Isn't most of the country obese? And don't we breed crops to look good over being nutritious? Aren't large portions of the population without reasonable access to grocery stores?

Many people will unabashedly say that they believe fire fighting to be special. It's not uncommon to hear people say that they don't believe profit motive has any place in fire fighting. I don't buy it. I don't see how fire fighting is any more special than, say, food production (both are obviously vital to health), yet I think most people have come around to recognizing that profit motive is a spectacular way to organize the production and distribution of food.

If the goal is to celebrate the free market, food production is probably not a great analogy. In the US it's heavily subsidized, regulated, watched and manipulated to ensure that the market doesn't act too much like a free market. [1]

Housing and Utilities are that way too. When you get right down to it, every vital fundamental service is backstopped in similar ways. At least inasmuch as disqualifying them from being great examples.

Which rather deprives us of a simple analogy between "How Health Care Might Be" and some other current market for a vital human need.

[1] Which may well work itself out in the end, but is given to trouble in the short run from things like fraud, bubbles, panics and crashes -- things society has voted that they like less than government manipulation of the market.

Not sure the impact, economically, but...

Cosmetic and eye surgery, are for the most part, elective and the pool of potential clients pretty vast, depending on how it's marketed. Other surgeries/treatments are necessary (not as elastic) --it's not as if people would say, well, I have an extra $$$$$ so let me get a hip replacement. They are forced into having to (by the nature of the situation). I'm saying the economics are different, but that's not to say that scale should not apply to non-elective surgeries, but just that maybe to a lesser degree.

Healthcare most certainly is covered by the laws of economics. It's a service for which there is inelastic demand. Laisk and cosmetic surgery are optional, so the price influences the quantity demanded. Nobody would buy a $100,000 cheeseburger. Treatment that's needed to end suffering or make people functional again is inelastic; if you charge someone's annual salary, he still has to pay it.

It's true that there could be competition on price for non-emergency care. It's okay for someone to eat cheap, low-quality food or live in shitty housing, because for the most part they'll be okay. Should there really be a Ramen of surgery? Are you really willing to inflict that on people?

A good portion of this country is. Those of us who voted Democrat aren't.

http://www.investopedia.com/terms/e/inelastic.asp

But a 325,000 burger, on the other hand, is fair game.

http://www.nytimes.com/2013/08/06/science/a-lab-grown-burger...

Some major insurance companies covered LASIK about 10 years ago, but have since stopped. My LASIK was paid 100% by my insurance co in 2003. I heard the logic that paying $2000 in 2003 was cheaper than paying $150-300 per year for exams, lenses & frames for 10-15 years.

I paid out of pocket for mine, but breakeven for me was 5 years because I previously wore one-day contacts ($$). For most contacts-wearers breakeven is around 10 years.

Of course, as well as not being covered by insurance, they aren't required to stay alive and in good health. How's that working for heart surgery?

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