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Comment by joshuahedlund | Hacker News Reader

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

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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.

> 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.

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.

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.

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.

> 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.

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.

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