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Comment by nikatwork | Hacker News Reader

Many in this thread are claiming that price fixing wouldn't occur in a "truly free" market. This is misty-eyed naivety.

In a completely deregulated free market, it is even more in the hospitals' interest to form a price-fixing cartel. Any new player in the market trying to set reasonable market prices could be excluded through market pressure tactics (eg, tell distributors don't sell to them or our cartel will no longer use you).

It seems to me that the parlous state of the US healthcare system is in fact a perfect demonstration of the dangers of a completely free market, and claims that "oh no it's not actually free enough" are merely handwaving.

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Well you can hardly have a free market for healthcare in the first place. A functional market requires that consumers be vigilant and make good choices. That's hard enough without being sick or injured.

I like to think of myself as a free markets guy, but driving healthcare via the market seems like the worst, most cynical application of the concept possible.

With respect, what is a functional market, and why does such a market require that consumers be vigilant and make good choices?

If consumers make bad choices, don't they eventually learn to make better choices?

> If consumers make bad choices, don't they eventually learn to make better choices?

Even if we assume that consumers will learn to make good choices, that would require that they understand their choice was a bad one.

This is an A-B-C problem (antecedent + behavior => consequence). The consumer must first recognize that a negative consequence has occurred, and then determine whether it was their behavior that was flawed (they made the wrong choice) or a flawed antecedent to that behavior (they'd made the right choice, had their assumed knowledge of the situation been accurate).

Consumers don't do this though. Studies have repeatedly proved this (e.g. the very large effect of marketing and advertising on selection of products of otherwise equal quality).

Consumers may make decisions that are non-harmful (i.e. they got about the same result but simply paid more) but they certainly do not make decisions that are optimal.

I am sure you'd be more careful next time after you tell the ambulance driver to take you to a sub-optimal hospital were they end up killing you.

"If consumers make bad choices, don't they eventually learn to make better choices?" One of the assumptions buried in this is the idea that consumers have access to the information required to make such a choice.

In the healthcare "market", they don't.

Look at Apple's App Store. It restricts what developers can do (and charge) and it restricts what users can download (and where from). But, because the short-term benefits are good enough, many people do use it, to the detriment of the group.

Regulations usually prevent consumers from making any choice. Regulation can make consumers buy insurance for procedures they do not want, or even physically be able to have. Regulation made impossible to shop across state lines for insurance. Government rules force suppliers to sell services at set rates to one customer and not to another.

Health care stopped being a free market when government stepped in. Then it because burdened by politicians creating a system which favored whomever was giving them money and votes.

> the US healthcare system ... a completely free market

I have read a lot of wrong things on HN, ranging from the merely misinformed to the willfully ignorant, but this might take the cake.

The sentence you're objecting to isn't claiming that US healthcare is a completely free market (which, as you note, would be an unbelievably ignorant view to hold... literally unbelievably). It's claiming that certain failures of the fairly-free US system already illustrate the sorts of failures that would plague a free(er) system.

You may or may not agree with that conclusion, but it's a far more plausible view for someone to hold than what you seem to have thought the original poster meant.

"US healthcare system is in fact a perfect demonstration of the dangers of a completely free market"

The commenter actually says exactly that...that the US healthcare system is (in fact) a perfect demonstration of a completely free market.

No, it is a comment about the idea that the failures come from it not being free enough.

Saying that something demonstrates the dangers of x by saying that the things that are wrong with it are features of it moving in the direction of x is not the same as saying that the thing is x.

I could say that something nearly catching fire and getting badly scorched is a perfect demonstration of the dangers of fire, but that would not mean that I think that the thing has actually caught fire, it just means that I am using a perfectly normal rhetorical device to describe that I think that the fire is a danger.

The part you quoted doesn't support your argument, re-read it and then disagree with what was actually claimed if you'd like.

OP:

"perfect demonstration of the dangers of a completely free market"

You:

"perfect demonstration of a completely free market"

Do you see where the difference is?

You are selectively re-arranging my words to create a different meaning. At no point did I say the US healthcare system was completely free.

Hint: if a half-dozen different people misinterpret your point, it's not them, it's you.

That also largely depends on if they are being wilfully obtuse, or lack the basic comprehension skills involved with recognising wider context beyond the level of single sentences, which seem to be the main two areas of confusion here so far.

So many unnecessary arguments crop up on this forum because of selective, incomplete reading of comments and misinterpretation.

If commenters took a minute to think about other potential meanings before going off on some misinformed rant it might make for a more productive debate.

Then again pigs might one day fly.

What could nikatwork have changed about the original comment in order to make the intended meaning more clear here?

"It seems to me that the parlous semi-free market state of the US healthcare system is in fact a perfect demonstration of the dangers we'd encounter if we moved to a completely free market. Claims that "oh no it's not actually free enough" are merely handwaving"

I think that (or something like it) would have been a much clearer approach.

Half a dozen is pretty easy to hit when you have such a wide variety of people readying your post online. What would be the percentage threshold be?

You are very clearly, and unambiguously declaring that as long as there are six people somewhere in the world who misunderstand, then whoever made the original point is at fault for not making it universally easy to understand, and impossible to twist or edit to fit the prejudices of the reader?

At what point does the number of people who correctly understand it come into play? If 6 people don't get it, but 6 people do, is it still the fault of the author? What about 60, 600, 6000, 6bn?

Surely if only six people out of the entire population of the world misinterpret a point, and everyone else gets it, then it must be the due to the prejudices or poor comprehension skills of those six.

On the contrary, if a half-dozen different people don't misinterpret your point on a widely-read Internet forum, you probably didn't say anything worthwhile.

"Today's Instagram outage is a perfect example of the dangers of hosting all your services on your own hardware."

...

"I never said Instagram hosts their own services!"

What the hell? He really didn't say that. It really does look like you chopped up his comment to make a fake comment to argue against.

I wonder if, perhaps, you could provide a counterargument to nikatwork.

http://en.wikipedia.org/wiki/Medicare_%28United_States%29

http://en.wikipedia.org/wiki/Medicaid

http://en.wikipedia.org/wiki/Hipaa

http://en.wikipedia.org/wiki/Patient_Protection_and_Affordab...

This is kind of like condescendingly asking someone to provide a counterargument to a proposition that the Earth is completely dry land.

Those are insurers. The article is about the hospital supply market. In particular, the completely unregulated part of the hospital supply chain.

So.. are you merely misinformed, or willfully ignorant?

> The article is about the hospital supply market.

That's fine. The sentence I'm objecting to is about the US healthcare system.

Again: that is a sentence you made up. You ignored the "it is even more" clause, which makes it clear that he believes the current market dynamics presage what would happen in a deregulated market. What's worse, in order to "object" to the sentence, you deliberately misquoted the comment and attributed your broken misquote to him.

http://en.wikipedia.org/wiki/Certificate_of_need

How do you explain other free markets that obviously deliver quality products at low prices? I don't feel gouged when I buy a television, a cell phone or lumber at Home Depot.

> I don't feel gouged when I buy a television, a cell phone or lumber at Home Depot.

You might if you were carted into a Home Depot unconscious on a gurney, handed a non-returnable light bulb and stuck with a bill for $6,844.

Cell phones are a great example of the terrible results from supposedly free markets.

Plans are deliberately priced to be confusing to compare prices; plans are frequently updated to cause people to be stuck in win-optimal contracts; consumers are gouged on some items (see bizarre cost of sms in UK); and companies collude to defeat market mechanisms - see the use of area codes in auction bids as a method of communication when frequencies were auctioned off.

Do you have a cell phone? If the results of this particular market are so terrible, why does virtually everyone elect, of their own free will, to buy a cell phone?

Many people buy cell phones. That doesn't mean the market works. Consumers are gouged every day by unfair practices from cell phone providers.

I'm a bit confused how anyone using a cellphone could chino otherwise.

Genuinely want to kniw what sequence of letters was intended in stead of "cbino.

I'd say probably "claim".

Because they have no other choice.

We choose between what we have, not what is the best or the right thing to choose.

If a person chooses it freely, how can you say it's not the right thing for them to choose? Epistemologically, how could you know this?

They are not choosing freely, society pushes them to have a cell phone, and by definition there is no free choice of carriers because the government allocates the spectrum.

I think you're suggesting that unless a choice has no consequences, it's not a free choice.

So because in this day and age it's convenient to have a cell phone, the choice to do without one is not a free choice. And because one doesn't have an unlimited number of carriers to choose from, that choice is also not a free choice.

I'm using free choice in a different way, perhaps. To me, unless someone puts a gun to your head (so to speak), every choice you make is a free choice. That doesn't mean the choices are without consequences, or that they are necessarily good for you.

The point is that a cellphone is the best tool we have and that you are severely disadvantaged not only practically but also socially if you don't have one.

So you are free to not choose one but the consequences are huge to most people in fact to big.

It's not a rational choice as the free market philosophy claims, its a choice thats primed by whats considered desirable at any given time.

Would this be the same free market that put a Cray 2-class computer in my pocket for $85/month?

When you look at how much other devices cost that are comparable but are not mobile phones, then over a grand a year does seem excessive. Comparing the cost of a phone to a cray-2 is fairly meaningless. It would make more sense to compare it to a Raspberry-Pi.

... when I pay $11/month for a similar cray in a developing nation.

You are getting fleeced!

no. that was done by people making and selling computers.

cell phones opportunistically exploit that innovation.

the fact that you get great hardware for a tiny monthly cost is just proof that they're over charging most people for something else.

What if structural separation and a wholesale bandwidth model could reduce that price? What if smart radios and eliminating bandwidth "ownership" could reduce it even more?

Those are examples of designed markets, even though there are accompanying technologies, as is the current mobile telephony business. Now guess who stands in the way of implementing those changes?

The nearly ubiquitous cell phone contract sucks and the operators certainly try to make things confusing but if someone really does want a cheap cell phone and plan they can be had for quite cheap and at not much inconvenience. Drive down to Walmart and you can pick up a $30 cell phone and start using a prepaid plan that costs $30/mo.

Most hospitals will not, however, tell you how much a procedure costs making shopping around for non-emergency procedures impossible. Combine that with the usual low deductible health insurance plans and you've driven out any incentive for the consumer to even attempt getting a good deal.

$30/mo is nowhere near cheap - go check plans eg over here in Europe, where you can easily pay €7.50/mo or less, data plan included.

Free markets are a problem when there is a resource that can be monopolized (doctors / medical supplies) or when corporate goals are at direct odds to community interest (a deregulated BP despoiling the Gulf of Mexico because safety measures are expensive and fuck you.)

Home Depot would happily gouge you if they could form a cartel and gain enough control of the supply chain.

And not only would they happily gouge you, but they would then claim they have a duty to their shareholders to do so, as the law permits them to do it.

This is, after all, the reason we tend to avoid government monopolies if we can avoid it. It's not just that government is inefficient, it's that monopolies are inefficient, whether "private sector" or otherwise.

I'm in much agreement with your initial point (that free markets allow for price-fixing), but you're getting a lot of comments here because you overstate your case!

There's nothing peculiar about medical supplies that make them easy monopolized. Pharmaceuticals and medical devices (neither of which are the topic of the original post) enjoy patent protection, but there are often many out-of-patent substitutes available.

Doctors are limited, but that is primarily because the state makes it illegal to practice "medicine" without either being a doctor or being supervised by one. Much other scarcity stems from this one, e.g. limited insurance options because it's difficult to create a physician network.

There are absolutely free-market-advocates out there who would remedy price-fixing problem by allowing self-taught people practice medicine. That should increase enough market-entrants to break any cartels we see.

I'm not one of those advocates, because I see some sort of quality guarantees as helpful in this arena. But there are lots of aspects of the healthcare market that could benefit from more market-like behavior, whereas there are other aspects which could use less (i.e. more regulation). We need nuance in order to make progress.

But we want the state to regulate medical practitioners! Even if we support natural selection acting on humans, we don't want an ambulance to take us to a homeopathic healer or Christian scientist, we want them to take us to a licensed professional.

I agree! Apologies if I was confusing on that point. Though I do suspect the states should license more MDs and provide more ability for PAs & NPs to practice without direct supervision.

I do very much believe more consumer choice for non-urgent care would be helpful, i.e. lab choice, hospital choice, a menu of drug options (ratings, side effects, out of pocket cost). This is controversial for a number of reasons, but after considerable, I believe this would have significant positive impact on the overall efficiency of healthcare.

You probably were gouged when you bought that TV.

A record fine for a CRT price-fixing cartel that ran from 1996-2006:

http://www.bbc.co.uk/news/business-20608949

And an LCD price fixing cartel that ran at the same time:

http://www.bbc.co.uk/news/technology-20910299

Well presumably you're not suffering from an ailment that requires immediate application of TV, Angry Birds or a 2x4 in those cases.

Of the healthcare that is delivered, most is non-emergent.

What if your primary refers you do doctor X for condition Y?

Emergency care has to be just a piece of the cost pie. People shop around for health care all the time, including for very expensive things like childbirth.

There was just a big NY Times article on the cost of childbirth. Turns out its extremely hard to shop around. Not only is it much more expensive in the US than in any other country to give birth, but, with a few exceptions, it's very difficult to get pricing information in advance. To quote:

>When she became pregnant, Ms. Martin called her local hospital inquiring about the price of maternity care; the finance office at first said it did not know, and then gave her a range of $4,000 to $45,000.

http://www.nytimes.com/2013/07/01/health/american-way-of-bir...

Plus when you "shop around" you still need to select a doctor's office which is close enough to be within viable range once the moment of delivery is at hand.

Even in the suburban areas I've lived in, for us that meant a "selection" of between 3-4 potential clinics, not exactly a very wide choice (and completely based on where I lived so it could very well have been that I would have been selecting from 4 of the worst clinics in the whole state).

On the billing side, I feel like there is a lot of inefficiency due to errors caused by complicated systems.

When my wife was pregnant, at some point we got billed several thousand dollars for a procedure the insurance company refused to cover. She called the insurance co., and they (I think) recoded the procedure to something that cost a couple of hundred dollars and was covered to boot.

It seemed like there was a bunch of new employees on both sides who were learning as they went (and pressing random buttons). So forget in advance, pricing was hard to find out even post facto ;)

So how do you bring your child back after you ended up picking a cheaper bad doctor who kills your child.

If you buy a bad TV you can return it and provide a bad review, so next time you shop from a better store. If you buy a car and it turns out to be a piece of shit, you just lost lots of money. It will take you years to recover and save for a better, but you still can.

You can't get your life back, you can't get your health back sometimes, you can't return your dead child back. That's the problem.

Do you link the expense with the quality? If bad doctors are out there its not up to the consumer to stop them, this is what regulatory bodies are for. basic public safety. Cost (in most places I have been - mostly within Australia, New Zealand and the UK) has little to do with the quality of the care.

hammers are really good at pounding nails into walls. hammers are not good for turning screws.

free markets are really good at efficiently allocating resources in certain types of markets, and not so good in other types of markets

Do you feel ripped off when you buy a pair of Ralph Lauren jeans for $100+ made in Mexico for $7-8?

Ralph Lauren jeans has plenty of competition and the customer is reasonably well informed: * Do you want to pay a premium for brand value? Awesome, buy the Ralph Lauren (or Lucky, or whatever). * Do you want something reasonably durable but cheaper? Buy Levis. * Do you want something cheap but convenient? Buy something at Target or Walmart.

There are dozens of options and hundreds of styles and the end customer can try them on and decide what works for them.

When you are at the emergency room and are given treatment with no opportunity (and in most cases, ability) to compare the various treatment options, then, yes, you tend to expect the caregiver to not mark something up 10, 25, 100X.

> Ralph Lauren jeans has plenty of competition and the customer is reasonably well informed

This isn't true at all, not even from a standpoint of brand and marketing. Most people cannot tell the quality of a garment by comparing alike items. Most people are not aware of fashion trends outside of what they see for sale at stores in their price point.

A bag of IV saline is a commodity. I would feel ripped off if I bought a bag of white flour and was charged $300 for it, too.

Imagine if Alinea billed you for the flour in your meal at $300 per bag (amortized). Would you feel ripped off?

Billing the saline to you is an accounting device. It has no meaning--it's just a component in a service that isn't a commodity at all.

Bullshit. As per TFA, all services that might conceivably be involved were explicitly charged as well. It is an accounting device in the sense of "Hollywood accounting", i.e. having the sole purpose of obfuscating actual costs while maximizing profits.

Mass-produced clothing is also a commodity.

You're just convinced it's not.

No, that's wrong. Mass-produced clothing is the direct opposite of a commodity.

A commodity would be silk, or cotton - the raw fabric used as base materials. What you then do with those materials to increase their value directly changes them from commodities into products.

Put another way - gold is a commodity, as is silver. Jewelry, however, is not. It can't be a commodity if the material has been changed into a diversified form to increase its value - it has to be raw in order to be a commodity.

Mass-produced clothing is the direct opposite of a commodity.

Check your dictionary.

No, it's not. Commodities are products with multiple sellers and minimal differentiation. You can only put Ralph Lauren clothes into that bucket by willfully ignoring the concept of differentiation. Meanwhile: there is literally no differentiation between different suppliers of IV saline; it's a standardized product.

When a brand label is reduced to "this is what we put on products our buyer/sourcer has obtained at the lowest cost", you no longer have a design element at work. Increasingly, brands don't designate manufacturer, but middleman (yes, there are exceptions, but they're increasingly, well, exceptional).

Some very high-end custom-designer fashions might be excluded, but if you're buying off-the-rack (or mail-order/online) clothing manufactured in mass, you're buying a commodity, in the sense of a largely undifferentiated item. The label is the _only_ item of distinction (and not even that when you're getting grey-market goods).

Incidentally, look up "commodity" in your dictionary, it doesn't mean what you think it does.

Many people think "free markets" when they should think "competitive markets".

Exactly this. All markets are more or less "free" and the question is how to structure markets to deliver the greatest benefit.

Absolutists about free markets are at least being purposefully obtuse if they don't admit that they think vendors should win every advantage from irrationality, inelasticity, and information asymmetry, plus every transitory advantage as markets get dominated for a supposedly temporary interval and for supposedly salutary purposes.

The above, combined with a bias toward investor-owned enterprises over co-ops, customer-owned, and nonprofit enterprises is what brought us to a place where market liberalization only hardens the position of incumbents.

Two of the major things that are said to be features of free markets are deregulation and price transparency. The trouble is that deregulation and price transparency are often opposing forces.

Even if there were perfect competition, it doesn't matter much, people don't comparison shop for ERs. If you are having a heart attack, you're not in a position to compare prices at local hospitals.

Well, I think it would have to start somewhere. I'd be happy to be able to comparison shop for routine, non-emergency stuff...let's say dentists to start off with. I have a feeling that once you start chipping away at it, the outlying examples would get taken care of as well.

There was a similar thread a few weeks back:

https://news.ycombinator.com/item?id=6258597

It'd be great if the HN community started throwing out some ideas for disrupting this behemoth.

I think people already cross-shop dentists. When I had a root canal done I inquired at two places. And I'm not even very sensitive to it since I have dental insurance.

Good luck with the same at hospitals though...

I would be nervous to do that. I trust my dentist, I know he does a good job, and is sensitive to my comfort, that's why I go there. I've been to a few terrible dentists before, and I've had to get dental work redone because it didn't last. Dentists seem to be so hit and miss. Doctors can be the same way, price isn't the only consideration.

It seems to me that the parlous state of the US healthcare system is in fact a perfect demonstration of the dangers of a completely free market

I... I just... wow.

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