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Comment by cs702 | Hacker News Reader

Many aspects of US society today are organized under the assumption that if every individual pursues what is in his/her best financial interest, the "invisible hand of the free market" will produce the best possible outcome for everyone.

Yet here we have reputable doctors acting in their self interest, and the result is that they are ordering unnecessary surgeries for financial gain. Meanwhile, patients are essentially unable to protect themselves against this travesty.

Maybe in this case the invisible hand cannot be seen because it is not there?

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This particular invisible hand has been hamstrung by malignant forces. Notably, the payer in a typical healthcare transaction is not the same as the recipient, splitting the typical buyer role into two.

Because health insurance is now commonly provided by employers because of World War II price controls, and because we have become accustomed to using health insurance to pay for all matter of health care, including routine visits, consumers are often ignorant of health care costs.

Customer A: My insurance will pay? Fine, let's do this. Cha-ching, price rises.

Customer B: My insurance will pay? Fine, let's do this. Cha-ching, price rises.

Customer C: Oh, insurance won't pay? How much? Whoa! How did the price get so high?

It's no surprise then that the invisible hand works in a way that appears flawed when one of its inputs (the buyer's sensitivity to price) is frustrated.

People of my persuasion often make the case that if automobile insurance worked the same as health insurance, and we used insurance to pay for oil changes, the price of oil changes would shoot up wildly. Reason being that you would no longer care what it costs.

Obviously the seller (the doctor in the case at hand) wants the price to be as high as possible. The invisible hand can't keep this in check—it cannot discipline the seller with lost sales—when so many buyers do not act with actual price sensitivity.

Just imagine what a hamburger would cost if you could only purchase them through some kind of hamburger insurance.

You would hand over a small copayment and get your burger. Months later, you would receive a really confusing looking Explanation of Benefits from your burger insurance provider with multiple pages of line items - full of really high prices for pickles, pickle slicing fees, etc... ending with an "Amount You May Owe Provider" that would be many times more than we pay for hamburgers on our current free market system.

We'd then demand a huge law be passed that would slightly decrease out of pocket costs for some, increase them for others, and force everyone to buy burgercare. And when it caused even more problems, we'd throw up our hands and finally adopt a single payer burger system.

In the end, we'd have long forgotten and laugh at anyone who suggested that burgers were once far cheaper, and that it was therefore a lot easier to buy a burger for someone who couldn't afford one.

But then again, nuclear medicine devices were never on the dollar menu.

Hm... who used to be able to afford cars? Cell phones? when they initially hit the market. I remember last year going to a radiologist, for my wife's ultrasound. The machine looked like a desktop, I thought pretty cool, the thing gets smaller. I asked how much it cost. The nurse said it they bought it for 50k USD. I almost fell off the chair. Year 2013 - an ultrasound for 50k. Sounded like progress backwards. Obviously, there are incentives at work that raise the price in health care, and less forces that would let them fall. Great example is that recent article in the NYT about the 5 artificial hip manufacturers in the US that basically run a cartel.

You make it sound like an ultrasound setup is a bulk consumer device. They very much aren't. They're quite low turnover items, and require significant specialist knowledge across a couple of fields to make. They're not consumables - if you sell one, it could be in service for 5, 10, 20 years. $50k for this kind of lasting professional tool isn't that much. I'd say $50 might be a touch high for this kind of thing, but not by much, and depending on the model, not at all.

I used to work at a place that made medical electronics, and the idea that 'because smartphones that are churned out by the million only cost half a grand, every other electronic item should be similarly cheap' is just wearying.

If there would truly be an enormous price pressure on hospitals and clinics driven by a free market setup, I am pretty sure they would turn around and talk to said equipment manufacturer: Hey, we know you are selling us a desktop with an audio card. We are pretty sure you can still survive if you reduce your $50k profit and sell us the same equipment for 20k or 10k. Then, said equipment manufacturer, would have to increase volume by starting to sell it to developing markets (what a novel idea) or find ways to produce it cheaper etc etc... but I get it - these are daily considerations of entire industries that the medical sector does not need to be concerned about. What if we tried and see where this would lead though? Right now, I think, we have a pretty good idea how a healthcare system looks like when it is run without any price incentive or cost assessment.

The high price of an ultrasound setup has nothing to do with the desktop PC component. Ultrasound probes are the specialty part of the hardware costings, the clinical know-how for the software is another expense, compliance is another, and low turnover contributes yet another.

Similarly, 'just sell in developing countries' is an utter throwaway line for medical devices the way you're using it - and you'll find that these products already do sell in such markets anyway (what a novel idea indeed!). Not to mention that developing countries have extremely limited medical budgets, and 'allied health' stuff like ultrasounds are luxuries - they're available and have sales teams, but the turnover is extremely low.

The machine really was a $1500 desktop with a $500 usb peripheral that was little more than a jazzed up sound card. The other $48k was for FDA compliance and insurance. We get the system we (collectively and emergent-ly) ask for.

Love it ;-). Now, here is a crazy idea: The burgercare just got passed, everybody was hoping for lower burger premiums, but instead they doubled - in fact co-pay at the restaurant went up as well! Anger, confusion. Now imagine, people find a way to look at the actual cost of a burger, maybe by looking at some restaurants that show their prices. People dump burgercare and rather pay directly - at least for the triple mac to save money. they find small restaurants that sell them burgers directly without burgercare. they find out that they won't be penalized if they don't sign up for burgercare as long as their tax witholdings are near zero. Pathway to a competitive high quality burger market?

> "People of my persuasion often make the case that if automobile insurance worked the same as health insurance, and we used insurance to pay for oil changes, the price of oil changes would shoot up wildly. Reason being that you would no longer care what it costs."

If it results in selling more bus passes and electric cars, we should do it. Unfortunately, we do not want to limit access to health care in the same way as health is needed to maintain a stable labor base.

How would a single payer system work with oil changes? We don't have to guess. Many places have single payer health and auto insurance. Large companies provide single payer benefits to their employees on much better terms then normal. Having only a single payer means prices can be dictated and adjusted as society demands to balance profit with affordable access to services.

I like that car analogy, because it also helps demonstrate the other way in which health insurance is fundamentally broken with respect to other insurances.

With car insurance, if someone wrecks my car, I get a check for the repair bill and the transaction is complete. However, if car insurance ran like health insurance, the insurance company would pay for a rental vehicle and leave my car totaled. If I ever drop my insurance, they'd take away my rental car and leave me with just the old wreck. There's no plan to make me whole again.

Granted, health insurance companies don't give out rental bodies. However, with other types of insurance, an adverse event (e.g. house fire, car accident) leads to an insurance payout that covers your loses. However, with health insurance, an adverse event (e.g. cancer diagnosis) just leads to a piecemeal payment of health expenses while you remain on their policy. If your policy ends, they don't have to pay for treatments on an event that occurred under their policy.

If we really want health insurance to act like catastrophic insurance, then it really needs to act that way. If I get diagnosed with cancer, I shouldn't get treatments covered on an annual basis as long as I am a member. Instead, the actuaries should calculate an average lifetime cancer treatment cost and I should be sent that as a check. It's then my responsibility to pay for that treatment.

This would be a far more economical system, but it requires that health insurance companies start paying for health expenses that are incurred under their policies, just like every other form of insurance.

If your house burns down and you receive the check and don't spend it repairing your house, oh well.

If you get cancer, get a check to cover the total expected cost of treatment, and don't spend it on treatment, the hospital can't refuse you treatment when you show up with serious symptoms.

Plus I'm not sure I'd want to receive a check for the "average lifetime cancer treatment cost" because it would sure suck if you case was more complicated than the average case.

I don't think you understand how medical insurance works or how fire insurance works in most cases.

With medical insurance you never receive payment without spending at least as much on the treatment and in most cases the payment is made directly to the provider.

With fire insurance if you have a mortgage the payment is made to the lender who hold it until the repairs are made and many insurance policy require that the money be spent on repair or pay less if it is not spent on repairs.

All of these rules and procedures are to reduce fraud and limit costs.

Regardless of what you do people who are bleeding out in the middle of a street or who are delirious from fever won't be acting with price sensitivity.

I hear this argument brought up a lot, but the majority of situations are not this type of situation, and those are also not the things that cost the most (which are more things like extending an unconscious, never-to-recover terminally ill patient's life another 2 months).

Even a large percentage of ER visits would likely see people acting with price sensitivity -- This is why in some places of the country you see Emergency Rooms advertising about how low their current wait time is. The wait time isn't really relevant to true emergencies (you get seen right away), but people without true emergencies don't want to wait. Financial cost is irrelevant (someone else is paying), but the cost to their time is relevant, and so people select emergency rooms (and urgent care clinics) where they will have to wait less. Hospitals are acting on the one thing that the patient cares about (sitting in a waiting room), since the other (price) doesn't matter.

For the really expensive things, like end of life care, governments with universal healthcare systems are the ones that act with price sensitivity and ration this care and refuse in some cases to pay for the most expensive treatments. For example, the UK has the National Institute for Health and Clinical Excellence (NICE), which set a maximum of about $47,000 per quality-adjusted year gained. What we refuse to do in the US is allow patients to make a choice like that (instead, we mandate that insurance cover far more in health care expenses, driving up the cost of that insurance). As a comparison, the US sets it supposedly to about $50,000 per QALY, but in practice it tends to be far more, with some regulation-required treatments requiring as much as $500,000 per quality adjusted year (some heart pumps, and kidney dialysis being another very expensive example).

If your child's leg is broken at a soccer game after close of business, it is not a "true emergency" because she is not going to die. But you are not going to leave her in the most significant pain she has ever experienced with a bone poking out through her skin until the urgent care clinic opens tomorrow morning.

How long she should suffer before getting treatment definitely doesn't have anything to do with your disposable income. Some people might agree with you that poor adults deserve whatever the market gives them (I won't) but how are you going to hold people's kids responsible for having parents who are too price-sensitive to get them timely medical treatment?

A bone fracture that breaks the skin, known as an open or compound fracture, is a true emergency. You should go to the emergency room immediately. If you delay significantly you will almost certainly get an infection and risk the loss of limb or life.

I know this is a straw man for your argument but try and make it somewhat realistic. And no need to appeal to emotion by making it about a child.

There is a reasonable argument that an adult ought to be able to deal with the pain, also an argument that adults are responsible for their own financial predicaments. I chose a child because I didn't want to go down those routes. Also because every ER visit I've been involved with has been a children's sports issue.

I think you are taking his argument too literally. Using your own examples, someone who chooses a treatment with a $500k/QALY is probably suffering from the same sense of urgency/price insensitivity as the guy bleeding out on the street. Just because that person has some time to shop around, doesn't mean that they aren't getting price gouged. When someones health/life is on the line they are not going to act rationally.

Does the ACA address QALY? Seems like it might make sense to tie health insurance coverage to that metric. I would be more than happy to pay for coverage that covered the low end of the spectrum if it would mean lower premiums.

>someone who chooses a treatment with a $500k/QALY is probably suffering from the same sense of urgency/price insensitivity as the guy bleeding out on the street. Just because that person has some time to shop around, doesn't mean that they aren't getting price gouged. When someones health/life is on the line they are not going to act rationally.

What insurance lets you do is decide in advance what you think is reasonable, assuming no government rules about what must be covered (just like the UK does for its entire population).

Nobody (at least before preexisting conditions were not required to be covered) was buying insurance that would cover a $500k/QALY right when they needed it. Instead, they previously bought insurance that the government decided had to cover a $500k/QALY for certain treatments and weren't allowed to make any other decision.

And what if they choose the insurance that didn't cover a $500k/year heart pump and realize in a panic at the last minute that they actually did want to be able to be treated at that high level of expenditure, but can no longer afford it? They're in no worse condition than somebody in the UK who would never be given the option.

I think we are starting to dig into the weeds a bit too much. I am well aware of how insurance works, and how single payer systems contrast to the US system. What the OP was trying to point out was that free market economics can break down in certain situations, and health care is a prime example.

>What the OP was trying to point out was that free market economics can break down in certain situations, and health care is a prime example.

And my point was that such situations account for a very small percentage of situations in health care. Most situations and most medical care expenditures aren't of the type claimed by OP. In other words, it's really not a prime example and many of the highest costs are things that people could decide on. For example, the UK will probably not offer treatments that cost more than about $50,000/quality-adjusted year. It would be possible to offer insurance in the US for substantially less if insurance companies could sell a policy that would stick to that, and many people would take probably buy them (many people choose not to even buy insurance currently).

If I slice open my finger badly, I might get myself to the hospital of my choice. But if I fear I am dying in a rather immediate way, or worse, if the people who find my unconscious body think that I am dying, then there is no way in hell I would be acting with any sort of price sensitivity. The hospital doors I could get to the fastest is the ones I would be going to.

I think you're missing my point. My point isn't that those situations don't exist, my point is that they don't make up the majority of situations in healthcare, nor do they make up the majority of healthcare expenditures.

> my point is that they don't make up the majority of situations in healthcare

And I think that you are wrong, particularly when you consider this based on dollars billed by emergency rooms, not patients seen by emergency rooms.

> And I think that you are wrong, particularly when you consider this based on dollars billed by emergency rooms, not patients seen by emergency rooms.

The statistics are that all emergency care expenditures totaled accounts for about 2% of all medical expenditures, or in any case no more than 10% depending on who is reporting and calculating [1]. And, not all emergency room visits are emergencies by far [2] and many patients are swayed by things like advertisements for emergency rooms.

Sources:

1) http://www.politifact.com/truth-o-meter/statements/2013/oct/...

2) My ER doctor wife

> 2% of all medical expenditures

Who is talking about all medical expenditures? I am talking only about emergency room visits.

1) Ads for emergency rooms function as ads for hospitals in general. People in need of non-critical care will naturally be influenced by ads that depict a high quality of care for emergencies. The existence of ads for emergency rooms therefore tell us little.

2) "Real" emergencies will almost certainly be more expensive than "non"-emergencies. They are going to charge more to sew your hand back on than to give your kid some coughdrops.

3) "Non"-emergencies, as perceived by a doctor, are not the same as "non"-emergencies, as perceived by patients. The mother frantically driving her kid with a broken arm to the hospital is going to consider the situation far more urgent than a doctor would. In these cases, people are not going to act with price sensitivity, even though they could, strictly speaking.

Also, I get the impression that "emergency care" omits emergency-related care. If you receive "emergency care" its not unreasonable to assume you may well need follow up - and that follow up could easily end up costing a lot more than the original incidents "emergency care". But that later care is often closely tied to the initial incident. Moving patients around and/or switching doctors often isn't easy nor necessarily safe.

In short: Non-emergency care doesn't necessarily mean care where you can flexibly and easily choose your care provider.

> Who is talking about all medical expenditures? I am talking only about emergency room visits.

I said "my point is that [those situations] don't make up the majority of situations in healthcare" and you said "And I think that you are wrong, particularly when you consider this based on dollars billed by emergency rooms". I don't get the point of looking at a percentage of emergency-related dollars billed in emergency room visits. My point is that if less than ten percent of all medical expenditures are related to the type of emergencies where (to quote OP) you are "bleeding out in the middle of a street or who are delirious from fever [and] won't be acting with price sensitivity.", then that type of situation is not a primary driver of medical costs in the US, nor is it the most important factor to consider when deciding how our medical system should be run. A huge portion of health care expenditures are of the type where a person would act on price.

I've heard that the event you're describing is just a few percent of total medical expenditures, and even if we could not collect on every single event you describe, it'd still be less than the loss rate in other industries, such as merchandising (where employees steal the stuff you're trying to sell).

If that's true, why are we using this tiny loss-rate percentage in healthcare—when other industries handle double or triple the loss rate without any drama—as a primary argument for making dramatic changes to healthcare, or alternatively, as an argument against changes that would fix a whole bunch of other things, but not that, because they don't go far enough? Do we really need to solve that?

It seems to me that we can actually just ignore the problem of emergency room situations—including non-payment—when discussing improvements to healthcare regulation in the US because it really doesn't matter. And since it doesn't matter, people should stop bringing it up as if it did.

My $0.02 (assuming the percentage I've heard is accurate).

This is a good point, but I think the answer is pretty straight forward:

"Not everybody can afford cell phones. What's the point in offering them on a free market place for the 1% who can afford them?"

Initially introducing price sensitivity into the healthcare space would only touch marginal areas - maybe surgeries that could be scheduled and small things where it's quite interesting to see whether CVS or Walgreens is the more inexpensive choice, or whether the physical is cheaper at an urgent care clinic or my primary care doctor who offers a monthly low membership fee. But, eventually, open competition by those who master processes and methodologies will create a price pressure (combined with public reviews/vetting) that will permeate the entire industry. Those who optimize by leaving patients happier (less cost more care) will draw more attention, money, expand). So, if you can picture such a model, even the person hit by a car in an accident could benefit from faster and higher quality EMR as and end point of a whole long list of improvements triggered initially by something as mundane as transparency in pricing. Still, funny, we accept that for most parts of our lives as a given.

Oil changes are a very poor analogy for health care.

First, the argument that insurance disrupts market pricing is wrong. Car insurance does cover car repairs and the car repair market is quite competitive, since insurers are heavily invested in managing prices.

The problem here is not insurance. It's that health care is a poor fit for free market dynamics.

In order for markets to function, consumers need to have the ability to comparison shop. That core requirement is often severely constrained in the health care "market".

One reason is urgency. A great deal of the most expensive health care offers no opportunity for the consumer to comparison shop whatsoever, because it's an emergency situation. You're wheeled in unconscious on a gurney. Even for non-emergency care, like cancer treatment, it's often urgent.

Another reason is capital requirements. Doctors and hospitals are extremely expensive to create. In order for markets to function there need to be multiple options to choose from. But the capital requirements of doing so with expensive specialities like oncology significantly retard competition.

There is a reason why every other industrialized country in the western world coordinates health care via a single-payer government instead of the free market. And usually with better public health outcomes.

Markets are not always the best solution. Consider the fire department "market". We actually tried that once in the U.S., a long time ago. Houses would pick their own fire company, which competed with one another. You'd affix an emblem on the front of your house with the company you subscribed to. It was something out of a 20th century Libertarian fantasy. Not so great a solution for fighting fires though.

> Car insurance does cover car repairs and the car repair market is quite competitive, since insurers are heavily invested in managing prices.

Are you really sure? It seems to me that functional changes are competitive but aesthetic changes are not. I wonder if that is because the primary buyer of aesthetic fixes is car insurance companies, while more functional fixes are financed by consumers directly.

> That core requirement is often severely constrained in the health care "market".

I am curious why you go off on emergency service, when the bigger elephant is the inability to price.

Ask any physician how much it will cost you on a high deductible plan to have anything done. If you are lucky they might be able to figure out an office visit, but usually they don't know and won't tell you anything about more complex procedures.

Since the person who chooses to have the procedure doesn't pay, we have not attempted to keep the ability to predict prices. Even if you could comparison shop, you aren't comparing real prices.

> And usually with better public health outcomes.

Except single payer doesn't solve any of the problems that we are discussing here. The only thing it solves is the silly system of marking up "standard" rates to make contracts more attractive resulting in impossibly high prices for uninsured people.

That's a fine bit of conservative nonsense you just regurgitated, coming to the conclusion that the problem the U.S. is suffering from is "too much health care", and therefore the solution is to reduce access to healthcare and insurance. It rests on the assumption that patients get frivolous medical procedures (open heart surgery for you! and open heart surgery for you! and open heart surgery for you!) because they may not pay full price for them, a claim which, like the teapot orbiting the sun directly opposite the Earth, has never been observed in real life.

In actuality, healthcare is a well known example of a market failure - there cannot be a normal market in healthcare ever, because definitionally, your health is worth an infinite amount of money to you (how much would you pay not to be a slave? how much would you pay not to have your hands and feet chopped off?).

Further, healthcare prices are unpredictable. How much does a gall bladder surgery cost? Did I mention that the patient got a flesh-eating bacterial infection as a result of the surgery? That's true and will always be true even if prices were posted at the door, which they are not.

The solution - which has been discovered by every advanced nation on Earth except the U.S. - is having the government strongly involved in paying for healthcare, insuring across the entire population to even out costs and making sure that, e.g., medical device manufacturers can't gouge the unknowing public. Monopsony powers nicely counteract the inherent power imbalance that healthcare providers normally have over the sick, and everything works just fine, costing each of those nations less to cover their entire nation than the U.S. currently spends to cover a small segment of its population.

> definitionally, your health is worth an infinite amount of money to you (how much would you pay not to be a slave? how much would you pay not to have your hands and feet chopped off?).

That is not how you measure preferences, at all. Try "what likelihood of having your hands and feet chopped off would you trade for not being a slave?" Probabilities are fungible in a way dollars aren't.

It depends on what part of healthcare you're thinking of, and what stage of the process you're at.

If you're wheeled into ER with a knife in your chest, you don't have a fungible probability of needing healthcare. You're going to be buying the knife-removal service whether it costs $100 or $100,000. You may be unconscious.

Obviously at the other extreme of choice is purely elective surgery, like breast enhancement. Lots of choice there - if you don't like one doctor's prices you can shop around or skip the surgery all together.

In between are situations where treatment is required but isn't urgent, or where the problem is minor and you can live with it/use off the shelf treatments, or where there are various types of surgery available. A lot of the time when there are multiple options with complicated trade-offs, that's exactly where it would be nice to have a friendly, trustworthy doctor who can give you some unbiased guidance.

How exactly to bring all the incentives into alignment and make them fair, over the entire continuum of choice and accepting that the people who need the healthcare aren't themselves experts - that's the hard part.

One thought: there are other industries which sell services and tools that fluctute in price or are so complex that it is amazing how they can price their products at all - but they do. Just the fact that I cannot get any reliable pricing information for most procedures from health care providers seems strange and might point to the fact that their processes and methods are under no self-regulating forces/pressure. The situation reminds of Florida, 10 years ago, when the parties could not agree on a way to fix schools and the only bipartisan solution possible was to issue grades for the schools. That little "market transparency" started a whole avalanche of changes most of which came as a surprise and all of which have moved Florida ahead ever since. It performs dramatically better now, than it did 10 years ago in almost all assessments (minorities, drop-out rate, avg. Math/Science). I think giving people a choice by posting transparent pricing information is crucial to improving the American health care situation.

...and btw, to anyone here who is a ruby or php developer and feels very strongly about this topic and likes to help with our project that is trying to change this (pricepain.com/why) shoot me an email, we can need some help.

A few years ago, I had an agonizing emergent medical condition, for which I headed to the emergency room, and ended up having surgery later that evening.

Of course, the cost to me was $0, since I live in Canada and we do it right here. But supposing I lived in your "transparent pricing information" ideal society. How exactly do you suppose I would flip through the ten-thousand page pricing book to determine what brand of surgical gauze I'd like to have used in my surgery, when I'm in 11/10 pain and going to die within a few hours if left untreated?

And do you think the other local hospitals would send over their ten-thousand pricing books as well, so I can price-shop? Do you think Dr. Smithers is really worth a 12% price premium over Dr. Johnson, or not?

Can you really have a meeting of minds when one of the minds is unconscious from an automobile accident? Please advise.

Fair point, but I am not saying a transparently priced system could be established over night nor would its benefits be felt right away by everyone in every situation. However under the assumption that you succeed setting up such a system, price competition and public reviews would continuously lower prices to attract more business whose success function would have to be truly happy patients expressing their health benefits publicly. This would force rapid medical progress and medical innovation such that a future you in this scenario could easily cover said surgery with your catastrophic insurance at the fraction of today's cost and probably with better quality care - because it will be in the clinics/doctors self serving interest to offer you the best possible care for the lowest price ... And in many cases this could just be a side product of a fast paced procedural and technical progress driven by transparency in price/quality which might lead to X-rays actually becoming cheaper or free and not more expansive then when they were invented which seems to be the current models trajectory - amu ing if it was not so sad.

> That's a fine bit of conservative nonsense you just regurgitated

Conservative, libertarian, I guess they are more or less the same for this subject. Fine.

> coming to the conclusion that the problem the U.S. is suffering from is "too much health care"

I suppose you're saying that because higher prices suggest a glut of supply? Wait, no.

I'm not sure why you say that is the conclusion of my argument. I certainly never said the US has too much healthcare, nor imply it.

In fact, if anything the US is supply-constrained in healthcare thanks to the AMA, FDA, etc. There is plenty of demand for healthcare, but the supply is pretty well controlled through regulation.

I certainly can't start selling healthcare. Even with a lot of studying, I still couldn't just sell healthcare. Making additional healthcare supply isn't like making more supply of furniture, food, or even cars (which is closer on the regulation spectrum to healthcare, meaning it requires a herculean effort to enter this industry—witness Tesla).

> therefore the solution is to reduce access to healthcare and insurance

What?

No, I'd rather make these services more readily available to everyone by making them available in the same way nearly every other product is available to anyone. Is the iPad unavailable to me because my employer doesn't provide tablet insurance? Just sell me healthcare and health insurance on regular markets, please. Nothing could be more available in my opinion.

As it is, the "availability" of healthcare in my life is extremely narrow (again thanks to what evolved from 1940s price controls). I have a small set of options from one vendor selected by my employer. With the ACA, I will now have that option (maybe, though it's an HSA and I've been told to kiss HSAs goodbye) and a few other ratified options that have been selected by a central planning committee.

If I can't afford routine health care on a regular market, I'd rather work harder to get a better job. In a worst-case scenario, I'll plead with friends and family or charities. I genuinely would prefer this to the current model. I'd pick up insurance to handle catastrophic events. I'd donate more to charity to boot.

> your health is worth an infinite amount of money to you

Actually, not really. If I have a quality of life issue and I can improve my quality of life for $500, I will weigh the pros and cons and probably go for it. If it costs $500,000, I'll suck it up until someone innovates the cost down to something I can afford.

Even if I have a catastrophic issue and I have no insurance, and the only resolution is something that costs $1M, this is something my family (friends, charities) should decide. Sell/refinance property or pull the plug? Bottom line, it's a local decision to pull the plug, not something for a central planning board.

> Further, healthcare prices are unpredictable

This is not a counter-argument to using regular price signals. Services that are unpredictable are usually billed at hourly rates or time and materials with an estimate. If I have the termite guy out to check my house, he's not going to be able to give me a quote until he assesses the situation. Even then, it may be worse than he thought. But he has a price sheet of hours and services and I can look at that and select a different termite guy if the price sheet seems out of line. Better yet, other people will have paid termite guys and give me a basic feel for what a termite guy charges. When he says his hourly rate is $5,000, I'll know he's a nutcase.

Today, if I heard it cost $5,000/hr for some medical procedure, I wouldn't even know how to react. Is that a lot? Is it low? I don't even know who I could ask for a guess.

> which has been discovered by every advanced nation on Earth except the U.S.

I don't enjoy the argument that everyone else does something a given way, so why don't you get in line already. The way I see it, this country has been doing healthcare more similar to other countries (no true market, no price signals) than similar to what I want for decades.

A free market can support a central-planning model inside of itself, but vice-versa is never possible. This is why those of us who support free markets are so sensitive to those who would shut them off. Central planners don't have to kill the free market to do their central planning exercise, but they always choose to.

We don't ask them to kill central planning so we can have a free market. In fact, we don't even care how central planners want to arrange their centrally-planned plan inside the free market, as long as it's voluntary. Have fun!

If I had my way, the ACA would make centrally-planned healthcare an entirely in or entirely out proposition. Voluntary. Don't want in? Fine, you're on your own. Entirely.

I'd opt out. And soon enough, I'd find people ready to sell me health care. Then I'd give more to charity. I'd be so much happier.

One major oversight that you fail to address in you hypothetical free market scenario is that supply is still constrained. In a truly free market, anyone can set up shop and try to market and sell their services. If I buy a TV that craps out in two days, I either get it fixed by warranty or I go online and write a bad review which hopefully contributes to the demise of the company. If I get a bad surgery from a poorly trained doctor I die. That is why we have the FDA etc, and that is why doctors are rigorously vetted and trained through the med school/residency process, and I think most people would agree that that is a good thing.

Another issue I have is your mention of 'charity'. Almost anytime this gets used in a political/economic discussion, it is used to dismiss a whole class of problems that the author does not want to deal with in their argument. In this particular case you mention that if you cannot afford a 'free market' doctor/treatment, then you can turn to charity to provide the funds. Of course we all know that charity will never come close to providing for the entirety of society, so you are left with a situation where almost everyone except those who can afford treatment are forced to go without it. And of course the typical libertarian response is "tough luck" or "work harder". But here is the thing, health, similar to environmental issues has strong public effects. There are a number of diseases and illnesses that, if left untreated in a large portion of the population, can have devastating impacts on society. A healthy population is a necessity of a first world economy and relying on charity to ensure positive, society level outcomes is absurd and ignores reality.

Look, I lean libertarian on many issues, but there are certain aspects of society that are just not suited to a free market. I want to be able to go to a restaurant without being terrified of catching TB from the waiter or getting salmonella poisoning from the food. I don't want industrial companies polluting the ocean and rivers that I surf and fish in. The free market can be very powerful, but it is also fairly dumb, it cannot recognize when it is doing more collective harm than good. I don't see why so many libertarians think in terms of all or nothing. Compromise shouldn't be such a dirty word in today's political discussions, it's a sad state of affairs.

> That is why we have the FDA etc, and that is why doctors are rigorously vetted and trained through the med school/residency process, and I think most people would agree that that is a good thing.

With the amount of error we have (see malpractice suits) as it is, I'm not convinced that what we have right now is actually yielding better overall results than a free market would with actual price signals.

Reason being that medical care quality is usually not a binary matter—with outcomes of either total success or total failure. Usually it's a broad continuum, and yet mediocre doctors are presently extremely difficult to differentiate from superb doctors because of the lack of price signals.

Malpractice suits would still exist in a free market, of course. And if care lead to death, there would be lawsuits. But in a majority of cases, bad care would lead to non-death but non-ideal resolution. That's where price signals will flourish.

Ironically, I see the current situation as an all-or-nothing where I want more nuance. We currently treat all doctors as essentially similar because they have all completed the same rigorous training and certification process, and we few other measures to use. (Some above-market review systems notwithstanding.)

Finally, don't be certain that doing away with regulation would lead to certifications evaporating. It more likely would mean variation in certification. A less politically-entrenched alternative to the AMA perhaps. (Of course, I'm also not necessarily bowled over by certification. I put no stock in computer programming certifications.)

> And of course the typical libertarian response is "tough luck" or "work harder".

While true, this shouldn't be dismissed cavalierly. We tend to speak without as much political thought as the right and left—saying apparently heartless things like "work harder." But what we mean in practice is that there would be more emphatic pressure on individuals to work to solve their own life situations first and only in extreme cases leverage safety nets.

We have a situation today where half of the country uses some form of government assistance. That's not what safety nets should be for. But outside of "character" or other intangibles, there's no incentive to avoid the safety nets—in fact there's every incentive to use them, lest you be a sucker. Only suckers pay for things.

When I had an electric car, I momentarily reeled at the $5,000 federal government incentive because it goes against my every belief. But, come on. Who is going to pass on such a sweet kick-back? I took the money. We all do.

Yes, it's utterly impossible for a libertarian paradise to provide a 50% safety net. But we feel we have such a large safety net because it's a venus fly trap, not because it is necessary to have a 50% safety net as a first principle.

Furthermore, many libertarians are amenable to a basic income, and with a basic income and a free market for health care and health insurance, it's almost a foregone conclusion that a great deal of competition would angle for that demand.

> Compromise shouldn't be such a dirty word in today's political discussions, it's a sad state of affairs

The trouble with compromise is what I said earlier. We're willing to allow central planners to build within a free market, to create a voluntary consortium of participants supporting one another through centrally-planned distribution of resources. But reverse the tables and we're absolutely never permitted the same freedom. Central-planning is not voluntary; it a piece of totalitarianism.

So compromising with central planners means totally conceding. Either they plan for you or you plan for you. I prefer planning for me, difficulties and all.

I am strongly in favor of basic income, primarily because I think technology is going to make it increasingly difficult for many individuals to find meaningful, high paying work. But even with sufficient basic income, people are going to forgo insurance and health care until it's too late, and as I mentioned in the previous post, this will have societal level effects.

I would agree that in a more ideal world, we could have free market health care. With enough technological progress, it might be possible to get accurate diagnoses of illnesses just by using an iphone app and then go to a pharmacy (or get drone delivery) to get a prescription for a cheap nano surgery pillbot. But we are way too far away from that, and there are way too many human lives on the line. I think it's okay to be militantly idealistic, but when human lives are at stake, I think it is necessary to cede to practicality.

>But in a majority of cases, bad care would lead to non-death but non-ideal resolution. That's where price signals will flourish.

Conjecture. Got proof? (let's say, a statistical analysis between the recent spate of doctors who no longer accept insurance -- only cold hard cash or credit -- and their Swedish counterparts in both patient care and malpractice suite rate)

That's the thing about this entire argument. We're point at those other folks that seem to be a doing a lot better job at this whole keeping people healthy thing than we are. And you're pointing at this conjecture that maybe people make rational decisions in a market.

And we know that's not true.

Just look at homeopathic medicine to see how well the free market does, without FDA intervention, at keeping people healthy - and getting them healthy if they aren't.

Libretarians tend to conveniently forget that the reason we have FDA, EPA and all that good stuff is that when it was all pure market, it wasn't working very well - that's why we set FDA up in the first place. That is not to say that the current system is perfect.

In spite of the FDA, people are still [potentially] swindled by e.g., colloidal silver, ionized air and water, various supplements, energy drinks, etc. Moreover, it's much harder to tout the benefits of eating e.g., oranges or kale without funding a zillion dollar study.

I do think various products and services should be reviewed but there are better ways to do it than with a federal agency. E.g., https://en.wikipedia.org/wiki/Air_ioniser#Consumer_Reports_c...

Much of this is due to the DSHEA[1][2], which really needs to be repealed.

[1] http://en.wikipedia.org/wiki/Dietary_Supplement_Health_And_E... [2] http://www.sciencebasedmedicine.org/dshea-a-travesty-of-a-mo...

I'm surprised that this point hasn't come up yet in this conversation: the whole point of insurance is to pool risk. The basic principle is that of everyone who pays in, the lucky ones subsidize the unlucky ones.

Obviously, this works best the more people who pay in. When people don't get insurance until they need it, it raises the cost for everyone. When people don't get insurance and still end up burdening those who did (by going bankrupt when faced with monstrous E.R. bills, for a common example), costs go up for everyone. In these situations, there's only way to make the system work: enforce that everyone buys in. That's why I support single-payer.

Here's another car analogy: car insurance is mandatory for drivers in the U.S., and most countries. Because the system only works when everyone buys in.

Of course it offends the libertarian sensibility to force people to buy something. How barbaric! Personally, I'm a libertarian-to-leftist convert. I think society needs a monopoly on force, and that monopoly goes to the government. The use of that force should be minimized, but one of reasons we need it is to force people to chip in for the common good. When it comes to pooled risk for catastrophic events, it's worth it. I have no moral qualms. It's not a matter of who's doing the planning, it's a matter of societal choices that just plain don't work if not everyone's on board. You're right that central planning is not voluntary. That's the whole point.

> But outside of "character" or other intangibles, there's no incentive to avoid the safety nets—in fact there's every incentive to use them, lest you be a sucker. Only suckers pay for things.

"Yeah, look at all those suckers, paying for things, how stupid. Why bother trying to make more money? It's not like I value character-building." - single mom making $12,000/year, and (gasp) receiving government assistance

Do you really think government assistance makes poverty appealing?

> That is why we have the FDA etc, and that is why doctors are rigorously vetted and trained through the med school/residency process, and I think most people would agree that that is a good thing.

I can imagine a world where it's sufficient to see that physician X is certified by Harvard and works for a clinic that's recommended by Consumer Reports without any involvement from the state. In this scenario the FDA would still exist as a competing organization but no one would be compelled to buy their product via taxation.

> Of course we all know that charity will never come close to providing for the entirety of society

Ostensibly, we've all voted for compulsory charity. If we can be trusted to vote so nobly, why not put down the guns and self-elect to be charitable?

> I want to be able to go to a restaurant without being terrified of catching TB from the waiter or getting salmonella poisoning from the food

I agree and I don't think I'd lose any libertarian cred to say that the government does have a role here because the restaurant has defrauded you and breached the implicit contract to provide you with safe food.

> I don't want industrial companies polluting the ocean and rivers that I surf and fish in.

I think property rights solve a lot of these things--"Oh, they polluted some river..." vs. "They polluted MY river?!" . I can concede that things like oceans and larger rivers should not be privately held but in these cases I'd prefer local government jurisdiction to federal/global governments. Essentially, the more aggregate the government, the more deliberate/unintrusive/restrained/super-majoritized I think it should be. In my mind, health-care is not one such federal issue.

What do you think of the Singapore model? It includes price subsidies, health savings accounts and catastrophic coverage. I think the US will not move towards single payer medicaid for all, I think it will adopt something along these lines.

I think if people are forced to pay for routine care, we will get a much better system. Then insurance will be what it is meant for, catastrophic insurance. The simple analogy that noone uses car insurance to pay for oil changes is relevant I think.

Admittedly, I'm not all that familiar with Singapore's model. But based on your description, it sounds better than where we're headed.

I fully agree that if we paid out of pocket for routine maintenance and minor "repairs," we'd have the makings of a superior system. Give healthcare a genuine price signal and stop asking, "why is healthcare so expensive?"

It's expensive for the same reason university education is expensive. Most of the time, someone else is paying.

Unfortunately conservatives who hardly pronounce a sentence other than "Repeal Obamacare". I think everyone would welcome some debate on alternatives. As much as we like the market influence on routine care, I think the real cost is the elder and catastrophic care. We have sophisticated and expensive systems for health care. I don't know the answer, maybe it means eliminating insurance companies for a single payer model, and maybe it means higher deductible catastrphic care insurance. I do think the combination of insurance company lobbying and american disdain of "socialism" make things different here.

> Actually, not really. If I have a quality of life issue and I can improve my quality of life for $500, I will weigh the pros and cons and probably go for it. If it costs $500,000, I'll suck it up until someone innovates the cost down to something I can afford.

Good luck sucking up "take the procedure or die." Somehow, the "free market is best! Free market is king! Free market loves you!"-crowd always seems to ignore this not so small part of healthcare. It is always just "I don't need this procedure, so I just wait until it gets cheaper and suck it up until then!" .. yeah, sure.

your health is worth an infinite amount of money to you

No, it isn't. Avoiding certain very undesirable outcomes is worth an infinite amount of money to me, but suffering from strep throat symptoms for 3 days instead of 5 days is worth a finite amount of money. My upper bound on that is hundreds of dollars, but if I can pay less to get the result I want (if I'm certain I have strep, I want a course of amoxicillin, and I don't care if that involves seeing a doctor), I will pay less. Competition can drive the price down even if the buyer isn't price-sensitive.

> has never been observed in real life

Frontline did a whole show on that, "Dollars and Dentists".

http://www.pbs.org/wgbh/pages/frontline/dollars-and-dentists...

Frontline isn't known for having a conservative bias.

Your opinion predicts the following:

- No person would ever sell themselves into slavery (OK, this is only implied).

- No person would ever kill themselves for the life insurance.

Do you see any problems with that?

Allow me to suggest that if your health is worth an infinite amount of money to you, you must have terrible relationships with your family.

What happens to people who cannot afford to purchase care in this hypothetical situation, or who become financially devastated by a (semi)permanent condition requiring expensive care and/or technology?

I have a hard time comparing seven years oncological torture to having your oil changed, you see.

This particular invisible hand has been hamstrung by malignant forces.

Thanks for saying this, it's fits in well with my sense that Capitalism (and Communism, and so on), like all -isms, is faith-based. People say the same thing about religious texts, that televangelists are reading it wrong, or that screwy evangelicals are taking the wrong parts too seriously, or a serial killer on a mission from God didn't pay attention to some other part. The problem is that the framework can be so radically misinterpreted, and this is a fundamental design flaw. It just so happens that Capitalism is the Western world's state religion.

Now we see that Adam Smith actually has myriad of hands, and they all have to be working properly for the system to work as intended. Never anything about the hand itself, only its steerer, or that we are experiencing the fruit of a poisoned tree.

The invisible hand operates under the assumption that there are no information assymetries.

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

This is obviously not the case in patient-doctor relationships.

The standard Austrian response for those information assimetries are that an independent third party will arise that will offer an unbiased opinion (usual example is Underwriters Laboratory or UL).

A more government-based approach would say that more regulatory oversight is needed.

However, in practice, I haven't seen this happening, I'm not an economist but I see there are agency problems, regulatory capture problems, etc..

Stiglitz said:

"the reason that the invisible hand often seems invisible is that it is often not there. Whenever there are "externalities"—where the actions of an individual have impacts on others for which they do not pay, or for which they are not compensated—markets will not work well...

recent research has shown that these externalities are pervasive, whenever there is imperfect information or imperfect risk markets—that is always"

There are always information asymmetries. Walmart knows a lot about it's suppliers, but the suppliers still know more about what there selling and how much it costs them to make it.

A better breakdown might be insurance as it completely destroys the concept of a market though a dramatic subsidization of coverage. It would be like your company buying your car for you sight unseen. Sure, you want a nice car(heath outcome) but you have a lot less incentive to research BMW vs Acura resale value as your not paying full price for it. So after minimal research your far more willing to go along with what the sales guy(doctor) says.

This isn't quite a straw man, but it is a little straw man-ish

Adam Smith coined the term invisible hand, so lets use him to take the place of the strawish man. Apart from 'Wealth of Nations' he also wrote 'A Theory of Moral Sentiments.' He was a moral philosopher at least as much as he was a economist. The invisible hand does not assume people are profit maximising robots in a theoretically perfect world.

Since Smith was very much talking human beings, he dealt with all sorts of motivations: selfishness, selflessness, empathy and a bunch of socially mitigated motivations like the desire to be held in esteem. He uses words like "often" not "always" to describe helpful outcomes from self interested motives. He isn't a fundamentalist at all.

So from a Smithian perspective I would say that immoral doctors are arseholes.

Honestly, I think this case just shows that nothing is perfect.

Well I think it shows that one thing is far from perfect, namely the American healthcare system which is the point of the article.

> However, in practice, I haven't seen this happening, I'm not an economist but I see there are [worse] agency problems, regulatory capture problems, etc..

Socialized medicine certainly has its problems, but I suspect that you might have dismissed the possibility on principle (as opposed to giving it a thorough look) because we actually do have a basis for comparison, the international community, and the overall trend doesn't agree with your supposition.

Single-payer systems in other countries manage to provide comparable care (in terms of outcomes) at half the cost [1], without leaving 15% of the population completely in the lurch [2], and without increasing barriers-to-entry for aspiring entrepreneurs. If our care providers matched that level of efficiency (cost per GDP per capita), the medicare and medicaid budgets would suffice to cover universal health care. Say what you will about theoretical waste and efficiency, but keep in mind that the experiment has already been run and the results are in: single-payer systems are more efficient. Not by 5% or 10% or a standard deviation, but by a factor of 2.

I like to compare free market health care to the GNU Hurd. It's a great idea in theory because it applies a solid, generalizable principle to an important problem but in practice devolves into a rat's nest of practical issues that frustrate the vision (I can talk about these at great length if anyone is interested: the problems are concrete and intuitive, but complicated). In this analogy, single-payer health insurance plays the role of Linux: a perfectly workable, well-tested alternative that performs better and with fewer bugs, even if it doesn't hold the same alluring promise of eventual simplicity and possible eventual superiority.

The US is like the hacker that sacrifices his career in order to stick exclusively with the Hurd. Except when it comes to health care the cost for "sticking with it" is ~$1.3T (50% of 2.7T) and 45,000 lives per year [3].

I'd rather cut our losses and go with single-payer.

EDIT: [2] is an excellent compilation of work on the subject ("work" as in "papers that include actual numbers and well-reasoned arguments as opposed to philosophical musings")

[1] http://en.wikipedia.org/wiki/List_of_countries_by_total_heal...

[2] http://www.pnhp.org/facts/single-payer-resources

[3] http://news.harvard.edu/gazette/story/2009/09/new-study-find...

This comment should be in the FAQ somewhere as model comment.

We actually agree more than you think :)

I live in Uruguay, and the local medicine system works a lot better than the U.S. system in practice, for the "normal" cases, and at an incredibly cheaper cost.

It's far from perfect, and hospitals are usually very near bankruptcy and have to be propped up by the state.

I've written a lot about it, I should condense it into a blog post, but for example:

https://news.ycombinator.com/item?id=6261120

"We have private emergency systems, and they work extremely well for the consumer, my girlfriend had a burn from scalding water and was treated by a doctor within 5 minutes, for U$ 15. Doctors at those emergency services are criminally underpaid, though (as little as U$ 500 per 6 hour-shift monthly)"

https://news.ycombinator.com/item?id=3558726

"My uncle went for a cardiologist evaluation here in Montevideo, Uruguay (where we have a form of socialist-style medicine in the style called Mutualism). They found a suspicious spike in his heartbeat, which they suspected to be a treatable syndrome (Wolff-Parkinson-White), and decided to do some special evaluations. He was treated (with full anaesthetics) one week later (at almost zero cost)."

A big one about healthcare costs in Uruguay, on a parent post comparing heart surgery in India to the U.S.

https://news.ycombinator.com/item?id=6124081

"on an investigative piece from a weekly that goes into great detail on the costs of surgery in Uruguay. I'll just quote some basic numbers:

- Fixed fee per major surgery (medical act) UY$ 27.500 / U$ 1300

- Monthly Head Heart Surgeon salary (per hospital) UY$ 263.000 / U$ 12500

- Other heart surgeons, between UY$ 162.500 and 243.000 depending on seniority and other factors - U$ 8.000 to 12.000 range, per month.

Those are close to the best salaries anywhere in Uruguay, usually as well trained as any doctor in the U.S.

- Cost to the hospital per major operation (heart surgery), UY$ 206.000 / U$ 10.000

Smaller operations like angioplasty cost UY$ 60.000 / U$ 3.000

The most expensive surgery is heart transplant, which costs UY$ 684.000 / U$ 32000

All those are set by the government, so those ARE the actual costs (well, actually they were in 2008, I didn't adjust by inflation and exchange rate), no insurance or strange stuff involved.

The patient is not billed a cent, but there is a huge delay (months usually), and doctors don't really schedule surgery unless it's critical for the person's health (almost no quality of life procedures through the public system). Source: http://www.semanario-alternativas.info/archivos/2008/5)mayo/...

MRI costs in Uruguay

https://news.ycombinator.com/item?id=2248231

The most expensive MRI bill for someone in the "mutualism" system here in Uruguay is U$ 100.

I tried to explain the Uruguayan "mutualist" socialist health system here:

http://news.ycombinator.com/item?id=1627862

"Mutual organisations do not have external shareholders - they are controlled by their members. Members may be users of the mutual, employees, other stakeholders or a combination of these Mutual organisations are either owned by and run in the interests of existing members, as is the case in building societies, cooperatives and friendly societies, or, as in many public services, owned on behalf of the wider community and run in the interests of the wider community"

A HN member compared them to credit unions, I think it's a valid analogy.

The mutualist system is always near bankruptcy and is perfectible (and the government is always meddling), but it doesn't bankrupt it's users and it kind of works (life expectancy here in Uruguay is the same as in the U.S.).

funnily, it seems it's very similar to the Japanese case (and MRI's cost U$ 98 there too):

http://news.ycombinator.com/item?id=2247969

The US tends to subsidize research in healthcare, significantly by its methods of pricing for healthcare.

For instance if a US company makes a drug knowing they will be able to sell a pill for $100 in the US and $20 abroad, is it really fair to say that the US paid 5x as much (since it is most certainly subsidizing the cost of the drug).

Correct. This lack of information ("lack of price transparency") has come to the forefront just in recent months. Dr. Keith Smith in Oklahoma and just the other day Regency hospital in NYC are examples that once you solve this lack of information you do indeed see prices fall. Granted, this works especially well for procedures that can be scheduled in advance but it is amazing in its own right given the current disastrous situation in general. I think they are on to something. Now, if we would couple this with direct primary care memberships supporting practices directly we would be able to offer high quality general health care at a minimum of the cost we see impacted by layer upon layer of health-administration.

This is true for any specialized service, for instance a plumber. The market solution is competition. You get three estimates to see who is providing services for how much then make a decision. This doesn't happen in the health care industry because it is a third-party payer system. That is, the insurance company pays for it, so the consumer has no incentive to shop for the best service/price.

If you need a certain drug to treat an illness and the drug company has a 20 year patent on that drug, how do you propose to get it for cheaper? If you need a rare but specialized surgery and there is only one or two surgeons in the country that can perform the operation, how exactly will you price shop? If you get in a horrible accident, will you go to 3 different ER's to check their prices first? Also who gets priority in the ER waiting room? The person who can pay the most or the person who is in most need? I went in to the ER a few years back for a broken nose. I got cut in line by a guy who got shot and two guys who got stabbed. My guess is none of them had insurance, but considering they could die from their untreated wounds, I did not complain.

I broke my pinky toe when I was younger. The first doctor I went to said I needed to have surgery to place a pin in my toe and then have it taken out a month later, being relegated to walking on crutches for a whole month. I was told that if I didn't get the surgery/pin then my toe wouldn't heal properly and it could hurt for the rest of my life. I went to a second, more reputable doctor and he told me to just wear a boot for a week or two and start wearing shoes when the pain subsided. My toe is completely fine now and I have had zero problems. Since then I have definitely been wary of doctors.

I've never been a fan of the US health care system (I much prefer a public system) for ethical reasons (I think everyone should have access to free health care). I never imagined stories like yours happening in either system. With things like that happening how can anyone support a private system with no free, public alternative?

To pile on to this, when my daughter was born the doctors were going on and on about how her Frenulum[1] was too short and our daughter wasn't going to be able to talk properly. They brought in some Stanford research paper and everything, saying "It hasn't been approved yet, but it's Stanford." That's when my nonsense-detector kicked into overdrive and I just gave them a blank, non-smiling, stare. Of course I did not do it, and now our 3 year old daughter is talking up a storm just fine and clear to everyone. To this day, I suspect that lady(or her son/daughter in med school) just needed some test subjects for some medical research paper or something and all the medical staff involved knew they were just trying to make our daughter a test-subject.

1. http://en.wikipedia.org/wiki/Frenulum_of_tongue

Invisible hand of the free market. Healthcare is not even close to a free market.

The market doesn't fail, it can only be failed.

This makes no sense. Market failure is masked by survivorship bias. Failed markets are invisible. Healthcare is both blatantly obvious (as a "market") and as a rigged regulatory "game".

Healthcare cannot be a free market. For a true 'free market', you need to have perfect information. Healthcare is the most complex field in the human condition, and you could have a dozen specialist consultants and still not have perfect information - a layperson can't possibly have anything close to perfect information.

I don't think many people believe that having every individual pursue what's in their best interest in a purely financial sense will result in the best possible outcome in every other sense. I always understood it as pursuing the best economic/financial result for you will result in the best economic/financial result overall, and even then, I think most reasonable individuals don't see that as an absolute law without exceptions.

This is exactly right. Why do people corner themselves into mutually exclusive, absolute truths, with absolutely no room for compromise? It just doesn't make any sense.

When I was in 4th grade I wrote a country report on the US. When I got to the economics portion of the encyclopedia, I still remember the opening line..

"The United States is a mixed economy operating predominantly under capitalistic principles.."

Why settle for one when you pick the best from both worlds?

Unbelievable how much this affects people's lives..you can ONLY like Go or C++..you can ONLY like Apple OR non apple products..you either watch Art House Cinema or you watch Hollywood blockbusters, absolutely not allowed to watch both..you're either 100% capitalist or 100% socialist.

The idea of the "truth lies somewhere in the middle" is at least as old as the Greeks (that quote was attributed to Aristotle when I first read it), and yet every single day, the same people regurgitate the same tired arguments to the point that I'm starting to sound like a broken record myself in response.

It's not just the encyclopedia entry on the US. In "The Wealth of Nations" Adam Smith himself argues that the market isn't suited to some economic sectors. I believe his examples were infrastructure, police, fire, and military, but education and health care wouldn't exactly be outliers and I'm sure if he were alive today he'd give the arguments for a single-payer system due consideration.

To answer the question, "why do people corner themselves?", I think it's because there is value in categorizing things. Unfortunately, this will eventually introduce negative consequences as well, as you describe. It's like the difference between voting for a candidate or party vs. voting on individual issues. Sadly, I think it is the nature of populations and the growing nature of our digitized world to clump ourselves into groups.

This has a lot in common with the "Being Alone" topic that's trending on HN right now. Being alone fills you with anxiety, with isolation, and with uncertainty. By establishing hard lines, and an aggressive stance, you align yourself with a group and gain peers. You have allies, friends, and a social tribe that you can look out on the world with. Your anxiety lessens and you feel more secure. I'm not sure if we're hardwired for it, but we as humans have a strong tendency towards categorization and "ingroup" / "outgroup" classification of our peers.

There's a deep rabbit hole at: http://en.wikipedia.org/wiki/Anxiety/uncertainty_management

Particularly relevant: "Axiom 20: An increase in perceiving that we share superordinate ingroup identities with strangers will produce a decrease in our anxiety and an increase in our ability to predict their behavior accurately."

From my listening to talk radio and reading conservative American news articles I have come to a different conclusion than you. As a matter of policy many people spout out and believe such things as the "magic of free markets" and support policies which ultimately boil down to every man for himself in the pursuit of profit. However, I do believe if you talked to such individuals and probed what why really want it's more inline with what you wrote.

Unfortunately there is a disconnect in the U.S. between what people really believe to be just, moral, and good governance and what they vote for.

Yes and no. The idealized invisible hand is built on the axiom that information flows, and the decision makers have feedback to learn from their own mistakes and the mistakes of others. When the axiom happens to be mostly untrue, then problems arise.

Medicine is an area where the individual patient can very often not provide useful feedback to themselves or others. It is too technically hard because anecdotes can easily fool individuals, even expert individuals.

Adam Smith himself was both a moralist and an economist. He had a nuanced understanding of the topic, and recognized the tendencies of the invisible hand to go the very bad places, under some scenarios.

Yes, there's the famous quote "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

Markets in medicine suffer from three problems.

One, that the doctor knows so much more than the patient it's hard for the patient to know whether or not he's receiving good care.

Two, that it's not practical to shop around in emergency situations. If I'm having a heart attack I'm not going to drag out the yellow pages and call around to find the best deal.

And three, many people will never make enough money to cover their own medical care. Sometimes because they have some expensive condition, and sometimes because they just don't have much money. While I'm pretty comfortable saying people who can't afford wide screen televisions should have wide screen televisions, I'm not at all comfortable saying people who can't afford and appendectomy should find a comfortable spot to die.

Well, the conservative argument, which probably has some merit, is that patients are disconnected from the economics and thus don't play their role in the invisible hand theory.

But I still don't see why insurance companies with a little help from patients aren't able to reel in costs.

Insurance companies do reel in costs. They often pay far below the "public" rates for services. However, they don't pass that difference on to consumers. They keep it for themselves as profit.

Then why don't employers/patients influence costs down?

Because, while not bosom buddies, the medical professionals and insurance companies are better at working together to influence costs up?

The invisible hand is there all right. It's just not creating value for customers but creating value for the medical establishment due to perverse incentives.

There's an "invisible hand" but it isn't omniscient, and doesn't work when you don't have a market.

We need to figure out a way to get out of the binary thought process where you are either a market guy or a communist.

Car sales people also talk people into spending too much on cars. It's the myth that doctors aren't in business and the interference with that market that has created the nightmare of our current system. Did you notice how difficult it is to determine the price of medical services? You call this a free market?

You misunderstand the absolutely beautiful concept of the The Invisible Hand. It refers to the self organizing (emergent) behavior of the economy and it's many benefits. The concept itself makes no assumptions about perfect information, quite the opposite - it describes the coordination of individuals with vastly different information sets (as well as resources, capabilities, etc.). Did you ever think about the absolutely enormous amount of coordination required to product the computer you type on? Most of that is the invisible hand. It is very much a real world concept as comes from Adam Smith's observations of the world around him. You might want to reread the Wikipedia article you linked.

The debate is all about when, how and for some even if the invisible hand can be improved on. Medical care should be a particularly difficult area for the reasons you list among many others. At least so far the results of efforts to improve on the invisible hand in US medical care have been mixed as the examples in the OP point out.

This is why we have laws. The "invisible hand" drives people to still too. We make it illegal to deter people from stealing. Ordering unnecessary surgeries should be illegal too.

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