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> 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...

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).

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

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.

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 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.

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.