Why can't free markets provide healthcare?

[SaintB]

Again, take everything in combination. Food can be a lot for American families, especially if you are trying to maintain a healthy diet.

Health care can be paid for with $15k. Food can. Shelter can. Transpiration can. Schooling can.

But $15k won't pay for all of that in total.

It can pay all of that in total, transportation doesn't have to be a car, you don't have to get the most expensive food or pay the most expensive rent, and it should be fine.

It really doesn't work that way, hate to break it to you.

[Trotskylvania]

Cheap doesn't necessarily mean quality. A house may cost $15,000 but it could be made out of substandard materials, badly maintained and bhave a whole load off issues with it such as poor heat retention or moisture retention.

What I meant was that an annual wage of $15-20k can pay for rent, healthcare and basic necessities.

Unless your employer is providing health benefits as part of your job, no it can't. Especially not in any major city. You can spend that much alone on a one bedroom apartment in Manhattan.

[Balshvik]

Free Markets are very greedy. Their number one goal is to make profit. Profit comes first not the people. You have no money, then you get no healthcare.

[Quew]

If healthcare was taken care of by free markets it would do so well and so many would be taken care of that the arguments of the intellectuals on government payrolls would get steamrolled as being total hogwash, and lots of new people would be tempted to ask for more of the economy be allowed into the free market and that would signifigantly curtail the power of the state you might even see poverty being solved again just like before the welfare state came into being.

[Tahar Joblis]

Here are the basic reasons why health care markets are prone to failure:

1. There are plenty of situations where your choice is get health care services or die. Market forces do not function well when you are dealing with a scarce but essential item.
2. Informational asymmetry. Consumers know very little about health care, especially now that it's highly technological. Markets do not function well under the pressures of asymmetric information.
3. Commitment problems. Health care providers and consumers alike have demonstrated great difficulty with fulfilling commitments for expensive medical services. Advance agreements ("insurance" or "health care plans") can be made, but the incentives to renege are strong, and the ability to enforce these commitments has been demonstrated lacking, in part because of informational asymmetry, and in part because actual decisions regarding acute medical problems must be made in a timely fashion; delaying a decision on whether or not to provide services is often as good as denying service, and on the other end, medical bankruptcy is a common thing.

The structure of the market, moreover, with middleman HMOs, is subject to problems related to having middlemen, who have an incentive to misrepresent, obscure, delay payment, et cetera, as we have seen... and medical services are too diverse, dispersed, et cetera not to have to rely on some sort of middleman to connect consumers with providers, especially with the risk distribution problem (insurance), and the relationship between preventative care and acute care that encourages insurance companies to become involved with brokering discounts on preventative care to save themselves money.

[Mooneystan]

this is a very interesting topic and a good question

i think the answer is as simple as it is terrifying: because healthcare is expensive and most people cannot afford all the treatments they need.

however, the problem is not just related to the fact that companies want to make profit, but to the increasingly difficult treatments and operations, that were not standard in the past (e.g. heart surgeries etc.).

[L Ron Cupboard]

The question is not whether free markets can provide health care, it is whether they can provide universal health care. Are homeless people ever going to be able to afford health care in a way that provides a profit to the provider?

[Pope Joan]

What free market? The corporations have all the leverage. They constantly make decisions which defy the will of the market rather than responding to it.

"What we have today is not the free market but “crony capitalism,” an altogether different matter. Government and business are in a predatory partnership that extracts wealth to its own benefit."
http://mises.org/daily/6540/The-America ... et-Economy

"It's time to start getting honest about a very simple fact: Nobody, but nobody, really believes in free markets. That's right. Not the Republican Party, not the libertarians, not the Wall Street Journal, nobody.

Here's why: a truly free market is a perfectly competitive market. Which means that whatever you have to sell in that market, so does your competition. Which means price war. Which means your price gets driven down. Which means little or no profit for you.

Oops!

Naturally, businesses flee perfectly competitive markets like the plague. In fact, the fine art of doing so is a big part of what they teach in business schools. "
http://www.huffingtonpost.com/ian-fletc ... 55820.html

[Fireye]

Why can't those arguments be applied to other products? Other products have similar problems as healthcare but the free market still manages to work its magic.

If you mean it's cheap, inefficient, profit-driven magic, then yes it does.

However, it's not disputable. The free market fails at ensuring that everyone can get healthcare, so the state must intervene.

To be fair: the biggest issue with the US healthcare system was the inability to shop around because of hospitals not publicizing their prices.

If hospitals had been doing that, the costs of healthcare would likely be lower, as consumers gravitate towards the hospitals/doctors who show the best perceived value, while avoiding those that are obviously overpriced.

[Sdaeriji]

Lots of externalities and the inherent inability to square a profit motivation with providing effective and humane health services.

Why can't we say the same thing for agriculture?

We do say the same thing for agriculture, which is why it's one of the most heavily subsidized industries in this country.

[Geanna]

If you can't afford to own a house or buy an iPod, that won't affect you. You can still work, pay the bills, etc.

If you can't afford health care and get into an accident, there it is. Think of the millions of Americans without health coverage who are at risk for diseases beyond their control.

However, I believe in providing universal health care through a market system. Similar to Switzerland, if you will. Plus a public option.

Then me for example - After having surgery - I lost my job, then my health insurance. I'm now either too rich or too poor to be eligible for Medicade, Medicare, or Obamacare - so essentially I've been royally fucked.

Universal Healthcare is nice - however, I don't see how it is applicable to privatized hospitals due to a conflict of interests.

[Nervium]

They can, it's just that most people aren't millionares.

[Ashmoria]

Too often I hear the arguments from liberals that healthcare is somehow different than buying potatoes or an ipod, that the free market cannot work. I think these arguments are a load of rubbish.

Information asymmetry exists in all markets, you don't know where your potatoes come from or how much pollution making them costs. There are various concentrations in various industries, many of them successfully run by the free market. If you buy a parachute and you choose wrong you still die, but the free market runs the parachute industry with success. So why not free markets?

Could it be that liberals don't want to give the American way a chance before they go around making things more socialist? I sense some bias at work here.

well the unimportant healthcare market can provide some elasticity, I suppose. so you might be able to get a good deal on a nose job.... NO YOU CANT ALL THE CHEAP GUYS ARE BUTCHERS!

we've had about 235 years of free market healthcare and it never provided good service at a reasonable price. why would we give it another chance now?

[Ashmoria]

Because healthcare is a public good. Someone getting treated for Ebola with taxpayer money is a net benefit to society.


The iPod is not. The potato might be, if the consumer can't afford a nutritious diet otherwise.

So should we collectivize farms?

there is no need to.

but you might notice that we already regulate farming and the food supply in an amount similar to how we regulate and support the healthcare industry.

[Ashmoria]

Therefore you try to maximize the number of customers paying premiums while minimizing how much they use your benefits.

As I already stated, but nobody responded to ...

The simplest way to maximize profits is to refuse to provide insurance to high risk patients (like me). By eliminating the top end of the risk pool entirely, the actuarial value of the smaller pool is lower, and they can charge lower premiums and still make lots of money. However ... people like me still require health services, so we'll stiff the hospitals instead of paying a more balanced premium. You're still going to soak up the costs in the form of higher-priced healthcare.

Health care can be paid for with $15k.

Until the Affordable Care Act, I couldn't buy health insurance for any price. So no, you can't make a generalization like that.

it is a hidden value of the ACA that (in states that took the Medicaid expansion) the expensively-chronically ill no longer have to be destitute in order to get the insurance coverage that they need. untold numbers of people had to choose working and going without insurance or becoming destitute so they could qualify for Medicaid. it is a fantastically important benefit that we have are working on eliminating the need for that choice.

[Fanosolia]

If you can't afford to own a house or buy an iPod, that won't affect you. You can still work, pay the bills, etc.

If you can't afford health care and get into an accident, there it is. Think of the millions of Americans without health coverage who are at risk for diseases beyond their control.

However, I believe in providing universal health care through a market system. Similar to Switzerland, if you will. Plus a public option.

You know ever since i started to hear talk about my country's wait times, i've sort of play around with this idea myself, because as much as I love my public healthcare it does make sense that I might want to pay more for my coverage if I could. Though with what you propose, how basic would the public option be and how much of the market are we talking?

[Ashmoria]

If healthcare was taken care of by free markets it would do so well and so many would be taken care of that the arguments of the intellectuals on government payrolls would get steamrolled as being total hogwash, and lots of new people would be tempted to ask for more of the economy be allowed into the free market and that would signifigantly curtail the power of the state you might even see poverty being solved again just like before the welfare state came into being.

yeah healthcare would be fixed just like the poverty problem was before the welfare state.


isn't that why it would be a very bad idea?

[Ashmoria]

If you can't afford to own a house or buy an iPod, that won't affect you. You can still work, pay the bills, etc.

If you can't afford health care and get into an accident, there it is. Think of the millions of Americans without health coverage who are at risk for diseases beyond their control.

However, I believe in providing universal health care through a market system. Similar to Switzerland, if you will. Plus a public option.

Then me for example - After having surgery - I lost my job, then my health insurance. I'm now either too rich or too poor to be eligible for Medicade, Medicare, or Obamacare - so essentially I've been royally fucked.

Universal Healthcare is nice - however, I don't see how it is applicable to privatized hospitals due to a conflict of interests.

many of the republican governors who rejected the Medicaid expansion are starting to think about accepting it (since it is an utter disaster for their states as you well know).

it is baffling to me that politicians can choose to screw over their people they way yours are screwing you.

[The Liberated Territories]

Because people assume healthcare is a right and wish to pay reduced or negligible amounts for it, regardless of market equilibrium.

^ not to mention public healthcare increases tragedy of the commons type scenario, whereas people's business can be adversely or inversely affected, making it a public "problem" as much as a public right, potentially creating social stratification. We see this with immigration and welfare already.

I'd be willing to pay for higher costs for a user fee type healthcare system, whether in the form of vouchers of whatever.

[Pope Joan]

It was only after doctors invented Blue Cross that medical costs skyrocketed. Insurance itself makes healthcare much more expensive.

"Deregulate, returning insurance to its traditional role as protection against bankruptcy and
promoting savings to pay for the higher health expenses that generally accompany old age. Let consumers spend their
own money on health care, free of interference from professors with statistical studies and bureaucrats with specific
notions of how people ought to behave. This is the choice that has the potential to stop the cost spiral, lower costs,
and provide better health care for all Americans".

http://www.westandfirm.org/docs/Gorman-01.pdf

[Apparatchikstan]

HMO's, by essentially nationalizing roughly one-third of the healthcare industry already, drove up costs leading to the supposedly untenable environment that inspires statists to clamour for single payer systems today. So we already know a mix market approach won't be effective. The AMA will eventually nationalize the rest of the system into a quagmire of bureaucratic ineffectiveness that will make HMO's appear lean mean Johnny on the spot by comparison. Depending on where you live, 25 to 50 percent of your income is already appropriated for public services of dubious quality and/or necessity before you've put bite one into your mouth. In coming years, AMA implementation will place more demand on your livelyhood for no better assurance of security or quality than has been historically given already by any government program. For those making the public education and health analogies, I can undo the indoctrination of my children at home, but I can't provide the best healthcare for them at home if all my financial options are mitigated and appropriated by an amorphous state agency whose concern for me and my family ended when my withholdings reached their pockets.

[Apparatchikstan]

It was only after doctors invented Blue Cross that medical costs skyrocketed. Insurance itself makes healthcare much more expensive.

"Deregulate, returning insurance to its traditional role as protection against bankruptcy and
promoting savings to pay for the higher health expenses that generally accompany old age. Let consumers spend their
own money on health care, free of interference from professors with statistical studies and bureaucrats with specific
notions of how people ought to behave. This is the choice that has the potential to stop the cost spiral, lower costs,
and provide better health care for all Americans".

http://www.westandfirm.org/docs/Gorman-01.pdf

This as well.

[The Liberated Territories]

Free Markets are very greedy. Their number one goal is to make profit. Profit comes first not the people. You have no money, then you get no healthcare.

I didn't know that an abstract economic system can be greedy.

What free market? The corporations have all the leverage. They constantly make decisions which defy the will of the market rather than responding to it.

"What we have today is not the free market but “crony capitalism,” an altogether different matter. Government and business are in a predatory partnership that extracts wealth to its own benefit."
http://mises.org/daily/6540/The-America ... et-Economy

"It's time to start getting honest about a very simple fact: Nobody, but nobody, really believes in free markets. That's right. Not the Republican Party, not the libertarians, not the Wall Street Journal, nobody.

Here's why: a truly free market is a perfectly competitive market. Which means that whatever you have to sell in that market, so does your competition. Which means price war. Which means your price gets driven down. Which means little or no profit for you.

Oops!

Naturally, businesses flee perfectly competitive markets like the plague. In fact, the fine art of doing so is a big part of what they teach in business schools. "
http://www.huffingtonpost.com/ian-fletc ... 55820.html

Libertarians are internationalists. Unlike highly nationalistic and protectionist conservatives, I believe that greater support for free markets internationally will affect everyone positively in the long run. Essentially what we got to do is trap corporations so that they don't fly to Ireland (and therefore, we won't have to strangle the market in the long run with tariffs and taxes to deter such a thing). Unrestricted free trade is just one way to do it. However, I do agree with you on the crony capitalism part.

[Luziyca]

Because not everyone is rich.

[Sociobiology]

because healthcare violates many of the assumptions that are needed for free market forces to optimize a service, demand is almost entirely invariante, it many places service is exclusive. this means normal free market forces will drive prices higher not lower because people really can't refuse service and they have few if any alternatives. It is not coincidence medical bills are among the largest causes of debt and bankruptcy.