I think discussions of health care economics pay far too little attention to the question of pre-modern health care. People have been earning a living as medical professionals for a long time. And yet everybody knows that the invention of actually useful medical treatments is pretty recent development. Surely this tells us something about the nature of the health care consumer’s ability to find and purchase cost effective treatments.
This is something that Mark LeMoine pointed out to me when I was interning with him at Spectrum Health - most health care is something that no one ever wants to buy. And when you're in a position where you do want to buy some health care (that is, you have a health problem that needs attention) you often don't have the time or resources to compare doctors/facilities, or make an informed choice about what is quality? and how much will it cost?
So, even though I often unfavorably compare the health care sector to other service sectors, health care is not analogous. It offers a service that people don't want to buy, don't want to research, and often can't find accurate or helpful information on.
There are many services and products people don't necessarily "want to buy" such as a new transmission for their cars or a new water heater for their home or maybe even mental health facilities (to give an example closer to healthcare). This doesn't make it a completely different good in terms of economics or the marketplace; in reality you do want to buy that medical procedure, you just more accurately didn't want the disease or ailment in the first place just as you didn't want your car to break down. Also, health services are something people will be MORE inclined to research as choosing the wrong doctor or treatment could cause irreversible harm to your life, unlike choosing a lemon at the car dealership. Finally, our current technology and information systems could make shopping around for the best healthcare much easier than in the past, we live in an age of ratings, consumer guides and social networks. If healthcare were allowed to be a much more competitive market just like any other market, I am confident these things would happen. For a close proxy, see the lasik eye surgery or cosmetic surgery industries; cost continues to go down while quality of the product improves as these practices must compete with each other and satisfy consumers.
ReplyDeleteThere was a comment here earlier that made a couple points I hadn't thought about, namely
ReplyDelete1) People don't want the problem or illness, but they DO want to buy the health care
2) Health care services are more apt to be researched because the consequences of making a wrong choice are bigger than choosing the wrong car or other consumer product
3) Developing technology and information systems make finding the best health care easier than in the past, meaning that we have increased capability to share information and find good health care, if only the market would allow for it.
I agree that people do want health care, that they should research it, and if the market were more competitive (or competitive in a different way) it would be better all around.
Here's what I still disagree with - by and large, I think few people take enough responsibility for their health and health care choices. They *should* research and act accordingly, but I don't believe people *do.* (Willing to reverse this belief, given evidence or even anecdata.)
And, the information that we should be sharing about doctors/hospitals/insurance companies/costs often isn't *available.* It just isn't there. You often couldn't find out how much a procedure costs and what the average outcome is at a given facility even if you wanted to.
I agree that this information should be available and that people should be sharing it, I just don't believe it's happening, or that it will happen without - not only a massive change in the economic structure of health care - but also a big change in cultural perspectives about health and medicine.
So perhaps the title of the post should not have been "Why a strict consumer model of health care can *never* work," but "Why it won't work right now, and not without big change."
Your 'disagreements' and not really in opposition to the 3 points above. Rather, the 3 points are pointing out how and why a strict consumer consumer model (aka 'free market') would and could work; your disagreements are just pointing out how the current system is not a free market and the current problems with it. I would agree that many people probably don't spend enough time researching and the information isn't all there. But this only begs the question of why? In a free market, people spend time researching both the quality and price of a product and businesses spend time trying to lower their cost as well as persuade consumers that their product is the best. But in our current HC system, the cost is essentially taken out of the equation due to heavy subsidies on healthcare and insurance; in many cases people don't even know the cost of their healthcare and don't care because they aren't paying for it.
ReplyDeleteSo yes, the current system is far from a free market system as you pointed out. The question is how do we get the system to that point and get people to research more and get more information available? If most or all subsidies and government intervention were removed from the HC system (i.e. it become much more free market) the incentives would line up much better. People would no doubt start waking up to the actual price they had to pay and the HC system would really start to try to lower their costs, especially if a competitor starts to do it before them and takes away their business. Notice that as consumers shopped around more they would naturally begin demanding more information from their doctors and the HC systems which started providing this would get an advantage over their competitors as well.
The other option is to continue down our current path, trying to legislate quality and price with massive amounts of laws written by people who don't understand the system. And without a functioning price system, it is impossible to know what people actually demand and what things are actually costing.