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“Whadaya mean they don't work!? They work perfectly! Those that can afford it gets it, and those that can’t . . .  well, meh . . .  they must not need it, ‘cuz they sure don’t seem to want to pay for it! Don’t know for sure, ‘cuz I can’t see ‘em from my house, but I'm just sayin'.”

Sound like anyone you know?

I read an interesting paper written during the lead up to the passage of the Social Security Amendments of 1965, the legislation that gave us Medicare and Medicaid. You can find it here from the World Health Organization (be careful, it's a powerful sedative as well).

The paper, entitled (rather unfortunately) “Uncertainty and the Welfare Economics of Medical Care”, was first published in the December 1963 edition of The American Economic Review, a publication of the American Economic Association. I say unfortunately because the word Welfare in the title has acquired such negative connotation that many people have forgotten the original, more benign meaning of the word.

My reservations with the title aside (and unimportant), the paper, written by Kenneth J. Arrow, then a Professor of Economics at Stanford University, provides “an exploratory and tentative study of the specific differentia of medical care as the object of normative economics”. That’s quite a mouth full!

The paper contends that applying free market principles to medical care is problematic because we know neither when we will need medical care, nor whether the medical care we receive will work. This built-in risk in the medical care market is one of the reasons for health care insurance, and is also one of the reasons why I believe that the medical care market will never behave like a classical free market, regardless of how long we hold our collective breath and stamp our collective feet.

So settle down, let out your breath, and follow me south of the curlicue.

As I’ve said before, I’m no economist, and I’ve never played one on TV. So let’s not make this a discussion about arcane and esoteric economic minutiae. This is a hack opinion piece, and I extend my most sincere apologies to Mr. Arrow if I have mischaracterized anything from his paper. But I wasn’t sleeping during those college Econ classes either! I do remember that ‘normative’ economics is about what we think ought to be and that ‘positive’ economics is about what is. And I also remember that the classic supply and demand models tend to break down under anything short of ideal circumstances.

One of the ‘ideal’ conditions of classic supply and demand models is that for any supply there is a price at which supply and demand are both satisfied. That satisfactory price goes up when demand is high or supply is low, and comes down when supply increases or demand decreases. The classic models suggest that all supply and demand levels are always satisfied. Otherwise, no market. Econ 101.

Dr. Hugo Z. Hackenbush
So, for every supply, there’s a demand, and for every demand there’s a supply. But when we try to apply this to medical care it gets a little more complicated. First, and quite rightly so, we have placed a high price of entry into the medical care supplier field. It’s spendy to be the doctor! And for good reason, since we don’t want every whack-job quack who can afford a white lab coat and a stethoscope dispensing medical care, like Dr. Hackenbush here. So right off the bat, supply is artificially limited.



YouTube video of the Nero tour, 64 AD
Additionally, demand for medical care is not steady, and the supply of medical care can’t respond to sudden and dramatic changes. Since I don’t know when I’ll need medical care, and in fact, I might need medical care at exactly the same time as many other people, say in a disaster or an epidemic, there may be no price where demand can be satisfied because supply simply can’t be found at any price. We just can't make doctors magically appear! It was probably really hard to find a good physician in Rome right after the Nero concert.

Another one of the ‘ideal’ conditions of the classic supply and demand models is certainty (read knowledge) about the commodity. If I’m selling corn, and you’re buying corn, and we both possess exactly the same knowledge about the corn in question, then we reach a price at which both the supply of and demand for corn are satisfied, and the model works. But if you know that there was a bumper crop of corn across the country, and I’m only aware of corn production on my farm, then other forces have acted on our market and supply and demand may not be properly satisfied. You get it cheaper somewhere else and I get screwed!

So, if buyer and seller both have complete knowledge of the item in question, markets work for all. But when we try to apply the cerainty principles of classic supply and demand models to medical care things start to break down. For one, I don’t know the first freakin’ thing about medicine! And I know I don’t know! I’m just sick, and I want to be better. You, as the medical care supplier, know everything about medicine! If we did our job right in the first example, you’re a medical god! So you are in control of what I am buying! And you know that I don’t know the first freakin’ thing about medicine! So right off the bat I’m at a disadvantage, and we both know about my disadvantage. And so does the next guy! Even if I could shop around, I still wouldn’t know anything about medicine! What’s the point? HCA wins!

My conservative buddy tries to tell me, "Doctors are just like mechanics, only better paid, you just keep tryin' around till you find one you like". Keep tryin' around? Till I find one I like? How many chances do I get? This is medical care, not an oil change! If Biff at the QuickieLube forgets to tighten my oil filter, I figure it out from the puddle of oil on the garage floor, or at the very worst, my engine (the heart of my car) siezes and I get a new one, and life goes on. If Dr. Hugo Z. Hackenbush forgets to tighten the zipper on my open heart surgery, I'm DEAD! How is that the same? Please pardon the hyperbole, but geez, come on! If you think you can compare medical care providers, then, geez, you must be a medical care provider!

OK. Medical care is a market with built-in risks. And what happens when we encounter risks? We try to insure against them! It’s the American Way! And we’ve been trying to insure against this risk in United States since the mid-19th century! And we still haven’t gotten it right! So here comes a completely new set of economic forces, just when we thought we had a handle on this whole doctor-patient economic model thing! The torture never stops!


I think he's here for you!
So, if you’ll remember, the built-in risks in the medical care market are, a) that we don’t know when we’ll be sick and, b) we don’t know if (or when) we’ll get better. And if you think about it, medical care costs are only a portion of the risk. Another risk, let's call it c), is the loss of production, temporary, prolonged or even permanent, as a result of being sick. Not only do you owe HCA oceans of money, that little trickle you call a living has just dried up! So where does that fit in? Queue the Aflac duck!


Now, let’s pretend I’m the insurance guy. Just like the economics of health care, there’s some theoretically perfect kind of insurance for society, too. It's all about who’s the biggest risk and putting people with similar risks in the same policy. That way, I can charge the least risky people the lowest premiums, the most risky people the highest premiums, and all’s good in my little theoretical insurance world, and I skate off to my secret bank account in the Caymans with all of your money. Hey, I wonder if Mitt's here this weekend?


Oh noes!
Not Commie-nism!
Except, it doesn’t really work like that (well, the skatin’ part does). I don't want you risky people, because, after all, you're, well, risky. I can never know when someone in my low risk group will suddenly get some disease that would have put them in my high risk group, had I known they had the disease when they signed up! And to beat that, if I take high risk and low risk people and pool them together and charge them all the same premium it works just like wealth redistribution! The low risk people subsidize the high risk people. And we all know what that is, right? Communism! Yikes!



Roberts said wha'?
And then there’s that whole incentive thing. People with fire insurance on their house lose the incentive to not smoke in bed or play with incendiaries. People with collision insurance on their car lose the incentive to not drive like their favorite Nascar driver or recreate scenes from the Fast and the Furious. And as we all know, people with health insurance lose the incentive to not get sick! Just ask Mitch and John, they'll tell ya! Health insurance increases demand for medical care! What kind of cost containment is that?

Now I don’t mean to pick on health care people or insurance guys here, because we’re all in this together. You need us, we need you, so let’s all see if we can pitch in and get this thing solved. I’ll bet that if you asked them, and as long as everything else remained the same, people wouldn’t care whether their health care comes from the Government or from the Man in the Moon. They just want it! So let’s stop trying to scare each other and get to work!

So, if you’ve made it this far, you can kinda see we got ourselves a sticky wicket here. If you still think that our health care problem will go away if we just let the Invisible Hand of the Market© sprinkle faerie dust on it, then put down the Adam Smith and cut back on the World of Warcraft a bit. And if you think health insurance in its current incarnation is just fine thank you very much, then you haven’t been paying attention and you've obviously never used it! (But can I interest you in my new low premium policy?) And if you think our medical care is such a good deal, then you should take a look at your pay stub (if you're even gettin' one these days) and double that number that you see there for insurance (if there's even one there these days), ‘cuz you’re only seein’ part of the picture there!

And once you see the whole picture, you’re gonna say “Hey, WTF, I’m gettin’ screwed here! Who’s gettin’ all this money?”

“Uh, dat would be . . .  uh . . . me . . . down here in da Caymans . . . wit’ da HCA guy. Hey Mitt! How ya doin’? Nice ta see ya, buddy! Come down ta visit yer retirement, huh?"


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Originally posted to rudyblues on Sun Jul 08, 2012 at 07:27 AM PDT.

Also republished by New Diarists and Community Spotlight.

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Comment Preferences

  •  Thanks for a great look (16+ / 0-)

    at this issue, rudyblues. Your combination of information and wit make this an excellent diary.

    "Those are my principles, and if you don't like them...well, I have others." --Groucho Marx

    by Dragon5616 on Sun Jul 08, 2012 at 07:42:14 AM PDT

  •  Your points about the (15+ / 0-)

    health care market work in a similar way in education. A for-profit model is not what is needed to educate children. It does not work.

    As a teacher, I am always amused by those who say we should run schools like a business. Having worked in business for 18 years as well as having taught school for 20 years, I can tell you that the two worlds have almost nothing in common.

    My favorite response is: Yes, let's run it like a business. I am handling 150 clients a day. Where is my secretary? My staff? Can I get rid of unprofitable clients (i.e., failing or challenged students)?

    It's ludicrous to think such essential human services are "commodities."

    "Those are my principles, and if you don't like them...well, I have others." --Groucho Marx

    by Dragon5616 on Sun Jul 08, 2012 at 07:55:12 AM PDT

    •  To the man with only a hammer . . . (8+ / 0-)

      . . . the whole world looks like a nail.

      There are a couple of other things that should be included in that list of "inalienable rights" we're so proud of, namely health and education. And those inalienable rights should not be thought of in economic terms.

      If "liberty" or "the pursuit of happiness" (read "my right to plunder") were somehow exposed to the same cost cutting measures that health care and education are subject to, you think the teabaggers wouldn't come screaming out of the woodwork?

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Sun Jul 08, 2012 at 08:03:33 AM PDT

      [ Parent ]

    •  May I recommend the most excellent (6+ / 0-)

      book "Schools Can't Do It Alone" by Jamie Volmer.  He started out thinking schools should be run as businesses and came full circle.  Plus I laughed out loud every few pages!

      ...Son, those Elephants always look out for themselves. If you happen to get a crumb or two from their policies, it's a complete coincidence. -Malharden's Dad

      by slowbutsure on Sun Jul 08, 2012 at 04:45:30 PM PDT

      [ Parent ]

    •  Except practically everything he wrote is wrong (0+ / 0-)

      Classical economics deals very well with markets in which there are barriers to entry, delays in supply reaction to demand, and asymmetric information.

      I'm taking an EMBA right now, and admittedly it's an intensive and fast moving program, but we are expected to cover these issues in our reading and prepare an initial assignment that covers several of them BEFORE our first class - these are so basic that they aren't even going to waste class time on them but expect us to be up to speed on them before we start.

      As I’ve said before, I’m no economist, and I’ve never played one on TV. So let’s not make this a discussion about arcane and esoteric economic minutiae.
      These are the crux of your argument, not esoteric economic minutiae and most basic micro-economics texts cover them in 50 - 100 pages in the first few chapters.
      •  Health care does not involve an arms length (4+ / 0-)

        transaction, with a willing buyer free to decline an unfavorable transaction in favor of a different provider. Demand is highly inelastic.

        If you've got a broken leg, you can't exactly walk away and shop around for a month like you can with a broken dishwasher.

        Fry, don't be a hero! It's not covered by our health plan!

        by elfling on Mon Jul 09, 2012 at 09:09:55 AM PDT

        [ Parent ]

        •  So? Standard economic theory easily handles (0+ / 0-)

          such cases.

          As you point out, demand can be elastic or inelastic.

          Anyway, you can also prebuy healthcare when you don't need it so you will have it when you do.  We call this fascinating blend of health care and financial engineering "medical insurance" or "health insurance".  Have you heard of it?

          This is actually a very large market in the US and demand appears to be highly elastic.

          •  Standard economic theory tells you (1+ / 0-)
            Recommended by:
            rudyblues

            that this is not a free market, and cannot be one.

            Fry, don't be a hero! It's not covered by our health plan!

            by elfling on Mon Jul 09, 2012 at 04:51:42 PM PDT

            [ Parent ]

            •  Huh? And how does it tell us this? (0+ / 0-)

              A free market is not a very well defined term but it generally means a market with minimal government interference.

              There are many countries with just that kind of health system - usually poor ones with minimal government.  You may not like the results, but claiming that health care cannot be a free market is demonstrably false.

              However, what does that have to do with anything we are discussing?  Is anyone suggesting eliminating all government regulation of the US healthcare market?  Or is this just a silly straw man?

  •  I hope this this diary gets a LOT of rec's.... (9+ / 0-)

    Succinct, cogent, lucid, and with enough ranty goodness to warm any Kossack hearts.

    Rec it up people!!!

    Oh, and, yeah, I kinda liked it, too ;-)

    Remind me why Jamie Dimon is worth about 50,000 teachers? Tweet

    by caul on Sun Jul 08, 2012 at 08:03:20 AM PDT

  •  Enjoy your writing, rudyblues. (7+ / 0-)

    Tipped, rec'd, republished, tweeted...

    Not gonna marry it though :-)

    "Compassion is not weakness, and concern for the unfortunate is not socialism." Hubert H. Humphrey

    by nomandates on Sun Jul 08, 2012 at 08:15:54 AM PDT

  •  another reason why the health care market in the (12+ / 0-)

    US does not fulfill a necessary condition of a free market: price discovery.  Supposing you do not have an emergency and have the time to shop around, ever try to get a quote for a medical test or procedure? Say an MRI.  Good luck.  And on the off chance you actually do get a quote it will not necessarily be honored.

    OTOH, in an emergency situation a person is in no position to be a cool calm and collected economic actor shopping around for the best deal.

    In these respects medical care is like fire protection - leaving it to the free market does not work very well.

  •  Like your plain English diary (6+ / 0-)

    and its lighthearted tone at times on a serious topic.

    Another reason It’s spendy to be the doctor! And for good reason, since we don’t want every whack-job quack who can afford a white lab coat and a stethoscope dispensing medical care, like Dr. Hackenbush here.
    I would add that barriers to entry also keep compensation UP for the medical establishment.

    I dreamed I saw Joe Hill last night, alive as you and me.

    by plankbob on Sun Jul 08, 2012 at 09:09:04 AM PDT

    •  Thanks plankbob . . . (4+ / 0-)

      . . . and I'm OK with that compensation being up, as long as the satisfaction with the product is up as well.

      Another interesting point in the paper I referenced is that, unlike most "things" we buy that have a clear delineation between "making" the thing and the actual thing, health care and the act of "making" health care are inseperable. Another reason it's hard to apply free market principles.

      Thanks for reading, thanks for commenting, and "Thank you for your support"!

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Sun Jul 08, 2012 at 09:19:08 AM PDT

      [ Parent ]

      •  supply & demand in service sector (5+ / 0-)

        is always a difficult thing to pin down. How much is a car washing worth? On a rainy day?
        Or a massage, if you're sorer than you've ever been?
        For health care, especially in life and death situations, the principle of supply and demand is warped like gravity at the edge of a black hole.

        How much is Magic Elixir X worth to me if I will die without it?  Answer: Everything I have and everything I can steal.
        How much is my doctor's advice about quitting smoking worth if I don't want to quit smoking? Answer: zero.

        Not to mention the obscenity which is profiting off the misery and suffering of others, or the ludicrous spectacle of a car crash victim price shopping from a gurney.

        Class war has consequences, and we are living them.

        by kamarvt on Sun Jul 08, 2012 at 01:44:00 PM PDT

        [ Parent ]

        •  Could not agree more kamarvt, especially . . . (4+ / 0-)

          . . . that last paragraph. I've always had a hard spot in my heart for someone who plunders from the misfortune of others. Ambulance chasing attorneys, unscrupulous contractors after Katrina, zombie bank CEOs; I think there's gonna be a special place in Hell for those types.

          Thanks for reading! I hope you enjoyed it. And thans for commenting too!

          To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

          by rudyblues on Sun Jul 08, 2012 at 02:19:29 PM PDT

          [ Parent ]

  •  The medical market demand is being taken care of.. (7+ / 0-)

    You missed a key facet on the demand side:  The Industrial Food Cartel!  They apparently exist to provide health care providers with constant demand - You know, diabetes, high blood pressure, heart disease, and the whole litany of medical conditions related to complications from ingesting processed, overly sweetened, high sodium, not-really-food food. It seems that this demand thing is so integral to the medical market place that other hands of government, including the FDA and Dept. of Agriculture, are doubling down to make sure that the large industrial food companies interests are top priority - They insure discrete law and regulation customization services; while keeping the the supply of patients completely in the dark, and of course, with the security of knowing that the are (not) in control.

    Now that's economics baby!

  •  Triple it... (6+ / 0-)

    on my pay stub, that is.  I thank goodness every day that my employer picks up two-thirds of the tab for my insurance.  It's crappy coverage, but I couldn't have had ANY insurance if not for my employer.  

    -7.62, -7.28 "Hold fast to dreams, for if dreams die, life is a broken winged bird that cannot fly." -Langston Hughes

    by luckylizard on Sun Jul 08, 2012 at 10:08:35 AM PDT

  •  rudyblues has left the building . . . (4+ / 0-)

    . . . but will be checking back in a little later. Thanks all for coming and see you real soon!

    To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

    by rudyblues on Sun Jul 08, 2012 at 10:49:54 AM PDT

  •  Many DO know when we need healthcare (5+ / 0-)

    Most people begin and end their lives in the healthcare system, or would want to if they were of sound mind and body (which they aren't, or else they wouldn't be in the healthcare system).

    How many of these idiots who blast healthcare for all would be around if not for someone giving them healthcare at the get-go?  How many were delivered at a hospital, or taken to a hospital ASAP after birth?

    •  Yes, I agree, we all know . . . (2+ / 0-)

      . . . when we need health care. But do we know far enough in advance to plan for it, like some who are against health care for all would have us do?

      Beter save that money, I can feel a need for health care comin' on!

      Thanks for reading! And for commenting.

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Sun Jul 08, 2012 at 12:52:21 PM PDT

      [ Parent ]

      •  Oh agreed (3+ / 0-)

        I was just noting that it's usually known when we'll need healthcare at least once or twice, at some key stages in our life where we're in no position to engage the healthcare apparatus in the same way that we might shop for a car.  It's not just about uncertainties about when you'll need it, but some very key certainties that pretty much everyone in society has in common.  At an aggregate level, birth and corresponding death rank up there with taxes in the "certainty" category.

  •  I just wasted that time on the Elliptical? (5+ / 0-)

    My employer subsidizes my gym membership.  I should tell them that incentives don't work and I can sit around posting on dailykos instead of getting all sweaty.

    •  Seems to work for me . . . (5+ / 0-)

      . . . but then, the last time I tried the elliptical it like to kilt me! I've been thinking about exercising, but the thought left me short of breath and I had to sit down and write a few comments!  ;-)

      I think your employer has the right idea. An ounce of prevention in every health care dollar.

      Thanks for reading and commenting. It means a lot. Now, back to the gym with you!

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Sun Jul 08, 2012 at 01:32:46 PM PDT

      [ Parent ]

  •  What an entertaining and informative diary.... (6+ / 0-)

    .....I live on a remote volcanic island -- a very popular one in the United States! There is a great demand for doctors, but they are in short supply, especially quality doctors. There are other factors at work other than supply and demand that maintain this imbalance: The lack of quality education, the remoteness of the location, cultural issues.

    Really enjoy your writing. You are a hoot. Just want to add that in linguistics you have the same thing: There is a prescriptive approach (The King's English, the way we think this should be said) and a descriptive approach (the way things actually are said).

    I had a wonderful French teacher who taught us the rules and then encouraged us to ignore them for the way things are actually said. When I arrived in France, I was better prepared than many for the way people actually speak.

    We need to describe the health care market as it actually is as well.  The Free Market did not create a marvelous health care system for us. Period.

    •  Thanks Bensdad, I appreciate that! And BTW . . . (2+ / 0-)

      . . . that popular volcanic island you live on seems like it ROCKS. (no pun intended) Wouldn't know though, can't see it from my place, but I'd like to see it someday. ;-)

      I like your French teachers approach. I always say "Question authority, 'cuz it probably doesn't know the answer"!

      I did a little reading on the history of health care in the U.S. and it was interesting. Seems the first people to really balk at what eventually became Medicare were the doctors. Who'd a thunk it?

      Thanks for reading and reacting, it is greatly appreciated!

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Sun Jul 08, 2012 at 01:44:47 PM PDT

      [ Parent ]

  •  Saw a Ron Paul sticker on a Handicap Plate SUV (6+ / 0-)

    I'm not making that up. The car in front of me, or the cement block house on tires in front of me, was all in black, had a handicapped license plate, and a Ron Paul 2012 bumper sticker.

    Yes, we'll doctor shop. We'll have concierge medicine. We'll have what we can afford. You see, so long as you are wealthy as Croessus, libertarianism makes sense in the viscera, which is probably where you make executive decisions anyway. "People in the waiting room. Ugh! I hate them. Some of them look different, too. I should own a doctor. Let those people get doctors when they get off their butts and inherit farms with tobacco subsidies like I did!"

    Remember: the U.S. model was not planned, is not synthetic. Our model is reactive and ad hoc. Our "liberty" has meant neither a market nor a utility nor a service model, but the most malicious of Frankenstein monsters. We have oversupply of doctors in some areas, none in others, and being a dermatologist in NYC is a license to print money, if you'll just shoot Botox into rich women's faces all day while Yanni plays on the loudspeakers.

    Every reductio ad absurdum will seem like a good idea to some fool or another.

    by The Geogre on Sun Jul 08, 2012 at 01:34:53 PM PDT

    •  I wonder if . . . (2+ / 0-)

      . . . it was really a handicap plate, or just a perq of knowing someone at the DMV? (I gotta guy who knows a guy . . . ). It's probably illegal and all, but money has a funny way of bending the rules.

      I'm in the Chicago area and most of the new hospitals that are opening in the metro area are advertising (hospitals didn't advertise when I was young, did they?) about their private suites (yes, suites, because you need a space for your loved ones to rest in where they don't have to rub elbows with the unwashed masses). This kind of hospital is all they would build if we let them!

      We want you to have the best health care experience you can afford. Can't afford it? Stand over there. Some of the cops in the burbs here have gotten their hands slapped for pulling "suspicious" people over who were just trying to get to the hospital in the burb.

      Thanks for reading! And for writing! It means a lot for people to take notice.

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Sun Jul 08, 2012 at 02:13:02 PM PDT

      [ Parent ]

  •  Here's another aspect: (8+ / 0-)

    The free market types want to tell us that the problem with our health care system is that people are too well insured - that health care costs too much because people are using "too much" health care.  The analogy they often use is that of some luxury commodity.  Say, fancy restaurant meals, for an example.  if people had restaurant insurance so that they didn't pay at the point of consumption, they would go out to a fancy restaurant every night and thereby drive up to cost to society by consuming too much.
    The key fallacy here is that consuming restaurant meals is pleasurable.  Consuming almost any luxury good is pleasurable.  Consuming health care is NOT pleasurable.  Consuming health care is somewhere on a scale from mildly annoying (a visit to your doctor) to really miserable (heart bypass).
    The second fallacy in this argument is that the control over big ticket spending in health care is largely in the hands of the doctor, not the patient.  You may control how often you visit the doctor's office, but that's the cheap part and most people go too seldom.  But if you go into the ER with chest pain, it's the doctor who says you need a heart cath, not you.  And you are in no position to bargain or question at that point.  
    One last pet peeve of mine: We often read stories that a public (usually county) hospital is loosing money.  What a stupid formulation.  We never hear that the sheriff's office is losing money, or the courts, or the jail, or the fire department.  And yet all of those are county services too.  How come only the hospital is expected to operate by the logic of business?

    "Wouldn't you rather vote for what you want and not get it than vote for what you don't want - and get it?" Eugene Debs. "Le courage, c'est de chercher la verite et de la dire" Jean Jaures

    by Chico David RN on Sun Jul 08, 2012 at 02:34:35 PM PDT

    •  Some really good points Chico David RN . . . (1+ / 0-)
      Recommended by:
      ladybug53

      . . . and I think another aspect of your first point (insurance causes overconsumption) could easily bring yet another party to our little table here . . . lawyers. I would be interested to know if some routinely administered tests and procedures are done so because of their legal value as much as their health value? And I don't mean that in a disparaging manner to the health providers! Please don't take it that way! It's just that we have become such a litigious society.

      And I like the part about the County services. Cook Co. hospital is always a political pinata here in Illinois. And they so don't deserve it.

      Thanks for reading! And for stirring my grey matter with the response. I may have to go research some county level stuff here!

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Sun Jul 08, 2012 at 02:49:41 PM PDT

      [ Parent ]

      •  rb, North Carolina and the GAO looked at the cost (4+ / 0-)

        of lawsuits. The outlay worked out to .05% of health care costs. iirc the costs of tort reform would save very little. trial lawyers are often the only resort in a non free choice system where mistakes that can be hidden at the patient's personal or financial peril.

        Most judges will not let "frivolous" suits go forward. Not enough time or resources for such foolishness.

        A red herring.

        Science is hell bent on consensus. Dr. Michael Crichton said “Let’s be clear: The work of science has nothing to do with consensus... which is the business of politics. Science, on the contrary, requires only one investigator who happens to be right,”

        by Regina in a Sears Kit House on Sun Jul 08, 2012 at 07:08:34 PM PDT

        [ Parent ]

        •  Agreed! (5+ / 0-)

          One of the best pieces of evidence on this is in Atul Gawande's work in the extreme high cost of health care in McAllen Texas.  Texas has some of the most restrictive laws in the country on malpractice, but contains the most expensive medical market in the country.  
          That said, some ordering of tests is driven by medico-legal considerations though - uncomfortably for those of us who generally favor robust government - that is more often regulatory than tort based.
          What I mean by that is that regulation in medical care is often a pretty blunt instrument.  One finds a circumstance in which many physicians are not living up to the standard of care.  So the Medicare system promulgates a regulation to fix that problem.  But the regulation turns out not to make the fine discrimination that is needed for optimum treatment at most efficient cost.  The regulation would not have been needed if the docs had been doing their job in the first place, but the regulation often results in increased costs for marginal benefit.
          I am directly involved with one such case in the area of congestive heart failure.  Patients with this diagnosis tend to be hospitalized frequently.  So Medicare has come up with regulations about what must be done for each such patient each time they are hospitalized in a laudable effort to reduce that rate.  But sometimes it's too much of a one-size fits all prescription and results in a bunch of diagnostic testing that probably contributes little to the care of the patient.

          "Wouldn't you rather vote for what you want and not get it than vote for what you don't want - and get it?" Eugene Debs. "Le courage, c'est de chercher la verite et de la dire" Jean Jaures

          by Chico David RN on Sun Jul 08, 2012 at 07:48:10 PM PDT

          [ Parent ]

          •  Medical decisions need to be made by . . . (1+ / 0-)
            Recommended by:
            Regina in a Sears Kit House

            . . . medical professionals!

            Medicare should be in the business of oversight, not prescription. If the docs didn't do their job, then an appropriate penalty. Don't tell the docs what to do, that's what the Hippocratic oath is about.

            To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

            by rudyblues on Sun Jul 08, 2012 at 08:01:09 PM PDT

            [ Parent ]

        •  Thanks, Regina. I didn't think . . . (1+ / 0-)
          Recommended by:
          Regina in a Sears Kit House

          . . . it would be a deal breaker. Just another layer on the onion. I for one would be a little reluctant to bring suit in a health care case unless the negligence was as plain as day. There are just so many factors in the health care outcome.

          The paper I read also went into the fact that we "trust" that the providers of the health care we buy are "in it" for the right reasons (I think he called it "level of care" or something like that). I think the vast majority of health care providers are there for the right reasons.

          Thanks for reading and thanks for commenting!

          To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

          by rudyblues on Sun Jul 08, 2012 at 07:53:57 PM PDT

          [ Parent ]

  •  I think you left out one very important factor (3+ / 0-)

    with everything else one buys, in the real marketplace, there is a cost for things. With medicine we are never given a cost until much later if you can decipher it.

    Imagine if you purchased some other service for an unknown price that could take your house for nonpayment.

    I don't like the idea of anyone making a profit on medicine, single provider is my mantra, but other places I've lived where there is much closer to free enterprise in medicine the prices for most situations are posted large in the waiting room for all to see. And things cost much much less.

    The theory that nature is permanently in balance has been largely discredited

    by ban nock on Sun Jul 08, 2012 at 04:10:19 PM PDT

    •  I agree ban nock, I don't know . . . (3+ / 0-)

      . . . of many other "markets" where you don't know what the price is before you buy. I think someone in one of the comments called that "price discovery".

      And usually, when you discover the price, it's more than you expected and it's too late to complain. Go for surgery and there's a host of "bills" that show up after you're home from people you don't even remember being there. You see the anesthesiologist for all of 30 seconds, which is hardly enough time to get a name, much less negotiate a better rate. I wonder what the hospital would say if you showed up with your list of "preferred providers" when you went for surgery.

      Thanks for reading! And for commenting. It helps to hear everyone's input.

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Sun Jul 08, 2012 at 04:24:26 PM PDT

      [ Parent ]

  •  This is an important diary. Thanks. n/t (3+ / 0-)
  •  Excellent diary (4+ / 0-)

    There is another aspect of the "free market health care system" that is often overlooked.  The vast majority of doctors benefit in some way from tax payer largess during their training. Yes it may be true that the cost of attending medical schools is high, but if those hospitals were to be taxed, if the instructors all paid exactly what their educations cost, and so on, the cost of medical school would be much higher.  Everywhere you look, from the medical discoveries that are funded by the NIH to the infrastructure, the tax payers have to kick in something to make it work. So the very idea of medical care for profit is just another wealth redistribution shell game where the wealthiest make the profits from a system based on tax policies.  Now we cant live without hospitals, ambulances, helicopters, etc. so the taxation isnt the problem, it is the implementation - for profit health care is something I have helped to pay for, then must pay for it again.      

    •  Oooh, double jeopardy . . . (1+ / 0-)
      Recommended by:
      Regina in a Sears Kit House

      . . . I wonder if we could ever really calculate the true cost of that procedure we just had?

      And another thing that frosts my cookies is the government funding research that the researchers then run off with and make millions! If the government funds the research (through grants or what not) then the government should get some of the action when it turns in to the next boondoggle. Fair's fair, right?

      Thanks for your time! I really appreciate it.

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Sun Jul 08, 2012 at 05:01:17 PM PDT

      [ Parent ]

  •  Thank you RUDYBLUES for this very readable (2+ / 0-)

    diary. The AHC link ...it's sickening. they're like an octopus with their greedy tenticles reaching into every crevis of health services.
    This system is truly sick, sick, sick!
    Now I'll go finish reading and savoring your informative and 'great read' diary.

    •  You're welcome, indres . . . (1+ / 0-)
      Recommended by:
      Regina in a Sears Kit House

      . . . and I hope that you don't need health care when you finish reading my atrocious writing!

      But seriously, thanks for reading, and thanks for commenting. Your support is greatly appreciated.

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Sun Jul 08, 2012 at 06:07:26 PM PDT

      [ Parent ]

  •  Must ... overcome ... force ... of ... internets . (2+ / 0-)

    . . . now

    That concludes our test of the Emergency Warninig System. And I'd like to thank each and everyone of you who stopped by today.

    Play nicely with each other, and help everyone you can, since you never know when you'll need help.

    See you next time!

    To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

    by rudyblues on Sun Jul 08, 2012 at 06:17:17 PM PDT

  •  I've always thought that expecting markets (3+ / 0-)

    to magically create just the right supply to satisfy demand is like a freshman physics class where you get to solve your problems by neglecting friction or air resistance.  An auto worker can't suddenly become a doctor because there is more demand for doctors than there is for auto workers.  If a textile worker whose job has been sent to China wants to become a nurse, it takes a lot of training, and how do they make a living while being trained?  Adjustments to changes in demand take time and money, and unemployed people might not have time and money, not to mention the emotional difficulty of changing to a completely new field.

    "The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt." Bertrand Russell

    by Thutmose V on Sun Jul 08, 2012 at 06:37:25 PM PDT

  •  My short answer (2+ / 0-)
    Recommended by:
    rudyblues, lonespark

    Markets exist to allocate (ration) scarce goods on the basis of income and desire (cost/utility in technical terms; in Srully Blotnick, Forbes, phrase "psychology plus cash").  Those goods and services that you want everyone to have cannot be allocated through markets.  QED.

    50 states, 210 media market, 435 Congressional Districts, 3080 counties, 192,480 precincts

    by TarheelDem on Sun Jul 08, 2012 at 07:01:58 PM PDT

  •  rudyblues, a well written and so well (1+ / 0-)
    Recommended by:
    rudyblues

    explained review of medical services viz. the "free market."
    The father of tea party, Ayn Ranadian, theories himself had reservations about providing for universal access to medical services.
    General Tea Baggery

    I've got to close one of my tabs open for the Tour de France. It looks like a Frenchman may get the stage win in Suisse.

    brb

    Science is hell bent on consensus. Dr. Michael Crichton said “Let’s be clear: The work of science has nothing to do with consensus... which is the business of politics. Science, on the contrary, requires only one investigator who happens to be right,”

    by Regina in a Sears Kit House on Sun Jul 08, 2012 at 07:23:56 PM PDT

  •  Here is a quote from "The Road to Serfdom" (2+ / 0-)
    Recommended by:
    rudyblues, Brooke In Seattle
    There is no reason why, in a society which has reached the general level of wealth ours has, (the certainty of a given minimum of sustenance) should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.
    Friederch Hayek.

    Vive La France!! ::smotches::

    Science is hell bent on consensus. Dr. Michael Crichton said “Let’s be clear: The work of science has nothing to do with consensus... which is the business of politics. Science, on the contrary, requires only one investigator who happens to be right,”

    by Regina in a Sears Kit House on Sun Jul 08, 2012 at 07:35:46 PM PDT

  •  Health care markets are coercive. (1+ / 0-)
    Recommended by:
    lonespark

    That's why they don't work. "Pay for this service or device otherwise you die."

    In a truly free market, you have the luxury of time and patience to make a fully informed choice and comparison shop. You don't need to be an expert to understand what you need, and you can choose to pay for the bare minimum of what you want.

    Not so with medical services. Experts act as the gateway, they add things to your bill at inflated prices, and you can't so no to some services because you might die or experience extreme trauma. "I'll take the open heart surgery without the anesthesia, please." Doesn't happen.

    Or, "I just lost most of my blood in an accident but I'm going to wait until next month because my favorite emergency room doctor will be back from vacation." Or "I'm going to call up some emergency rooms and ask which of them has the cheapest price on skull fractures." Or "I wanted both cancer treatment and a car this year, but I only have room in my budget for one, so I put off getting cancer until next year."

    You can make those kinds of choices with nearly every other purchase, except health care. Health care markets are naturally coercive.

  •  thanks for this (1+ / 0-)
    Recommended by:
    ozsea1

    I have tried to explain this many times to conservatives, but they're usually too dense to get it. Although I focused more on the free market concepts of choice and profit motive.

    In order for free market price controls to work, you need competition and choice. You need to be able to choose which TV you want to buy; if you can't freely choose then there is no way to control price or quality. With health care and insurance, you usually aren't making a free choice. Your boss decides what insurance company to use, and if you're not too sick to choose a doctor your choices are nonetheless limited by in-network providers.

    Second, the profit motive for the insurance companies is counter intuitive. They are in business to provide care, but they make more money if they don't provide care. That is a basic fatal flaw of the "free market" health industry.  

    "Mediocrity cannot know excellence." -- Sherlock Holmes

    by La Gitane on Mon Jul 09, 2012 at 12:11:03 AM PDT

  •  About the mechanic analogy (0+ / 0-)

    And let's remember, we can't  "shop around" when we are sick.  Like the roadside mechanic who help us  when our car is stalled on the Interstate:  we have no choice but to choose him.  

    Old Hippies Never Give Up!

    by ravenrdr on Mon Jul 09, 2012 at 01:48:23 AM PDT

  •  Them that has a doc ... (1+ / 0-)
    Recommended by:
    rudyblues

    ....are afraid of losing the doc.

    Health insurance increases demand for medical care
    Health insurance increases the demand for certain kinds of medical care, the routine kind.  Like going to a family doc, your gyn and your pediatrician.  The kind of health care that keeps you healthy over the long run and makes the short run more bearable and less fearful.

    These are exactly the kinds of docs that are getting in shorter supply and getting more difficult to see.

    I've seen this "concern" argued on some DKos threads:  if everyone has health insurance, we won't have enough docs (and, unspoken, "I" might not get in to see the doc I want).

    Used by the right, it's a wonderful argument to turn the 99% against itself.

    •  Yes, Progressive Mom, it's a . . . (0+ / 0-)

      . . . powerful argument, akin to the "rationing" and the long waits opponents of health care reform attribute to Canadian health care. It makes me wonder why we aren't making as many GP and family doctors as we once had. Might be because they can make more money in specialties.

      I think the one take home that I have from the paper I read is that we were having the same arguments in 1963 that we are having today. The more things change the more they stay the same.

      Thanks for reading! And thanks for commenting.

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Mon Jul 09, 2012 at 11:10:34 AM PDT

      [ Parent ]

      •  We will have a primary care doc shortage... (1+ / 0-)
        Recommended by:
        rudyblues

        ...for a whole host of reasons:  more insured people needing primary care; baby boomers needing more care at the same time the cohort of baby-boomer-docs are retiring; and, yes, too few new primary docs because they can't make as much money as the specialists.

        Add to that the huge cost of medical education, and you have a mess.

        But, the ACA was never intended to take care of our health care industry's problems.  It's only intention was to make sure that we all got insured, one way or another, so that all of us can have an equal opportunity to obtain the care we need.

        All the other problems with the system remain.

        But at least we've made a major step toward solving the first one:  because if you aren't insured, it doesn't matter how many pediatricians are practicing in your town.

  •  A Personal Tale (1+ / 0-)
    Recommended by:
    rudyblues

    Two years ago, my wife and I were uninsured when she developed detached retinas in both eyes. We had a choice. Either she could go blind or we could somehow come up with cash. We chose coming up with cash.

    We selected the first doctor available (fortunately, he turned out to be one of the best in our city). Despite what conservatives (and far too many liberals) say, hospitals don't just let you walk in the door and use their surgical facilities for free. We had to pay for the hospital and the anesthesiologist before the surgery could commence.

    Fortunately, the doctor was able to do the surgery that very day and my wife's vision, while not perfect, still exists. Also fortunately, we had credit cards we could borrow against to fund the treatment.

    This diary hits the nail on the head. There is no free market in healthcare and there can never be one. When you're at immediate risk of dying, going blind, or becoming permanently disabled, you don't go on Amazon or eBay and shop for the best price. You seek treatment. End of story.

    Congress shall make no law abridging the right of the people peaceably to assemble.

    by edg on Mon Jul 09, 2012 at 10:54:15 AM PDT

    •  WOW! This is a powerful tale edg, I'm so . . . (0+ / 0-)

      . . . glad things came out at least OK, if not maybe a "Happy Ending".

      I can see both sides of the argument on health care. Yes, I probably can shop around for that elective cosmetic surgery, and no, I can't shop around for the treatment for that heart attack. But I still think of health care as a basic human right and the health care market as something we must control so that it does not leave people behind.

      Thaks for reading, and thanks for commenting.

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Mon Jul 09, 2012 at 11:19:33 AM PDT

      [ Parent ]

  •  one more point about cost uncertainty (1+ / 0-)
    Recommended by:
    rudyblues

    It was mentioned above that even if one tried to call around for price quotes for specific procedures, they are hard to get.

    In addition to that. a patient often doesn't know what treatments will be required before going to the doctor, and neither does the doctor/hospital until the patient has been examined, which may require some diagnostic tests. Often, we know we are sick, but we don't know what is wrong, and certainly don't know what might be required for treatment. And no health professional will diagnose over the phone. How does one "shop" for that kind of care?

    48forEastAfrica - Donate to Oxfam If you can't feed a hundred people, then just feed one. - Mother Teresa

    by wasatch on Mon Jul 09, 2012 at 03:15:19 PM PDT

    •  Wasatch, I think we need a stronger word for . . . (1+ / 0-)
      Recommended by:
      wasatch

      . . . the uncertainty of medical care. The word needs to convey a little more . . . well, uncertainty! And we could actually be a little more certain if things like Health Maintenance Organizations actually did anything to maintain our health!

      I suppose if we could convince everyone to take a positive role in their health care, you know, exercise, eat right, and quarterly check ups, that sort of thing, that we could do a lot towards actually lowering health costs. But health care has become more of a "fix what's wrong" thing for most of us. I know I'm guilty of it! Perhaps it's because it's so damn expensive!

      Thanks for playing along, I appreciate all comments! "See" ya real soon!

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Mon Jul 09, 2012 at 04:58:37 PM PDT

      [ Parent ]

  •  If Health care (1+ / 0-)
    Recommended by:
    rudyblues

    obeyed the free market forces...people in NYC (where there are more physicians per capita than anywhere else) would have the cheapest healthcare in the US.   The idea that the market has anything to do with healthcare is one of the Republicans greatest myths.

    My social security, medicare and military retirement are EARNED benefits. The checks Paris Hilton and the Waltons receive while sitting around the pool are entitlements. Don't let the Republicans confuse you.

    by regis on Mon Jul 09, 2012 at 04:03:09 PM PDT

    •  And regis, you know, they get a lot of those . . . (0+ / 0-)

      . . . myths, and keep coming up with more of 'em every day.

      Thanks for reading! And commenting. Every little bit helps!

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Mon Jul 09, 2012 at 05:01:58 PM PDT

      [ Parent ]

  •  i said not long ago, (1+ / 0-)
    Recommended by:
    rudyblues

    IF I WAS RICH ENOUGH TO HAVE A BOAT, I'D BE RICH ENOUGH TO INSURE IT...

    BUT WE ALL HAVE HEALTH/CARE CONCERNS. AND WE ARE NOT ALL WEALTHY ENOUGH FOR BOATS, LET ALONE INSURANCE. WHY DOES THIS NOT REGISTER WITH THE PUBLIC?

    OH - WAIT, I GET IT NOW - IT DOES REGISTER WITH THE PUBLIC.

    IT DOES NOT REGISTER WITH CORPORATE-FUNDED REPUBLICANS AND CONGRESSMEN.

    IT'S TIME TO UPGRADE THE GOVERNMENT WITH BETTER PEOPLE who are not so susceptible to corporate lobbyists and corporate payouts. (and anyone in software knows, YOU DON'T BACKGRADE SOFTWARE.)

    SHIT, IT'S BEEN LONG OVERDUE.

    YOU DON'T HAVE TO BE RICH TO WANT SOMETHING BACK FOR YOUR TAX MONEY OTHER THAN WARS. OUR ECONOMY IS BASED ON WEAPONS MANUFACTURING AND KILLING PEOPLE. ...SOMEDAY WE SHALL ALL BE ONE... WHY FIGHT YOURSELF???

    by theChild on Mon Jul 09, 2012 at 04:14:47 PM PDT

    •  Bravo, theChild, I wish . . . (0+ / 0-)

      . . . I had said that. If we want a better result we should elect a better kind of politician!

      Thanks so much for stopping by! Hope you enjoyed your stay!

      To these unfortunate citizens aid must be extended by Government--not as a matter of charity but as a matter of social duty. - Franklin D. Roosevelt

      by rudyblues on Mon Jul 09, 2012 at 05:04:47 PM PDT

      [ Parent ]

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