The Bishop and the Butterfly: Murder, Politics, and the End of the Jazz Age
    Michael Maiello's picture

    The Actual Reason Markets Do Not Work In Healthcare is... Pain!

    Today, David Brooks asks whether or not markets function well in the American health care system and he seems to think that, when it doesn't, it's largely because health care providers know so much more about health and wellbeing than health care consumers:

    As you know, the American health care system is not like a normal market. When you make most health care decisions you don’t get much information on comparative cost and quality; the personal bill you get is only vaguely related to the services; the expense is often determined by how many procedures are done, not whether the problem is fixed.

    You wouldn’t buy a phone this way.

    The real issue is that you don't buy a phone because you are experiencing intense pain and discomfort and believe that the purchase of a phone would make the pain go away.  Buying a phone would be like buying health care if and only if somebody twisted your arm out of your socket and agreed to let go and reset you if and only if you present your credit card to the AT&T store.

    Health care transactions are almost all performed under duress. Now, later on, Brooks says, "Patients on a gurney can’t really make normal choices..." but that's about it, and it's not even clear that he's talking about pain and discomfort here, he may mean that the patient has been anesthetized.

    Maybe I'm weird, but I don't go to the doctor for every scrape, bruise or headache. I go once a year for a physical because it's the right thing to do and for a follow up if I am directed.  If I show up sick or hurt, I am really sick or hurt.  A limb has been damaged.  The flu is so bad I had a hard time even making it to his office.  Okay, I'll go in for a flu shot, but that's to prevent the pain that I know is coming if I don't.What I pay for such services is the functional equivalent of protection money.

    When does the stock market not work?  When people are forced to sell stocks against their will.  A lot of the health care market functions as a market in crisis.  In the stock market, it's sellers forced out.  In the health care market, it's sufferers forced in.

    Says Brooks:

    Laser eye surgery produces more patient satisfaction than any other surgery. But it’s generally not covered by insurance, so it’s a free market. Twenty years ago it cost about $2,200 per eye. Now I see ads starting at $250 an eye.

    Well, okay.  The market functions, over time, for elective procedures.  But let's not expect people to negotiate over serious, sometimes chronic conditions. Every time somebody suggests a market-driven health care solution, they are suggesting that patients negotiate with providers while under considerable duress. YIf you ever buy a phone that way, you're buying it from the mob.



    i.e. price elasticity of demand = 0

    Well maybe not zero but lowish

    I've thought this for some time, but if you look at various proposals to replace ACA, there is this idea idea that unless coverage is restricted within a plan, folks will go hog wild. They'll go to the doctor every time they stub a toe. I know there are people who are neurotic doctor see-ers, who go because they're lonely or need someone to "take care of them." But for the most part--especially men--don't relish the idea of going to the doctor.

    The other place where usage comes into play is with tests. If you and your doctor know that your plan "covers everything," you'll both support undergoing every test "just to be safe." Cadillac plans. But if you need to pay for some of the tests, you'll be more likely to ask whether test X is really necessary. How much this decision-making comes into play, I don't know. But many tests are not risk-free, and your doctor should be telling you about the pros and cons and how necessary it is.

    The real cost drivers seem to be the underlying costs of the medical care itself. I don't know whether you can control those by fiddling with health insurance. The ACA had some pilot programs aimed at this goal, but I don't know how well they've worked. In any event, as far as I can tell, they are going bye-bye under the new regime.

    The biggest disconnect between the health care market and other markets is that those who really need the Cadillac coverage often can't pay for it. Cadillacs are built for people with more money. The need and ability to pay for it often go hand in hand. Other people buy Pintos and they're perfectly happy with the cheap transportation. But the people who truly need the Cadillac care often can't afford it (economic circumstances have mitigated against their taking care of themselves). So there's no market correlation between people who need the Cadillac care and their ability to pay for it, as there is between Cadillac CAR owners and their ability to pay for the high-priced car.

    If you think about national health care systems you realize it has nothing to do with Cadillacs.

    Cars don't get diabetic sores on their tires if they have undiagnosed uncontrolled diabetes. Car engines don't have strokes or heart attacks if they have undetected untreated unmonitored high blood pressure. Cars don't get despondent and drug dependent because they can't afford treatment for pain or for acute mental health care.

    Universal coverage in every other nation in the industrialized world is far less costly, and has better outcomes of every type, than the 'got mine' money driven fee for service 'system' in the US.

    So true!  I had the bad luck this morning to see a FOX Financial Report on tv.  The guy said, "We don't have socialism here, and so I want a 60 year-old diabetic to be able to get his medications covered, I don't want a healthy 24 year-old to have to pay for it."

    I could hardly CONTROL myself!  What if that same "healthy 24-year-old" developed diabetes, cancer, broke a femur,, had kidney problems, had a baby with problems....?  The selfishness and stupidity of this is what I can't wrap my mind around.  Without considering the populace as a pool, no health care plan will work, because as long as it is market-driven, the sick, the injured, the elderly will not have access.  That is a FACT!

    My brother, who is a trump supporter, believes that if you don't have the foresight and the abilities to get a government job like he did, with excellent coverage, you probably deserve to waste away and die.  Oh.  By the way he is a BIG Christian.

    I no longer dread Thanksgivings or Christmases because I no longer invite them.  I've never been invited by them!


    The sister's spouse was in 2 unions and knew the top guys who did them favors above and beyond the usual as to medical care for the family. Votes solid Republican, believed the Iraq adventure had nothing to do with oil. College educated. Never talk politics anymore.

    Fact is 24 year olds are paying for your brothers retirement and health care, and ours or the Fox guys future Medicare, you need a pool of the whole population.

    "Five percent of the population accounts for almost half (49 percent) of total health care expenses."  The lower 50% of health care users accounted for only 3% of health care spending. It's the very nature of heath care insurance. Everyone needs to pay a relatively small amount yearly to prepare for the chance that they might be among the five percent that have a catastrophic accident or a severe medical condition and to have sufficient funds to pay for those extremely expensive conditions. Many people will not use the amount they pay each year but no one can know if they will use less than they pay or dozens  times more. No one but the top 1% could actually pay for a severe illness. The system is set up this way so that if you or me or your daughter got leukemia or a brain tumor etc. they could get treatment.

    It's Paretto's curve, by the way. And yeah, it's 5% to cover half the population (that doesnt need it) and 20% to cover 80% of the population) and 100% to cover everyon, including those who really really need it.

    We can base our system on missing the seriously sick and risky, and save a ton of money for more wars and tax breaks for vot suppressors and other whoop-de-do. I think Jesus said the poor and sick will be with us always, so we have an out clause. Wheeee! I like this curve, like a carnival slide.

    Perhaps I wasn't clear. I was trying to explain why a market-based approach to providing health care is inappropriate. HC is a different kind of product from, say, a car. With cars, we don't worry that working class people can't afford a car with all the bells and whistles, i.e., a Cadillac. Cadillacs are built for wealthy people in general, and there are new and used cars for people who can't afford a Cadillac. So the various levels of car are aligned with people's needs and ability to pay for them.

    With HC, this is not so. People who genuinely need the equivalent of Cadillac HC--very expensive, high tech-- are often the people who are least able to pay for it. It would be as if--somehow--car manufacturers built Cadillacs to sell to poor people. Put more simply, poorer people often have poorer health and need very expensive treatments and drugs to live. There is no health care in their "price range" as there is with other kinds of products or services, e.g., starter homes and apartments instead of mansions, row boats instead of yachts, the Gap and Goodwill instead of Armani, and so on.

    My thesis is that with these other kinds of products, there is generally a price point for every pocketbook. And you can often make do with less or spend time shopping for a bargain. This isn't true with HC where those who can least afford HC are the ones who need the most expensive HC. And when you need an operation, you're in no position, really, to spend time shopping for the "best deal," and it's somewhat hard to imagine an open-heart surgery that would be the equivalent of a Pinto.

    Maybe you forgo a private room with T.V., but you're not going to forgo anesthesia or fewer operating nurses in the OR than are needed or are wise for a successful outcome or sterilized instruments or anything else that might compromise the procedure and your health. No doubt there are ways to save money on certain aspects of a heart surgery. Eliminate certain "nice to haves" that aren't necessary strictly speaking. Or maybe you endure a little bit more pain to save on X. I don't know.

    All the examples I've read about where surgeons are making do with less are horrific, e.g., they run out of anesthetics, so the patient, literally, bites the bullet. 

    You make the perfect case for universal health care.  Only if there is a pool of the young and the old; the healthy and the ill; can health care dollars be spent effectively to cover everyone.  

    The problem is that republicans don't WANT to cover everyone.  They simply don't care about those who are in need because they see those who are in need as less than deserving.   They believe that because they have landed on 3rd base, they made it happen and everyone else is a loser.

    The whole concept of health-care consumers going on-line for pricing is ridiculous and ignorant.  A good health-care consumer might go to the Cleveland Clinic, UVA, Johns Hopkins, etc to find out what the latest thoughts are about their rare illness; they might check to see who has done the most of these procedures with the best outcomes, but NO ONE is going to find the cheapest alternative to the surgery that they need!

    These ridiculous GOP talking points make me want to confront them face-to-face.   They are just liars and scare-mongers.  I am so sick of it!

    Well stated. Repeal and replace is a Republican con job.

    ACA is a law, you can amend it or strike sections of it. You don't repeal the entire tax code or traffic laws to change them.

    The replace is the con. Snake oil. 

    It is eventually going to fail 56 million Americans with preexisting conditions as underfunded 'risk pools' don't work.

    The only goal of the GOP is eliminating taxes, especially the 3.8% unearned income tax on 250k incomes and up. The Center on Budget and Priorities says that tax break alone will, just for the richest 400 households, eliminate the entire ACA subsidies for just.under one million families in 20 states.

    Even with something as simple as a damaged arm it's nearly impossible to shop around. First you need to go to a doctor  (for free?) to get authorization for an X-ray. Is it a bad sprain, a torn ligament, a simple fracture, compound fracture? Do you just need to set and cast it or will it require surgery? Then you'd need to take the x-ray to a few doctors to get a price quote. Are they really going to examine that arm and x-ray for free to give you a quote? How long would it take to get a few doctor appointments to have them give you a price quote. You might be walking around with a broken arm for a few days just to see the doctors to give you the quote.It's not like calling a few garages and asking how much they charge to replace an alternator. Like Mike said, shopping around for some elective procedure might be possible but not when a person is in distress.

    And that doesn't even include the time it would take you to be in a position to evaluate what each doctor tells you. "Yes, you need this." "No, you don't need that." "Well, why is that?" "I'm sorry, I have someone waiting for me (with real work for me to do). Hope to see you when you've made your decision."

    Not impossible, but so many obstacles are in the way, especially if you're not well educated, or even if you are.

    I know there are people who are neurotic doctor see-ers, who go because they're lonely or need someone to "take care of them." But for the most part--especially men--don't relish the idea of going to the doctor.

    Yeah, we have this whole debate as if doctor visits are some sort of desirable leisure activity.  When I go to the doctor, it's serious enough that I needed to go to the doctor. My doctor's opening line is always, "Why didn't you call in days ago? Why did you suffer like this?" Because I was hoping it'd go away so I wouldn't have to be here is why!

    The only circumstances I can think of where a carte blanche approach would be a problem is 1) if my insurance covered elective procedures and the technology existed for me to painlessly optimize myself or 2) if I contracted some unknown or incurable condition and, to treat it, demanded limitless tests and experimental treatments. Well, issue 1 is not even in the cards.  As for issue 2 -- I'm all for it. In the event that only unlimited and unhindered treatment has any chance of saving me or alleviating me from pain, that is what I want.  Otherwise, I want the bare minimum to fix the problem and I mostly want the problem to fix itself.

    Brooks? Oh boy Oh boy...

    Dr. Brooks... Dr. David Brooks. Please report to the Vivarium. The orangutan cage is in need of cleaning.



    From: A Nose Embedded in the Noise





    Very funny. Also cheap. But that's OK. It's hard to resist the temptation to make fun of Brooks. He's such a maddening combination of clear gentility and cluelessness. Or as a friend says in terms dripping with sarcasm "A sociologist" !. Anyway , he's the only person I know  besides me who's actually read tKenneth Arrow on  why the invisible  hand metaphor is completely inapplicable to health care . Which is all demand, no supply.

    Like the guy who slips and falls off a cliff. Grabs a root  and dangles over a thousand feet of space. 

    Is anybody out there? He shouts

    A deep voice:

    I'm here my son

    Oh ,thank God .

    You're welcome.


    And who are you?

    I am the only person on whom you can rely  now.

    Thank you  thank you. And what are we going to do ?

    Let go of the root.

    Let go of the root?

    Let go of the root.

    And drop a thousand feet?

    Trust me, my son.

    And  let go of the root?




    Is anybody else out there?


    Latest Comments