That is entirely unlike the choice involved in buying something like a refrigerator and seriously skews the applicability of traditional free market thinking to the problem.
What you're referring to here is a high "price elasticity of demand", and markets are used to provision all sorts of goods for which this is true. Food, for example, is predominately provisioned by the market, and consumers are constantly faced with a choice of "buy food" or "starve to death".
And funnily enough, food is heavily government-subsidized and regulated. It's not really a free market either.
Also starving to death isn't really the same level of urgency as dying of a heart attack. There's a couple orders of magnitudes difference in the amount of time available to make a purchase decision, and the level of physical and mental stress you're under while making that decision.
Sure, but by this metric, there exists no free market on the planet. If your argument is that the healthcare market should look exactly like the food market does today (with subsidies and FDA regulations), most adherents of private healthcare would agree with you.
Privatization != "no welfare".
> Also starving to death isn't really the same level of urgency as dying of a heart attack. There's a couple orders of magnitudes difference in the amount of time available to make a purchase decision, and the level of physical and mental stress you're under while making that decision.
Okay, but not all healthcare is "dying of a heart attack". Obviously it's impossible to shop around for healthcare when you're having a heart attack, and that's exactly what insurance is for. After EMTALA, emergency care is free if you can't pay for it. This isn't really controversial. What's controversial is whether the same framework needs to be applied for planned care, like MRIs, colonoscopies, annual physicals, tonsillectomies, vaccines, prescription drugs, etc.
You may be surprised to know that 80% of hospitals in the US are non-profit. The evil profit motive isn't the reason their bills are so outrages.
In the 60's US healthcare expenditure was 5% of the economy and it is close to 20% right now.
Other than that I have yet to see a problem that isn't solved by this scheme: increase the set of choices available to the person, and in some corner cases give them money so they are free to choose.
You have to bear in mind that the alternative to the free market approach is for someone else to come in an constrain either the buyer and seller in some way. Ths may work for a limited time and for a specific set of buyers and sellers but it won't work beyond that. Given that people have diverse and evolving needs the forced solution causes long term harm. Then you'll need some kind of propoganda machine to either exagerate the good or down play the harm.
To be clear I do not believe that we have a free market in the US in a lot of areas and what people conceive of as free market -- or rather what has been shoved down their throat as free market is anything but that.
> increase the set of choices available to the person
This view abstracts behavior into that which is governed by "choice" and "coercion." I think this binary distinction is a fine model for a lot of domains, but a poor one for healthcare.
Choice feels much more like a spectrum in the domain of healthcare than it does in other domains. For a rough sample of points along this spectrum, you have "do this or die immediately," "do this or die in the next several months," "do this or suffer permanent disability," "do this or suffer great pain," "do this or suffer some probability of some amount of disability," "do this or suffer mild discomfort," "do this or be slightly annoyed."
The far-"left" part of this spectrum cannot ever realistically expand its set of choices. The most extreme version of this is that you're literally incapacitated and so can never make a choice of e.g. what hospital to go to and what treatment to administer no matter how many hospitals or treatments exist.
However, I think the same problem persists in less extreme states as well. Health ailments can directly impact a person's ability to choose to begin with in a variety of ways apart from just physical or mental incapacitation or degradation. Various treatments and healthcare choices impose switching costs that reduce a person's choice even when they are nominally capable of making one. For example, if a patient chooses a single hospital for a bout of appendicitis (when they are in such pain that they cannot make a choice in that moment other than to dial 911), even once the acute problem of surgery passes, they are unlikely to be able to choose a separate hospital for their post-surgery hospital stay without jeopardizing their health due to movement and continuity of care concerns.
Even in non-emergency cases there is an extreme information asymmetry and unpredictable path dependence (certain choices lock into other choices down the line but the nature of how they lock in may not be apparent at the beginning) that make it hard to formulate what "choice" would even look like.
In some ways, I personally view the need for coercion in the healthcare space as precisely a way to return to a world where modelling things as a binary distinction of "choice" vs "coercion" makes sense again.
Any plan for regulation of healthcare always must deal with a distinction between "elective" and "necessary," "non-essential" and "essential," "covered" and "not covered." That line is drawn precisely where we have a best guess that the model of a binary "choice" vs "coercion" holds vs the model of a spectrum of choice; the ideal is that care is provided to boost a patient back into a universe where the binary "choice" model is a reasonably good approximation.
More generally there is the problem that healthcare has a weird squeeze of monopolistic and non-monopolistic needs.
At a base level, in almost all domains including healthcare you need some amount of a regulatory framework to counteract the problem that market participants generally have an incentive to decrease the number of choices to the other side. I think you probably agree with "coercion" at this level (stuff like preventing collusion among players, certain stances on breaking up certain kinds of monopolies, etc.).
But the problem is that in healthcare you do want powerful players because there are benefits we want to reap from large players. Large drug makers are the only ones capable of performing substantial R&D and regional hospital and transportation networks are really the only ways you can get the necessary infrastructure and expertise to treat a lot of things. On the buyer side you want large insurance pools to even out risk for people.
But those all have inherent monopolistic tendencies that are exacerbated by the problems of choice that I mentioned.
Healthcare is not as fungible. Most medications have single-digit or even no effective alternatives.
For an illustrative example and the flip side of the coin, water is a good example of where unregulated markets do terribly (since you really do need water and can't substitute it with something else and it's also geographically heavily monopolistic). Potable water production and pricing in all developed countries is heavily regulated for good reason.
To the extent that healthcare isn't fungible, it's in very specific cases like end-of-life care, cancer, catastrophic surgery, and rare patented drugs. They also account for a tiny minority of overall health expenditure.
We can use different tools across both of those problems.
I don't think that's true for the U.S. Preventive care and planned care (if understood to be stuff like physicals, blood checks, screening, etc. including your examples of MRIs and primary care) as far as I remember is actually a small minority of healthcare expenditures (< 20% is a number I recall). I can try to root around for sources if you're curious, but I'm also curious where you're getting the impression of "vast majority."
> Antibiotics are fungible.
Not really. Definitely not in the same way that food is fungible. I assume you're talking about generics here? But generics again actually make up a startlingly small minority of healthcare expenditure costs despite making up the majority of prescriptions IIRC (again I'm going off memory but I think it was something like 75% of medication expenditures are due to medicines with no allowed generic alternatives).
Basically the places that you're suggesting the free market should best apply to are already the smallest slices of the healthcare expenditure pie (and also already quite effective in that limited domain).
But even stuff like hip replacement kind of is on a sliding scale. How much choice do you have if the alternative is death? What about cognitive impairment? What about blindness? What about impaired range of motion? What about mild discomfort? What about pure annoyance?
The point is, the free market should be plan A, and government programs should only exist to cover the gaps. Ultimately, people should be responsible for their own health, but in special cases, for no fault of their own issues, government should provide a backstop because it is the right thing to do.
Most taxpayers would agree with that. What they don't want is to be forced into something that is inferior and on top of that be penalized to subsidize someone else's premium.
Water is also a necessity as is food and you can have a free market for those.
The questions are: 1. Does the buyer have enough choices or alternatives to choose from when it comes to healthcare? 2. Do those who offer services have a monopoly on the service?
When you look at the US market you'll find that it doesn't meet those criterias. Market forces are prevented from acting and being able to reduce costs.
The fact that there is a captive audience, as you suggest, means that we cannot just shovel money into it. You end up exactly where you are. Costs go up because it is a necessity. Same reason food prices go up when there is a shortage. It is not a luxury.
To answer your point:
Most/all of the issues you raised are met by "pooling" aka insurance. The need arises at random and when it does there is a massive cost and you urgently need the service. This is what insurance is for.
What I was suggesting isn't that people go and pay the doctor out of pocket -- although they can. Rather that they purchase insurance. Those who can't get $$ indexed to some national average or whatever scheme you prefer. The point is everyone gets to purchase insurance if they so prefer.
The problem is that choice of insurance providers is artifically limited right now and the choice of healthcare providers is as well. So you have a system where you are captive to the need and those who provide the service have a monpoly. Naturally costs will rise. Putting political preassure on government to increase spending is easy way out but that will only shovel more money from the pockets of the many into the pockets of the few. In fact this was predicted when Medicare was first introduced, and here we are. It is not like doctors and providers magically became greedy capitalists in the last 40 years.
Also to be very clear this isn't an issue of "profits". Insurance companies don't have huge profit margins. They make their "wealth" by being a monopoly. The execs make their money on the rise in stock prices which isn't sensitive to their 3-5% profit margin.
i think that has some merit, but its hard for me to imagine that having the payer, be disconnected from the consumer can really create a stable market without heavy handed regulation.
i dont think insurance can really get you to an efficient market. health care is simply not a good where price and substitution apply as in many other markets. and rather than jumping through hoops to invent such a market lets agree that this an ethical part of social contract and manage it with the best technocratic solutions that our society can offer. E.G. NHS and NICE
I think the argument for single-payer is that the buyers of healthcare now have a monopsony to drive down costs with.
If concentration of power was good we'd just find a few wise persons to run the country and leave it all up to them. Other than the little snag, the sinle buyer argument would work.
Giving the individual the money to make their choices is a better way to ensure that people get what they want. A universal healthcare plan (irrespective of how it is funded) because different people -- or even the same person at different stages of their life -- don't have the same needs and the same risk profiles.
What makes you say this (RE water)?
Where I think we both agree is that the current disastrous mix of regulation and free markets in the present US system is a terrible solution.
You should look at historical healthcare expenditure by the US.
The problem isn't providing healthcare for all... it is the method and the cost. Universal payer is one way. It is not the best way and in fact Medicare is one reason costs are currently high. It is a bit like a car that used to get 30MPG and now gets 15MPG, and getting worse, and the solution being offered is for all of us to collectively chip in and buy gas for those who can't -- which is not tenable in the longterm because you're spending more and more of the GDP on transportation.
There are other ways of giving everyone coverage. One scheme, would be giving people money. Enough to cover average cost of healthcare plans and say education plans. The individual is then responsible for their own healthcare and has the funds to purchase health insurance. Then you have a healthy market and have mechanisms for the costs to come down.