I have experienced this only as a programmer in the healthcare industry for 19 years realizing that a small fraction of what I did actually helped doctors take care of patients. It was soul crushing, but clearly I was only on the fringes of the full horror.
Healthcare needs far, far less government, but people think “reform” always means more government. So here we are.
Sorry but healthcare should not be a "free market". Sick people by definition are desperate and the asymmetry of information and power between a sick patient and a provider is too stark. Patients need reliable and timely access in proportion to their healthcare need, not in proportion to how much they can pay. Almost every OECD country has figured out how to do healthcare provision better and cheaper than us and they all use tightly regulated systems.
There are many many reforms one ought to do to the US healthcare system, making it a "free market" is not one of them. A free market already exists for purely elective and cosmetic procedures.
Most healthcare transactions are shoppable and not where someone is sick. There are a billion elective clinic visits each year. All of those can be handled in the market. The alternative is for a government bureaucrat to allocate clinic visits.
Also you're achingly close to the point: elective and cosmetic procedures function more like a free market, and interestingly enough the number of medical spas that offer botox and rhinoplasty have exploded and prices are no longer out of reach for middle class consumers.
You're making an argument that also easily applies to any skilled profession or trade, or do you not think the person facing an ex parte custody hearing is not desperate for legal representation, nor is the homeowner whose pipes explode at 3a on Christmas morning?
Insurance fundamentally makes sense for healthcare because people experience rare and expensive health events.
But a free market in insurance doesn't work because those who buy insurance disproportionately will tend to be those who require the most care. That drives the price higher (since the insurer expects to pay out more for those people). As the price rises, regular folks drop out of the insurance pool, making it even more adversely selected from the insurer's point of view. It's a death spiral until most of your population is uninsured except for a few very sick, very rich people.
Furthermore, healthcare is often purchased under duress, making it harder to price-shop.
Most healthcare transactions don’t need insurance. There are a billion elective clinic visits a year. Hundreds of millions of lab tests, x rays, and generic meds. These things are predictable and, if paid for without third parties, incredibly cheap.
The point of insurance is to pool risk for rare but catastrophic events. To have it pay for routine, predictable stuff is to court disaster and that is exactly what we have. The insurance industry developed in early modern times in the maritime field. Worldwide trade was just opening up and a ship returning with spices or gold or whatever was a huge windfall but some didn't return at all. Hence, investors tried to pool their risk.
This is a very easy problem to fix, and one that all other insurance types have fixed. You have two choices: just actually have an insurance mandate (pre birth) or repeal the law requiring treatment regardless of ability to pay.
If everyone gets insurance before they acquire expensive conditions, it works just fine.
This is how it works in most places re: auto insurance and allow for risk-based pricing. For those who are uninsurable a public insurance option (similar to state-offered auto insurance) would seem a reasonable option.
Well, for optional things like driving, wouldn't we want "uninsurable" (defined as no insurer willing to give them a policy to cover the harms they are likely to cause) people to actually not be driving though? They're incredibly dangerous to others!
For health insurance, it's obviously different in that you can't not do the thing that might incur liability (i.e. be alive!) but we can still get around the "uninsurable" thing in the traditional way, by requiring you get insurance before you acquire any pre-existing or conditions that make you "uninsurable", such as at or before birth.
Very good. Employer based health care is a huge problem. In addition to the points you’ve made, it also reduces labor mobility, creates dependency on the employer for “benefits” rather than what should be a simple “I work you pay me” relationship, and helps feed and grow HR gargoyle nests.
1) In order to collect on the debt they have to actually demonstrate it is a valid obligation. They have to demonstrate that the recipient was aware of the cost.
2) Due to 1, they usually just discharge the vast majority of the debt in exchange for some amount of payment. The money is in the reimbursements, not the cash pay.
Astounding misplaced faith in an organization that is utterly incapable of providing any good or service. Actually, government is good at one thing: Killing people. And yet here I am treated to many people convinced that such an organization should be in charge of your healthcare.
1. Government produces nothing; therefore, it has to steal resources from one person to provide to someone else. This immorality creates a corrosive effect upon society.
2. Insurance is not healthcare. What good is coverage when nobody takes it, or it covers so little to be useful.
3. There are only two ways to lower the price of anything: Increase supply, decrease demand. Government chooses the worse possible option: increase demand and restrict supply. Prices go up and then they blame the market. HaHa: the joke on you for putting us in charge.
4. The OECD has not figured out anything. Their great innovation of late is government imposed euthanasia. You have become too expensive to care for so we will eliminate the problem.
5. Finally, it is about ultimate control over the populace. Watch "The Net". You want Trump to control your healthcare, now image an actual Tyrant running your healthcare. Government PSA will instruct you to kill yourself for the greater good.
The only free market healthcare in the US is veterinary medicine. People want grandma kept alive at any cost, because they aren’t paying. But when they are told that Fluffy’s surgery will cost them $9000, they actually think about it.
You're not wrong. But then the question is, how do you get the benefit of a market (the value signal) without accepting consequences we're not willing to tolerate?
In particular: Most of us want everyone to receive care. Not gold-plated luxury care, but if they have a disease and it can be treated without utterly unreasonable effort, we want to do that.
The naive answer is UBI: "Everyone gets $X, and make sure X is enough to pay for health care." But this runs into a problem: Different people need wildly different levels of care. I know someone with hEDS, younger than me, who's in and out of the doctor's office constantly and in the hospital a couple times a year. Kids with congenital defects can rack up gargantuan bills before they're even born. And of course the costs absolutely skyrocket when people get old.
Meanwhile, here's me, healthy as a horse my entire life to date. If you made X high enough to pay for *everyone's* care, people like me could quit our jobs, and many would. And that's a disaster because being sick or old interferes with work a lot; those with the lowest health costs are generally the most productive workers. Society collapses if we leave the workforce.
You could put restrictions on that cash grant and say it can only be used for health care. But if you do that, your value signal is massively compromised. People have no incentive to comparison shop unless they're pushing up against that sky-high upper limit, and most of us won't come close.
There's also the problem of emergency care, where price shopping is seldom an option. If I'm having a heart attack, I take whatever ambulance and paramedics I get.
Thinking through this, I guess I'd lean toward trying to identify areas where we don't have these wildly different levels of need (primary care, elective surgery, widely used medications, etc.) and opening those up, with a modest "basic care fund" for everyone. For the rest, just bite the bullet and have the government run it directly. No value signal, but also no private rent-seeking.
There's also the question of how to fund medical and pharmaceutical research, but that's a whole other can of worms.
Excellent exposition. I am not a medical professional but a finance type that did run a large employer based plan for a number of years. I saw all of this and it has gotten worse since I retired.
Last year I lived in France. This year I’m working (as a cardiologist) in New Zealand. Both countries have their problems but both cover all their citizens (including expats) at a fraction of the cost with similar or better outcomes. And neither is as complicated as this.
You're comparing countries of roughly 5 million and 68 million people to a country of 340 million people with vastly different demographics, geography, immigration levels, legal systems, and disease burdens. The question isn't whether France or New Zealand can run a single-payer system. It's whether the U.S. could adopt one without major tradeoffs.
The U.S. already spends heavily on healthcare because Americans are wealthier, consume more care, have higher obesity rates, and use far more expensive medical technology and pharmaceuticals. We also lead the world in much of the medical research and drug development that other countries benefit from while paying lower prices. France and New Zealand can negotiate aggressively because they're relatively small buyers in a global system where much of the innovation cost is borne elsewhere.
More importantly, "everyone is covered" doesn't automatically mean better access. Many single-payer systems achieve cost control through rationing, waiting lists, limited provider choice, and lower compensation for doctors and specialists. If the goal is affordable, accessible healthcare, the real debate is whether the U.S. should reform its existing system or replace it entirely, not whether a country of 5 million people can do something that a country of 340 million can.
I believe both countries avoided the political nonsense of making health insurance/healthcare expenditures a tax-advantaged responsibility of employers.
I suspect they also have lower rates of obesity and diabetes than the current US population.
“Patients should know prices before care whenever possible.” I appreciate the “patients should know” phrasing. It’s so key. Prices can be found for some routine care, but it sure ain’t easy! However, it would help to get the ‘whenever possible’ out of that sentence. A free market can’t succeed when price information is concealed from one party. By including that phrase, we open the door to a thousand loopholes. The better way to say it might be ‘except in rare circumstances.’ This aligns with the observation that most healthcare services are not heroic lifesaving or treatment, but boringly routine.
I didn’t know that doctors were paid differently by insurance companies (public or private) based on whether they were affiliated with a hospital or not, but even without that, there’s a clear patient benefit to having one’s doctor having the lab and radiology right there. Years ago I went to a private practice doctor who sent me across town to a shitty Quest diagnostics to get routine labs, and after that experience I changed to a doctor with a bigger, hospital affiliated practice. These arrangements tend towards economies of scale just in the patient care infrastructure even neglecting the economies of scale in the financial infrastructure, which I imagine is substantial. If reimbursements are higher that just is one more weight on the scale.
Healthcare will inevitably be rationed — no healthcare system can provide immediate care to everyone at all times for every ailment. So the question is pretty simple: do we want to ration based on need, ability to pay, or something else?
Outside of the Emergency Room, the American system rations based on ability to pay. It’s not a “free market” but it’s certainly driven primarily by profits.
No one wants their heart surgery done by the cheapest doctor. Crazy Harry’s Hair Transplants and Heart Surgery is definitely not a place that I want to entrust my life too.
Edit needed: “EThe patient is left with premiums, deductibles, copays, coinsurance, networks, and surprise bills.”
I have experienced this only as a programmer in the healthcare industry for 19 years realizing that a small fraction of what I did actually helped doctors take care of patients. It was soul crushing, but clearly I was only on the fringes of the full horror.
Healthcare needs far, far less government, but people think “reform” always means more government. So here we are.
Sorry but healthcare should not be a "free market". Sick people by definition are desperate and the asymmetry of information and power between a sick patient and a provider is too stark. Patients need reliable and timely access in proportion to their healthcare need, not in proportion to how much they can pay. Almost every OECD country has figured out how to do healthcare provision better and cheaper than us and they all use tightly regulated systems.
There are many many reforms one ought to do to the US healthcare system, making it a "free market" is not one of them. A free market already exists for purely elective and cosmetic procedures.
Most healthcare transactions are shoppable and not where someone is sick. There are a billion elective clinic visits each year. All of those can be handled in the market. The alternative is for a government bureaucrat to allocate clinic visits.
Also you're achingly close to the point: elective and cosmetic procedures function more like a free market, and interestingly enough the number of medical spas that offer botox and rhinoplasty have exploded and prices are no longer out of reach for middle class consumers.
You're making an argument that also easily applies to any skilled profession or trade, or do you not think the person facing an ex parte custody hearing is not desperate for legal representation, nor is the homeowner whose pipes explode at 3a on Christmas morning?
Insurance fundamentally makes sense for healthcare because people experience rare and expensive health events.
But a free market in insurance doesn't work because those who buy insurance disproportionately will tend to be those who require the most care. That drives the price higher (since the insurer expects to pay out more for those people). As the price rises, regular folks drop out of the insurance pool, making it even more adversely selected from the insurer's point of view. It's a death spiral until most of your population is uninsured except for a few very sick, very rich people.
Furthermore, healthcare is often purchased under duress, making it harder to price-shop.
I don't see any easy solutions. Right now we have an unholy hybrid of government and private sector actors which doesn't have the advantage of either approach. Given the complexity of getting healthcare right, perhaps we should just copy countries which do it well such as Switzerland: https://www.nytimes.com/interactive/2017/09/18/upshot/best-health-care-system-country-bracket.html
Most healthcare transactions don’t need insurance. There are a billion elective clinic visits a year. Hundreds of millions of lab tests, x rays, and generic meds. These things are predictable and, if paid for without third parties, incredibly cheap.
The point of insurance is to pool risk for rare but catastrophic events. To have it pay for routine, predictable stuff is to court disaster and that is exactly what we have. The insurance industry developed in early modern times in the maritime field. Worldwide trade was just opening up and a ship returning with spices or gold or whatever was a huge windfall but some didn't return at all. Hence, investors tried to pool their risk.
Exactly - consumers understand this on some level, nobody runs their oil change or air filter change through their auto insurance.
So what happens when a 10-year-old gets cancer? Lots of tests and procedures to pay for.
Insuring a 10 year old for major illnesses is very very cheap. The healthcare coat problem is largely:
1. Bureaucratic bloat as OP describes
2. People live longer and accumulate lots of expensive care in their last years of life
3. People over medicalizing those last years instead of hospice
4. New awesome drugs that are expensive
Add in chronic disease (which is spreading to younger segments of the population) and you have it. MAHA
Children are among the cheapest patients to insure, precisely because serious disease and illness are so rare.
This is a very easy problem to fix, and one that all other insurance types have fixed. You have two choices: just actually have an insurance mandate (pre birth) or repeal the law requiring treatment regardless of ability to pay.
If everyone gets insurance before they acquire expensive conditions, it works just fine.
This is how it works in most places re: auto insurance and allow for risk-based pricing. For those who are uninsurable a public insurance option (similar to state-offered auto insurance) would seem a reasonable option.
Well, for optional things like driving, wouldn't we want "uninsurable" (defined as no insurer willing to give them a policy to cover the harms they are likely to cause) people to actually not be driving though? They're incredibly dangerous to others!
For health insurance, it's obviously different in that you can't not do the thing that might incur liability (i.e. be alive!) but we can still get around the "uninsurable" thing in the traditional way, by requiring you get insurance before you acquire any pre-existing or conditions that make you "uninsurable", such as at or before birth.
Yep, looks like that's how it works in Switzerland.
Very good. Employer based health care is a huge problem. In addition to the points you’ve made, it also reduces labor mobility, creates dependency on the employer for “benefits” rather than what should be a simple “I work you pay me” relationship, and helps feed and grow HR gargoyle nests.
Another aspect that everyone forgets is that you don't have to pay your medical bills.
Like really. If you get a big hospital bill just don't pay it. There is a near 0% chance they are going to come after you.
Providers want third party payments and treat cash pay from individuals as a rounding error.
Absolutely incorrect
Or they will settle for a small portion of the absurd bill.
Don't count on it.
Actually you really can count on it.
1) In order to collect on the debt they have to actually demonstrate it is a valid obligation. They have to demonstrate that the recipient was aware of the cost.
2) Due to 1, they usually just discharge the vast majority of the debt in exchange for some amount of payment. The money is in the reimbursements, not the cash pay.
Astounding misplaced faith in an organization that is utterly incapable of providing any good or service. Actually, government is good at one thing: Killing people. And yet here I am treated to many people convinced that such an organization should be in charge of your healthcare.
1. Government produces nothing; therefore, it has to steal resources from one person to provide to someone else. This immorality creates a corrosive effect upon society.
2. Insurance is not healthcare. What good is coverage when nobody takes it, or it covers so little to be useful.
3. There are only two ways to lower the price of anything: Increase supply, decrease demand. Government chooses the worse possible option: increase demand and restrict supply. Prices go up and then they blame the market. HaHa: the joke on you for putting us in charge.
4. The OECD has not figured out anything. Their great innovation of late is government imposed euthanasia. You have become too expensive to care for so we will eliminate the problem.
5. Finally, it is about ultimate control over the populace. Watch "The Net". You want Trump to control your healthcare, now image an actual Tyrant running your healthcare. Government PSA will instruct you to kill yourself for the greater good.
The only free market healthcare in the US is veterinary medicine. People want grandma kept alive at any cost, because they aren’t paying. But when they are told that Fluffy’s surgery will cost them $9000, they actually think about it.
You're not wrong. But then the question is, how do you get the benefit of a market (the value signal) without accepting consequences we're not willing to tolerate?
In particular: Most of us want everyone to receive care. Not gold-plated luxury care, but if they have a disease and it can be treated without utterly unreasonable effort, we want to do that.
The naive answer is UBI: "Everyone gets $X, and make sure X is enough to pay for health care." But this runs into a problem: Different people need wildly different levels of care. I know someone with hEDS, younger than me, who's in and out of the doctor's office constantly and in the hospital a couple times a year. Kids with congenital defects can rack up gargantuan bills before they're even born. And of course the costs absolutely skyrocket when people get old.
Meanwhile, here's me, healthy as a horse my entire life to date. If you made X high enough to pay for *everyone's* care, people like me could quit our jobs, and many would. And that's a disaster because being sick or old interferes with work a lot; those with the lowest health costs are generally the most productive workers. Society collapses if we leave the workforce.
You could put restrictions on that cash grant and say it can only be used for health care. But if you do that, your value signal is massively compromised. People have no incentive to comparison shop unless they're pushing up against that sky-high upper limit, and most of us won't come close.
There's also the problem of emergency care, where price shopping is seldom an option. If I'm having a heart attack, I take whatever ambulance and paramedics I get.
Thinking through this, I guess I'd lean toward trying to identify areas where we don't have these wildly different levels of need (primary care, elective surgery, widely used medications, etc.) and opening those up, with a modest "basic care fund" for everyone. For the rest, just bite the bullet and have the government run it directly. No value signal, but also no private rent-seeking.
There's also the question of how to fund medical and pharmaceutical research, but that's a whole other can of worms.
https://offlabelideas.substack.com/p/universal-healthcare-the-american?r=5usio6&utm_medium=ios
Excellent exposition. I am not a medical professional but a finance type that did run a large employer based plan for a number of years. I saw all of this and it has gotten worse since I retired.
Last year I lived in France. This year I’m working (as a cardiologist) in New Zealand. Both countries have their problems but both cover all their citizens (including expats) at a fraction of the cost with similar or better outcomes. And neither is as complicated as this.
You're comparing countries of roughly 5 million and 68 million people to a country of 340 million people with vastly different demographics, geography, immigration levels, legal systems, and disease burdens. The question isn't whether France or New Zealand can run a single-payer system. It's whether the U.S. could adopt one without major tradeoffs.
The U.S. already spends heavily on healthcare because Americans are wealthier, consume more care, have higher obesity rates, and use far more expensive medical technology and pharmaceuticals. We also lead the world in much of the medical research and drug development that other countries benefit from while paying lower prices. France and New Zealand can negotiate aggressively because they're relatively small buyers in a global system where much of the innovation cost is borne elsewhere.
More importantly, "everyone is covered" doesn't automatically mean better access. Many single-payer systems achieve cost control through rationing, waiting lists, limited provider choice, and lower compensation for doctors and specialists. If the goal is affordable, accessible healthcare, the real debate is whether the U.S. should reform its existing system or replace it entirely, not whether a country of 5 million people can do something that a country of 340 million can.
I believe both countries avoided the political nonsense of making health insurance/healthcare expenditures a tax-advantaged responsibility of employers.
I suspect they also have lower rates of obesity and diabetes than the current US population.
You might like this one
https://danjschmidt.substack.com/p/coding-mastodons-doctor-story?utm_source=publication-search
“Patients should know prices before care whenever possible.” I appreciate the “patients should know” phrasing. It’s so key. Prices can be found for some routine care, but it sure ain’t easy! However, it would help to get the ‘whenever possible’ out of that sentence. A free market can’t succeed when price information is concealed from one party. By including that phrase, we open the door to a thousand loopholes. The better way to say it might be ‘except in rare circumstances.’ This aligns with the observation that most healthcare services are not heroic lifesaving or treatment, but boringly routine.
I didn’t know that doctors were paid differently by insurance companies (public or private) based on whether they were affiliated with a hospital or not, but even without that, there’s a clear patient benefit to having one’s doctor having the lab and radiology right there. Years ago I went to a private practice doctor who sent me across town to a shitty Quest diagnostics to get routine labs, and after that experience I changed to a doctor with a bigger, hospital affiliated practice. These arrangements tend towards economies of scale just in the patient care infrastructure even neglecting the economies of scale in the financial infrastructure, which I imagine is substantial. If reimbursements are higher that just is one more weight on the scale.
Healthcare will inevitably be rationed — no healthcare system can provide immediate care to everyone at all times for every ailment. So the question is pretty simple: do we want to ration based on need, ability to pay, or something else?
Outside of the Emergency Room, the American system rations based on ability to pay. It’s not a “free market” but it’s certainly driven primarily by profits.
No one wants their heart surgery done by the cheapest doctor. Crazy Harry’s Hair Transplants and Heart Surgery is definitely not a place that I want to entrust my life too.
I’m not wasting my time…
What does this have to do with the critique of our insanely over-regulated healthcare system?
The market wouldn’t work..
Based on what?