Healthcare industry a monopoly

[ag]

Well, I'm not surprised. Personally, I think I'd find a completely private system far more agreeable if it was backed by rigorous anti-trust laws. Small business is the lifeblood of capitalism.

The problem with healthcare is that demand for it is inelastic and thus under any conditions a just price could never exist.

1. Actually, demand for health services is quite elastic.

2. What is this "just price"? This is the first time I hear of smthg like that.

The problem w/ healthcare is asymmetric information. That's the true problem.

[ag]

Well, I'm not surprised. Personally, I think I'd find a completely private system far more agreeable if it was backed by rigorous anti-trust laws. Small business is the lifeblood of capitalism.

The problem with healthcare is that demand for it is inelastic and thus under any conditions a just price could never exist.

1. Actually, demand for health services is quite elastic.

2. What is this "just price"? This is the first time I hear of smthg like that.

The problem w/ healthcare is asymmetric information. That's the true problem.

1. When you make a counter claim you should provide some supporting details, and sources.

Go to scholar.google.com and google elasticity demand health services. You will find as many papers as you'd like that that estimate this elasticity as statistically distinct from zero. Not that it matters: elasticity of demand is not the major issue here, unless, of course, there is truly a monopoly in health services provision (in wich case the problem is the monopoly, not the elasticity). Asymmetric information, though, is THE problem.

[ag]

Well, if you bring in a multi-payer system, the government could set a fair price anyway.

No, it couldn't. Because there is no such thing Pricing at marginal cost is not intrinsically fair - it may be efficient, but it is no more "fair" than anything else.

[ag]

1. Actually, demand for health services is quite elastic.

Yes, but that very frequently involves the death of the person who is providing the elasticity.

Every human decision without exception leads to death - in the end we all will be up there. But the bulk of healthcare choices are not about immediately life-threatening situations. And even if the issue is life and death, there may be other considerations involved. Especially given the intrinsic asymmetric information between the patient and the doctor: the patient has no way of knowing, whether the procedure is being recommended because it is truly necessary or because, though it is no better than the cheaper alternative, it would result in a higher income for the medical provider. So, even there, the demand might be quite elastic.

[ag]

Well, I'm not surprised. Personally, I think I'd find a completely private system far more agreeable if it was backed by rigorous anti-trust laws. Small business is the lifeblood of capitalism.

The problem with healthcare is that demand for it is inelastic and thus under any conditions a just price could never exist.

1. Actually, demand for health services is quite elastic.

2. What is this "just price"? This is the first time I hear of smthg like that.

The problem w/ healthcare is asymmetric information. That's the true problem.

1. When you make a counter claim you should provide some supporting details, and sources.

Go to scholar.google.com and google elasticity demand health services. You will find as many papers as you'd like that that estimate this elasticity as statistically distinct from zero. Not that it matters: elasticity of demand is not the major issue here, unless, of course, there is truly a monopoly in health services provision (in wich case the problem is the monopoly, not the elasticity). Asymmetric information, though, is THE problem.

Yes.. if we were just all fed your opinion on healthcare, we'd have no problems!

Please, read what I say. There are humongous problems w/ healthcare. They are just not the problems that people have been mentioning here. Asymmetric information - not mentioning it in the context of healthcare means not talking about healthcare, period. It's the big fat elephant smack in the middle of your living room. The rest is minor.

[ag]

Asymmetric information is the main justification for mandates, as well as for Medicare. These arguments have been hashed out already many times. The patient knows more about their health than the insurance company. In a voluntary insurance market, the pool of participants will be disproportionately unhealthy. This will raise health insurance costs compared to what they would otherwise be. In extreme cases, higher costs in turn will lead more people, again the relatively healthy, to drop out. And so on and so on, until only the "lemons" (the sickest) are left. Then the insurance companies go bankrupt.

This is referred to as the Lemon problem, first articulated by George Akerlof in 1970, and it is Business 101.

This is one of the problems. But not the only one. There is the expert problem: the doctor knows more than either the patient, or the insurer, and he is also the medical service provider. And there is the moral hazard problem - if everyone is insured they might be using the services more than they'd want to (and then would be optimal) if they are not insured (whether because of more risky behavior, or for whatever other reason). This is a humongous bundle of asymmetric information problems. Each of which is orders of magnitude more important that whatever had been previously mentioned in this thread.