Health care is a shot in the dark

In one of the better pieces of headline writing for the Washington Post, “Doctors vs. dishwashers,” Sarah Kliff reports on a new survey comparing the time devoted to shopping for healthcare and doctors versus more mainstay consumerist items. Unsurprisingly, people spend more time doing detailed research before purchasing refrigerators and mid-sized sedans than they do with doctors or health plans. Yet Kliff surprises me by being, well, surprised:

This is surprising in the context of what a big chunk of consumer budgets go toward health care: The average family with employer-sponsored insurance spends $10,944 on premiums each year. But it’s perhaps explained by one of the survey’s other findings.

…which is that people are far less confident when in their ability to discriminate on pricing in health care services. Yet I would think that Kliff should understand that people are less confidant shopping for health care because health care pricing is extremely opaque for several reasons.

An exercise in understanding how to frame such a survey can be played out in many different ways. One angle I’d like to mention is how this reminds me of discussions on introducing “free market” mechanisms to cure one’s pet “ill’s” regarding the American health care system.

I had one such exchange at a town hall meeting with my congressional representative, where I asked him what his response was to criticism that the Rep. Ryan Medicare proposal merely shifts costs from the federal government to seniors. He touted the drop in price of Lasik procedures as an example of how seniors shopping for their own health care would bring down the growth of costs. I pointed out to him that, indeed, health care procedures like Lasik are similar to other durable consumer products and services, but only in one crucial aspect: they’re non-essential. Yet trying to predict the future utility of a present purchase in finding a family doctor (or for that matter, insurance) is quite different because that future utility is inherently unpredictable. Of course this isn’t even mentioning the expertise gap between doctor and patient. His counter was that his preferred policy would change this aspect by removing the government as a wall between physician and patient. Then he moved on, leaving me unable to point out that his insurance would still be a ‘middle-man’, and that his counter was largely irrelevant and misleading.

There are those who, like my representative, choose to believe that that the only real problem is government interference (whether state or federal is rarely distinguished), which is to say that if you could take government out of health care then an economically rational (or a least more functional) system would emerge. For several reasons, but mainly for one I outlined above, I’m highly skeptical of the probability of a result that would please most people. You could remove all the things you don’t like – whether it’s government, for-profit business, even insurance – and you still wouldn’t remove the inherent uncertainty in determining your future health care use. In my mind the only people who benefit (or at the very least are left unharmed) from such a system are those who have the money to compensate for the probable monetary shocks that come with such uncertainty.

I have yet to see a free-market proposal that actually addresses this feature in a world where health care is to be the same type of consumer service as computers. The fact still remains that the details of our future health consumption is largely a shot in the dark, which seems to me to be a hindrance to the possibility of the considerable benefits that a free-market model otherwise provides for non-essential services.


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