[acslater00]

This is definitely true, so far as it goes. For many types of medical care it is unreasonable to expect a patient to act in a price setting capacity on the demand side.

However there are many types of medical care where that is very reasonable! LASIK and cosmetic surgery are classic examples because they elective and have historically not been covered by any insurance. You can see cosmetic surgery prices on ads in the NY city subway. Other kinds of care, such as dentistry, orthodontia, and vision services, also have very well-functioning markets, largely because insurance has historically not covered these things. Lots of non-urgent care (primary medicine, pediatrics, dermatology, psychiatrics, orthopedics, many surgeries) would probably have well-functioning markets if they were separated from the insurance system.

Now, that's all the cheap stuff. The expensive stuff (hospitalizations, cancers, chronic disease) that makes up the bulk of the US health expenditure - yeah. You can't expect a patient to come in and argue with the doctor about whether they really need that saline drip. But in a properly functioning market, there is another entity that can and should (and does) act as a price-setter mechanism on the demand side, and that is the insurance company.

The problems show up when 1. there is only one supplier in a market 2. the insurer is required by law to cover a certain thing 3. the supplier does not face a price control, and through (1) and (2) has unlimited pricing power

This is very acute with prescription drugs. Even generic drugs sometimes only have one supplier because the process of getting FDA approval is so onerous. It is also very acute when you have hospital and physician consolidation within markets, so that medical suppliers can effectively act as a cartel.

So - deal with the supply side problems. Stop the cartel behavior. Make it easier to sell prescription drugs and open hospitals. Allow consumers to act as consumers when it makes sense (by excluding basic medical services from the insurance system) and reserve insurance for the risky, expensive, hairy stuff. This is the path forward, and it all follows very neatly from basic supply and demand.

[speedplane]

I like your comparison to LASIK and cosmetic surgery, which I agree are functioning markets. But I'm not sure I agree with the rest.

There are two components to healthcare funding: (1) insurance which protects from the serious unforeseen health expenditures; and (2) healthcare, which includes routine health checkups, preventative care, and also, the very common ailments as one gets older. The two are somewhat inter-related (if you're generally unhealthy, you're more likely to have serious ailments), but makes sense to separate the two as separate products.

Even for relatively wealthy people, it's difficult to afford serious medical care out-of-pocket (it can cost >$20k/day in the hospital). So that's one product people can buy, with its own deductibles.

However, routine medical care that everyone needs no matter what is a different product, and the cost of that product could be more closely tied to the value of the services received.

Separating these two products may bring about more competition in each, and perhaps more efficiencies.

[smallnamespace]

One large problem with making preventative care a separate market is that people who are too poor to get preventative care and get sick usually end up in an ER, where the rest of society ends up footing the bill.

And a sick person in the ER can easily cost tens to hundreds of times as much as the preventative care would have been in the first place.

So making preventative care mandatory actually saves everyone a lot of money in the long run -- even if the preventative care is run extremely inefficiently and poorly, it would still be cheaper than what we have now, which is socialized medicine that only kicks in after people get incredibly sick and expensive to treat.