Quote:
Originally posted by Tyrone Slothrop
Health care involves buyers and sellers who have radically different levels of information, in circumstances approaching if not defining duress. It should be no surprise that markets don't work well in these sorts of situations. You can try to ameliorate these problems by negotiating insurance contracts, but it only helps somewhat, and creates massive incentives for gamesmanship as the insurer and provider fight over the application of coverage. We have compounded these problems by incenting (I hate that word) employers to purchase group coverage, further removing the customer from the decision about what to purchase.
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1) Buyers and sellers always have different levels of information, but that doesn't mean we should price-regulate in all circumstances. There is certainly an argument for it in some instances, e.g., emergency room care, and perhaps an argument for quality regulation (i.e., licensing requirements), but not wholesale. Even with a PPO plan, I shop around both for credentials and for price (i.e., are they in the plan). Why can't other consumers do that--it's 20% of the frickin' economy; people drive 5 miles to save a nickel a gallon.
2) Insurance contracts and employer tax incentives create the problem, and are not themselves market failure, but regulatory failure. I agree, however that they contribute to the problem. Take away the tax incentives then.
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