Wednesday, June 14, 2017

Free market principle doesn't work for healthcare

U.S is the country truly believe in free market. In order for market to work, we need buyers sensitive to price and quality. In healthcare patients have limited ability to differentiate quality, and price shopping when a patient has life threatening disease, is, if not fantasy, very very difficult to do. Yes, you can price shop on small things, but for the big ticket surgeries and cancer treatments, how sensitive are you to price difference?

Free market does not work in healthcare. Not in a meaningful way. Add on to the complexity is the insurance market. For profit insurers are avoiding the sick and try very hard to sign up the healthy. Given the high cost of coverage, the young and healthy, if not working for large employer, try to avoid buying health insurance altogether. These behaviors make the US healthcare the most expensive in the world, while the results, judging from premature death rate and life expectancy, lagging OECD countries. What's the point of having a first rate medical research if you don't have access to healthcare?