Price and Quality in medical setting
Posted by BCRinFremont 5 years, 5 months ago to Economics
I saw a news item today about requiring hospitals to disclose prices and I began preparing a long and drawn out economic analysis of price, quality, and results expected. Instead of posting what could be a doctoral thesis in economics, I would like to present a small template to the masters in Galt’s Gulch and see if anyone will end up where I ended up. Here goes!
Let it be given that healthcare is a Right. (Analysis without this “given” is also acceptable and maybe necessary.) Please address the following 4 scenarios:
1. High priced care with bad outcomes.
2. Low priced care with bad outcomes.
3. Low priced care with good outcomes.
4. High priced care with good outcomes.
The question posed is, “How will a healthcare system settle starting with equal amounts of these 4 types of care?”
This is kind of like determining the number of rabbits it takes to have a healthy fox population.
Let it be given that healthcare is a Right. (Analysis without this “given” is also acceptable and maybe necessary.) Please address the following 4 scenarios:
1. High priced care with bad outcomes.
2. Low priced care with bad outcomes.
3. Low priced care with good outcomes.
4. High priced care with good outcomes.
The question posed is, “How will a healthcare system settle starting with equal amounts of these 4 types of care?”
This is kind of like determining the number of rabbits it takes to have a healthy fox population.
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Thanks!
1. High priced care with bad outcomes will become higher priced care with even worse outcomes.
2. Low priced care with bad outcomes will become higher priced care with even worse outcomes.
3. Low priced care with good outcomes will become higher priced care with even worse outcomes.
4. High priced care with good outcomes will became higher priced care with even worse outcomes.
:) See the pattern? If government forces prices down - outcomes will be even worse as the incentive will be removed to do better.
But, without know in what ways and how much the government would interfere hard to tell. As they have done thus far - I still think higher prices and worse service. But if they lift a heavier hand than they have to this point in forcing prices down - I think we will have our own 3rd world medicine - if not worse.
Forced lower prices will kill R&D and qualified medical staff. It will drive the qualified people out and cause shortages then long delays to get any quality of care.
Pretty much - read Atlas Shrugged.
Without knowing the real costs involved at every level from top to bottom - no one can make any rational decisions about what is too much at what point. Those running their businesses have to make those decisions and the free market has to let them compete - which is currently not the case. In other words. If a convenience store sells gas - even it they are not regulated themselves, but the fuel producers are - then the effect of government intervention cascades to the convenience store. The current health care system is so filled with regulatory interference that we really have no idea what the expenses of healthcare really are. The overhead I'm sure is insane. Depending on ROI on equipment, the many insurances that must be paid, wacko judges awarding insane payouts if frivolous cases, the R&D costs (including FDA regulation and related costs) can drive normal prices through the roof.
I always say - unless you are the business owner and know the details of the finances and the decisions behind them - it is not reasonable to assume any knowledge of why they have the prices they do. Someone glancing in from the outside has no bases for any opinion of the actual prices charged. You must know more.