ray

Cost has got to be a factor in health care decisions. The most important way for cost to be a factor is for the consumer to have skin in the game.

I understand. And I suppose theoretically you're right. Insurance coverage does take price negotiation out of the equation.
And yet, in countries with 100% coverage, health care costs are as little as 3/5 of the GDP of the US , and individual procdures are often less than about half the cost ...There is no cost squabbling between patients and doctors... and yet they manage that enormous efficiency.
There is a real dignity between a doctor and patient when the only thing that matters is the ability to improve the patients life. There's not much dignity in foregoing medical care because one can't afford to take care of one's self.
Incidentally I'm in for an MRI on my right knee August 3 or 4 th as I have a misaligned knee that has been deteriorating since I was 30. Mostly because it didn't interfere with my sports played or cause unbearable pain I simply coped. But as I age its become rather constant with the pain, and with the new procedures my doctor thinks it might be time. If I do need to replace my knee, it won't cost me anything. So the decision to have the operation will be based only on the potential outcome and potential discomfort...
Well, and whether or not an operation is actually the right solution. There are three other possibilities

steve

Easy question: is the US medical insurance market a "free market?" If yes, then address the points previously made. If no, then please tell me when it was a free market and how costs have been impacted since the government got involved.

Steve, what I was pointing to was that there is evidence within the US system that increased competition there is not increased price competition or lower medical cost inflation. So, I ask you: Is more entrants in a market More Competition?
I pointed to States like Illinois where there are as many as 20 insurance companies competing for business. Compared to states with only a couple ...and yet there has been no significant difference in the inflation rates or the actual costs of states with lots of entrants and those with few.

You seem to think there must be absolute perfect free market for competition to take hold. I don't know if a careful examination of any market would ever point you to an industry where there was such a thing as a completely "Free Market" in your mind. (You sound like a communist claiming that communism hasn't succeeded becasue we've never achieved perfect communism,)
There are encumbrances on every market. Some of it may be regulatory. (But then don't you wish that certain encumbrances of regulation had remained on the people of Goldman Sachs et al?....) Generally though the regulations on health insurers don't stop them from marketing themselves on price advantage do they?

I agree with you that allowing interstate insurance competition would likely increase the numbers of insurance companies competing in some states. I simply point to the current evidence that there is no real track record of an increased number of insurance companies affecting price or inflation.
Moreover, I can point to dozens of health systems with only 1 entrant who have controlled costs more effectively. .

rickyp wrote:steve

Easy question: is the US medical insurance market a "free market?" If yes, then address the points previously made. If no, then please tell me when it was a free market and how costs have been impacted since the government got involved.

Steve, what I was pointing to was that there is evidence within the US system that increased competition there is not increased price competition or lower medical cost inflation. So, I ask you: Is more entrants in a market More Competition?

Richard, you do like to include names, don't you? Does it help make your point, Richard? Apparently not.

For example, Richard, read your first sentence. Does it: 1) read coherently? 2) answer the question?

Of course, the answer to both, dear Richard, is "no."

I will answer your question when it makes sense (are you from Russia? What does ". . . is more entrants in a market more competition" supposed to mean?) AND when you answer mine.

You have railed about the failure of the "free market" in the US with regard to medical insurance. I have asked you repeatedly how we could possibly know that since our market is heavily regulated. You have NEVER responded directly to that.

I pointed to States like Illinois where there are as many as 20 insurance companies competing for business. Compared to states with only a couple ...and yet there has been no significant difference in the inflation rates or the actual costs of states with lots of entrants and those with few.

Illinois? Really? You do know that it is nearly as Democratic (big "D") as MA, right? Where Democrats flourish, so do regulations on markets. If you can establish that 20 insurance companies freely compete without the heavy hand of government in IL, then you'll have a great point. Feel free to prove your point.

The world awaits. This article might help you.

You seem to think there must be absolute perfect free market for competition to take hold.

No, but I do maintain we have nothing approaching a free market in medical insurance. The easiest way to demonstrate that is to ask if companies can sell across State lines. The answer is "no." Why is that? Answer: federal law.

I don't know if a careful examination of any market would ever point you to an industry where there was such a thing as a completely "Free Market" in your mind. (You sound like a communist claiming that communism hasn't succeeded becasue we've never achieved perfect communism,)
There are encumbrances on every market. Some of it may be regulatory. (But then don't you wish that certain encumbrances of regulation had remained on the people of Goldman Sachs et al?....) Generally though the regulations on health insurers don't stop them from marketing themselves on price advantage do they?

So, you would say there were no restrictions on Goldman-Sachs, et al?

YOU are the one who claims, over and over again, that the "free market has failed." All I say is "How would you know? We don't have a free market."

If you don't mean to argue that "the free market doesn't work" than stop saying it.

I agree with you that allowing interstate insurance competition would likely increase the numbers of insurance companies competing in some states. I simply point to the current evidence that there is no real track record of an increased number of insurance companies affecting price or inflation.

So, competition can work in some areas, but not medical insurance? You know this based on the history of competition in the highly-regulated medical insurance field? So, the experience we have with Wal-Mart, amazon.com, etc. is utterly meaningless when it comes to healthcare? How do you know? Have you ever considered that it might be that some of the regulations discourage or impede competition?

So, competition can work in some areas, but not medical insurance?

Based on the evidence presented by comparing the insurance rates, and health cost inflation rates in states with lots of competitive players versus those with few .... nope. Doesn't seem to ...
If you don't buy into the concept that the number of companies competing within a market is a measure of greater or lesser competition ...please explain why not. Why would a state with 15 insurance companies operating within it not have a more competitive marketplace then one with 2? Why wouldn't one or more of the 15, start using price points as a way to differentiate themselves, ala Walmart?

Probably because the whole transactional type that defines a use of a medical service, or the choice of an insurance plan is one helluva lot more complicated than choosing where to buy the next Tom Clancy novel or which kind of toothpaste to pick up when out shoppoing...

rickyp wrote:

So, competition can work in some areas, but not medical insurance?

Based on the evidence presented by comparing the insurance rates, and health cost inflation rates in states with lots of competitive players versus those with few .... nope. Doesn't seem to ...

Your ignorance knows no bounds.

You have babbled incessantly about the failure of "free markets." I have asked for evidence that something resembling a "free market" exists in health insurance. Your response?

"Competition doesn't work."

Based on?

"Historical evidence."

Where is there a free market for health insurance?

"Competition doesn't work."

Can't you see you've made this whole thing up? You claim the "free market" doesn't work for healthcare, but you know there's no such thing--there is nothing approaching a "free market" when it comes to health insurance.

If you wanted to be honest, there are many answers you could give, but you keep trotting out the same trope, even knowing it to be (at best) an exaggeration.

If you don't buy into the concept that the number of companies competing within a market is a measure of greater or lesser competition ...please explain why not.

Funny.

The guy who steadfastly refuses to cite ONE "free market" for healthcare wants me to prove competition works.

Let's make it easy: how many States have laws that force insurance companies to take applicants with pre-existing conditions?

Would that not artificially drive up prices? The answer to anyone who knows anything about insurance or economics would be a resounding "YES!!!!"

Imagine a market for auto insurance where companies had to insure pre-existing conditions. Get into an accident without insurance? No problem--just buy it retroactively! Buy the lowest deductible available and get all the bells and whistles.

Would that drive up auto insurance costs? You betcha.

So, why wouldn't it drive up medical insurance?

Every state has regulations, some quite extensive, that healthcare providers have to obey. That's not a free market. That inhibits competition. That drives up costs.

The question remains:

Doctor Fate wrote:You have railed about the failure of the "free market" in the US with regard to medical insurance. I have asked you repeatedly how we could possibly know that since our market is heavily regulated. You have NEVER responded directly to that.

Will you answer it or not?

How about a very minor example on free markets pricing.

My insurance requires a deductible should I require an ambulance. My wife had an appendectomy a while back, if the ambulance was free, heck, I would call them up and let them take her. I have a co-payment for specialists that causes me to not go unless really required. If there were no co-pays, no doubt I would go more often. It's a simple example of price and demand working.

I am not advocating high co-pays or things not being covered but I am showing how cost certainly does affect how one would approach their medical care, yet Ricky says there is no such thing. Nope, if you allow the free market to actually be free (ok, throw in some limited restrictions) then we might have something to work with, to insist a government mandate can create a better and more economical system is just crazy. It may work that way right now because we all have so many restrictions and requirements that your example can make sense compared to the current status quo but as Steve mentioned, we do not have anything that even comes close to free market competition do we?

steve

Can't you see you've made this whole thing up? You claim the "free market" doesn't work for healthcare, but you know there's no such thing--there is nothing approaching a "free market" when it comes to health insurance.

It is a fact that some states have more insurance companies competing within their borders then other states.
It is a fact that there is substantially no difference between costs in states with many competitors and those with few.
If what you are claiming, that additional competition will see price decreases were correct with health insurance we would see differences. Period.
I can't get into a debate with you about the possibility of what you want to define as a pure free market and its pointless anyway. Nothing will ever reach your notion of pure fee market in medical insurance. Without regulation insurance would be rife with scam artists and fly by night operations...
But I can point to the number of entrants into a market and the lack of any effect on price. Yes, there are regulations and limitations on these entities. But they all have the same limitations and regulations. That doesn't stop them from competing within those limits. They just don't seem to actually try that tactic.

tom

How about a very minor example on free markets pricing.

This isn't an example of free market pricing. It is an example of how cost responsibility makes people more cost conscious.
And I've never said that cost doesn't affect the decisions people make about their medical care. I've said that there is no effective negotiation between providers and users in the current US ssytem. Or anywhere else in the health care field.
In your example you've made a decision not to use a service because you couldn't afford the service. But, you didn't shop around between specialists to find the one offering you the lowest hourly rate or rate per procedure and go to the individual. Why? Becasue the specialists don't encourage that, or advertise their prices as "best in the state".... It just doesn't exist. I'll bet if you asked you'd find identical prices in 90% of the doctors schedules.
And if you became unhealthy enough, surely you'd suffer the cost of the specialist and show up in his office eventually despite the co-pay no?.
The only thing thats happening here is a delay of use due to cost. I suppose to a certain extent it suggests there is a slight elasticity of demand in health care...but its not the kind of elasticity that is generally beneficial.
The problem with simply delaying treatment is that when the patient eventually goes to the doctor, invariably the problem is worse and the treatment more expensive...

tom,

to insist a government mandate can create a better and more economical system is just crazy.

Its crazy to look at every other nation in the western world and deny that what they have accomplished is impossible.

Has every other nation proven they are as cost effective as they could be if allowed free competition?
Gee we don't know that do we?

Your examples of doctors having the same prices helps prove exactly this point, there is no free market, there is no need to reduce prices, their is no reason to compete on price, their is little ability to compete on prices. Thanks for pointing this out, I see you are agreeing with our position now?

rickyp wrote:It is a fact that some states have more insurance companies competing within their borders then other states.
It is a fact that there is substantially no difference between costs in states with many competitors and those with few.
If what you are claiming, that additional competition will see price decreases were correct with health insurance we would see differences. Period.

First, I will demonstrate the emptiness of your argument.

Suppose prices were fixed by the government, that would negate your entire argument. You've not shown that they are not fixed.

And, in fact, the more regulations that are placed on an industry, the less competition there can be. Why? Because the base costs for all companies are driven up by these regulations.

Even costs like office space are kept artificially high by refusing to allow sales across State lines. If NY medical insurance companies had to go head to head with companies in Mississippi, I think the cost of office space, salaries, etc, could actually make a difference, don't you? Or is the cost of doing business in Mississippi the same as doing business in New York?

I can't get into a debate with you about the possibility of what you want to define as a pure free market and its pointless anyway.

Fine, but you don't even understand what a "free market":is, yet you use the term as frequently as you breathe. Two companies in a market does not necessarily constitute a "free market." Isn't that why the FTC investigates price-fixing?

You're hoisted on your own petard; you just haven't figured it out--or are too full of yourself to admit it.

Nothing will ever reach your notion of pure fee market in medical insurance. Without regulation insurance would be rife with scam artists and fly by night operations...

Please point to where I said there should be no regulations whatsoever? Don't confuse me with an anarchist or a pure libertarian. I just cannot believe an "economic conservative," like yourself *cough*, can say the "free market" doesn't work when any moron examining the facts could see there is nothing resembling a "free market" in healthcare insurance. Government so constrains the market that no meaningful competition exists. That's why the FTC isn't investigating price-fixing.

But I can point to the number of entrants into a market and the lack of any effect on price. Yes, there are regulations and limitations on these entities. But they all have the same limitations and regulations. That doesn't stop them from competing within those limits. They just don't seem to actually try that tactic.

Dumb.

So, these "profit-driven" insurance companies, that are so evil in your sight, they aren't willing to compete for market share? Wouldn't that increase their profits?

So, which is it--are the companies greedy, or are they engaged in price-fixing, which the government is failing to stop?

Either way, you are wrong. Congratulations.

I'll repeat steve. I''m not trying to prove there is a Free Market in the currenbt US health insurance industry. I'm arguing that there is no evidence that increased competition within the industry market has had a dampening effect on insurance rates and more importantly on the underlying medical costs...
And thats pretty easy to do. Compare states with lots of entrants with those with few. There is no difference.

The rest of your convoluted arguements don't address this evidence.

Suppose prices were fixed by the government, that would negate your entire argument. You've not shown that they are not fixed.

You have evidence that the rates in Illinois are fixed? I don't

And, in fact, the more regulations that are placed on an industry, the less competition there can be. Why? Because the base costs for all companies are driven up by these regulations.

Yes, but the cost of regulation is borne equally by all entrants. They still have room to compete for market share with price... they jsut don't.

Even costs like office space are kept artificially high by refusing to allow sales across State lines. If NY medical insurance companies had to go head to head with companies in Mississippi, I think the cost of office space, salaries, etc, could actually make a difference, don't you? Or is the cost of doing business in Mississippi the same as doing business in New York?

Fair point. But so what? It doesn't refute the idea that curently evidence where there are more entrants pricing doesn't become a major marekting feature, nor does it indicate how this would attack the underlying medical costs.
Moreover, just becasue a company has an operational cost advantage that they would pass those savings along to the consumer. They just might pocket the profit for their shareholders.
I'd guess that in illinois of the 20 entrants some have a lower operational cost than others...

Fine, but you don't even understand what a "free market":is, yet you use the term as frequently as you breathe. Two companies in a market does not necessarily constitute a "free market." Isn't that why the FTC investigates price-fixing?

Again I'm not saying there is a free market in health insurance. I'm saying that the increased number of participants, increased competition, hasn't lowered either insurance or underlying service costs. You can blame whatever you're fervent imagination wants you to blame, price fixing if you want. The result has been what it is...

Please point to where I said there should be no regulations whatsoever? Don't confuse me with an anarchist or a pure libertarian. I just cannot believe an "economic conservative," like yourself *cough*, can say the "free market" doesn't work when any moron examining the facts could see there is nothing resembling a "free market" in healthcare insurance. Government so constrains the market that no meaningful competition exists. That's why the FTC isn't investigating price-fixing.

Yes, well, in Illinois the government allows 20 competitors. In other states there are only 1,2, 3, or 4 ... There's no difference in pricing or on the underlying medical inflation. Whatever else you want to claim is responsible, it isn't lack of competitive entrants in the market.

So, these "profit-driven" insurance companies, that are so evil in your sight, they aren't willing to compete for market share? Wouldn't that increase their profits?

Increasing market share isn't always beneficial to the bottom line. Maximizing profits is generally more important to most companies than increasing market share at the expense of operating margins and over all profit. That's probably why there isn't price competition within the insurance and medical industries... Again, demonstrating that the health industry in the US seems immune to most principles of competition.

So, which is it--are the companies greedy, or are they engaged in price-fixing, which the government is failing to stop?

Companies greedy? They are operating to maximize their profits and as long as they do it without harming their customers, the environment or acting illegally why should they be judged in this way?
A dispassionate look at the delivery of health care has to examine the reasons things happen, and at the same time try to deliver on the objectives that society has for the health care industry.
Usually free markets deliver services and products efficiently and effectively. They aren't, as so-called conservatives used to claim, always self correcting, but if governed with reasonable regulation can usually be counted on to perform .
When the rules of supply and demand don't really apply, as they don't with health service apparently, too much can go wrong. And apparently has in the US system.

Tom

Has every other nation proven they are as cost effective as they could be if allowed free competition?
Gee we don't know that do we?

As usual Tom, you're given to believing only what you personally experience. The history of 'socialized medicine" really evolved from the 30's and gained a lot of steam after WWII. So the decisions that were made in other nations were made because of objectives and conditions that those nations encountered at that time. Its really only since the 50's and 60's and particularly in the last 2 decades, that socialized systems have demonstrated that, compared to the US, they are better at controlling costs and delivering more effective care per dollar.
Medicare also delivers its services at a lower cost than private care in the US. (Despite being hobbled by regulation that doesn't allow the administration of Medicare to take advantage of its potential negotiating power) So you have an example, in the US of a greater ability to control costs by socialized medicine. (Do remember that Medicare is socialized medicine. So is veterans care. And no one complains about those two unless its to worry about them being defunded or cut back.)

The question you should ask Tom, is, if i had medicare instead of my current insurance plan would I be happy? And if the answer is sure, as long as my access to treatment is pretty much the same.....
There is an excess of supply over demand in the US right now. How do i know? Que jumpers and some provincial Canadian plans take advantage of the excess supply. Que jumpers to pay for an MRI now rather than wait 6 weeks for a non-emergent MRI. Provinical systems to alleviate occassional over demand for certain procedures without investing in building an infrastructure for that demand - usually becasue the demand isn't regular, sometimes becasue it takes a few years to build up the service...(educate physicians for instance)
I digress. The point is Tom, that if supply is so generous there is probably room for the US system to accomodate currently uninsured who don't have the money to pay for required treatments. At least to a point.
Costs? Just saving on the variance in administration costs would produce substantial savings...17% versus 3% for the average US hospital versus the average CDN hospital. The administrative savings for private practioneers is also enormous.... (A downside would be the lower employment for medical insurance clerks in hospitals, and doctors offices...)
In general, its about dispassionately looking at the objectives. Right now its a political footlball and generates mostly unproductive arguements filled with irrational postions. Witness the enormous ball of fury Steve ties himself into to try and refute the fact that more entrants in a state insurance market hasn't lead to lower medical costs or insurance rates....

Ricky, you offer contradictory arguments and cannot reconcile the "competition" vs. price-fixing problem. You can carry on, but you've lost.

Ezra Klein does a good job of pointing out the reasons why both the republican and democrat "plans" are failures...... One proven al;ready to fail and the opther probably...
Lets start with the republicans.

The Republican plan, in fact, heads in the opposite direction: The GOP outsources Medicare to private insurers and gives senior citizens checks that cover less and less of the cost of insurance every year. Republicans hope that when faced with more cost pressure and more options, seniors will be able to exert the sort of consumer pressure that lowers prices while retaining, or even improving, quality.
What they’ve got in mind already exists in Medicare. “Our premium-support plan is modeled after the Medicare Part D prescription-drug program,” Paul Ryan (R-Wis.) told me. But Part D hasn’t controlled costs. Instead, premiums have risen by 57 percent since 2006, and the program is expected to see nearly 10 percent growth in annual costs over the next decade.
Moreover, this isn’t the first time we’ve tried to let private insurers into Medicare to work their magic. The Medicare Advantage program, which invited private insurers to offer managed-care options to Medicare beneficiaries, was expected to save money, but it ended up costing about 120 percent of what Medicare costs

And the Democrats:

The Democratic plan, conversely, quietly recognizes that government-run health-care systems that are willing to throw their weight around can control costs. So the plan is to have Medicare try to pay for quality, not volume.
Could it work? Sure. But it’s a gamble. It’s easy to imagine that strategy improving quality without cutting costs. That’d leave us with a better health-care system than we have now but the same budget problems. Another danger is that Congress could override the IPAB, rendering it useless as a tool for cost control

.

Here's the kicker. The US health care system already has higher government expenditures per GDP than any other country. Not health expenditures...government health expenditures.

And it’s worse than that: Atop our giant government health-care sector, we have an even more giant private health-care sector. Altogether, we’re spending about 16 percent of the GDP on health care. No other country even tops 12 percent. Which means we’ve got the worst of both worlds: huge government and high costs

But no one's actually interested in copying systems that create better efficiency and effectiveness because of a little word.
ezra's article: http://www.washingtonpost.com/business/economy/the-hard-truth-about-health-care/2011/06/06/AG34XbKH_story.html?sub=AR

Back to reality. I saw a special--well, I haven't finished it (and I'm looking forward to the Van Hollen vs. Ryan head to head debate). Yes, it was on Fox, but hosted by Bret Baier. They spoke to Alice Rivlin and a spokesman for the Center for American Progress. Baier let Van Hollen rail against the Republicans, etc. Baier was very "hands off."

They spoke to Alice Rivlin, an adviser to Bill Clinton, and now at the Brookings Institute. She said premium support, a key part of Ryah's plan, is something Democrats have supported in the past. She thinks it can work.

Ryan said the premium support for the poorest starts at $7800, greater than $6400 projected cost, and he said the sick receive more. He also said the negative projections presume competition will do nothing. I loved this quote, "Monopolies don't work." Why do we frown (and outlaw) monopolies? Because they foster fraud, abuse, and raise costs. Yet, liberals pretend that a government monopoly on healthcare will drive down costs. How?

Obama cuts half a trillion from Medicare by simply reduce payments to service providers. They're supposed to just take less money and provide the same service? Really? That's the "plan?" The government will just tell doctors to take less money and that will solve the problems.

Next.

Anyway, if you get the chance, watch the show. You'll see Democrats defend the status quo, which we all know is not going to last.