It's too high, by a factor of about seven. Procedures that
"ought" to cost $20, cost $140 and when a fair price
would be $100, we and our insurers are charged $700. Why?
- that's one question economist Paul Krugman didn't address yesterday. I will. First, let's define "fair". A fair price, like a fair
wage, is what buyer and seller would agree upon if no third
party were present. It's a price that is equally pleasing (or
displeasing) to each. Otherwise, it could not be fair - one would
enjoy the deal less than the other. There is only
one price that pleases each to the same
degree, and that degree of subjective pleasure can be assessed only
by the two parties involved. This principle is true of all
exchanges, so fairness occurs only in a free
market - one in which no third party is present, to distort
either choice. Unfortunately, following more than a century of intrusion by
government, that's far from being the case in health care.
So, there is no fair price in that industry. It may be
possible to ruin it a bit further yet, but it is basically
already broken. The intrusion and distortion has been in favor of physicians
(by prohibiting low-price competition from those lacking an
expensive degree) and of drug makers (by granting them a 17 year
patent monopoly after requiring them to submit to FDA testing for
7 years or more) and of insurers (by encouraging and now
mandating purchase of their products; the encouragement was to
tax earnings but not "benefits.") It has very much disfavored
everyone else - we who have to pay, directly or indirectly. Not
one of those intrusions is necessary or even beneficial; for
example a new drug is kept off the market long enough for FDA
bureau-rats to feel secure, but during the delay thousands may
die while awaiting its approval. All of them bring extra, greedy,
parasitic mouths to the table and feed them well at our expense,
in return for which they make generous re-election
contributions and run a shell-game to disguise the real costs.
Our immediate, out-of-pocket expenses seem appreciably lower, but
all the charges have to be paid (that's why the bill displays
them) so we do, for sure, all end up paying them. Few if any such intrusions took place in South Asia (yet) so prices
there are much closer to being fair (that is, as above, close to
zero-government levels.) The facilities offered are comparable
to American ones and may be superior; the professionals are just
as skilled and were often even trained here.
As a healthy foretaste of life in a zero government society, I
leave you with this table of sample prices in US dollars, drawn from a
page about treatment
in Thailand:
10A074
The Price of Health
by Jim Davies, 11/15/2010
Procedure
$s in US
$s in Thailand
Saving
Heart bypass
130,000
11,000
92%
Heart valve replacement
160,000
10,000
94%
Angioplasty
57,000
13,000
77%
Hip replacement
43,000
12,000
72%
Knee replacement
40,000
10,000
75%
Hysterectomy
20,000
4,500
77%
Spinal fusion
62,000
7,000
89%
