Why are medical tests so expensive? (1 Viewer)

[Chu Gai]

One of the worst impulses of capitalism, is that once certain industries realize they have a dependence on the government they funnel monies to those in the government. Kind of like extortion money.

 

[RobertR]

I think exactly the opposite. Economies built on State ownership of resources are worse off than those built on the principles of private ownership and voluntary production and exchange. "Mixed" economies involve political favoritism. It's how well you're connected to politicians that determines success, not business acumen.

 

[Edwin-S]

An interesting anecdote. I interpret it this way. You were fortunate enough to be in need at the precise time of a confluence of events. By fortunate, I don't mean losing your sight which was supremely bad luck. However, there were two events that worked in your favour (from a financial standpoint).

1) Your condition was extremely rare.
2) There were a number of foreign surgeons being trained and your rare condition afforded hands-on training that would normally be unavailable.

From their standpoint, your arrival with a rare medical condition most likely met their needs for a prime case study; therefore, your value as a patient exceeded their needs for payment. As such, you were fortunate enough to get the procedure done for free.

Either that, or they lost the bill.

Regarding the Canadian health system. I do not intend to imply that it is perfect. It is far from that. It is also true that there are procedures available in the U.S that are unavailable in Canada. However, most major common surgical procedures are available and I believe those procedures can be performed, in Canada, with far less personal financial effect than in the U.S. Furthermore, if a procedure is available only in the U.S but is financially out of reach of the vast majority then it is no different than if it was never offered in the first place.

Edit: BTW, I just wanted to add that it is a good thing the procedure worked and you were able to regain your sight.

 

[Edwin-S]

I guess we will have to agree to disagree. We have a publicly owned and regulated power grid in my province. We have some of the lowest power rates in Canada. You guys had an unregulated power market and got ENRON. If it is a choice between the two then I'll choose the public system every time. In fact, thanks to the American experiment in deregulated power, we will probably be facing a rate hike to make up for the loss of billions of dollars owed by American power companies for supplied Canadian power.

Also, I do not believe private ownership reduces the need for political connectedness. The American congress is a case study in the use of political connections for the benefit of corporations and their CEOs. State or Private ownership has a net effect of zero weight when it comes to the usefulness of political connections. The CEOs of both state and private corporations recognize the value of owning an alleged "public servant". Private corporations are more likely to own more "public servants" because they pay better than state owned corporations once the "public servant" leaves office.

I am going to try to leave it at this point. I don't want to get crap from a moderator for getting too political. The discussion has been interesting though.

 

[RobertR]

That's not true. The U.S. has not had a true free market in the power industry for a very long time. It's true that price controls were lifted in some places (hence the false claim of "deregulation"), but that's a FAR cry from a true free market where buyers everywhere are free to buy from whoever they wish, with freedom of entry of producers charging unregulated prices.

In the 1970s, people in this country suffered long lines at the gas pumps, which were not the result of some "capitalist conspiracy", but rather the consequence of the government imposing price controls, which had the effect of suppressing production and increasing dependence on Mideast oil. I remember very well the zealous opposition to the lifting of such controls, a filibuster against the lifting of price controls on natural gas in particular. The opponents of the free market said there was no question that gas would become horrendously more expensive as a result. Instead, the opposite happened (and, of course, opponents of the free market never learned anything). So it would be with electricity.

 

[Jeff Gatie]

Thank you Edwin for your detailed analysis of why I was so fortunate that my procedure was weighed as beneficial to the US corporate medical conglomerate; but I'm afraid your cost analysis is a little to in-depth compared to the explanation I received as to why I was able to have my eye fixed without any insurance. The explanation came from the doctor himself, who when told I did not have insurance replied (in a thick german accent) "Money? I don't vorry about money. Let the front desk vorry about money. I just fix eyes."

Something tells me that if the procedure had been available (a big if) in a socialized medicine environment, some beancounter would be making the same analysis as you when time came for me to get in line for my treatment. I say I'm lucky that most doctors don't think like you.

PS, there was a lag between the exam and the surgery and in that time the foreign surgeons were flown in. Mass Eye and Ear has a deal with other teaching hospitals around the world that allows this type of cooperation. It's quite probable that under your proposed government control, those opportunities for education may be fewer and far between.

 

[Edwin-S]

Thanks for the expanded explanation. I did say it was an interpretation. As it turns out it was incorrect. Except for the second part where I said that they might have lost the bill. I said that as a joke but maybe they really did lose it. In which case it turned out well for you.

If the procedure was available in Canada then you would have been given an assessment. If delaying the procedure would have resulted in permanent loss of sight then you would most likely be immediately scheduled for surgery. If the assessment determined that it could be done at a later date then someone who was considered a more urgent case would go first. Like I said it is not a perfect system and it doesn't make the person with the ailment feel better, but that is just how it is done at the present time. In some cases, they may actually pay to have the procedure done in the U.S if it is not available in Canada.

I think the system has plenty of flaws and could always be improved but I still think a socialized system allows a majority of people access to a wide range of medical care without the added worry of whether they will be financially ruined while recovering from a serious illness.

 

[Jeff Gatie]

As Chu stated before, in spite of the predictions of those who favor socialized medicine, there is no epidemic of people going untreated for serious ilnesses and/or injuries in the US. Our system does it the same way socialized medicine does it, with none of the flaws. The rich subsidize the poor, without the regulation that limits what doctors can specialize in or what they can charge, ranging from what many see as "expensive" right down to what (in my case) is considered quite cheap.

Also, I'd like to correct a bit of projection that occured before in your assumption that the "Candian porker" went to the US for treatment while "a sick (but poorer) American may have got bumped". We don't "bump" people in this country, unless it is a transplant. We don't even have a government regulated triage. We treat every one according to need and I assure you there are no lines for cancer care or any other treatments (aside from transplants). Will money get you the best care? Yes, in some instances, but even our care for the poor has the benefit of the dollars the rich can spend, both for treatment and for charitable donations. Please don't tell me a government that can't compete with private industry in mail delivery, never mind caring for the poor, could do better.

 

[Chu Gai]

No one's being denied health care here Edwin. All you've got to do is walk into any hospital in the US and there are signs that say even if you don't have any money, you'll not be denied care. Even the 'irregular migrants' get all the care that's required. Certainly it can and does affect people's finances but there's also a lot of safety nets going on too. Can you expand on how the healthcare premiums are funded in Canada? Does it vary according to income, by province or some other metric? If I were travelling in Canada and got ill, would I be admitted to a facility for treatment regardless of whether I could pay or not?

Jeff, did the procedure restore your sight to any degree?

 

[Jeff Gatie]

I've got about 20/300 without a prosthetic lens because the natural lens in my eye was taken out. I've got about 20/40 with the lens, but it is a little Salvador Dali'ish; straight lines are sort of warped and clocks melt off the wall (just kidding on the last one). I'm definitely left eye dominant now, whereas before I was right eye. Considering I had a 3/4 inch gash through my top lid into my eye and all my retina was detached except for a very small part of the rear, I think my surgeon was really an angel in disguise.

 

[Carlo_M]

Hmm, the more we talk about free market vs. socialized medicine...suddenly our own system [as it stands] doesn't sound so bad...

I do thank my lucky stars that my PCP is part of the best hospital in the West (vis a vis where I work and where my HMO has allowed me to go).

I'll have to rethink my position. Now more than ever I'm against free market medicine, but now I've softened on the problems I thought I'd seen with our current system in the U.S.

Time to make that appointment for my annual physical!

 

[ChristopherDAC]

It's impossible to have a free market in electric power. The laws of electrodynamics, which unlike the "laws" of economics are built into the nature of the Universe, demand that the power you consume comes from the same generating station as the power your neighbour consumes. There is no alternative, and there cannot be unless additional sets of distribution lines are built, which would be sufficiently expensive to preclude any would-be competitor from so doing.

The purpose of government regulation (or local ownership, either municipal or cooperative) of electric utitlities, and the like, has always been to ensure universal service. The cost of running and maintaining lines is sufficiently great that the electric companies, on a strict private-enterprise basis, would never serve the great majority of areas, because it would be insufficiently remunerative. Given the option, they would serve a few concentrated districts of business works and high-income residences.

It is recognised that universal electric service, however, like universal road service, contributes to the general prosperity and well-being, and so the "universal service obligation" is created, under which generating stations are built and lines are run to serve whole communities, and the highly remunerative accounts serve the slightly remunerative or even unremunerative ones. Benefit to society is not necessarily measured by a single business organisation's balance sheet.


Tell me about a free market in electricity, home gas delivery, water and sewer, when you can do magic. Not until then.

 

[Joseph DeMartino]

Then the problem is your understanding of things, not the market. That there are always people who will commit fraud tells us nothing about "the market" and everything about human nature. Or do you think that there's no fraud, cheating and abuse under non-market systems? Oh, yeah, the old U.S.S.R. was a model of honesty, integrity and fairplay. And when the U.S. imposed wage and price controls during WWII, there were no profiteers and no black market.

The market exists. The market is a reality. When people try to replace the market with some fanicful scheme it doesn't go away, it just goes underground.

Socialism, syndicalism and all other completely ficticious theorectical "systems" are based on the denial of two fundamental and unavoidable truths:

1) A thing is worth what someone else is willing to pay for it. There is no other rational test of value. Any attempt to prove otherwise is a lie and a waste of everyone's time. There is no such thing as what a thing "should" be worth or what a person "should" earn. Your labor is worth what someone else is willing to pay for it, just as the job I offer is worth whatever a competent candidate can convince me to pay for it.

2) Human nature has not changed in any fundamental way since before history began to be recorded. It is unlikely that it ever will. Any system that depends on Human beings magically becoming entirely rational, honest, and altruistic is fantasy. Any attempt to actually produce such a system will create new problems at best and horrors at worst because it represents an attempt to govern the real world by the edicts of fantasyland.

The 20th century managed to kill millions of people chasing these fantasies and still people say, "But you haven't tried my version of whatever-ism, my version - being purely theorectical and unfalsifiable - is perfect and if we only impose it on the world, we'll finally have paradise on Earth."

There is no paradise on Earth. The market won't produce Utopia. But people who prefer the market are smart enough to know that and they don't expect it to. Given that there are always going to be crooks and liars - in business, in government, in charitable organizations and in volunteer groups - they seek checks and balances and prefer impersonal mechanisms that cannot themselves cheat or lie or do anything but follow their own rules. There are no "solutions". There are only choices among real alternatives - compromises and trade-offs. You can "insure" everyone with a government program, but only at the cost of massive inefficiency and rationing - all of which the rich and the well-placed will still be able to avoid - so even the unstated goal of distributing misery equally will be missed. You can have a market system, but people with money will get better and faster treatment than the poor - yet no one will be refused treatment, and the technology that the rich underwite will gradually be made available to the poor. (And, as noted, the rich get better treatment - sometimes by going overseas - even in the "socialized" systems.)

Regards,

Joe

 

[RobertR]

It fascinates me that so many who say they are strongly opposed to private monopolies are all in favor of government created ones. All the logic about lack of innovation, inefficiency, etc. caused by a monopoly suddenly goes out the window.

 

[ChristopherDAC]

Electricity is not a private monopoly, or a public monopoly. It's a natural monopoly. Under actual "free-market" conditions, only one electric company per locality can survive, and so there will only be one, no matter who owns it. That is reality, and no amount of "thinking outside the box" will change that. (It's amazing how people who claim to be doing that always come up with some pre-packaged solution.)

All these "electricity providers" are middlemen who do absolutely nothing except mail out bills and collect money. The transmission lines, the generating stations, the linemen, even the meter readers are the same as they have ever been. So-called power deregulation is a prime example of rent-seeking behaviour : they've used the power of the State to create a business which didn't exist before, so that they can profit by it.

 

[RobertR]

As DiLorenzo demonstrates, the concept of the so-called "natural monopoly" has no basis in history, and is based on faulty reasoning by economists who ignored human behavior and instead viewed economics as an engineering exercise AND the desire of some to use political power to gain wealth, with the cooperation of politicians eager to share the loot.

 

[KurtEP]

The question here is how narrowly you want to define the idea of a market. If you exclude everything except the buyer, seller and their product, you can make some generalizations that are useful, but you don't have the whole picture.

In the real world, there are transaction costs, inequalities of bargaining power and knowledge and so on. There's even fraud, unless you're trying to say that human nature doesn't impact the market. I'd argue that the market is a defining part of human nature, and hence, as you argued so well, is unavoidable. If we become social insects like bees or ants, maybe we can function without one, but otherwise, it's an essential part of human existence.

The only disagreement we're having here (I won't bother to defend socialism or syndicalism since my knowledge of those systems is limited), is that I define a market as the buyer and seller and all things that materially impact their transaction. Fraud does materially impact the market (we can, of course argue materiality) in various ways. This is especially true in the stock markets (if you give out false information, it can drive the market price up or down for everyone, not just your own transaction). However, it's also true of other built in costs that you'll have to contend with if you want to run a business. A few examples include increased rates and audit fees for commercial loans of various types and audit fees charged to audit percentage rent at malls. If there was no fraud, these fees wouldn't exist, and your costs would be lower. You would either make more profit, charge a lower price to your customer, or more likely, split the difference.

Of course, if you are trying to make a useful model, you'll probably take out fraud as a factor, along with common things like transaction costs. This doesn't take them out of the actual market, it just takes them out of the model for the sake of simplicity, since we don't have the computational power or the math currently available to consider these inputs and still have a usable model.

 

[Jeff Gatie]

But we can model the Earth's climate for the next hundred years?

(Sorry, couldn't resist!)

 

[KurtEP]

The concept of a natural monopoly is textbook economics. In a given area, it's simply more efficient to have one set of electrical wires delivering power to a given residence. Whoever gets that set of wires up first is going to have a huge advantage over anyone who comes later. They can even undercut competitors prices to protect their market for the short term. Mr. DiLorenzo doesn't mention whether these competing power companies shared the same area, or were merely in the same city controlling different localized monopolies. I'd guess the latter, but I don't have any way of telling you this for certain.

I'd like to know what Mr. DiLorenzo's standing in the Economic community is, however. He appears to have some controversial views. I was going to drop in a few links, but I think some of his articles are pushing the no politics policy a bit. Google will turn up some interesting stuff rather quickly, though.

 

[RobertR]

This "fierce competition" would obviously not have existed if each company was safely ensconced in a limited geographical area, operating a monopoly for "its" area.