Why is healthcare in the US so expensive?

[Cornu Ammonis]

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I think the moral hazard associated with health insurance is overstated. I would venture a guess and say that people with the least healthy lifestyles are also uninsured, while at the same time it's hard to argue that people would knowingly live unhealthy lives because that their treatment will be covered down the road. The fact that the abuse of insurance is in this particular case inimically tied to one's very life and well-being mitigates the hazard. Still, I know there are studies on this that argues otherwise, and I'm guilty here of the same kind of 'common sense' axiomatic thinking that I disdain, so take what I say with a grain of salt.

Anyway, I will concede to cheerios4cat that in a perfectly free market health care costs would be affordable. If we were to remove the mandate to treat health emergencies at hospitals and get rid of drug and physician licensing the economy could bear the costs of health care. Of course, the care they would receive would be as hazardous to their health as their diseases, and many people still wouldn't be able to afford the new accupuncturists-cum-doctors, and care would be even more stratified than it is today. All we would need then is tort reform and with neither regulation nor redress for damages, patients would have to navigate minefields to receive care and doctors would still make less money. Don't worry, though; there would be private care-ratings industries that certainly would not be bought out or bribed by special interests, and in any event people could just vote with their wallets and try meditation or auto-surgery instead.

 

[kduck]

I think the moral hazard associated with health insurance is overstated. I would venture a guess and say that people with the least healthy lifestyles are also uninsured, while at the same time it's hard to argue that people would knowingly live unhealthy lives because that their treatment will be covered down the road. The fact that the abuse of insurance is in this particular case inimically tied to one's very life and well-being mitigates the hazard. Still, I know there are studies on this that argues otherwise, and I'm guilty here of the same kind of 'common sense' axiomatic thinking that I disdain, so take what I say with a grain of salt.

I think you're slightly misunderstanding what moral hazard means - it's not saying that people will live unhealthily knowing that they are covered, but that they will not hesitate to consume extra, or more expensive, services for the same problem because they are not shouldering the entire cost. There is no motivation not to go for the latest, greatest, and most expensive options around.

 

[Cornu Ammonis]

I think you're slightly misunderstanding what moral hazard means - it's not saying that people will live unhealthily knowing that they are covered, but that they will not hesitate to consume extra, or more expensive, services for the same problem because they are not shouldering the entire cost. There is no motivation not to go for the latest, greatest, and most expensive options around.

What you're saying is true, too, but the decision really should be left to the doctor. Of course, right now there's a perverse incentive for doctors to queue up unnecessary and expensive procedures because of the way reimbursement works, but that's a much more difficult problem to solve without a single provider system, which I think is one step too far since it actually stifles competition where it matters: at the level of care. I suppose if we can't trust doctors of all people to be prudent, there's really no one we can trust and no way to solve that problem.