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Ep. 22 Free markets in healthcare: Objecting to the objections

Mr. Roman Zamishka

Many ardent supporters of free markets still believe that healthcare is an exception where government intervention is, for some reason, necessary.  Our guest on this episode is Roman Zamishka, a financial analyst and medical school applicant who authored a witty and carefully constructed article titled “A Libertarian’s Case Against Free Markets in Healthcare.” The piece garnered a lot of positive comment on The Health Care Blog where it was published.  Mr. Zamishka kindly agreed to be cross-examined about the points he made.

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Roman Zamishka: Twitter

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11 Comments

  1. Anthony Perry on 08/24/2018 at 2:32 AM

    I’m just 10 minutes into your free market show but I have to comment. I hear the ER argument all the time. But I see billboards all over now that advertise the ER waiting time, presumably to induce patients to use their facility over others. Well if that sort of advertising works why would not hospital ER’s in a free market system compete by advertising that they are lowest cost, stating for example “No Surprise Charges”. Very few ER patients come in unconscious or in extremis so that they cannot choose. Most decide where to go, even if brought in by ambulance. Why would they not go, in the free market situation, to the ER that is known to be the best value. Furthermore in a true competitive free market environment hospitals would have to compete with each other so that all would have to provide the best value they could including no surprise billing. They would have to make appropriate arrangements with their contractors for a billing package.

    Now back to the podcast.

    • Michel Accad on 08/25/2018 at 9:27 PM

      Agree with you. The ER argument (or something similar) was first made by economics Nobel Prize winner Kenneth Arrow, and most economists since then have bought into it.

  2. Marc Fouradoulas on 08/24/2018 at 9:06 PM

    Great analogy about the stars as guidance, Michel!

    As usual, the discussion entangles itself in totally different areas of health care with different degrees of marketability and predefined academic structures (licensing). Better make clear: what is health care? what is a doctor and when is he needed? Otherwise it’s a useless umbrella term. In case of the surgery center, the market works for surgery, nothing more. It has nothing in common with mental care or child care. And does surgery need even doctors? or technicians? In the same line there cannot be “health” insurance but insurance for certain events. In the same line Roman can not know that there is no free market health care flourishing around the word.
    Anish, it’s 10% co-pay per visit, not 10$..

    Keep up the good work!

    • Michel Accad on 08/25/2018 at 9:27 PM

      Thank you, Marc!

  3. Anthony M. Perry, MD on 08/25/2018 at 7:25 PM

    Not to particularly defend the private insurance companies – however the reason that Medicare has less intrusive preauthorization is that the insurance companies cannot lose money or they will go out of business. Medicare on the other hand has an ever increasing ability to tax and accumulate debt. Before too long Medicare is going to founder and require a combination of some level of increased taxation, decreased reimbursement or rationing of care. In this regard the existence of privately funded heath care is critical since the publically funded segment is forced to compete and provide at least a similar level of service to that which is privately funded. Once there is total government control elimination of that consideration will allow gradual increasingly stringent rationing based on political calculations.
    Keep in mind however the great deal of intrusiveness from the government sector which we have almost come to accept as normal like frogs in the gradually heating pot of water. It is Medicare that has put in place the absurdly complex coding system for E&M services, the reporting requirements, the mandatory EMR’s, the onerous hospital regulations and on and on. It may be less obviously apparent than preauthorization requirements but what portion of our time is spent on such useless and even harmful activities. To my mind it is worse.

    • Michel Accad on 08/25/2018 at 9:30 PM

      I agree, Anthony, the argument for plain Medicare is historically ignorant and ignorant of the realities: Medicare itself wants to move away from traditional Medicare and has been trying to do so since the 1970s. Plus, even it it promises a less annoying system, what guarantees that it will keep its promises?

  4. John Bartel on 08/26/2018 at 7:37 PM

    Michel, I was disappointed that you did not repeat one of your classic tweets. When Roman said he thought single payer in the USA was inevitable, your tweet response was perfect—we need to be thinking of what will replace single payer when it crashes and burns. The retirement of the baby boomers will bankrupt the current system. There is no credible way to pay for it, and this will become the primary political hot potato over the next ten years.

    People may groan at this, but we should look at the healthcare system of the 1950s in the USA. There was very little use of third party payers. Healthcare was fee for service. Prices were low. The indigent were handled at the local level. The county hospital provided care for those without money, and local doctors volunteered to keep it running. For a strict libertarian, we still had licensing laws that restricted the supply of healthcare, so it was not nirvana (for the 1% who think like Michel and me). But it was a functioning healthcare system that was sustainable. My bet is that this is the model that will replace single payer once it crashes and burns. But I do think single payer will have to crash and burn before we return to a sustainable model.

    Anish and Michel, it would be fascinating for you to discuss options for treating mental health issues. My primary interest is understanding what works and what does not. Giving depressed individuals lots of drugs does not strike me as treatment, yet that seems to be the current standard of care. The standard of care has changed over time and we now release people who were once institutionalized. Are there any options for the homeless and drug addicts that have overrun our major cities? It is so hard to help someone who is on a downward spiral. We have demonstrated that just throwing money at the problem does not solve it. If you can highlight some approaches that work, you would continue the great work you are doing on this podcast.

    • Michel Accad on 08/26/2018 at 9:18 PM

      Thanks, John!

      1) I think that’s the tweet you’re thinking of.

      2) The 1950s system was already unsustainable. Employer-based insurance, enabled by government, was causing prices to go up rapidly and affecting the elderly and the poor, hence passage of medicare/Medicaid in the 1960s.

      3) Agree, very important issue. Two controversial concepts in mental health: “mental” and “health”

      • John Bartel on 08/27/2018 at 7:09 PM

        1) That is the tweet!

        2) My parents had six kids in the 1950s. They had no insurance and saved for each delivery in advance. The most they paid was a single delivery was under $300. I’m sure you are correct that prices were rising, but it was possible to get by without insurance then.

        3) This is a subtle topic that requires careful thinking. A perfect topic for Accad & Koka!

  5. Ep. 24 Making the case for Medicare-4-All on 08/31/2018 at 11:50 PM

    […] Ep. 22 Free markets in healthcare: objecting to the objections […]

  6. […] Ep. 22 Free markets in  healthcare : objecting to the objections […]

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