Extra money in the health professionals’ accounts won’t keep you alive much longer…
Anyway, were she or her husband entitled to NHS care, Mrs. Gates’ wealth would not disbar her from free care, and why should it ? Social healthcare takes no cognisance of wealth or income or turpitude: it would be like saying street-lighting is there for all, but the rich must pay a premium.
And… belonging to a wealthy family in no way guarantees they will spend that wealth on your health. Years ago I read that the Arch-Randian Hetty Green’s son, Col. Green, lost his leg as a child because she cheaped out on care. Hetty Green was very rich.
Sure. There are lots of reasons any individual might choose one or the other, which is what is great about having the freedom to choose. The market might cause CheapMRI to close, or it might not, but it will be the collective activity of a whole market and not the personal choice of a single individual.
Sure, but the whole market is made up of the actions of lots and lots of individuals. When those individuals have few incentives to pick the cheapest, competition alone can’t bring prices under control.
Based on 2009 statistics, the lower 50% of health-care spenders account for about three percent of total national health care expenditures (a rate that has been pretty consistent since the 1970s), while nearly half of all health care expenditures went to just five percent of the population.
The average bill for that 5% is $40,682. Compare that figure to your proposed $3000 deductible. What difference does it make to me if I spend $3K and my insurance company spends $37K, versus me spending $3K and the insurance paying only $27K, or even $17K? If saving them money costs me anything at all in time, effort, inconvenience, or discomfort, what is the economic incentive for me to bother, given that I’m going to be spending that same $3K either way?
Extended a little further, more than 97% of all health care expenditures in the U.S. are made by or on behalf of individuals who are going to far exceed that $3K deductible (average: $7900 per capita) and who therefore have little price sensitivity because the insurance (or Medicaid or charity spending, etc.) is going to pick up the balance. They’re never going to see any cash left over from that $3K, so they’ve got little to no incentive to minimize what the insurance company has to spend. The other half of the population, the ones whose average expenditures amount to less than $300 per capita, may have extreme price sensitivity, but three percent of total expenditures isn’t going to grossly influence the market.
When 97% of your market has little price sensitivity, how does price competition work?
Well, $3000 was just a talking point, not having had access to your data. Clearly $40,000 is too high, as that’s only 5% of the population anyway. For the 97%/$7900 per capita, there is a point where price sensitivity can be introduced (perhaps at $7900). If this experiment does drive prices down, then of course the per capita expense goes down, too.
I wonder if you have the curves for spending. 97%/7900 per capita is clearly a mean. With more granular data it might be interesting to see if there’s a figure that we can arrive at that introduces price sensitivity.
In some ways I imagine that for some people a high deductible health plan could introduce price sensitivity. As you say, the vast majority don’t consume the majority of the resources, and there’s (I’m guessing) likely a high proportion of users that never reach their maximum out of pocket expenses. These are people that I suspect might be price sensitive, however I don’t know how common these high-deductible plans are.
To the question, from another angle.
Yes, it does. For instance, should aromatherapy be paid for under a health insurance program? Is it scientifically sound? If not, then, no.