Cost, Price and Triage
The cost of medical care has always been confusing because the target has been the collective cost, not the price of individual encounters. And people often confuse cost with price. For example increasing availability of providers would presumably drive the cost of their services down but might increase the aggregate cost by making them more affordable to marginal patients. The classic way of managing this problem is through restricted access. The free market restricts on the basis of expense; not everyone can afford dental care or plastic surgery so not everyone gets it. Government controlled systems control access through bureaucracy--meeting arbitrary milestones and restricted access through bottlenecks. Should a drug addict get a liver transplant? Should an eighty year old man get dialysis?
Survey results this week showing that a third of people with chronic or persistent illnesses who had been rejected for insurance claims said their conditions worsened following the rejection. According to CBS, the survey is the latest development “in the ongoing tug of war between doctors, pharmaceutical companies and insurers over just how much insurers should be involved in the decision-making role for patient care.” The article adds that this study may “raise questions about how insurance practices have changed,” in particular, since the ACA took effect.
Health insurers denied coverage for nearly a quarter of the Americans with chronic conditions or persistent illnesses. The U.S. General Accounting Office study based on early 2010 data indicated that denials then were only 19 percent, and a study by the American Medical Association in 2013 found that figure even lower.
The desire to feel better is universal. Resources are not. That conflict must be resolved in some way. After all, politicians cannot repeal the laws of supply and demand, they just say they can. Costs can sometimes be pressured but price is arbitrary. The essence of decreasing price is where, and how, to create the shortages.
The cost of medical care has always been confusing because the target has been the collective cost, not the price of individual encounters. And people often confuse cost with price. For example increasing availability of providers would presumably drive the cost of their services down but might increase the aggregate cost by making them more affordable to marginal patients. The classic way of managing this problem is through restricted access. The free market restricts on the basis of expense; not everyone can afford dental care or plastic surgery so not everyone gets it. Government controlled systems control access through bureaucracy--meeting arbitrary milestones and restricted access through bottlenecks. Should a drug addict get a liver transplant? Should an eighty year old man get dialysis?
Survey results this week showing that a third of people with chronic or persistent illnesses who had been rejected for insurance claims said their conditions worsened following the rejection. According to CBS, the survey is the latest development “in the ongoing tug of war between doctors, pharmaceutical companies and insurers over just how much insurers should be involved in the decision-making role for patient care.” The article adds that this study may “raise questions about how insurance practices have changed,” in particular, since the ACA took effect.
Health insurers denied coverage for nearly a quarter of the Americans with chronic conditions or persistent illnesses. The U.S. General Accounting Office study based on early 2010 data indicated that denials then were only 19 percent, and a study by the American Medical Association in 2013 found that figure even lower.
The desire to feel better is universal. Resources are not. That conflict must be resolved in some way. After all, politicians cannot repeal the laws of supply and demand, they just say they can. Costs can sometimes be pressured but price is arbitrary. The essence of decreasing price is where, and how, to create the shortages.
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