The Market for Health Care

by Russ Roberts on January 16, 2006

in Health

Any time someone complains to you about how bad the market for the health care works, it’s important to remind them that most areas of the health care system are highly regulated in a top-down fashion or heavily subsidized.  The top-down part is often hidden, but today, at least, it’s out in the open.  From the New York Times (rr):

With tens of thousands of people unable to get medicines promised by
Medicare, the Bush administration has told insurers that they must
provide a 30-day supply of any drug that a beneficiary was previously
taking, and it said that poor people must not be charged more than $5
for a covered drug.

Someone should ask Samuel Alito why this is constitutional.

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the Radical January 16, 2006 at 2:48 pm

Forcing companies to sell hundreds of $$ worth of drugs for $5, that'll do wonders for the heath care market.

Chris Meisenzahl January 16, 2006 at 4:06 pm

I agree completely w/ your sentiment. This thing is an unconstitutional and immoral tratedy. ;-(

Aaron Krowne January 17, 2006 at 1:38 am

I can't see how the health care we have is even remotely a market, let alone a free one.

For one, where are the prices? I suppose in extreme, border cases, one sees the prices when one does not have enough coverage.

But for most routine and typical care, you don't see a price until a quarterly insurance statement comes in the mail, and even then, why bother looking, since its just telling you how much the *insurer* paid?

Health care providers love not having to discuss a price (who would ask, anyway?), because it lets them charge a high one.

Basically, there's absolutely no moral hazard in the system, for any party. What a mess! And people are shocked we have the most wasteful system in the world!

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