Why does free market economics NOT influence the cost of health care in the USA?

Question

It would seem to me that the services surrounding health care would be motivated to decrease their costs and prices to compete with each other for patients. For example, the cost of hospital care skyrockets compared to wages, products and services in other non-health care areas. Even my insurance company would likely send me to one hospital over another if the costs were less for similar care. What gives? .

Answer 1

That's a very interesting question, as the US have the most expensive health system in the world, while having one of the least efficient (mostly because of very limited outreach: most doctors are excellent, but many people can't afford them...).

One of the reasons for skyrocketting costs is the problem of responsibilty, and the lawsuit craze in the US. Doctor have to pay insurance to be protected against lawsuits if they ever make a mistake, and they also prescribe lots of useless tests just to lower the risks of being accused of negligence.

But the underlying reason is that Healthcare is one of the sectors in which an efficient government-run monopoly is far better than free competition. The best health system in the world (according to studies making international comparisons) is the French one, which is quite expensive and has a huge deficit, but in which the socialization of demand through a compulsory public insurance allows maximum outreach. Public hospitals are also extremely efficient and well run in most cases.
It's not always the case, as you can easily see the problems that happened with the NHS in the UK, so again building the system can be quite delicate.

Reasons for this increased efficiency of state monopolies can be found in the fact that they don't have to market themselves at all, and thus save a lot in advertizing.
It should also be noted that health can't really be analyzed as any standard good, mostly because it would lead to analysis where the supply actually "creates" the demand (that's your doctor who tells you which drugs to buy or which treatment to get, you don't make this choice yourself).
The doctor/patient relationship isn't the one of a seller and a consumer, because trust is central in it.

Answer 2

When you pay for healthcare, you pay a constant rate usually weekly. Why would anyone take their time calling hospitals or doctors for the "best deal" if in the end the result will always be the same, you pay the same.

If hospitals were forced by law to supply prices, and there was some benifit where your weekly health care costs would flucuate according to how much you spent then free market economics may have some impact on health care. It will also help as more doctors are available, clinics at wallmart, more hospitals ect.. give more choices. This would also inevitibly decrease the cost of health care.

Answer 3

The costs are highly inelastic because the costs of labor and good needed for healthcare are very high. There are few ways for hospitals to cut costs, they are already barely breaking even in most cases. At least, that is what I suspect. All the hospitals in an area are basically charging the minimum they can.

Answer 4

No. medical doctors are refusing Medicare by using fact there is an inflow of recipients, at a time that $500 billion became decrease from its funds. Medicare is cumpulsory. So people who could have the money for a secondary, complementary application, or pay funds, or use a private scientific well-being assurance, do. It in simple terms expenses so lots extra. EDIT And related to medical doctors dropping Medicare, they are additionally doing it by using new well-being mandates, like digital records, and stuff like that. it relatively is a fact.

Answer 5

Because of the GOVERNMENT regulations in health care. They cap limits that can be charged for many drugs, charges of both the insurance companies and providers. The government and everyone else involved cannot take your house to get payment for health care edpenses. It's a tightly limited arena. They charge astronomical prices to get top dollar to cover other expenses that are not paid.

Answer 6

There is a monopoly of power and the drug companies are working together to keep drugs and health-care costs outrageously high.
The people elected to government are helpless because every one of them is lobbied/bribed/paid-off by these giant super rich drug companies. It is one of the most corrupt systems in the U.S. we need national health-care and we need to make it illegal to get rich off of other peoples health problems.

Answer 7

Coming from one of the countries that export medical personnel to the US (that's the Philippines) I'm guessing its a lack of supply. Maybe if more americans studied to become doctors and nurses, and be willing to be paid less, then the price of medical care will also go down.