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Who: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
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Why Health Care Cannot Be Left to Free Markets

13 July 2013 | Pago Pago, American Samoa
Kimball Corson
Why Health Care Cannot Be Left to Free Markets

More than forty years ago economics Nobel Laureate Kenneth Arrow explained why, but since then, all concerned have acted as though they do not understand or believe him. His analysis is ignored because it is incompatible with people's preconceptions or their financial interests.

In a nutshell, Arrow's position is free markets fail in this area because excessive uncertainty substantially destroys competition. Markets can deal well with risk which is probabilistic, but not uncertainty. The former is a known range of outcomes, each with an attending probability. Uncertainty is ignorance of the plausible outcomes and their probabilities. Markets fail where there is future uncertainty of the product or service involved, its price or both. The market for health care entails both fundamental uncertainties and others as well. I explain.

Typically, a customer or patient does not know well in advance what medical care he will require, when he will require it, from whom he will obtain it, where he will obtain it, what it will cost, whether it will be effective or how he will pay for all of it. That is, he faces product or service uncertainty (as to type and effectiveness) uncertainty regarding the timing of his purchase, uncertainty regarding the identity of the supplier, uncertainty regarding price and uncertainty regarding how he will pay for it, as such expenditures are usually large or very considerable, especially in the US.

In this context, shopping around by the consumer/patient, or, additionally, hospital efforts seeking to acquire patients in the open market does not typically occur which is to say that by and large competition on both the buyer and seller sides fail. The buyer does not know what he will need, neither does the seller and of course, the price to be paid for it is up in the air. The system is riddled with uncertainty, competition largely fails on both sides of the market and in turn the market fails to do what markets usually do best, which is minimize costs, allocate resources optimally and handle all persons needs optimally given the true constraint of scarce resources.

Specific, prospective and elective care is an exception, but not a large enough one to matter or alter the conclusion that the market for health care fails for want of product and price uncertainty and the competition that is impossible in their presence. Yet we continue to try. The result is US health care costs are double the average in the other 32 advance OECD nations, patient care (measured in doctor/nurse hours of attention) is only 68 percent of what it is on average in those other advanced nations, and the health outcomes are substantially worse than in those other nations, as measured by infant mortality, longevity, recovery rates and occurrences and the like. So much for the argument American health care is better on average.

All of the other 32 advanced OECD nations have single payor national health care systems to obviated the problems Arrow identified long ago, but vested and profitable financial interests in the US, which account for those increased health care costs, block a comparable solution or system for the US by successfully lobbying against it within the political process to Congress.
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Vessel Name: Altaira
Vessel Make/Model: A Fair Weather Mariner 39 is a fast (PHRF 132), heavily ballasted (43%), high-aspect (6:1), stiff, comfortable, offshore performance cruiser by Bob Perry that goes to wind well (30 deg w/ good headway) and is also good up and down the Beaufort scale.
Hailing Port: Lake Pleasant, AZ
Crew: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
About:
Kimball Corson: I am a 74 year old solo sailor, by choice. However, I did take on a personable, but high maintenance female kitten, now a full grown cat, named KiKiPoo when she is sweet, or KatKatPo after she has just killed something like a bird or bat. [...]
Extra:
Although I was a lawyer and practiced law with good success for thirty years, creating significant new law, I never really believed in the law, the politics of law or in the over reaching self-interest of most lawyers I met. Too much exposure to Nietzsche and other good and seriously thoughtful [...]
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Profile

Who: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
Port: Lake Pleasant, AZ