The following economic problems with the American health care system cannot simply be solved with a freer market; regulation is required:
- Health insurance is a natural monopoly because of economies of scale.
- Health insurance which people can opt-out of suffers from adverse selection.
- Because emergency rooms cannot turn people away even if they cannot pay, it is a de-facto insurance system, which suffers from moral hazard.
- There are economies of scale in providing healthcare, so natural monopolies will form.
- Licensing required to become a healthcare provider is a barrier to entry into the industry.
- A patent on a drug or medical device gives a monopoly to the patent holder.
- A patient's healthcare decisions and consequent health affect more than just the person himself or herself. This is an externality. (The canonical example is communicable diseases.)
- Patients exhibit systematic irrationality in healthcare decisions which have major but low-probability consequences or consequences only in the very far future.
- Patients exhibit systematic irrationality when choosing among extremely complicated health insurance plans.
No comments :
Post a Comment