a spoilered excerpt of an article linked by Dauric wrote:It's not a cost-plus system at all.
No, it's a market based system. They charge what the market will bear. It's hard to compare with cars, as each patient case is different but cars are pretty fungible. It's a bit more like pricing artwork, which is another example of "not a cost-plus" system. Also, being more of a service than a product
, the costs are much less material for medical care.
I think that's true to a certain extent, Jose, but if your treatment involves drugs--as almost all treatment does--there's a significant product cost involved.
The laissez-faire, let's see-what-the-market-will-bear approach works well for most things, but not for medical-related stuff. If we're talking cars, or clothing, or coffee, selling overpriced stuff to whoever's foolish enough to pay for it is fine. If people aren't willing to pay what you're charging, they can do without--no big deal.
But when the "sell-a-few-to-rich-people" business model trumps the "sell-a-lot-to-everyone" business model in the medical field, people die. The following examples of egregious price gouging, with life-and-death consequences, come to mind:
(a drug which formerly cost $1 per pill, was raised to $5,000 per pill overnight by Martin Shkreli, and then got "generously" reduced 50% to $750 in response to the bad PR)? People are still either paying $750 per pill for a drug that formerly cost $1 per pill, or doing without.
Remember the EpiPen
(a.k.a. inexpensive, widely-available epinephrine, packaged in a patented injector to make its administration a no-brainer for non-medical personnel like schoolteachers who might need to administer it)? It cost $56.64 per dose in 2007, when Mylan purchased it from Merck. It now costs more than $600 per dose, although it costs only about $30 to produce. Mylan has responded to the resulting bad publicity not by lowering the price for everyone, but by issuing coupons
to offset the costs for certain groups of consumers, which introduces its own set of problems.
And then there's Naloxone
, which reverses the effects of opioid overdoses. Increased demand has resulted in a recent price increase for Naxolone injectors from $690 to $4,500, leading my local paramedics and firefighters to stop purchasing as many as they really need. That's how the market rights itself.
Before the U.S. Supreme Court ruled, 9-0, that human genes cannot be patented
, the generally-regarded-as-best test for breast cancer and ovarian cancer genes had a list price close to $4,000 (as of this 2013 NYT piece
), thanks to Myriad Genetic Laboratories' monopoly on it. I'm all for medical researchers being able to profit from the fruits of their labors, especially since that money can fund future breakthroughs, but come on.
Drug and medical equipment companies are in the business of making money for their shareholders, not saving lives.
Likewise, insurance companies are in the business of making money for their shareholders, not saving lives.
Insurance companies negotiate deals to reduce the price of drugs and equipment for certain groups of people, but that makes the prices higher for the people who can least afford them--i.e., the people who can't afford to buy insurance, and thus have to pay the list price out of pocket, or just do without. (Speaking of those who can least afford to pay for medical care, what genius thought of linking health insurance to employment, so that when people get too sick to work, and thus lose their income, they lose their medical insurance as well? But I digress.)
TL,DR: The evidence seems to suggest to me that laissez-faire capitalism really isn't the best way to provide medical care.