From: DGS4@psuvm.psu.edu
Newsgroups: alt.politics.bush
Subject: Re: Bush/Quayle's Health Plan -- vouchers?
Date: 10 Sep 92 01:19:10 GMT
 <1992Sep9.180602.24891@CSD-NewsHost.Stanford.EDU>
 <92253.150552DGS4@psuvm.psu.edu>
 <1992Sep10.001658.1498@CSD-NewsHost.Stanford.EDU>
Organization: Penn State University

In article <1992Sep10.001658.1498@CSD-NewsHost.Stanford.EDU>,
andy@SAIL.Stanford.EDU (Andy Freeman) says:
>
>In article <92253.150552DGS4@psuvm.psu.edu> <DGS4@psuvm.psu.edu> writes:
>>In article <1992Sep9.180602.24891@CSD-NewsHost.Stanford.EDU>
>andy@SAIL.Stanford.EDU (Andy Freeman) says:
>>>I note that any provider can basically decide on how much it wants to
>>>spend on overhead (read "waste").  People who think that a much lower
>>>overhead system is possible in the US without changes that have
>>>nothing to do with payer systems can prove that any time they want.
>>
>>You note incorrectly.  You should do some studying of health care
>>business practices, particularly the arrangements between providers and
>>insurers, the literature on monopoly conditions in medical care and
>>insurance markets, and the importance of uncertain medical judgement.
>
>Try again.  Other than MDs and facilities who have EXCLUSIVE ties to
>HMOs, MDs and facilities will take money from ANYONE, and the
>exclusive arrangements are quite rare.  Given that, no monopoly is
>possible unless consumers insist on paying more or avoiding your

You seem to be confusing monopoly and monopoly power.  Every economic
study I've seen argues that medical care markets, including both physician
care and hospital care are characterized by monopoly power.  In particular,
markets for physician care are modeled as monopolisitic competitive, while
hospital markets are typically modeled as oligopolistic.  The prevailing
view in economics is that market power appears in physician markets because
of consumer uncertainty about the quality of medical care and the high costs
of consumer search.  This also plays a role in hospital markets, with
economies of scale being important here, too.  As a result consumers are
very insensitive to differences in price, and, some studies show, take
attempts to compete on price as a sign of low quality.


>service.  Remember, payer systems only have to deal with providers and
>consumers; they don't have to deal with insurers at all.  (In fact,
>the payer is an insurer.)

I really am baffled as to what you mean by this last sentence.  Do you
mean a single payer system doesn't have to deal with insurance companies?
Is that a criticism of such a system?  Numerous countries have multiple
payers but single payment systems, in the sense that all payers pay the
same price and use the same forms.  You can certainly have multiple payers,
yet have a single payment system.


>It doesn't take many customers to get a large enough pool so that the
>risks are predictable.  Moreover, if overhead really is an issue and
>can be easily wiped out, it's quite a cushion.

Again, I don't see your point here.  Can you explain what you mean?  To say
"risks are predictable" in health insurance must be a joke, when you consider
medical inflation and the fact that risk charges are quite high for groups
less than 100 persons.



Dennis G. Shea, Penn State
<<DISCLAIMER>>
Ain't nobody's bizness but my own. I'll be happy to accept all
the credit for anything I've written.  It's funny, however, how
employers only acknowledge the profitable ideas.
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