I want to commend an interesting conversation between Megan McArdle econ prof Bart Wilson on the problems with using fiat pricing in healthcare. It’s an interesting discussion and makes a pretty good backgrounder for some of the fundamental economic issues in healthcare.
My questions are somewhat different. For one thing how can a really free market in healthcare persist in the presence of a supply bottleneck? The supply bottleneck in healthcare is maintained through licensing, limitations on accreditation of med schools, restrictions on med school class sizes, intellectual property law, and certificates of need, just to name a few of the devices. I think that in such an environment you’ll have cartel pricing rather than market pricing.
Secondly, much of the “demand” in healthcare is supplier-created. As long as that’s the case doesn’t it place nearly all of the influence in determining the market-clearing price in the hands of the suppliers?