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Do you have evidence that you are normative in terms of comparison shopping for healthcare? It seems to me that costs won't vary much between providers and that comparison shopping would be a mostly useless thing to do in the U.S. Indeed, your own experience in comparison shopping is that the price differential was not that great.

Health insurers in the U.S. have a captive audience. Most people before the age of 60 who have insurance get it through their employer. What the employer pays for insurance comes out of money that would be paid in salary. It seems to me that the insurance companies don't have a great incentive to lower cost of healthcare. On the surface the evidence suggests that they haven't since procedures cost so much more here than elsewhere.




I don't live in the US, but India does have a health care system fairly similar to the US. The biggest difference is it has less red tape than the US, and insurance companies play a minor role. Most people pay out of pocket and comparison shop.

Costs here did vary significantly for the surgery - the dirty hospital was 0.9-1.5lac (depending on general ward vs private room, etc), the place where I had it done was about 85k. It was the MRI for which the price differential was minor.

I was actually pretty surprised that the price gap was so big - I wouldn't have expected the city hospital to be almost 2x as much as the private hospital.

It seems to me that the insurance companies don't have a great incentive to lower cost of healthcare.

Insurance companies don't have a great incentive to lower the cost of their biggest expense? Um, ok.

On the surface the evidence suggests that they haven't since procedures cost so much more here than elsewhere.

The relevant counterfactual is what procedures would cost absent insurance company negotiation, not what they would cost if US patients had as few MRI's as French patients and US health care workers were paid as little as their French counterparts.


> The biggest difference is it has less red tape than the US, and insurance companies play a minor role.

If true, you are glossing over a pretty substantial difference between the two systems.


I'm not so much glossing it over as emphasizing it. The Indian healthcare system is like the US healthcare system, except people are not insulated from the price. As a result, people shop around.

I.e., Nitramp is wrong, people are capable of shopping around, all they need is incentive to do so.


And then ignoring most of the others, like the truly colossal difference in money spent per capita and the fact that the public health system, while so chronically underfunded that it is unable to do it's job, is at least nominally charged with trying to provide a free universal service paid for by taxation.


Insurance companies don't have a great incentive to lower the cost of their biggest expense? Um, ok.

They only have such incentive if it increases their profit margins. There are a number of scenarios where this wouldn't be the case. They aren't interested in lowering cost just for the sake of lowering cost. I don't have data either way and so my belief in this is easily shaken.


I'm confused, could you name a situation in which this wouldn't be the case? The profits that an insurance company makes are the amount it charges for its services minus the amount that it pays out, it seems that reducing the amount they pay out would necessarily increase profits.

I'm not aware of any insurance companies that charge on a cost-plus basis, and the insurance companies can't just charge companies as much as they want (or else they'd charge an infinite amount).


One situation: if they believe that their competitors will follow suit. Unless an insurance company concocts a way to lower costs that isn't easily replicable, they have little incentive to do so. Otherwise, they're just triggering a race to the bottom.


By this logic, no company in any industry should attempt to reduce costs in an easily replicable way. Since the world doesn't behave that way, there must be something wrong with your logic.


Or maybe there's nothing wrong with my logic. Maybe there are other forces at play that, when all mixed together, result in companies sometimes seeking cost reductions, and sometimes not seeking cost reductions.

Parent was looking for an example to explain a possible situation, not a dynamic that the entire world must obey at all times.




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