> Health care is an unusual product in that it is difficult, and sometimes impossible, for the customer to say “no.”
But there are other products that we absolutely need to stay alive that don't suffer the runaway prices we see in healthcare.
The best example is food. You can't say no to buying food.
So why don't food sellers have us over a barrel? Because consumers see prices and force the many providers to bid competitively against each other.
My point is that inelastic demand is not the fundamental cause of high costs in healthcare. It has much more to do with the many layers of abstraction we place between patient and provider that prevent price signals from passing through.
But there are other products that we absolutely need to stay alive that don't suffer the runaway prices we see in healthcare.
The best example is food. You can't say no to buying food.
So why don't food sellers have us over a barrel? Because consumers see prices and force the many providers to bid competitively against each other.
My point is that inelastic demand is not the fundamental cause of high costs in healthcare. It has much more to do with the many layers of abstraction we place between patient and provider that prevent price signals from passing through.