Health insurance prices up

Up, up, up, everything's costing more and more. According to the LA Times (via Ezra Klein):

Workers with job-based coverage for their families saw earnings rise 3% from 2001 to 2005, while their health insurance premium contribution increased 30%, according to the study by researchers at the State Health Access Data Assistance Center at the University of Minnesota.

What I can't understand is why Republicans think that doing nothing about this sort of thing will win them elections.

Rice prices up 35% in SF

It's caused a run on rice in Chinatown:

At the Sun Kau Shing grocery, for example, 50-pound bags of long-grain rice were selling for $32 to $38 on Tuesday. That, customers said, was an increase of about 35 percent over a month ago. It was enough to stop amazed pedestrians in their tracks.

It appears that higher energy costs are part of what's driving the prices up:

Likewise, while California rice farmers have begun planting this year’s crop of half a million acres, the high prices may prove only enough to cover their increased costs of fuel and fertilizer, industry officials say.

“Diesel is up 40 percent, and fertilizer has doubled,” said Tim Johnson, president and chief executive of the California Rice Commission, a trade group in the nation’s second-largest rice-producing state, after Arkansas.

Pretty alarming.

The market doesn't have an M.D.

An essay by one Sandeep Jauhar, M.D. talks about the difficulties of treating patients without gouging them. His cardiologist friend relates the story:

“When I started in practice, I wanted to do the right thing,” he told me matter-of-factly. “A young woman would come in with palpitations. I’d tell her she was fine. But then I realized that she’d just go down the street to another physician and he’d order all the tests anyway: echocardiogram, stress test, Holter monitor — stuff she didn’t really need. Then she’d go around and tell her friends what a great doctor — a thorough doctor — the other cardiologist was.

“I tried to practice ethical medicine, but it didn’t help. It didn’t pay, both from a financial and a reputation standpoint.”

This, I think, really illustrates a problem with the argument that the free market should primarily determine how healthcare is distributed. The idea is that an informed consumer choosing between competing healthcare providers in an unfettered market will result in the most efficient distribution of healthcare, with the lowest costs.

But as the cardiologist's story shows, since people are not experts in medicine, it is impossible for them to accurately judge the performance of a doctor. People end up making irrational decisions based on superficial impressions of thoroughness, or on whether the doctor's methods and equipment seem cutting-edge, or some other such thing.

Moreover, because the stakes are so high where a person's health is involved, patients become extraordinarily risk averse and their decision process becomes clouded with emotion, resulting in more services and higher costs. For example, let's say I take my car to the shop and the repairman tells me that I should have some moderately expensive work done on the engine. He says that if I don't, there's a .01% chance that the engine will be ruined. Do I have the work done? Probably not--it's a risk I can live with. But suppose a doctor tells me that if I don't have a moderately expensive treatment done, then there is a .01% chance that I will die a slow, painful death. I don't know about you, but I'd get the treatment, if I could afford it, even though the likelihood of me dying would be very remote.

So it seems to me that the idea of letting the patient make an "informed decision" is problematic, because the patient lacks expertise and has distorted levels of risk aversion (i.e., is overcareful).