Saturday, September 26, 2009

Dillinger Rules

One panacea often floated by the right-wing is that the solution to high health care costs is competition. Competition, they say, will reduce health care costs. There's just one problem with that saying: It utterly contradicts the data. What the data says is, the more competition, the higher the healthcare costs.

There's a simple reason for this. Health care operates under the same rules as bank robber John Dillinger: Your money or your life. If you have a disease that will kill you if untreated, you will utterly impoverish yourself if that's what's needed to save your life, and health care providers know this. Since all providers in an area operate under Dillinger Rules, more providers in an area is just like having more muggers in an area -- the competition between muggers results in you having *less* money, not in you having *more* money, as each mugger tries to obtain his desired profit margin from the limited supply of clientelle for his "services". Someone who went to med school and ran up a $500K debt to do so, then borrowed another $500K buying or building a practice, needs a certain amount of cash to pay down that debt, and he will literally charge whatever is necessary to do so. If there is more competition, he will get fewer patients. If he gets fewer patients, he will charge each of them more. John Dillinger rules, remember -- all the doctors in an area have these same fixed expenses, so they'll all charge what they need to get their profit margin, and overall costs rise in the area.

So what's the solution to high medical costs? Well, that's a complicated question. But one thing is clear: Since health care operates under Dillinger Rules ("your money or your life!") rather than via the rules of the free market, the magic Free Market Fairy isn't going to just wave her magic wand and make everything right. Reality simply is, and we have the numbers: competition simply doesn't work in health care.

-- Badtux the Health Care Penguin


  1. I'd love to hear you on CNBC after one of those "competition" idiots spouts off.

    Love ya,


  2. I really like this post, thanks.

  3. It's very interesting that the people who spout that the free market is the answer to everything are incapable of understanding the difference between "if you don't buy this car, you don't have a new car" and "if you don't pay for this procedure, you die."

    Hey, gang. Maybe ... just MAYBE ... the market forces in play in these two cases are just a WEEEEEEEE bit different.

    Makes you wonder if these people actually believe the bulls*** they are slinging.


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