Having the state predict local and regional demand for healthcare services may sound useful for planning purposes, but it is at best merely a replacement for the empirical (or analog) demand measurement the marketplace naturally provides on its own. Other problems arise, too, like the one the writer describes.
COPN – Don’t leave home without it
Published
The COPN is one of those ideas central planners think is for the public good only because they don’t believe in markets.
It’s really no different than requiring permissions from auto dealerships for a Jiffy Lube to open in their territory. It’s the Jiffy Lube that keeps them from charging $80 for an oil change.
It is excess capacity in the marketplace that keeps prices down.
LikeLike
“It is excess capacity in the marketplace that keeps prices down.”
So truthy! Except in healthcare prices go UP when there is excess capacity. Why? Because they can charge whatever they damn please and they do. So with fewer “customers” they have to charge more to recover their fixed costs and generate the profits they want. This is the actual pattern that lead to COPNs in the first place.
LikeLike
Really?
In 40 years in health care I never saw that to be the case.
Health care does have the complicating factor of insurers selecting providers, laboratory and imaging services from participating provider panels, but the insurers are very aggressively shopping and negotiating price.
Health care prices go up for a number of reasons, but excess capacity is not one of them. COPNs are anticompetitive and protect the high price providers from competition.
LikeLike
Dentistry is a very different market situation than life and death healthcare.
LikeLiked by 1 person
Same insurers.
Health care is mostly delivered through Participating Provider Panels. Insurers negotiate with providers and the advantage is definitely on the insurer’s side. That’s why you see providers becoming parts of large groups in order to have at least some negotiating power.
Sure, you as an individual with an inflamed appendix would have very little ability to negotiate a fee, but Humana buys appendectomies in bulk at a price you could never get.
LikeLike
Facilities governed by COPN are nothing like a dental practice.
LikeLiked by 1 person
RE: “insurers are very aggressively shopping and negotiating price.”
That’s true. Historically, those negotiations have occurred behind closed doors, with insurance companies pursuing a slightly (but significantly) different set of incentives than patients. I contend that this structural set of relationships has distorted the demand for healthcare services from what it naturally would be if the demand were solely patient-based/driven.
Of course, insurance makes access to healthcare available for many people who couldn’t afford it otherwise. The devil in the details is that insurance financing allows prices to rise to what insurance companies, not patients, can afford. That’s the essence of insurers shopping and negotiating.
I believe the insurance model for healthcare financing can’t work for structural reasons and should simply be made illegal.
LikeLike
“… simply made illegal”
No radical extremists here. Move along. Move along.
LikeLiked by 1 person
RE: “No radical extremists here. Move along. Move along”
What’s radical? Ponzi schemes are illegal. Insurance is not a Ponzi scheme, but the economics are just as unsustainable.
LikeLike
What’s radical?
Making insurance illegal. Duh!
LikeLiked by 1 person
I believe the insurance model for healthcare financing can’t work for structural reasons and should simply be made illegal.
LikeLike
RE: “The COPN is one of those ideas central planners think is for the public good only because they don’t believe in markets.”
Exactly.
LikeLike