Lidl/Aldi v. The Health Service

[campbeca]

I made my maiden voyage to my local Aldi the other day. To anyone who hasn't been I can't recommend it enough (although I haven't consumed the groceries yet so I may repent).

As I was walking around I thought of how this is truly a triumph of the free market. Health much like food is a necessity but government chooses not to involve itself in food (save 'food safety') with the predictable result that food costs less and less and the department of health is 'angola'.

Could we learn from this comparison and attempt to scale back the ambitions of the health service and allow regulated competition enter the health market?

Naturally we couldn't leave people with cancer or other diseases to the control of the market but could we consider means testing cash payments to people stricken by disease which they would use and choose the hospital that offers the best value?

[rockofcashel]

I made my maiden voyage to my local Aldi the other day. To anyone who hasn't been I can't recommend it enough (although I haven't consumed the groceries yet so I may repent).

As I was walking around I thought of how this is truly a triumph of the free market. Health much like food is a necessity but government chooses not to involve itself in food (save 'food safety') with the predictable result that food costs less and less and the department of health is 'angola'.

Could we learn from this comparison and attempt to scale back the ambitions of the health service and allow regulated competition enter the health market?

Naturally we couldn't leave people with cancer or other diseases to the control of the market but could we consider means testing cash payments to people stricken by disease which they would use and choose the hospital that offers the best value?

See Campbeca, theres where you argument falls down immediately.

Why interfere with "the market" for cancer care or other diseases (what other diseases). Why not interfere with it for fixing broken fingers ? Or stitching peoples heads after fights on a Friday night ?

You see, once you begin the way you've begun, i.e. in specifying interference in "the market", you diminish the effect of the market.

There are lots of other considerations also. How could you allow the free market to be the only administrator of healthcare, if by being subject to market forces, less densly populated, and hence less profitable areas, will see a flight of health services.

Don't let me knock you completely. There are huge inefficiencies in the administration and delivery of health services in this state. A dose of a certain level of market practices would not go amiss to solve some
problems, and create a better service. But throwing health to the market wolves will simply create a massively inequitable health service (See the USA).

For all those who think the market can deliver on all ills in economics, through the power of competition, let me advise you of a few rules.

Perfect Competition requires at least four criteria being met for any market.

1. All in the market are price takers (many small firms, too small to have no controlling influence on either the price at which a service is sold, nor to control the level of output produced)

2. The service provided must be homogenous (all providers providing exactly the same thing)

3. There must be perfect information in the market (buyers must know where they can get the product at all prices it is being delivered at, and suppliers must be perfectly aware of the cost of production of their competitors)

4. There must be costless entry and exit to the market (Suppliers can get in and out of the market at will


Practially NO SUCH TYPE OF MARKET EXISTS. Thats why competition in the truest form, that all you free marketeers wish we had foisted upon is, will be the answer to pareto efficiency in the delivery of any product.

This includes healthcare.

[Biffo]

As is often the case in these situations the Rock is correct, the idea of perfect competition is flawed and could not apply in the area of healthcare.

[campbeca]

good comprehensive post

Interfering was possibly the wrong word. By giving people cash payments you allow poor people to get care but still allow market efficiency. It's actually becoming a more popular idea in economics

As regards the ballygobackwards argument.... I don't know, harrier jump jet ambulances to bring people to Dublin???

The argument that perfect markets are rare is true but is a throwing the baby out with the bathwater scenario

[factual]

I made my maiden voyage to my local Aldi the other day. To anyone who hasn't been I can't recommend it enough (although I haven't consumed the groceries yet so I may repent).

As I was walking around I thought of how this is truly a triumph of the free market. Health much like food is a necessity but government chooses not to involve itself in food (save 'food safety') with the predictable result that food costs less and less and the department of health is 'angola'.

Could we learn from this comparison and attempt to scale back the ambitions of the health service and allow regulated competition enter the health market?

Naturally we couldn't leave people with cancer or other diseases to the control of the market but could we consider means testing cash payments to people stricken by disease which they would use and choose the hospital that offers the best value?

See Campbeca, theres where you argument falls down immediately.

Why interfere with "the market" for cancer care or other diseases (what other diseases). Why not interfere with it for fixing broken fingers ? Or stitching peoples heads after fights on a Friday night ?

You see, once you begin the way you've begun, i.e. in specifying interference in "the market", you diminish the effect of the market.

There are lots of other considerations also. How could you allow the free market to be the only administrator of healthcare, if by being subject to market forces, less densly populated, and hence less profitable areas, will see a flight of health services.

Don't let me knock you completely. There are huge inefficiencies in the administration and delivery of health services in this state. A dose of a certain level of market practices would not go amiss to solve some
problems, and create a better service. But throwing health to the market wolves will simply create a massively inequitable health service (See the USA).

For all those who think the market can deliver on all ills in economics, through the power of competition, let me advise you of a few rules.

Perfect Competition requires at least four criteria being met for any market.

1. All in the market are price takers (many small firms, too small to have no controlling influence on either the price at which a service is sold, nor to control the level of output produced)

2. The service provided must be homogenous (all providers providing exactly the same thing)

3. There must be perfect information in the market (buyers must know where they can get the product at all prices it is being delivered at, and suppliers must be perfectly aware of the cost of production of their competitors)

4. There must be costless entry and exit to the market (Suppliers can get in and out of the market at will


Practially NO SUCH TYPE OF MARKET EXISTS. Thats why competition in the truest form, that all you free marketeers wish we had foisted upon is, will be the answer to pareto efficiency in the delivery of any product.

This includes healthcare.

There are a number of reasons not to use the market here. The fact that this is an important part of life isn't in itself a reason: the SDLP person (campachea) is right to note that food is a really important market and to be fair its pretty competitive and there is no huge problem of prices being greater than marginal cost. (Although monopsony power may mean a bad deal for the suppliers).

The real difference between health and food is partly as ROC says to do with the lack of information but its also to do with equality.

The that there is a lot of risk in the health market. You might find yourself being a high risk type of person that nobody in a free market would insure (for example if prone to cancer) except at a very high rate of insurance. If this risk is known to the firms then you'd pay a hell of a lot to cover your costs and that would quite simply be a situation of inequality (between people with different health risk profiles) that we cannot permit.

(There is also a problem if the risk is not known to the firms. Here the whole market starts to operate badly as firms start to require high payments even from people who are low risk , which means the latter drop out of the system (the "adverse selection" problem)).

There is also the fact that healthcare is expensive and the poor simply couldn't afford it. We just can't tolerate a society in which the poor also have worse healthcare.

Health is the most important thing in our lives. If you ever lose it you will realise that. Those who have relatives or friends who are sick know this.

A civilised society has a good healthcare system and one which makes the best healthcare available to the poor.

We do not have a good healthcare system.

Sinn Fein have put healthcare at the top of their policy agenda.

Check out http://www.sfhealthpolicy.com/ which I think is one of Sinn Fein's strongest policy areas.

We really have to improve the healtcare system in this country.

[sean1]

Lidl's and Aldi's are the only supermarkets that I know of in Ireland that don't allow trade unions, and I therefore have no respect for them.

[campbeca]

Lidl's and Aldi's are the only supermarkets that I know of in Ireland that don't allow trade unions, and I therefore have no respect for them.

is that not illegal?

[campbeca]

.

I know it sounds like an elastoplast policy (well its not a policy i'm just talking) but surely we can legislate that health insurance firms cant get info beyond the bare necessities

Adverse selection is a problem in lots of insurance markets.

[factual]

.

I know it sounds like an elastoplast policy (well its not a policy i'm just talking) but surely we can legislate that health insurance firms cant get info beyond the bare necessities

Adverse selection is a problem in lots of insurance markets.

Its particularly bad in health, and health is particuarly important.

I think the main problem though is not to do with lack of perfect competition. Even if you had perfect competition I wouldn't want a fre market.

The reason is that in health a good quality treatment is often hugely expensive and low income people couldn't afford the best care a lot of the time.

In food it doesn't matter so much that rich people buy caviar and so on. But in health the inequalities of some people having little or no healthcare (because they are too poor) and others having extremely high quality healthcare makes a totally unequal and uncaring society. Especially in Ireland where the difference between rich and poor is now so large.

[Biffo]

Check out http://www.sfhealthpolicy.com/ which I think is one of Sinn Fein's strongest policy areas.

That says it all really.