It is not a fee-for-service relationship. The price system in medicine has been mangled beyond recognition. Patients are not told prices; doctors avoid, even disdain, any discussion of prices; and the prices make no rational sense even if and when you do discover them. This destroys all ability to make rational economic choices about healthcare.
I think pricing of medical services faces somewhat of a breakdown in the normal price-setting mechanism of markets. For some random good like a sandwich or whatever the buyer can at least have a reasonable sense of how much they want it, the seller understands their costs to produce it, and the price gets established by this balance. But how is someone who seeks medical care really supposed to know how much they value a particular medical service? They would presumably have to rely on their provider, who is on the opposite side of the transaction. Insurers could somewhat serve this role, but I think people often look down upon this, and also it seems likely to be a difficult and imperfect process.
Yes, true, but somehow we don’t have that problem with veterinary care, even when there’s insurance involved. I don’t really know how likely it is for any given treatment to help my cat, or for how long, but the vet gives me a list of options and each of their prices, in advance, and then that’s what I pay. I pick based on a combination of my understanding, their recommendations, and my budget. It’s generally far more humane, more empowering, and less condescending than getting care for a human, because our society lets people take responsibility for their pets in ways it doesn’t let adults do for themselves.
Even besides that, though, the reality is much, much worse than that in (human) medicine.
Depending on whether I have insurance and exactly which kind, the base price of a service—not what I ultimately pay, but the total number that I and my insurer pay—can vary by more than an order of magnitude. Even after the fact it can be really difficult to know how much anyone is paying anyone else. I’ve had three different situations, with different providers and insurers, in which the provider kept applying payments to the wrong line items, in ways that messed up who was supposed to pay what and when, that took months of calendar time and tens of hours of time on the phone to sort out.
As you noted, goods like prescriptions should be simpler than medical services to price out. But, when I have to fill the same prescription in different pharmacies (which is every month, because I travel full time), the price has varied by as much as a factor of a hundred between pharmacies or even by 2-10x month to month from the same pharmacy. The price depends on the insurer. The price can sometimes be higher with insurance than without, because I can’t combine insurance with various magic-seeming discount programs like GoodRx that are available to anyone and that some pharmacists will apply for you without you even asking. But it can sometimes also be ultimately cheaper to pay the higher price anyway depending on how your deductibles and copays work and when the magic plan year end date happens. Many pharmacies won’t tell you the price before your Rx is in their system, and once it is in the system, you may not be able to change whether or not to use insurance. For many medications it is difficult or illegal to move them to a different pharmacy at all, or it can only be done a certain number of times, or it can only be done after the first pharmacy has filled it at least once.
I think pricing of medical services faces somewhat of a breakdown in the normal price-setting mechanism of markets. For some random good like a sandwich or whatever the buyer can at least have a reasonable sense of how much they want it, the seller understands their costs to produce it, and the price gets established by this balance. But how is someone who seeks medical care really supposed to know how much they value a particular medical service? They would presumably have to rely on their provider, who is on the opposite side of the transaction. Insurers could somewhat serve this role, but I think people often look down upon this, and also it seems likely to be a difficult and imperfect process.
Yes, true, but somehow we don’t have that problem with veterinary care, even when there’s insurance involved. I don’t really know how likely it is for any given treatment to help my cat, or for how long, but the vet gives me a list of options and each of their prices, in advance, and then that’s what I pay. I pick based on a combination of my understanding, their recommendations, and my budget. It’s generally far more humane, more empowering, and less condescending than getting care for a human, because our society lets people take responsibility for their pets in ways it doesn’t let adults do for themselves.
Even besides that, though, the reality is much, much worse than that in (human) medicine.
Depending on whether I have insurance and exactly which kind, the base price of a service—not what I ultimately pay, but the total number that I and my insurer pay—can vary by more than an order of magnitude. Even after the fact it can be really difficult to know how much anyone is paying anyone else. I’ve had three different situations, with different providers and insurers, in which the provider kept applying payments to the wrong line items, in ways that messed up who was supposed to pay what and when, that took months of calendar time and tens of hours of time on the phone to sort out.
As you noted, goods like prescriptions should be simpler than medical services to price out. But, when I have to fill the same prescription in different pharmacies (which is every month, because I travel full time), the price has varied by as much as a factor of a hundred between pharmacies or even by 2-10x month to month from the same pharmacy. The price depends on the insurer. The price can sometimes be higher with insurance than without, because I can’t combine insurance with various magic-seeming discount programs like GoodRx that are available to anyone and that some pharmacists will apply for you without you even asking. But it can sometimes also be ultimately cheaper to pay the higher price anyway depending on how your deductibles and copays work and when the magic plan year end date happens. Many pharmacies won’t tell you the price before your Rx is in their system, and once it is in the system, you may not be able to change whether or not to use insurance. For many medications it is difficult or illegal to move them to a different pharmacy at all, or it can only be done a certain number of times, or it can only be done after the first pharmacy has filled it at least once.