Wednesday, September 21, 2011

An American with U.S. Healthcare in China

Brian Abadia emails:
I am an American student currently studying in China, and recently had an experience with insurance that clearly demonstrates the moral hazard at work in health-care. My girlfriend and I recently had an encounter that required us both to get a precautionary rabies vaccine. I went to a western run and staffed hospital (because I was covered by my American University's health insurance), while she went to a local hospital (because she is a Chinese local without the same coverage). For one specific shot we needed, she was billed about 1,000 rmb (~$150 USD), while I, for the EXACT same shot, was billed about 10,500 rmb (~$1,600 USD)! Mind you, this bill was ONLY for the shot, not hospital expenses, doctors fee, etc. I even looked at the box of this shot: EXACTLY the same, manufacturer and all. When I asked my doctor why it was so expensive compared to my girlfriends shot, he explained that because most of their clients were westerner with insurance, they didn't really care about the expense. After-all, why would they? They're not paying for it. This experience demonstrates firsthand the resulting moral hazard that comes about when the connection between expense and payer of that expense is lost. What incentive does the Hospital have to maintain low prices? Is it any wonder that our health insurance costs in the U.S, are rising at such a rapid pace?
The structure of healthcare and health insurance in the United States is largely structured by the government. You would never have this kind of system with a free market. Naturally, though, we are heading in the wrong direction---with even more regulation, even if Obamacare is stopped.


  1. Great anecdote, Bob-

    It's just like Rothbard's "shoes" analogy- if the gov't didn't "help" health care, and provide it, who would?

    If the gov't treated health care like cell-service (bad example now) or computer manufacture (ditto) or software (uhhhhh, is there an area the gov't DOESN'T have major control?) then it would be cheaper, better and advance more swiftly.

    They are strangling us slowly...

  2. Yep.The stranglehold by the medico-drug cartels in this country is pretty wholesome.They work tirelessly with your leftislators in Washington to keep you permanently in debt and somewhat alive, so you can keep paying into their HMO mouse trap system.

  3. @ RW. You write:
    "The structure of healthcare and health insurance in the United States is largely structured by the government. "

    Wouldn't it be more accurate to say?:
    "The structure of healthcare and health insurance in the United States is largely structured by the government WITH their corporate partners."

    I could see how this type of story might bolster the socialized medicine argument. Just like an Austrian might say that the current US system is not really a free-market system, a socialist might say that our current system isn't really a socialist system either.

  4. But couldn't an insurance company just make a bunch more money by checking up on the costs?

  5. From what I understand (and I am not an expert--I have a friend in medical billing), the insurance companies never pay the full amount billed--the final price is always negotiated to some percentage of the monthly invoices. This in turn causes the providers to put pressure on driving the "list" price up in hopes of getting the same percentage of a higher fee. Since these "list" prices are regulated (ostensibly to keep them low-hahaha)the un-insured or self-insured individual gets stuck with a ridiculously high invoice for a minor procedure.