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.