September 21, 2014
The NYT had a fascinating piece on medical care freelancers: health care professionals of various types who show up at hospitals and pass along huge bills to patients undergoing treatment. According to the article these contractors generally do not make their employment status known to patients at the time, so they would reasonably assume that they are hospital staff who would be covered under normal billing procedures. Patients often first discover that this is not the case when they get bills for services, which can run into the tens or hundreds of thousands of dollars.
The piece explains that there have been some efforts to regulate these practices, but the industry has been largely successful in blocking serious restrictions. This presents another case of the enormous potential gains from free trade in health care. Other wealthy countries do not have medical scammers running around in their hospitals. If people could arrange to go to Canada, Europe, and many of the top notch facilities in the developing world, they could save a huge amount on their procedures, even after covering the cost of travel for themselves and their family members. Large-scale trade would likely put the medical scammers in the United States out of business quickly, since hospitals that did not bar them would not be able to get any patients.
Unfortunately, protectionists largely dominate public debate so freer trade in health care is almost never discussed. Economists like to help the protectionists in this respect by politely agreeing not to discuss trade in medical services. This makes it easier for them to say silly things about inequality being due to globalization and technology. They get to conveniently ignore the fact that our doctors make twice as much as doctors in other wealthy countries, not because of technology and globalization, but because they enjoy protection from international competition.
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