EconTalk: Keith Smith on Free Market Health Care
A dysfunctional set up in the market can be perceived as when buyers and sellers are brought together; this is when we can understand and see the true indication and what questions can be posed. In our today’s economy we have buyers and sellers and they together coexist and are the basis of what formulates a true market. Within the podcast it was mentioned that the mission of the FMMA, which is very tough work, bringing buyers and sellers together, really has to overcome much that has been thrown in between buyers and sellers. Whenever we look at the Free Market Medical Association, we begin to recognize to that bringing buyers and sellers together is something that is meant to overcome all of the obstacles that have been placed between them and this is where we can draw our interactions within entrepreneurs in society, and seeing how those interactions stifle, affect, and push entrepreneurs.
Jay Kempton, one of the co-founders of Free Market Medical Association, knows that really good things happen when buyers and sellers talk directly on what is of value to them and haven't succumbed to the ideology that all of the intermediaries that profit from buyers and sellers not talking directly have served them. This holds much truth because this viewpoint is where many entrepreneurs fail. The consumers are basically anyone who is a patient or anyone who is likely to be a patient, which means everyone. In all likelihood, everyone in our everyday lives, certainly in this country, is a consumer. Some patients are direct buyers. These patients pay with cash or their own personal funds, which is something that can be quite difficult. Those who have an ombudsman or an intermediary are defined as indirect buyers. Indirect buyers also play the role of drivers of innovation, particularly through their supplier relationships. Indirect buyers mainly monitor and advise on innovative solutions to meet the needs of their internal customers. There are advantages and disadvantages when a proxy is involved. When looking at the disadvantages one can’t help but to feel that an entrepreneur must take credence to these disadvantages not only from the free market health care aspect but from an overall general perspective. Unfortunately, it is easier for your wishes to get lost in translation, as it is not your exact preferences in writing but instead the words and choices of your Health Care Proxy who will be solely responsible for making the decisions on your behalf. The choices made by a Health Care Proxy are seldom casual and almost always of the essence. That means making prompt decisions that hold the utmost significance without downloading or dithering. This duty demands generals, not grunts. Lastly, if you, as Health Care Proxy, don’t get along with your finance counterpart, it can mean added hardship if, for instance, he/she withholds the release of funds to pay for medical expenditures you’ve already authorized.
Although, within the podcast it was mentioned that the Surgery Center of Oklahoma and all the other members of the Free Market Medical Association, would deal with proxy buyers as well as individual buyers spending their own personal funds and treat them all the same, afford the same price to them all. But we have to remember that a buyer is basically someone who has sticker shock. Stated also in the podcast, “Jim Epstein from Reason Magazine picked up on that early, that a buyer is someone who we would all characterize as an individual who actually cares what it costs, and there are a lot of people in the United States who receive medical services who could care less what it costs because they’re not paying the bill.” “They don’t have sticker shock. So our focus in developing a free market must begin with those who actually care. Whether people know that they should care what it costs is kind of beside the point, because everyone should; to the extent that the government remains involved in the purchase of medical services to the degree that those services are unaffordable, everyone’s tax burden is much larger because there are so many patients and buyers out there who really don’t care what it costs, a shocking number in fact.” In such a manner the extent of government regulation involved in any area can affect an entrepreneur and also affects motivation to create value for customers since there is such a strain.
So a buyer in my mind, someone with sticker shock and a seller is someone who has medical services to offer on the marketplace, and a true seller is one who will attach a price to it and then allow the market to judge whether it’s a value or not. So the idea of a free market seems obviously very attractive, but very, very difficult in today’s healthcare environment and this can bring along the same concern for entrepreneurs today, entrepreneurs who are producing a new product or service can a find a price that is attractive to themselves but have to understand that they need to navigate the correct one that is also attractive to the buyer. It must be of value to both parties and the podcast described this best. We can raise the question: how can innovators achieve this for them? During the podcast they go deeper answering on how entrepreneurs can achieve for the customer first, those buyers who have sticker shock, which is always the first concern of a market.
Just the same, a true market, when someone says and declares in a marketplace of sticker shocked buyers, “Here is what I do and here is the price I believe should be attached to it,” they’re declaring their own value”. This alludes to if they’re not any good, then they will not be chosen. People will not vote for them with private funds or the proxies will avoid them because their reputation is on the line as an advising buyer, we can also tie this interaction to entrepreneurs in our world today, people will not exchange if there isn't any incentive value given. When we can understand the market and how components affect it we can see how those interactions can either aid and, or stifle entrepreneurs in our society today.