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Making hash out of health care


A couple of months ago, I had bloodwork done at the local government facility. Paid about $95 for it up front. A couple of days later, out of the clear blue sky, a $600 lab bill arrived. My wife and I were appalled on two counts. First, why were we billed twice for the same procedure? Second, how could there be a sixfold price difference for the same procedure?

Turns out somebody checked a wrong box on a form, so the lab bill was withdrawn. But the mix up showed beyond any shadow of a doubt that something other than the “free market” has a role in determining the price of a blood test.

Let’s say we’re buying, not a blood test, but a can of hash. Brand X typically costs $2.85. But if we use the bloodwork pricing model above, the hash would cost more than $18. To justify that price, it would have to be hash made of Kobe beef filet mignon and potatoes that grew spontaneously in a truffle patch, discovered by a pig with rudimentary language capabilities.

But in this case, the $18 hash is perfectly identical to the $2.85 can.

That kind of pricing cannot work in a free market, but it’s completely within the norms of the U.S. healthcare system. For instance, in a free market where multiple hash producers compete, your buying options might include MinceMix at $3 a can, BeefyBlend at $4, and maybe a generic Brand X at $2.50. But if there is only one producer, mayhem happens—as when the nefarious Shkreli Hash skyrocketed from $5 to $1,000 just because it could.

Then there’s the problem of actually acquiring the hash. In the old days, you could get it straight from your preferred grocers, who, by and large, were highly dedicated to the concept of providing necessary human services. Sometimes, if the need for hash was pressing, the grocer would even bring the hash straight to your house, pulling it out of his little black bag.

Over time, the technology of hash production yielded great benefits to humanity, but the advances also jacked up prices. And few people could just go get hash from their grocer. Instead, they paid up front to a hash brokerage to meet their anticipated needs at a reduced group price.

Eventually, that practice wasn’t enough. The brokers wanted more profits, so they started controlling hash distribution—deciding which people can have access to hash, when they can have it, and whom they can get it from. Today, the hash brokers’ control works like this:

If you have no history of eating hash but want hash access just in case, you will get to pay a low rate to the hash broker. That’s because the broker expects, in most cases, to get money for nothing.

If you have eaten hash in the past, but not excessively, you will pay more for your access to hash. A lot more. This category includes most of us.

Until recently, if you had a history of eating too much hash, forget it. You had a pre-existing taste for hash, which could force the broker to pay a lot to provide you with future hash. So, unless you had enough money to go straight to the grocer and buy hash on your own, you were done for. New rules have ended this practice, but those rules may be eliminated.

As if that’s not bad enough, most brokers require you to buy the first 50, 100, 150 cans of hash yourself, before they will buy even one can! Isn’t that a great deal? Sometimes, a need that could have been handled with only two or three cans ends up requiring 100 cans because the hash came too late, after hash hunger had reached starvation levels.

But it gets worse. The brokers hire people who tell you that, even though you paid for access to hash, you still can’t get any! So, no matter how urgent the grocer says your need is, you still have to get past the broker’s naysayers. Sometimes it seems they say no just to see if the consumer will fight their decision. Many don’t.

And we’re still not done. On those occasions when the consumer is lucky enough to get the broker to pay up, the broker starts working the other end, trying to drill down what it pays to the grocer.

Now, most grocers see what they do not as an occupation but as a calling. They’re elated when they can use their special, hard-earned skills to ensure people get the hash they need. Still, the grocers are running a small business and must clear the same hurdles as any other business. They find themselves fighting to get fair compensation from the broker. Moreover, their overhead skyrockets as they are forced to hire office help just to keep up with the demands of dealing with the brokers.

All of this has led to the whacked-out pricing policies of this day and age, in which the exact same can of hash may carry a Brand X or a Kobe price, depending on who’s buying it. But the problem lies not with the consumers, nor with the grocers. It lies firmly and squarely with the brokers.

Regardless of your taste for hash, the market for it is clearly a failure—overly controlled by greedy brokers and completely unconcerned about fulfilling your hash needs. When such a market failure happens, it is absolutely incumbent upon the government to step in and set things right to the best of its ability.

 

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