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July 23, 2009


Brad Spangler

Sounds like you're reinventing what was called "lodge practice"...

"Medical Insurance that Worked — Until Government 'Fixed' It"


John Robb

Excellent. What would be interesting is to reverse this. Say, a mechanism by which a prospective medical student gathers together a group of people that want to invest in future care at a set rate by paying tuition and stipend.

400 families paying $500 to $750 would likely be sufficient for the schooling. Once educated, it would be ~ $500 a year for GM subscription.


Interesting post - but carry it to the logical extreme.

Your small community will inevitably need services not available to it from in house medical personnel. No problem, they setup a system for access to hospitals, specialists, etc. Eventually, they realize that it is cheaper to bring this in house, so they do. Then they figure out that it is more efficient to pool their population with another town so that they can together support an obstetrician, or an MRI machine, or whatever, again at a lower cost. So they do that.

Whoops, they have some abusers, and they find that the doctors are prescribing treatments that are too expensive or which are not proven to have any benefit, so they impose cost controls and approved treatments.

Now you have socialized medicine. Or, really, our existing system minus the insurance companies in the middle.

You can see how the insurance companies come to be: the communities decide they need to pool all their cash and have someone manage that, controlling risk and doing investments. It is a big a complex job, after all. Now you are approaching our current system, although I really doubt they'd let the managers ("insurers") rake off obscene profits.

I did find the lodge practice article fascinating. I do agree with it, we've seen a fairly classic market breakdown, the question is what caused it. They like to blame the government, but it seems to me that you had the doctors - through the AMA - bonding together to form an oligopoly and that the barrier to entry helped them do it. Maybe, maybe not, but in any case, you have a broken market, so either you try to revive it by breaking the oligopoly or you just decide the market is broken, period, time for the public to manage the system for the greater public good.

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