Is health care just another good?

8,000 patients will no longer be able to receive care from UNC Hospitals and their affiliated physician practices because of a dispute between UNC and the insurance company Aetna. The bottom line is that Aetna does not want to pay as much for care provided by UNC as UNC wants to be paid for providing this care. No surprise there, as the interests of the two parties (health care provider and insurance company) are in opposition. However, UNC has taken the unusual step of no longer accepting Aetna's insurance, forcing 8,000 persons to receive care elsewhere (some can get exceptions). And Aetna hasn't backed down and increased the pay rates.

And patients are upset, because their preferred pattern of health care delivery has been upset.

There are numerous examples in everyday life in which one party wants to get paid more than the other would like to pay, and a business decision is made. I would rather Duke pay me more for being a professor than they do, but my desire is not such that I am looking for a new job. Likewise, I would rather not still drive a minivan because my kids are a bit older, but the van is paid for and I don't want to pay as much for a new Honda Accord as the local dealer wants for it. Similarly, I am a season ticket holder for the Carolina Hurricanes, but I have upper level seats instead of lower level ones, simply because I am not willing to pay the difference in ticket price between the levels. I would rather sit in the lower level, but not that much.

All of us make innumerable tradeoffs and choices in deciding how much we are willing to pay for goods and services, and we don't think much about it. Many people claim they want more competition and sensitivity to price of this type in health care. However, whenever you get a story like the dispute between UNC and Aetna, people get very upset because they no longer get to keep their doctor, or receive care from the hospital of their choice. I don't know any details about how far apart UNC and Aetna are, and there are many unstated reasons that one or both of the sides in this negotiation may not want to strike a deal. It doesn't really matter, because this is simply a story of two organizations seeking to do business in their best self interest.

If your reaction to this story is 'but health care is different from those other examples you gave' then you probably don't think that health care is just another good.

Increased competition and market forces brought to bear on health care and in health insurance would increase, not decrease disruptions such as this one. That might be good or bad depending upon your perspective. And of course health insurance is not the same as health care, but very few could hope to afford care if they got sick without insurance, so a third party being involved in the patient/provider relationship is virtually inevitable, and likely to increase if we are to address health care cost inflation.

full disclosure: my wife is a nurse at UNC hospitals.