Everyone knows better than to buy a pig in a poke, so selling one ought to be hard. It happens everyday in clinics and hospitals, though. Marketing is the key. The seller just has to convince the buyer that nobody really knows what’s in the bag, and that it might be really good. Fortunately, the task is easy for healthcare providers, because it’s just’ telling the truth. Much of the time, both parties can take a good guess at the bag’s contents. Sometimes neither is certain. In any case, a rational price is difficult to determine.
That’s why our current system uses baseline administrative pricing. There may be equally bad ways of pricing healthcare services, but there probably aren’t any better ways. At least this way, prices are based on an educated guess about what is in each bag.
Market pricing is an alternative method. It would give very good prices for squealing bags with pig-shaped lumps in them – things like Botox treatments and laser vision correction. Prices for bags with more amorphous lumps, containing things like cholesterol medicines, blood pressure medicines and cancer screening tests, not so much. The prices for those bags which, in livestock terms, could hold a pedigreed piglet or a skunk, would vary based on the buyers’ fears, hopes and disposable income. It’s a recipe for very good, cheap Botox treatments, and very good, cheap cardiac bypass surgeries and kidney transplants. It might not result in an efficient allocation of resources, but it would present an excellent marketing opportunity for those willing to prey on others’ hopes and fears.
Dedicated to the Game 