Medicare loses about 4% in overhead, to insurance's 11%.
This is complete nonsense. Forget for a moment that relative administrative overhead costs tell us
nothing of practical value about efficiency of healthcare delivery; let's pretend for a moment that having an advantage in administrative services is necessary or sufficient to lend a given firm a comparative advantage.
What exactly are we talking about when we say Medicare spends (the money is spent, by the way, not "lost")? This means that 4% of the premiums collected by Medicare are spent on administration, with the remaining 96% spent elsewhere - specifically, mostly on covering medical bills. It is also true, then, that private insurance likewise spends its remaining 89% elsewhere - specifically, mostly on covering medical bills.
Does this corollary (Medicare spends 96% of its revenues paying medical bills, and private insurance spends only 89%) prove that private insurance has an efficiency advantage in paying medical bills relative to Medicare? I gather you'd reject
that claim. And you'd be right to do so on the basis of this statistical sleight of hand - in fact, I've proven no such thing.
Medicare, by design, covers the elderly, and they are a much riskier portion of the population.
Even if Medicare and private insurance companies spent an identical real dollar amount per patient on administrative costs, the relatively higher medical expenditures in Medicare would make administrative costs a smaller percentage of overall costs. When we actually look at the per patient administrative costs for Medicare versus private insurance, we find that they are
not equal. In fact, Medicare spends far more per patient than the private sector,
despite the fact that private firms must pay taxes, fees, marketing and regulatory costs that Medicare simply does not have.
On price elasticity see the famous RAND health insurance experiment. It is the largest study I know of, and concludes a price elasticity of about -0.2. Its not quite 0, but its pretty close :
http://www.rand.org/health/projects/hie.html
A PPD of -0.2 is
not at all close to the perfectly inelastic case of 0,
which does not exist in real markets. In fact, there are an infinite number of real values between 0 and 0.2 on the number line.
In real terms, this figure tells us that the price elasticity of demand for healthcare is relative inelastic, but still elastic - a 1% rise in prices, ceters perebus, results in 0.2% less consumption. This is more than sufficient to create viable markets. For comparison, the market for eggs is relatively
more inelastic than the market for healthcare, by a factor of 2. Consumers are twice as responsive to changes in the cost of healthcare than to changes in the cost of eggs!
This is a far cry from your original claims - that dieing people will spend anything on life saving treatments, and that therefore healthcare is not a marketable good. Shall we nationalize the egg market next?
On asymmetry of information, we seem to agree- correct me if I'm wrong?
I don't! I haven't seen any argument that the market for healthcare is more prone to moral hazard or adverse selection than any other technical or specialized marketplace. The existence of asymmetries in healthcare makes the sector neither special nor unworkable. Consumers
and suppliers deal with information scarcity constantly; this fact alone is not sufficient to establish market failure. Rational market participants are understood to invest the resources necessary to inform their decisions before they make them. Where they cannot, they price in risk premiums. If they cannot, the transactions don't occur.
This is confirmed by most studies which attempt to measure the adverse impact of information asymmetries on real world markets; in practice it's virtually impossible to find and measure statistically. Do so on a systematic basis, and you'd probably win a Nobel prize. Good luck, though; I think you'll find market mechanisms are remarkably self-preserving.
Also, do we need to argue about whether patients in an emergency have choice?
Of course patients in emergency have choice. That patient may prefer immediacy of care, all things being equal, but this is not determinant. If the nearest hospital is closed, the consumer certainly won't choose it on the basis of distance. Likewise if the nearest hospital only accepts Visa and he carries Mastercard, or if it only treats cancer patients and he is having a heart attack. These points might seem absurd, but they serve to make the point. Indeed, critical patients are routinely routed to medical centers other than the closest for
myriad reasons.
You seem to imagine that the healthcare market is some extreme, fantastic place full of zeros and infinites. In the real world, you simply don't find that, and if your theory suggests you ought to, there's probably something wrong with the theory.