A serious discussion of the role of barter in health care

Last week I suggested that someone should dig into candidate Lowden's suggestion more deeply. I'm glad to say someone has.

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I'm amazed that no one in the audience seemed to know what a chicken ranch was.

A chicken in every pot, a couple more for your HMO

Sue Lowden, the candidate who is currently on track to become the next senator from Nevada recently said about health care:

"And I would have suggested, and I think that bartering is really good. Those doctors who you pay cash, you can barter, and that would get prices down in a hurry. And I would say go out, go ahead out and pay cash for whatever your medical needs are, and go ahead and barter with your doctor."

My first thought was that she meant 'barter' in the figurative sense, that patients should try to cut a deal with their doctors, not that patients should literally give doctors goods and services in lieu of cash.

I was mistaken:

The campaign of Senate candidate Sue Lowden (R-NV) is continuing to stand by Lowden's call for the use of the barter system as a means to bring down health care costs.

On Monday, Lowden doubled down on the barter idea: "You know, before we all started having health care, in the olden days, our grandparents, they would bring a chicken to the doctor. They would say I'll paint your house."

[TPM] asked Lowden spokesperson Crystal Feldman how this could ever be a workable policy, in an era of costly procedures, tests, pharmaceuticals and provider networks? "Americans are struggling to pay for their health care, and in order to afford coverage we must explore all options available to drive costs down," Feldman told TPMDC in an e-mail.

Feldman continued: "Bartering with your doctor is not a new concept. There have been numerous reports as to how negotiating with your doctor is an option and doctors have gone on the record verifying this. Unfortunately, Harry Reid's failed leadership forces us to take drastic measures. The fact remains that instead of producing a health care solution Americans support, Harry Reid spends his time focusing on attacking his biggest threat to another six years in Washington, Sue Lowden."

Aside from comic potential here (there are a lot of services you can barter for in Nevada), this suggests an interesting thought experiment:

Assuming that medical costs were driven by individual doctors and not by hospitals and drug companies (which really can't be bartered with), what would the introduction of barter do to the economics of health care? I would think that the introduction of wide-scale bartering would make the market less efficient and would produce more maldistribution of resources. Is this always true or is this another case where the strange economics of health care produce counter-intuitive results? And what would the other consequences be?

Given that there are approximately eight gazillion economics blogs out there, is there any chance that someone who knows what he or she is talking about could answer this one for us?