Wednesday, April 16, 2008

I can see/hear clearly now the state is gone...

In a post a few years ago in Tyler Cowen's blog Marginal Revolution, Alex Tabbarok suggested that one of the reasons that laser eye surgery was so cheap (price has fallen about 40% in real terms from 1998 to 2004) and well-liked by consumers was because since it wasn't covered by Medicare, Medicaid, or insurance (often though of as a market phenomenon, but in reality not a good that would lend itself to insurance) – the government left its hands off of its development, and the laws of supply and demand have made this product cheaper and more helpful than it otherwise would have been if the price signals had been distorted by inclusion in government healthcare plans. From the NY Times, another example of this: the Lyric hearing aid. The blog post describes the wonders of this product compared to others (it sits deeper in the ear canal than any other hearing aid has managed), with glowing reviews from unaffiliated users and doctors. And all of this, despite (or because of, if you believe in free market healthcare) the fact that:

When the Lyric’s battery dies, the entire device is replaced. Patients do not pay for a new device every time; instead, they pay an annual subscription fee of $2,900 to $3,600 for both ears (less if the hearing loss is in only one ear). Insurance plans typically do not cover the cost of the Lyric, or any other hearing device.

The technology is apparently in beta, and due to technical limitations, is only able to be worn by half the population, but the company says they're working on a version that "should work for about 85 percent of patients." While $3,000/year is too much for most people to pay per year, hopefully competition and technological development will bring down costs. Just cross your fingers and hope that patent laws don't give the inventors rights over everything like it.

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