Friday Rant: When Arbitrage Is Usury

There's something so innately satisfying in buying low and selling high that it was only my adversity to financial risk that stopped me from becoming a stockbroker decades ago. Now, one of my many satisfying hobbies involves buying and selling vintage electronics, musical instruments and Persian rugs -- strange mix, I know -- on Craig's List, eBay and at garage and estate sales. I love that they are all among the purest markets in contemporary times.

Conversely, why would anyone pay a 3x mark-up and higher for an item that can be bought for 1x a block or so away? That is exactly what some physicians are practicing on their patients.

This week's New York Times reveals that "At a time of soaring health care bills, experts say that doctors, middlemen and drug distributors are adding hundreds of millions of dollars annually to the costs borne by taxpayers, insurance companies and employers through the practice of physician dispensing." To wit "a popular muscle relaxant known as Soma ... from a pharmacy is priced at 60 cents per-pill ... Sold by a doctor, it can cost more than five times that, or $3.33"

One of the most distressing aspects of this debacle in addition to the unconscionable greed of certain medical professionals who abuse the supposed intrinsic trust between doctors and their patients, is the blind irresponsibility of the patients involved. It's akin to how these same people might totally ignore item pricing if shopping for a friend or relative who's paying the tab but who would be far more vigilant when spending their own cash.

Maybe patient behavior in this regard involves sheer out-to-lunch stupidity. Even if they harbor disdain for insurance companies, government and their employers, what explains their obliviousness to the fact that wasting dollars paid by their benefit providers ultimately results in either fewer benefits and/or higher co-pays? It's an erroneous free good mentality that not only defies basic logic, it enables the practice of price gouging.

There's not much to be said for physicians who practice such unbridled greed -- and in what other areas they immorally abuse the system and their enabling patients. Perhaps their punishment should involve being forced to recruit patients on eBay without medical insurance. I just hope that these consumer responsibility shirking patients aren't also clamoring for smaller government and less regulation lest they dismiss their custodians.

- William Busch

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