>Aman, you started by asking how the market can provide necessities.
Not just ‘necessities’ but ‘absolute necessities’ of the sort that are unique to medical services and the goods that support them.
Indeed, food, water, housing, clothing are necessities that can gently find their reasonable prices based on normal market forces. They are for the most part in ‘enormous supply’ from a vast array of suppliers. Of these ‘necessities’ we can take our pick in a developed society. We are awash in the ‘necessity’ of food to the point of obesity. We dine at the ‘Heart Attack Cafe’ every day. But the necessity that I’m talking about is of a qulitatively different sort. It’s what happens when the ‘consumer’ of all this food does indeed have the inevitable heart attack. At that moment, a different sort of ‘necessity’ comes into play that requires a different economic reckoning than the ‘normal’ one that determined price of his burger, from grassland to fuel to the wages of the person that served it to him. At that moment this poor consumer enters an economic twilight zone where aspirin sells for $1 a tablet, band-aids cost $3 and a room rents for $1500 per night. He and his family are going to become acquainted with a whole new economics in the days and weeks to come. And I would say that the price of the goods and services that he is about to ‘consume’ are determined, driven, at least in part, by the absolute necessity of his ‘demand’. A completely unique demand.
In this rather typical scenario, this consumer has no particular choice in physician or hospital or set of services to be received, at least insofar as it concerns his bill. When was the last time anyone saw an advertisement for medical services that touted their ‘low price’. Can you even imagine it?… “Come to Northern General, the cheapest hospital in town”. No. In fact, it’s quite a violation of the etiquette of medical care to even discuss its cost. After all, isn’t health ‘priceless’? Indeed it is. And ‘priceless’, it seems to me, is a very interesting economic idea.