Health care among the Amish

Scott Alexander has an interesting account of how the Amish handle health care. The opening paragraphs:

Amish people spend only a fifth as much as you do on health care, and their health is fine. What can we learn from them?

A reminder: the Amish are a German religious sect who immigrated to colonial America. Most of them live apart from ordinary Americans (who they call “the English”) in rural communities in Pennsylvania and Ohio. They’re famous for their low-tech way of life, generally avoiding anything invented after the 1700s. But this isn’t absolute; they are willing to accept technology they see as a net positive. Modern medicine is in this category. When the Amish get seriously ill, they will go to modern doctors and accept modern treatments.

[...] But by some miracle, the US government played along and granted the Amish exemptions from all the usual health care laws. They don’t have to pay Medicare taxes or social security. They aren’t included in the Obamacare mandate. They can share health care costs the way they want, ignoring any regulations to the contrary. They are genuinely on their own.

They’ve ended up with a simple system based on church aid. Everyone pays tithes to their congregation (though they don’t call it that). The churches meet in houses and have volunteer leaders, so expenses minimal. Most of the money goes to “alms” which the bishop distributes to members in need. This replaces the social safety net, including health insurance. Most Amish go their entire life without needing anything else.

About a third of Amish are part of a more formal insurance-like institution called Amish Hospital Aid. Individuals and families pay a fixed fee to the organization, which is not-for-profit and run by an unpaid board of all-male elders. If they need hospital care, AHA will pay for it. How does this interact with the church-based system? Rohrer and Dundes, my source for most of this post, say that it’s mostly better-off Amish who use AHA. Their wealth is tied up in their farmland, so it’s not like they can use it to pay hospital bills. But they would feel guilty asking their church to give them alms meant for the poor. AHA helps protect their dignity and keep church funds for those who need them most.

Well on in the article we find this:

Careful price-shopping can look very different from regular medical consumption. Several of the articles I read talked about Amish families traveling from Pennsylvania to Tijuana for medical treatment. One writer describes Tijuana clinics sending salespeople up to Amish Country to advertise their latest prices and services. For people who rarely leave their hometown and avoid modern technology, a train trip to Mexico must be a scary experience. But prices in Mexico are cheap enough to make it worthwhile.

Meanwhile, back in the modern world, I’ve written before about how a pharma company took clonidine, a workhorse older drug that costs $4.84 a month, transformed it into Lucemyra, a basically identical drug that costs $1,974.78 a month, then created a rebate plan so that patients wouldn’t have to pay any extra out-of-pocket. Then they told patients to ask their doctors for Lucemyra because it was newer and cooler. Patients sometimes went along with this, being indifferent between spending $4 of someone else’s money or $2000 of someone else’s money. Everything in the US health system is like this, and the Amish avoid all of it. They have a normal free market in medical care where people pay for a product with their own money (or their community’s money) and have incentives to check how much it costs before they buy it. I do want to over-emphasize this one, and honestly I am surprised Amish health care costs are only ten times cheaper than ours are.

There's much more in the article.

H/t Tyler Cowen.