Earlier quoted context omitted.
The Invisible Hand works generally fine-ish for non-essential and commodity goods. People might be sad their favorite store went away, but, for the most part, life goes on. It seems to even be the least bad way to handle these sorts of things. It's a bit harder for me to see this as an acceptable approach to health care. Not every segment of the economy needs to be a constant drunkard's walk in search of maximum prof…
Will people pay more for stability and reliability? If so, then that is what businesses will optimize for. Businesses exist to give us what we want. Those that do it well are profitable, those that don’t aren’t. Keep in mind that the effort spent to make healthcare more stable could have instead been used to provide more healthcare overall. Or something else entirely, like shoes or haircuts. All services are not as g…
Given that the USA pays higher-than-average prices for poorer-than-average outcomes, I'd say this is a spurious hypothetical, mostly useful for helping to demarcate the point where economics ceases to be an empirical, scientific pursuit and instead becomes a sort of low-rigor offshoot of moral philosophy.
But, back in the realm of epiricism, we know that this is one of those situations where closer government regulation can produce higher quality of service at lower cost, because the rest of the developed world has figured out multiple successful formulae for doing so. The only clear downside, if you can call it that, is that their hospital administrators don't seem to have quite such large collections of luxury watches.