The U.S. health care system is in dire need of reform. I have written about the sad state of health care on many occasions. In stark contrast to other sectors of the economy, about 90% of all medical care is paid for by someone other than the consumer. Of that 90% – and a portion of the remaining 10% – prices were negotiated in advance by a third part. However, there is not one price, but rather many different prices for the same service, depending on who the payer is. Furthermore, prices have no relation to costs. The list price for those who lack access to a negotiated discount is about 1.5 times what large health insurers pay for the same service. Yet, prices vary from one facility to the next.
In our health care system, providers use all loopholes and shady techniques to extract more money from both patients and their payers. For example, medical services have been disaggregated into 10,000 plus billing codes. A surgical procedure is not one billing code (service) but rather a bundle of many codes making price comparisons all but impossible. For their part, payers are often accused of using unsavory methods to ration care.
Scholars Charles Silver, David Hyman and Michael Cannon argue that government can do little to reform the health care system, saying:
Mainstream policy analysts are convinced that government, and only government, can save us from the monster the U.S. health care system has become. That’s why their recommended solutions to the system’s many problems all have government at their core.
As evidence the writers go on to cite a passage from the National Academy of Medicine (NAM) quadrennial Vital Directions report. I won’t repeat it, but you can read it here. It fails to appreciate that government is the underlying cause of the dysfunctional health care system. The NAM proposes solutions that would be costly for taxpayers and exacerbate the problems. More from Silver, et al.:
But the deeper problem is that the failures of the past seem not to have taught mainstream health policy thinkers anything. They keep pitching the same, tired ideas that got us into this mess: more government spending and programs; more insurance mandates; more insulation of patients from financial responsibility; and more public control of the health care sector. If the past teaches us anything, it is that no one should expect the government to get health care right.
The writers’ core argument is that mainstream health policy analysts continue to pursue the same policy solutions with cult-like devotion, despite decades of poor results.
To improve health care, we must jettison cargo cult-like beliefs. We must stick to what works. We must start treating health care like an ordinary service that people buy and sell through ordinary market mechanisms.
You read that correctly. To create a health care system that keeps people reasonably happy by delivering high quality services at affordable prices, we must pay for most medical care the same way we pay for food, clothing, transportation, and most other things: directly, at the point of sale, with our own dollars. Instead of compelling people to funnel their money through Medicare, Medicaid, employer health plans, and other insurers, we must free people to do their own shopping in free markets that subject providers to serious competition and price discipline.
No more protecting high-cost, low-quality doctors and hospitals from competition. No more tax preferences for dollars that go toward health insurance or that favor businesses that are nominally nonprofit. No more mandates that force people to buy insurance coverage they don’t want. No more certificate-of-need or scope-of-practice regulations that inflate prices by restricting supply. No more tort “reforms” that let providers deliver shoddy care by insulating them from the cost of mistakes. No more restrictions on the “corporate practice of medicine” that prevent efficient businesses from whipping high-cost hospitals and physicians’ practices into shape.
In conclusion, the only way to fix health care is by engaging patients to act like consumers in such a way that providers must compete for their business. The retail model in health care has already worked when allowed. Corrective eye surgery is highly competitive, as is plastic surgery. Veterinary care and dental services were good examples but have recently been corrupted by third party insurance.
Read more at: Government cannot fix the many problems with health care | STAT