March 2, 2013

OUT OF MIND OR OUT OF POCKET?:

Yes, Hospital Pricing Is Insane, But Why? : Time magazine issues a 24,000-word memo on what we already knew. (Holman W. Jenkins, Jr., 3/02/13, WSJ)

"What is so different about the medical ecosystem that causes technology advances to drive bills up instead of down?" Mr. Brill asks. But his question is rhetorical since he doesn't exhibit much urge to understand why the system behaves as it does, treating its nature as a given.

In fact, what he describes--big institutions dictating care and assigning prices in ways that make no sense to an outsider--is exactly what you get in a system that insulates consumers from the cost of their health care.

Your time might be better spent reading Duke University's Clark Havighurst in a brilliant 2002 article that describes the regulatory, legal and tax subsidies that deprive consumers of both the incentive and opportunity to demand value from medical providers. Americans end up with a "Hobson's choice: either coverage for 'Cadillac' care or no health coverage at all."

"The market failure most responsible for economic inefficiency in the health-care sector is not consumers' ignorance about the quality of care," Mr. Havighurst writes, "but rather their ignorance of the cost of care, which ensures that neither the choices they make in the marketplace nor the opinions they express in the political process reveal their true preferences."

You might turn next to an equally fabulous 2001 article by Berkeley economist James C. Robinson, who shows how the "pernicious" doctrine that health care is different--that consumers must shut up, do as they're told and be prepared to write a blank check--is used to "justify every inefficiency, idiosyncrasy, and interest-serving institution in the health care industry."

Hospitals, insurers and other institutions involved in health care may battle over available dollars, but they also share an interest in increasing the nation's resources being diverted into health care--which is exactly what happens when costs are hidden from those who pay them.

By which he means, hidden from those who don't pay them.  The simple reform to Obamacare is to make us pay those bills, via mandating HSAs.
Posted by at March 2, 2013 12:04 PM
  

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