Wednesday, July 8, 2009

We are having the wrong discussion on health care.

Dull Geek has an excellent post discussing the problems with health care in the US. It shows exaclty why our problem is not that there are to many uninsured, but that there are to many insured. We don't need more insurance - public or private - we need LESS health insurance so that people purchasing health care are exposed to its costs.

The fact that a third party pays for just about every medical procedure has resulted in a situation where neither the health care providers (your Doctor) nor the customers (the patients) know the price of the good/service being purchased:

I've gone to the doctor with my child trying to get stitches for a cut. Before I went in, I asked what this was going to cost, because I was going to have to pay for it. They didn't know.

Stop for a minute and think about this. Is there *ANY* other service provider that you pay for, where they have zero idea of what the cost is going to be?

The reality is that the doctor's office didn't need to know. Their job is not to let the patient make an informed decision about the cost and benefit of the procedure/service that is being performed. Their job is to do the service and take care of the billing later.
Not only does nobody know how much anything costs, since the customer doesn't have to pay for the procedure, people have no incentive to ration. Why not have every procedure known to man if you don't have to pay for it.

If we did away with medical coverage as we know it (along with all the 3rd parties with their hand in the till along the way), customers would be forced to make choices, competition would cause doctors to lower their prices - and they could since they wouldn't need a small army in their billing office filling out 800 forms in triplicate for the kid coming in for two stitches.

UPDATE: I further expanded on my views last year.

3 comments:

  1. Not the other anonJuly 14, 2009 at 6:43 PM

    In certain ways I think that you are right, John, but I do not consider medical services to be completely comparable, financially and ethically, to other kinds of services. Surely, supply and demand relationships apply, but in drastically different ways. First, the demand for medical services exist from a true need to maintain life and health not just from a whim. Demand for antibiotics is different than demand for color-copy services, for example. Next, the supply of the services is based on highly specialized skills, methods, equipment, knowledge, research, etc, which when combined, makes many medical services scarce. You can’t just build another machine that will take an expectant mother through pregnancy and birth. There are a huge amount of resources used to achieve modern mortality rates for both infants and their mothers.

    So, I don’t see a direct comparison mostly because of the life and death issues involved.

    The biggest issue that I think you overlooked is one’s affinity for risk. I see the risks on two fronts -- one involving the frequency and severity of the cost of the medical services, and the other one involving the knowledge of the necessity and efficacy of a medical service.

    Opting to pay or not pay for two stitches for one child is different than opting to pay or not pay for two stitches for each of 12 children -or- opting to pay or not pay for a kidney transplant.

    Also, I don’t like the thought of being faced with these types of questions:

    Should I spend $5,000 on a colonoscopy?
    Is the $40 HIV test worth it *to me*?
    Should I risk not going to the ER when the doctor told me he thinks that I might have a pulmonary embolism?
    Should I postpone physical therapy until I get my bonus at work in two months?

    Sure, people opting for or against the above services may allow the invisible hand to make price adjustments, but what is that hand going to do for the people when they end up with colon cancer, HIV, dead or permanently disabled?

    Should my medical decisions be based on finances or not? For the most part, I don’t think so. Any new healthcare plan needs to address BOTH cost to the participants AND the level of health that the plan provides to the participants.

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  2. Free market is even MORE critical for life and death issues such as medical care than it is for color copies.

    Obviosly, nobody WANTS to be faced with the decision of wether to pay $5000 for a colonoscopy, but SOMEBODY has to decide who gets a colonoscopy or not.

    There is a finite supply of colonoscopy equipment, MRI machines, etc. as well as a finite number of doctors, technicians, etc and each of them have a finite amount of time to provide services.

    So somebody has to make the decision as to who gets medical care. Cost is the only reason individuals have to ration care on their own. Otherwise, the insurance company (private or public) decides who gets care and who doesn't.

    If life or death is the issue, why shouldn't the government purchase & distribute food, clothing and shelter. As it stands now, the rich can have as much of whatever kind of those items while others scrape by...

    Regardless, just because people don't like having to decide what to pay for doesn't mean the decision. As it stands now, apparently, you are willing to put your life in the governments hands.

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  3. One other thought:

    If people had to shell out cash for routine procedures like colonoscopies, they wouldn't cost $5000 for long.

    The lack of a payment connection between the provider and patient both inflates demand, while at the same time clouding the market so that less doctors are inclined to practice.

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