Wednesday, February 08, 2006

market vs. central planning

America has the best health care system on the planet, but there are some aspects that desperaely need reform. With costs rising faster than inflation, healthcare insurance premiums causing real wage decreases for workers, and quality of care has not improved appreciably, some people are calling for a government takeover of healthcare. Many doctors are retiring early or not practicing at all because the costs associated with malpractice insurance are too great a risk.

All of those undesirable outcomes are a reflection of the “third party payer” system, where Americans are not faced with market forces; we pay out of pocket a tiny percentage of the real costs and are therefore completely insulated from real pressures to make rational market decisions based on price and quality. There are no pressures to limit costs by hospitals because they will be paid by insurance companies or government programs regardless of the costs.

Now think about two areas of healthcare where market forces are allowed to work…elective surgeries like cosmetic surgery and Lasik eye surgeries.

Unlike other healthcare options---consumers actually pay for these services out of their own pockets. They research who is the “best” doctor, who is the most affordable, and weigh other concerns like location and reputation and post operative care. Not surprisingly, the quality of these services has improved while prices have gone down.

I predict if we don’t get some real reform in healthcare my children will see the greatest healthcare system on the planet be split into two distinct systems. One will be a nationally socialized system for the poor, complete with communist style rationing and waiting lines, poor quality of care, and insane government involvement in the doctor-patient relationship.

Those who can afford to will have a completely separate healthcare system: a pay as you go system where the wealthy and upper class pay for the best quality care that they can afford out of pocket and shun the “government hospitals” in favor of better amenities and better quality.


Anonymous JW said...

What you describe is the system we already have. Wealthy people can seek out the best healthcare they can afford, while the majority of us rely on the HMO's offered by our businesses.
My wife's aunt works for a company on the east coast that caters to wealthy people. They get paid to find the best doctors for whatever specialty they need.
Meanwhile, the rest of us wait in line at our doctors offices, and take whatever they give us.

9:42 AM  

Post a Comment

<< Home