Thursday, January 8, 2009

Wait 'til it's free

For all the sectors of the health care industry, guess which ones offer the greatest quality and greatest price competitiveness? If you answered those that are paid for out-of-pocket where the consumer is most sensitive to prices and can compare prices and quality over a range of providers vs. those that are paid for by a 3rd party (employers, insurance company or government), then move to the head of the class.

Competition in a free market has held prices in check while driving up quality in the areas of cosmetic surgery, laser eye surgery, retail generic drugs (as carried by Wal-Mart), walk-in clinics and medical tourism (much like is practiced by the citizens of nations with socialized medicine that can’t/don’t want to wait 18 months for a hip replacement)…. Areas all that are not covered by a 3rd party where the prices are negotiated ahead of time in a highly bureaucratic fashion.

Since these negotiations are made without much price-sensitivity, there is no real competition for patients and you wind up with a system that is plagued with high costs, inconsistent quality and poor access.

Keep these inherent traits of free markets vs. highly artificial markets in your back pocket the next time you read about the glories of socialized medicine, a system by which could be argued, we are closer to now in our current state than that of truly free market for a health care system.

Read more here at Carpe Diem

P.S. The title of the post is in reference to P.J. O'Rourke's mantra about health care: "If you think health care is expensive now, wait 'til it's free"

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