The "Free Market" Party inaction
From posts by Avik Roy at Forbes:
Why do Hospitals Charge $4,423 for $250 CT Scans? Blame Arizona Republicans
... “Do we want free market health care?” [Arizona Republican state senator Nancy] Barto asked in a recent blog post. “Then why have common sense reforms that will produce one been opposed, defeated and/or vetoed at the legislature for the last 2 years—even though we have a Republican Governor and Republican supermajority?”
It’s a good question. “The short answer,” she writes, “is swarms of lobbyists. The longer answer is legislators succumbing to lobbyists on issues that should be rather plain.”
Price transparency seems like the kind of thing that everyone should be able to rally around. But you’d be wrong. Pretty much everyone in the health-care world—other than the patient—has an interest in keeping prices opaque.
... Not all providers everywhere are against price transparency. The pioneering Surgery Center of Oklahoma, led by G. Keith Smith, posts prices online for the full range of surgical procedures that they perform. “Our prices are so low in comparison to what others are charging,” says Smith, “that our competitors are feeling the pressure, and are beginning to lower their prices as well.”
Observes Daniel Anderson, “The clinic simply posts their prices on their website, and those prices are often [50 to 75 percent] lower than [those of] most major hospitals. The clinic is drawing in both the insured and uninsured, not to mention out-of-state and even foreign patients.”
Some libertarians argue that it’s not kosher for free-marketeers to force health care providers to post prices. People should be free, they say, to hide their prices if they want to. After all, we don’t seem to need to force Best Buy or Amazon to post their prices. And it’s true that, in a dream world where everyone buys insurance for themselves, and everyone has a health savings account, such measures might be less necessary.
But that’s not the world we live in today. Today, if you try to buy health care on your own, government policies and industry stakeholders do everything possible to make your life miserable. Transparency is the sort of thing that Republicans and Democrats should be able to agree on. But instead, they’ve agreed to let industry lobbyists preserve the status quo.
The Myth of 'Free-Market' American Health Care
Earlier this week, Pascal-Emmanuel Gobry posted a stimulating comparison between the American and French health-care systems. “From my outlook,” he writes, “there’s something that I haven’t seen discussed and yet seems striking to me: how similar the French and U.S. healthcare systems are. On its face, this seems like a preposterous notion: whenever the two are mentioned together, it’s to say that they’re polar opposites.”
Indeed, there are a lot of misconceptions about how America’s health-care system compares to those of the other developed countries, including France. Both liberals and conservatives believe that the American system is a “free-market” or “capitalistic” one, and that European systems providing universal coverage are “socialized.” In this article, I’ll explain where both of these conceptions go wrong ...
... Does universal coverage equal socialized medicine?
One of the most frequently-made arguments in favor of socialized medicine is that it saves money, relative to the American system. And it is true that Europeans et al. spend less per-capita, and as a percentage of GDP, than we do.
But the pro-socialism argument has a glaring weakness: it ignores the two most significant examples of market-oriented universal coverage in the developed world, Switzerland and Singapore, where state health spending is far lower than it is in other industrialized nations. Neither Switzerland nor Singapore could be described as libertarian utopias—both systems contain aspects that conservatives wouldn’t like—but they provide powerful examples of how market-oriented health care systems are more cost-efficient than socialized ones.
I’ve described Switzerland as having the world’s best health-care system ...
How Employer-Sponsored Insurance Drives Up Health Costs
... Why is it that ... dominant insurers are rolling over when powerful hospitals demand higher prices? It’s quite easy to explain.
Fourth-party insurance is worse than third-party insurance
The fundamental cause of this problem is the fact that only 10 percent of Americans with health insurance buy it for themselves. Due to an artifact of World War II-era wage controls, if employers take money out of your paycheck and use it to buy health insurance for you, you don’t pay income or payroll taxes on those funds. However, if you decide to buy insurance for yourself, you have to do so with after-tax dollars. As I described in a 2010 article for National Affairs, this quirk gives employers a “major incentive to provide generous benefit packages.”
"For example, a worker who pays federal and state income taxes at a combined rate of 30% will receive $7,000 for every $10,000 his employer provides in gross salary. But the same employee will receive $10,000 in benefits for every $10,000 his employer spends on health insurance—a 43% improvement."
Stanford Nobelist Kenneth Arrow famously described third-party insurance as one of the principal flaws in America’s health-care market. That is to say, because patients don’t pay for their health care directly, they’re insensitive to the cost and value of that care. But the 155 million Americans with employer-sponsored insurance in fact have fourth-party insurance. Not only do they not directly pay for their care, but they don’t directly pay for their third-party insurance.
It is, therefore, no surprise that insurers cave in when hospitals demand higher prices. Workers have no idea what their employers spend on their health plans, and therefore get upset when their employers buy insurance that doesn’t provide access to brand-name hospitals. “Of critical importance [to increased hospital leverage] was employer resistance to choice-limiting networks with few providers,” write the Health Affairs authors.
The Biggest Driver of Health Costs That Nobody Talks About
Why do Hospitals Charge $4,423 for $250 CT Scans? Blame Arizona Republicans
... “Do we want free market health care?” [Arizona Republican state senator Nancy] Barto asked in a recent blog post. “Then why have common sense reforms that will produce one been opposed, defeated and/or vetoed at the legislature for the last 2 years—even though we have a Republican Governor and Republican supermajority?”
It’s a good question. “The short answer,” she writes, “is swarms of lobbyists. The longer answer is legislators succumbing to lobbyists on issues that should be rather plain.”
Price transparency seems like the kind of thing that everyone should be able to rally around. But you’d be wrong. Pretty much everyone in the health-care world—other than the patient—has an interest in keeping prices opaque.
... Not all providers everywhere are against price transparency. The pioneering Surgery Center of Oklahoma, led by G. Keith Smith, posts prices online for the full range of surgical procedures that they perform. “Our prices are so low in comparison to what others are charging,” says Smith, “that our competitors are feeling the pressure, and are beginning to lower their prices as well.”
Observes Daniel Anderson, “The clinic simply posts their prices on their website, and those prices are often [50 to 75 percent] lower than [those of] most major hospitals. The clinic is drawing in both the insured and uninsured, not to mention out-of-state and even foreign patients.”
Some libertarians argue that it’s not kosher for free-marketeers to force health care providers to post prices. People should be free, they say, to hide their prices if they want to. After all, we don’t seem to need to force Best Buy or Amazon to post their prices. And it’s true that, in a dream world where everyone buys insurance for themselves, and everyone has a health savings account, such measures might be less necessary.
But that’s not the world we live in today. Today, if you try to buy health care on your own, government policies and industry stakeholders do everything possible to make your life miserable. Transparency is the sort of thing that Republicans and Democrats should be able to agree on. But instead, they’ve agreed to let industry lobbyists preserve the status quo.
The Myth of 'Free-Market' American Health Care
Earlier this week, Pascal-Emmanuel Gobry posted a stimulating comparison between the American and French health-care systems. “From my outlook,” he writes, “there’s something that I haven’t seen discussed and yet seems striking to me: how similar the French and U.S. healthcare systems are. On its face, this seems like a preposterous notion: whenever the two are mentioned together, it’s to say that they’re polar opposites.”
Indeed, there are a lot of misconceptions about how America’s health-care system compares to those of the other developed countries, including France. Both liberals and conservatives believe that the American system is a “free-market” or “capitalistic” one, and that European systems providing universal coverage are “socialized.” In this article, I’ll explain where both of these conceptions go wrong ...
... Does universal coverage equal socialized medicine?
One of the most frequently-made arguments in favor of socialized medicine is that it saves money, relative to the American system. And it is true that Europeans et al. spend less per-capita, and as a percentage of GDP, than we do.
But the pro-socialism argument has a glaring weakness: it ignores the two most significant examples of market-oriented universal coverage in the developed world, Switzerland and Singapore, where state health spending is far lower than it is in other industrialized nations. Neither Switzerland nor Singapore could be described as libertarian utopias—both systems contain aspects that conservatives wouldn’t like—but they provide powerful examples of how market-oriented health care systems are more cost-efficient than socialized ones.
I’ve described Switzerland as having the world’s best health-care system ...
How Employer-Sponsored Insurance Drives Up Health Costs
... Why is it that ... dominant insurers are rolling over when powerful hospitals demand higher prices? It’s quite easy to explain.
Fourth-party insurance is worse than third-party insurance
The fundamental cause of this problem is the fact that only 10 percent of Americans with health insurance buy it for themselves. Due to an artifact of World War II-era wage controls, if employers take money out of your paycheck and use it to buy health insurance for you, you don’t pay income or payroll taxes on those funds. However, if you decide to buy insurance for yourself, you have to do so with after-tax dollars. As I described in a 2010 article for National Affairs, this quirk gives employers a “major incentive to provide generous benefit packages.”
"For example, a worker who pays federal and state income taxes at a combined rate of 30% will receive $7,000 for every $10,000 his employer provides in gross salary. But the same employee will receive $10,000 in benefits for every $10,000 his employer spends on health insurance—a 43% improvement."
Stanford Nobelist Kenneth Arrow famously described third-party insurance as one of the principal flaws in America’s health-care market. That is to say, because patients don’t pay for their health care directly, they’re insensitive to the cost and value of that care. But the 155 million Americans with employer-sponsored insurance in fact have fourth-party insurance. Not only do they not directly pay for their care, but they don’t directly pay for their third-party insurance.
It is, therefore, no surprise that insurers cave in when hospitals demand higher prices. Workers have no idea what their employers spend on their health plans, and therefore get upset when their employers buy insurance that doesn’t provide access to brand-name hospitals. “Of critical importance [to increased hospital leverage] was employer resistance to choice-limiting networks with few providers,” write the Health Affairs authors.
The Biggest Driver of Health Costs That Nobody Talks About
Comments
Post a Comment