I found this article by Elisabeth Rosenthal in today’s NYT to be extremely resonant and sensible. It’s written at the intersection of a) the reality of “shopping for health care,” including drugs and treatments, and b) the frequently heard admonition that the best way to reduce our bloated health costs is through consumer-driven price competition.
If you’ve ever found yourself at that dangerous intersection, I suspect you’ll nod rigorously throughout this piece. Of course it’s true that price competition and price signaling play critical roles in capitalist economies. But as I constantly point out here at OTE, health care is not a normal market.
I just shopped around for a suit and got a great bargain. Compare that activity to the time I rushed my injured kid to the MD’s office with what I thought might have been a broken limb. The MD sent us downstairs to an independent lab for an X-ray. We were told we could shop for one that was cheaper, but no one will do so with a hurt kid in tow, and anyway, we had no idea how much our insurance would cover. I challenge you to find me a parent who’s going to stop and shop in that situation.
Or the time I developed a horrible toothache on a Friday afternoon in DC. I finally found a dental surgeon to pull the tooth and—I’m not making this up—as I was in the chair with the (absolutely wonderful) gas about to knock me out, they were handing me bills to sign. I suppose I could have said, “Hold on! I’m going to call around and see if anyone will beat this price,” but all I cared about was stopping the pain.
Of course there are non-emergencies where you theoretically have time to engage in price comparisons, the simplest of which—again, in theory—should be prescription drugs. Rosenthal, however, points out that even here, it’s difficult and time-consuming to figure out the actual out-of-pocket costs at one pharmacy versus another, especially once you start adding the key factor of how that pharmacy interacts with your insurer. A bunch of websites have sprouted up to help, and they sound quite useful, but they won’t know the specifics of your coverage and how that plays out with your pharmacy.
One service she documents allows you to bid out a procedure to discover the lowest bid from a doctor or surgeon. “Who out there wants to replace my knee!? Do I hear $12K? How about $10K—anyone…going once…” Maybe there’s something to it, but it sounds like an accident going out to happen (quality control??). There’s gotta be a better way.
Clearly, our current system is the worst of both worlds. Many with coverage don’t face the costs of their decisions which has made the unsustainable American health care the most expensive in the world, without commensurate quality gains. Those without coverage can’t afford much of anything.
Co-pays and deductibles nibble at the edges, but why not just do what every other advanced economy does: control health care prices (and MD salaries, drug costs, and hospital stays) by fiat? The question answers itself: because we insist of freedom of choice, consumer sovereignty, etc.
As Rosenthal sees it, Americans “…have cast their lot with so-called consumer driven health care.”
To which I say, “No, we haven’t!” At least, that’s not obvious to me. The medical industrial complex—the insurers, MDs, big pharma, hospital associations—certainly depends on the belief that we insist on extensive consumer choice. And for every truly market good, we do. But I hear far more people complain about their difficulty affording health care, the confusion and obfuscation built into the delivery system, the arbitrary changes in coverage and cost—than I hear clamoring for a more transparent and competitive market for thoracic surgeons (“dude, have you seen the awesome deal on heart valves down at City Hospital?!”).
Hold your fire—I’m not suggesting we give up our freedom, become “bloody five-year planners,” as PG Woodhouse says it, and switch from our current doctor to Dr. Marx. I’m just saying that the real costs of the illusion of free choice outweigh the alleged benefits (and really, what “benefits” are we talking about?!). Much of health care will never be susceptible to price competition, and the sooner we recognize that, the sooner most of us—excepting the beneficiaries of the current regime—will be better off.