The high price of health-care obscurity
The Wall Street Journal has an “Ask the Experts” blog, which is currently fielding questions about how to bring down health care costs. Dr. David Foster, who was a co-executive producer on the long-running Hugh Laurie drama “House, M.D.” had a particularly intriguing suggestion:
Speaking as a consumer of health care, it is the one area of my many types of consumption where I have no clue about costs. And I try. I get my car fixed, I’m given an estimate up front. Same for my accountant, my grocery store, my veterinarian. But, when I go to my doctor’s office, I have no clue. Even after the fact, it takes five rounds of paperwork to figure out what my insurance company actually paid for the visit.
Now, I’m not saying a price chart handed out to patients would reduce costs. I am saying it would educate consumers. That is the first step in having an honest, public debate about the relative worth and costs of health care. And we need one.
One of the biggest factors in rising health care costs, across the past several decades, was obscurity. The distance between the providers of health care, and its consumers, had grown to interstellar proportions. All that remained was to make the gulf intergalactic, by socializing medicine.
It’s not going too far to say that as of ObamaCare’s unlovely birth, very few Americans actually paid for health care at all. They paid for insurance, and the insurance companies paid for health care. Health insurance is almost like a separate currency, whose rate of exchange is entirely mysterious to consumers holding fists full of dollars. Nobody knows what anything costs – they’re barely aware of the true cost of their insurance, since much of the purchase is handled by employers. This virtually eliminates the incentives that drive competition, and the highly regulated health insurance and health care industries were nobody’s idea of free markets. How many average consumers even fully grasp the idea that those two markets are separate?
ObamaCare doesn’t really change any of this – it just makes everything worse, by introducing new mandates and controls that further divorce the value of health care, and health insurance, from its cost. The situation grows even more obscure for the average consumer, who recoils in shock as his premiums explode for no good reason he can see… or, contrary to the President’s “you can keep your plan” promises, his insurance coverage disintegrates completely.
The old saying holds that “time is money.” It is also true that money is data. Prices provide valuable information about supply and demand, to both producers and consumers. The less clear the parameters of a transaction are, the more distorted value becomes… which results in high prices, shortages, or both. The great genius of command economics is distorting market data to the point where things become both more expensive and less available.