There are numerous issues that drive the current demise of our health care system. One is our national attitude towards and fascination with anything new and high tech, which create a needless demand without proven cost-effectiveness. Another one is the physician financial interest in services provided. When the physicians began owning the diagnostic tools and profiting from the treatments prescribed, the skepticism about the necessity of these tools was seeded. Of course, whenever the doctors become business people, they have to go with the market rules: consumer is always right!

Historically, the money for the services rendered was settled between the doctor and physicians. When the services provided and the providers became diverse and interactions complicated, the medical community decided to regulate and set the parameters. AMA was the institution that created the insurance companies. It is in a way responsible surrendering their power for compensation – and precedence for litigation issues. Progressively, we ended up in the mess we created for ourselves. In Turkey, we have a saying “1 lunatic throws a stone in the well, 40 wise men couldn’t find a way to get it out.”

Health care is a quite different than many other businesses in many ways but one is very important: no one can know how to manage an illness but a trained doctor. So they are the sole authority on telling what a patient needs. In general, the patients are not in a position to know the difference between a competent and not so doctor to make an informed choice so it improves the quality of the care. There is also the scarcity of the provider. When we decide to let the free market totally to run the health care business, we cannot limit the number of people who can be doctors. When you artificially control the supply side, you cannot expect the demand side to determine the price and quality. Also most patients develop an emotional bonding with their doctors (which is not true with our Best Buy or Microsoft sales person); hence, in most instances market forces would not work to determine the prices. Besides the services provided may have life-and-death consequences while many other goods may not be that essential to a person.

I do think that the current health care financing should be changed. The doctors, rightfully, demand to recoup their years of intellectual and financial investments. However, there should be a way for every hardworking citizen of this country (and yes, the Americans are the hardest working people in the world regardless of what some partisan people claim) to access a basic health care. Maybe a two-tiered system might not be such a bad idea. There are pros and cons to every model; we just need to choose the one that will benefit two interest groups: doctors and patients. Finding that model is a big challenge but a good venue to innovate…

Orszag said it could take more than five or ten years for measures such as health information technology and comparative effectiveness research to begin lowering costs…

See full CQ article here.

“I think lurking behind your obtuse statements on health care is the idea that when patients have sufficient fiscal skin in the game, they may force physicians to be more innovative in finding cost-effective care. Perhaps so.

Of course, it would be nice if you ever came out and called this by its proper name: rationing health care by price and ability to pay. Why not have a little courage, John, and say so openly.”

I’m sure Dr. Reinhardt understands that there must be rationing by some means.

The rationing by price could be substantially alleviated by government transfers of money from taxes, for health care only, to individual citizens, and letting the health purchases take place in a free market.

My approach along these lines is at plan.bipartisanhealthplan.com.

Doctors feel beleaguered by insurance companies and lawyers, and then are told what their services are worth. Most doctors are individualists and don’t tolerate this kind of intrusion into their lives. This leads to deception and skulduggery, as it always will with government interference and price fixing.

Why not offer incentives to doctors and patients, in effect, a tax cut, to live a healthy lifestyle? Is this not what HSA’s do? Make them more available and explain to the people how this will benfit them.
Encourage patients and doctors to promote this, then offer better rates to those that do. And for God’s sake, get rid of this awful link of insurance to the employer.
The fatal conceit of the bureaucrats is to think that they can tell us little people how we should behave.
It’s never worked.
And Uwe, why ask me for my prices when the insurance company tells me the charge??

Where are the price signals? We allocate resources to super efficient efficient facilities the same as we allocate resources to facilities one ought to avoid like the plague. Payers try to send price signals with P4P, but this is terribly inefficient. Why do the payers not offer an open market product that REWARDS PATIENTS for using best value facilities. PPOs have got to go. 90-95% of a given payers PPO facilites are “in-network” Why don’t payers go the whole way and invite 100% to participate. Hospitals should decide what they want to charge so as to compete for patients on price/quality? Patients would pay less, nothing or even get paid in some cases to use a best class facility. What we have now is a bunch of Monday morning quarterbacks trying to control everything – absolutely absurd. It’s nothing short of embarrassing from my perspective, and it’s stressful for everyone involved. As always pride is at the heart of the matter… everyone thinks he knows best his brothers health care needs: what, where, how much, the cost, how much he should pay, who should treat him, and how many bedpan changes he should get. Absurd.