Monday, February 22, 2010
First off, please don't buy the straw man argument that because conservatives are against the current Democratic offering they want to do nothing. This could not be further from the truth. We DO want to improve the healthcare system. The question is how do we do it without bankrupting the country, lowering the quality care, and giving up our right to choose the doctor or plan we want.
Why is that almost all other things we buy come down in price over time except healthcare?
Remember the first time you bought a CD player, cell phone, or HDTV? Remember how rare and expensive they were? Think about how widespread and cheap they are now.
Take a look at laser eye surgery. From Marginal Revolution:
Laser eye surgery has the highest patient satisfaction ratings of any surgery, it has been performed more than 3 million times in the past decade, it is new, it is high-tech, it has gotten better over time and... laser eye surgery has fallen in price. In 1998 the average price of laser eye surgery was about $2200 per eye. Today the average price is $1350, that's a decline of 38 percent in nominal terms and slightly more than that after taking into account inflation.
We are very wise how we spent our money and shop around for the best bargains. Businesses and eye doctors have to compete for our limited dollars. It is this frugality and competition that drives innovation, efficiency, and price declines.
Why is healthcare different?
Milton Friedman observed nobody spends their own money as wisely as their own. In large part, we don't care how much healthcare costs when we receive it because we either pay nothing or only a small fraction of what is actually costs when we go to the doctor's office or emergency room. Our perception is that healthcare is free. There is a perverse incentive to consume more and more healthcare and little to no motivation to seek out the best deal.
The vast majority of payments to providers are made by third parties such as Medicare and health insurance companies. Thus, the success of the physician or hospital depends more on maximizing reimbursement from insurance companies than on delivering quality healthcare at a reasonable cost. Efforts to increase efficiency are focused on administration not delivery.
The only way to truly fix the system over the long haul is to do away with the employer sponsored healthcare plans and give the tax incentive to individuals. From The Heritage Foundation:
The best way to change the current tax treatment would be to replace the existing tax exclusion with a more equitable and efficient system of individual tax relief, leveling the playing field for robust competition among insurers and creating a level of consumer choice that is routine in every other sector of the American economy.
So far, nothing the Democrat's are offering comes even close. If the government is allowed to increase its' control over our healthcare system without fundamental change, we will see continued cost increases and, ultimately, a need to ration care and/or ever increasing taxes to pay for it all.
Labels: healthcare reform, tea party
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