The market for health-care services is a lot like the market for cellular phones: It is driven by technology and innovation and, because the capital costs of building a cellular network or a hospital MRI clinic are substantial, the markets tend to be more efficient when there are larger numbers of participants. If you could take an iPhone back to 1982, it would seem like something out of science fiction. But a 2009 visit to the doctor’s office is depressingly similar to a 1982 visit to the doctor’s office, and in many ways is worse: It’s more expensive, the insurance and billing systems are even more frustrating, and the record-keeping is frequently defective. The system is plagued by fraud, waste, and malfeasance. There have been some great innovations in medical technology, but there has been regress when it comes to affordability, freedom of choice, and transparency.
Here are ten things that would go a long way toward getting that done:
1) Insurance Choice. The third-party-payer problem isn’t limited to insurance companies and government programs.
2) Real Competition: A National Market for Health Insurance. Insurance companies are not your friend.
3) Price Transparency. Here’s an experiment for you: Pretend that you need a particular medical service — anything from a heart stent to having a broken finger set — and then call around to your local hospitals to see what it would cost. You will have a hard time getting an answer, and in many cases will not be able to get one at all. Why? Because doctors and hospitals don’t answer to you — they answer to your insurer, and they have important financial reasons to obfuscate and mislead when it comes to pricing... But markets cannot function without prices; if consumers are going to be empowered make their own health-care decisions, providers must make real prices available.
4) High Ceilings for HSAs (and No Taxes). Some things will probably always have to be paid for by insurance: That’s why we have insurance, after all — for catastrophic developments like heart failure, cancer, or car wrecks. But at present we use insurance to pay for everything from flu shots to sex-change operations. The best way to get rid of third-party-payer problems is to have consumers spend their own money — not their insurers’ money, not taxpayers’ money.
5) Insurance on Your Insurance. What is needed, as John H. Cochrane of the Cato Institute has argued persuasively, is a two-pronged approach to insurance: health insurance of the familiar sort, and what he calls “health status” insurance, which is, essentially, an insurance policy that keeps you covered in the event you develop a chronic condition that would normally render you uninsurable.
6) Tort Reform. The plaintiffs’ bar is an infection in the health-care industry, and there is a cure. States such as Texas have experimented with such commonsensical measures as reasonable limits on non-economic damages (the “pain and suffering” awards) and pre-trial review of medical malpractice claims by a panel of doctors.
7) Non-Physician Competition. The physicians could stand a little more competition, too. Medical-licensure laws and the AMA’s cartel status mean that full-on physicians — expensively trained and often highly specialized — have a monopoly on performing procedures that could be done just as well, at a lower cost, by non-physicians.
8) Approval/Patent Reform for Drugs and Treatments. A streamlined FDA approval process and better patent protection would make pharmaceuticals, biotechnology, and medical devices less expensive.
9) Provisions to Force Medicare and Medicaid to Compete. Market-based reforms will go a long way toward making health care more accessible, less expensive, and more secure for the great majority of Americans, but government programs are not going away, and the very poor, the very sick, and the otherwise vulnerable will still need some form of public support.
10) CHIP Registration for Eligible Kids. CHIP, the Children’s Health-Insurance Program, is another imperfect entitlement regime, but it’s the one we have and it is unlikely that we will replace it.
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