Thoughts on the Cost Conundrum

This New Yorker article on health care proposes that we shouldn’t focus on who writes the checks, but rather that hospitals have a well-coordinated team in place keeping costs down.

Imagine that, instead of paying a contractor to pull a team together and keep them on track, you paid an electrician for every outlet he recommends, a plumber for every faucet, and a carpenter for every cabinet. Would you be surprised if you got a house with a thousand outlets, faucets, and cabinets, at three times the cost you expected…

Even if facilities had identical rates for procedures, the cost of a given inpatient stay is impossible for anyone to predict. Neither the incoming patient nor the insurer are in a great position to judge what care given would be unnecessary or inefficient, yet hospitals in McAllen, Texas (and likely all over) appear to deliver a lot of care that might qualify as such. So what can we do about it?

In other news, there’s probably never been as much public support for single-payer care as there is now, but like many of Obama’s promises, it’s off the table. Again, a single-payer switch might only shave minor administrative costs, but it should also give us more control over providers to encourage more to operate like the Mayo Clinic.

I still find the free market health care dream intriguing. If we could just remove all government regulation and insurance, the market would just work its magic and care would be affordable (and for enough people to be considered a success). It would be a grand experiment* to just say, “OK, you get ten years to make it work.” (*Does any country have a freer market health care system I should look at?)

The reality:

  1. Voters will never ditch Medicare, so the experiment will never happen.
  2. Democrats, like Republicans, will be driven by existing industry dollars, so single-payer will go nowhere (unless unemployment got much, much worse).
  3. We’ll inevitably raise taxes to cover Medicare (no politician facing re-election will let it (or SS for that matter) go insolvent on ideology).

So we’ll continue to have a system that few are happy with, and we’ll pay too much for it.

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