Could medical insurance — insurance for “health care” — itself act like a drug?
Are we addicts?
Third-party (“insurance”) payments sure are super-convenient. But their convenience comes at a cost: insurance (and other third-party payers) that remunerate doctors and hospitals directly is what’s driving much of the price inflation in this sector.
Automobile insurance policies overwhelmingly pay the insured, not the mechanics, and we have no automobile repair crisis.
This was related with utmost clarity by Jeffrey A. Singer in his recent Wall Street Journal commentary “The Man Who Was Treated for $17,000 Less.” A patient got an astoundingly better price for a surgery by simply setting aside his insurance program and paying in cash. Singer explains why:
- “Hospitals and other providers make their ‘list’ prices as high as possible when negotiating contracts with health plans and Medicare regulators. No one is ever expected to pay the list price.”
- “[M]ost people these days don’t have health ‘insurance.’ They have prepaid health plans. They pay premiums to take advantage of a pre-negotiated fee schedule arranged for and administered by a third party.”
- “It is the third-party payment system that interferes with true price competition, so ‘market clearing prices’ can’t develop.”
Singer reminds us that specialty services like Lasik eye surgery, which tend not to be covered by insurance policies, have improved in quality and gone down in price.
Alas, as he laments, the United States is “headed in the exact opposite direction” from a real, cost-reducing solution. To a nation addicted to third-party payers in medicine, Obamacare is nothing more than upping the dose of the same old drug.
This is Common Sense. I’m Paul Jacob.