Common Sense
Kevin MD links to this article by a CEO of a Massachusettes HMO:
FOR THE SIXTH year in a row, health care costs are rising at rates that far exceed the rate of general inflation. Studies continue to suggest that health care delivery is uneven at best, and in some cases, harmful, and everybody's got a financing scheme or a policy proposal to shift the cost and quality burden onto someone else.
But most of these ideas won't solve the problem.
The real problem is about much more than high drug prices or corporate profiteering. It rests with the lack of credible, publicly available -- and understandable -- information around the cost and quality of health care. If the whole thing is just a big black box, why should we be surprised if it isn't as effective or efficient as we might like it to be?
When someone buys any other product or service, he or she knows the price of that product, and has some ability to determine if its quality is worth the cost. In recent years, the Internet has made consumers even better purchasers than they were before, driving down prices, improving knowledge and enhancing value.
But not in health care. As consumers, we don't know the price of any common medical procedure. We don't know the price of an appendectomy at South Shore Hospital, knee surgery at the New England Baptist, or having a baby at Brigham and Women's. We don't know if it costs more or less to have an MRI at UMass Memorial or Worcester Medical Center, or if bypass surgery at the Beth Israel Deaconess costs less than bypass surgery at Massachusetts General Hospital. We also have no clue about how much it actually costs at either institution: $5,000? $15,000? $25,000? $50,000?
Kevin agrees that this is a good idea. I don't think it's a good idea so much as I think it is so common sensical that we should ask why things are the way they are. Easily obtainable pricing and quality information is one of the fundamnetal qualities of a functioning free market. It is one free-market reform that I am confident even Graham and Cameron can (and do) buy into.
However, it is only one side of a two-sided coin. Consumers only want and seek the information if the benefits of such information exceed the costs of finding it. Part of the reason things stand as they do is that patients do not save from finding this pricing information. This is the fundamental problem with third-party payers, whether they be HMOs in a employer-based insurance structure or governments in a national health care system. Why would anyone ever have the incentive to seek price information, and more importantly, to act on that information, if the benefits acrue to a third party?
The author in the above article wants patients to shop for best prices because he will see better profits. The government wants patients to shop for best prices so it can spend tax money on other things. But consumers don't care because, for the most part, higher prices only come from their pockets indirectly (higher taxes and premiums). Such information is useless without the incentive to use it.
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