And Let’s Let Patients Be Consumers, Too

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Earlier today, I suggested that trapping students in government schools (rather than empowering their families with choice) turns them into commodities to be built into government budgets and exploited to expand tax collections.  Progressives have been trying the same trick with health care for a long time, gradually pushing all pricing information and financial responsibility away from the individual.

Whether their difficulty accomplishing that goal has been a result of their method or simply because they missed the window of opportunity during the Twentieth Century Progressive Era would make for an interesting study.  Nonetheless, technological innovations that democratize information have certainly not helped their totalitarian cause.  Stephen Green recently posted a story on Instapundit about a particular business-model innovation (and we shouldn’t miss the sense that returning to basics could be called an “innovation”):

Time has a great story about bringing basic market forces to medicine. Titled “What Happens When Doctors Only Take Cash,” the article uses the Oklahoma City Surgery Center as a model for a different way of doing business. Co-founded by the outspoken libertarian Keith Smith and Steven Lantier, two anesthesiologists, the center takes no insurance whatsoever. Instead, they take cash only and advertise and guarantee their prices and services.

As Green writes, “the insurance-for-everything model has been a disaster,” but what strikes me is the ability for such stories, and such models, to spread nowadays.  The central planners who think we’re all ultimately children to be cared for by the powerful would have had more success containing such stories in the past, partly because of the slower spread of information, but also because of the inherent limits on innovative businesses in the past.  Note this:

The Surgery Center would charge $19,000 for [patient Art Villa’s] whole-knee replacement, a discount of nearly 50% on what Villa expected to be charged at his local hospital. And that price would include everything from airfare to the organization’s only facility, in Oklahoma City, to medications and physical therapy. If unforeseen complications arose during or after the procedure, the Surgery Center would cover those costs. Villa wouldn’t see another bill.

Think of all the areas in which technology helps (and regulatory burden hinders) this process, from the communications technology that allows contact and consultation (including video calls), as well as the instantaneous transfer of documents, to safe and inexpensive travel over vast distances.

No doubt, as this model catches on, the market will squeeze the margins.  Compared with the ridiculous excess in our current insurance-for-everything approach, it’s relatively easy to come in with a lower price that covers everything, including the risk of complications; in the future, competitors will offer consumers packages that are less expensive to the consumer, but that make the costs more predictable to the seller.*

Whatever the case, when this catches on, and if government gets out of the way, we’ll all be more empowered and get better care at lower prices.  Of course, we can expect the left-wing news media to trumpet every discomfort experienced along the way as an indictment of capitalism.  Oddly, some of the same factions in society who believe that people ought to be able to choose assisted society don’t believe they should be able to choose lower-cost health care that accepts more risks.

In the long term, though, freedom will win if we don’t shy from it.

 

* The idea of risk is critical.  Yes, in a freer system in which people can choose lower-cost options that require them to carry more of the financial risk, some people will find unhappy surprises when the gamble doesn’t play out.  But people who want to do so can always pay more on an ongoing basis, essentially, to buy risk relief from somebody else.  That, umm, is called “insurance.”  Right now, we’re all being forced to pay top dollar to cover everybody’s risks, and the whole scheme has become so opaque that, as the Surgery Center story shows, the margins are outrageous.



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