domingo, novembro 04, 2012

Freeing the market for health care

The Best Essay on Health Care por Russ Roberts — After the ACA: Freeing the market for health care (PDF) por John H. Cochrane:
Health care markets need a big supply‐side revolution, in which the likes of Southwest Airlines, Walmart and Apple enter, improving business practices, increasing quality and transparency, and spurring innovation. And disrupting the many entrenched interests and cross‐subsidies of the current system.

I outlined a long string of restrictions on competition that can be repealed, or modified to allow competition. At a minimum, every new regulation should be evaluated by its effect on competition by new entrants, or protection of incumbents, a consideration not even spoken in policy discussion today. 
Health care is singularly ill‐suited to payment‐plan provision, either by government directly or by heavily regulated insurance by a few large well‐protected businesses.  A functional cash market must exist in which patients can realistically feel the marginal dollar cost of their treatment, or (equivalently) enjoy the full financial benefits of any economies of treatment they are willing to accept, and are not patsies for huge cross‐subsidization and rent‐seeking by an obscure system negotiated behind the scenes between big insurance companies, hospitals, and government.

Both supply and demand must be freed. Without supply competition, asking consumers to pay more will do little to spur efficiency. Without demand competition, new suppliers will not be able to succeed.

The alternative, doubling down regulations on an already highly regulated system, full of protected and politically connected incumbents and rent‐seekers, has little chance of achieving these goals. Whether in the post‐office model (government provision), or the 1950s‐style regulated airline, utility or bank model (the ACA)  this effort will just produce less efficiency, more costs, and another generation of bright ideas dashed. Oh ye reformers, remember that the last 20 bright ideas did not fail simply because the people in charge weren’t as smart as you are, or as well‐meaning!  

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