What I call health policy orthodoxy is committed to two propositions: (1) The really important health issue for poor people is access to care, and (2) to ensure access, waiting for care is always better than paying for care. In other words, if you have to ration scarce medical resources somehow, rationing by waiting...
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Despite the fact that prices in healthcare do not play the same role as they do in other markets, there is a tendency on both the political right and the political left to ignore this fact. The right, for example, issues frequent calls to make prices transparent. A number of proposals would even require...
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If you ask a hospital in your neighborhood to give you a package price on a standard surgical procedure, you will probably be turned down. After the suppression of normal market forces for the better part of a century, hospitals are rarely interested in competing on price for patients they are likely to get...
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Why is the price of a knee replacement for a dog—involving the same technology and the same medical skills that are needed for humans—less than one-sixth the price a typical health insurance company pays for human operations? Why is it less than one-third of what hospitals tell Medicare their cost of doing the procedure...
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Complex systems, by definition, are systems that are too complex for any single individual (or group of individuals) to grasp and understand. What difference does that make? It makes a huge difference. Most of us wouldn’t walk into a chemistry lab and start pouring solutions from one beaker into another—at least if we don’t...
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In fields as diverse as cosmetic surgery and LASIK surgery, we are discovering that healthcare markets can give patients transparent package prices and that costs can be controlled—despite a huge increase in demand and enormous technological change (of the type we are told increases costs for healthcare generally). For services as diverse as walk-in...
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The premise of my latest book, Priceless: Curing the Healthcare Crisis, is that most of our problems arise because we are trapped. We are caught up in a dysfunctional system in which perverse economic incentives cause all of us to do things that raise the cost of care, lower its quality, and make access...
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Health Savings Accounts are the fastest growing product in the health insurance marketplace. Currently, about 25 million families are managing some of their own healthcare dollars as a result. Virtually every serious study has found that these plans lower costs without jeopardizing the quality of care people receive. In fact, most employers have decided...
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One of the many pitfalls of Affordable Care Act, I explained in my previous blog post, is that it requires insurers to spend no more than 20 percent of their income from premiums on administrative costs and no less than 85 percent on medical care. Regulating the medical loss ratio (MLR), as it’s called,...
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The Affordable Care Act requires health insurance plans to spend at least 85 percent of their premium income on medical care and no more than 20 percent on “administrative costs”—the portion of insurance premiums that are not spent on medical care.[1] Here’s one immediate problem: no one knows how to define “administration.” Just as...
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