Health care is a prodigious source of righteous indignation. When someone says our health care system is screwed up and needs to be fixed, everyone cheers.

The trouble is, everyone is hearing different diagnoses of the system’s problems, and cheering for different changes.

1. Doctors and other medical professionals want a system where their pay is protected, and no one is reviewing their decisions.

2. Consumers want a system that provides them with any treatment they want at no personal cost to them.

3. Insurance companies want a system that funnels most medical transactions through them, so they can skim off as much as possible.

4. Companies that pay for their employees’ medical care want to lower its aggregate cost while keeping their workers happy.

The particular problem you mention, flu, can be easily traced to these conflicting forces playing out. Insurers arrange for deals to get medical services at way below “list price”. It might actually be closer to the true cost than the list price, and sometimes below, but that’s not even the point from the insurer’s perspective. They just want the difference between list price and their price to be very high. That forces people to use insurers.

Most of us can afford to buy our own cars and other needs. The fact that ridiculously small medical outlays (like for doctor visits, or even procedures costing a few hundred or thousand dollars) are funneled through employers and insurance companies is an inefficient legacy of WW2-era govt wage controls, sustained by the employer deduction for employee insurance costs, in turn sustained by consumers and insurance companies and doctors motivated by 1-3 above.

The inefficiency is driven by the same thing that made the housing market overpriced – misalignment of interests. Consumers should be the ones driving the choices, with advice from doctors. Instead we often have doctors driving choices. More importantly, payments, as much as possible, should be made by the same people who get the benefits – consumers. Instead payments are shifted to a third party – insurers – that has no direct interest in the health or satisfaction of the consumer, and no overall incentive to limit costs. A fourth party – employers – are the only ones really motivated to limit overall costs. Again, that role should be played mostly by consumers.

So you have a huge part of our economy operating under wildly inflated prices, driven mostly by easy money managed by people who have no interest in the final outcome, and encouraged by govt tax and other subsidies. In many ways, the housing bubble and the health care markets are very similar.

Health care is a prodigious source of righteous indignation. When someone says our health care system is screwed up and needs to be fixed, everyone cheers.

The trouble is, everyone is hearing different diagnoses of the system’s problems, and cheering for different changes.

1. Doctors and other medical professionals want a system where their pay is protected, and no one is reviewing their decisions.

2. Consumers want a system that provides them with any treatment they want at no personal cost to them.

3. Insurance companies want a system that funnels most medical transactions through them, so they can skim off as much as possible.

4. Companies that pay for their employees’ medical care want to lower its aggregate cost while keeping their workers happy.

The particular problem you mention, flu, can be easily traced to these conflicting forces playing out. Insurers arrange for deals to get medical services at way below “list price”. It might actually be closer to the true cost than the list price, and sometimes below, but that’s not even the point from the insurer’s perspective. They just want the difference between list price and their price to be very high. That forces people to use insurers.

Most of us can afford to buy our own cars and other needs. The fact that ridiculously small medical outlays (like for doctor visits, or even procedures costing a few hundred or thousand dollars) are funneled through employers and insurance companies is an inefficient legacy of WW2-era govt wage controls, sustained by the employer deduction for employee insurance costs, in turn sustained by consumers and insurance companies and doctors motivated by 1-3 above.

The inefficiency is driven by the same thing that made the housing market overpriced – misalignment of interests. Consumers should be the ones driving the choices, with advice from doctors. Instead we often have doctors driving choices. More importantly, payments, as much as possible, should be made by the same people who get the benefits – consumers. Instead payments are shifted to a third party – insurers – that has no direct interest in the health or satisfaction of the consumer, and no overall incentive to limit costs. A fourth party – employers – are the only ones really motivated to limit overall costs. Again, that role should be played mostly by consumers.

So you have a huge part of our economy operating under wildly inflated prices, driven mostly by easy money managed by people who have no interest in the final outcome, and encouraged by govt tax and other subsidies. In many ways, the housing bubble and the health care markets are very similar.

Health care is a prodigious source of righteous indignation. When someone says our health care system is screwed up and needs to be fixed, everyone cheers.

The trouble is, everyone is hearing different diagnoses of the system’s problems, and cheering for different changes.

1. Doctors and other medical professionals want a system where their pay is protected, and no one is reviewing their decisions.

2. Consumers want a system that provides them with any treatment they want at no personal cost to them.

3. Insurance companies want a system that funnels most medical transactions through them, so they can skim off as much as possible.

4. Companies that pay for their employees’ medical care want to lower its aggregate cost while keeping their workers happy.

The particular problem you mention, flu, can be easily traced to these conflicting forces playing out. Insurers arrange for deals to get medical services at way below “list price”. It might actually be closer to the true cost than the list price, and sometimes below, but that’s not even the point from the insurer’s perspective. They just want the difference between list price and their price to be very high. That forces people to use insurers.

Most of us can afford to buy our own cars and other needs. The fact that ridiculously small medical outlays (like for doctor visits, or even procedures costing a few hundred or thousand dollars) are funneled through employers and insurance companies is an inefficient legacy of WW2-era govt wage controls, sustained by the employer deduction for employee insurance costs, in turn sustained by consumers and insurance companies and doctors motivated by 1-3 above.

The inefficiency is driven by the same thing that made the housing market overpriced – misalignment of interests. Consumers should be the ones driving the choices, with advice from doctors. Instead we often have doctors driving choices. More importantly, payments, as much as possible, should be made by the same people who get the benefits – consumers. Instead payments are shifted to a third party – insurers – that has no direct interest in the health or satisfaction of the consumer, and no overall incentive to limit costs. A fourth party – employers – are the only ones really motivated to limit overall costs. Again, that role should be played mostly by consumers.

So you have a huge part of our economy operating under wildly inflated prices, driven mostly by easy money managed by people who have no interest in the final outcome, and encouraged by govt tax and other subsidies. In many ways, the housing bubble and the health care markets are very similar.

Perhaps combine universal coverage for catastrophic matters with a market-based approach for everything under a certain threshold.

Insurance companies are a racket.

Perhaps combine universal coverage for catastrophic matters with a market-based approach for everything under a certain threshold.

Insurance companies are a racket.

[quote=gandalf]Perhaps combine universal coverage for catastrophic matters with a market-based approach for everything under a certain threshold.

Insurance companies are a racket.[/quote]
Just about to say same thing. Medical savings account could cover the common procedures. In order to work we need to see upfront prices for health care. This is one of the few sectors in USA that prices are banned until one gets crazy bill.

patientrenter,

great explanation of the conflicts.

flu,

the other outrage is that person who doesn’t have insurance is billed the full rate with no discount. Does that item cost $200 or $1000?? No wonder that many people cant afford to pay the bill and hospitals raise the retail prices to $1100 next year.

[quote=gandalf]Perhaps combine universal coverage for catastrophic matters with a market-based approach for everything under a certain threshold.

Insurance companies are a racket.[/quote]
Just about to say same thing. Medical savings account could cover the common procedures. In order to work we need to see upfront prices for health care. This is one of the few sectors in USA that prices are banned until one gets crazy bill.

patientrenter,

great explanation of the conflicts.

flu,

the other outrage is that person who doesn’t have insurance is billed the full rate with no discount. Does that item cost $200 or $1000?? No wonder that many people cant afford to pay the bill and hospitals raise the retail prices to $1100 next year.