Real Solutions for Health Care, Part I – The Problem

If one looks at Barack Obama’s principles for health care, the basic ideas are right. His three principles are:

  • Reduce Costs
  • Guarantee Choice
  • Ensure Quality Care for All

Unfortunately, the health care measures the president is backing shows he clearly doesn’t understand the main problem with American health care.

In America today, doctors rarely answer to patients. Instead, they answer to layers of faceless bureaucracy that ultimately answer to either employers or politicians. This makes doctors unresponsive to patient needs and results in ham-fisted results to control costs like senseless denials from private insurers and underpayments by government health care programs.

This system also presents a clear incentives for patients to get as much as they can without regard to cost. Since costs are borne by insurers and the government, the patient seeking treatment is shielded from them and have no incentive to seek only the treatment they need. In addition, they are further spurred to get “their share” by being set up as adversaries of insurance companies, employers, and the government.

The result of this incentive structure is a completely dysfunctional price system in health care. In a functioning price system, buyer and seller are competing for opposite purposes. The buyer wants to get the most product for the least money, while the seller wants to deliver the least product for the most money. When the price system is working, these incentives balance each other out and prices are controlled.

In health care, insurers-both private and government-try to deliver coverage as cheaply as possible without regard to quality because that’s what their masters want. Patients try to get as much value from their insurers without regard to cost. The result of these crossed incentives is a health care system that doesn’t meet the needs of patients while becoming ever more expensive.

Barack Obama’s health care plan does nothing to change this, and in fact goes to great lengths to make this incentive structure inescapable. Barack Obama, like many before him, is proceeding with good intentions but a poor understanding of what he’s trying to fix. The result is a health care plan that takes our problems and apply them to everyone.

Coming soon: Part II – Divorcing Health Care from Employment

  • Vast

    As long as Insurance companies get to ration health care to people and drop people who get sick Our health care system will be broken. There should only be two people involved in any health care decision, the Patient and the Doctor.

  • Aaron

    As a health care provider (physical therapist), the only patients that ask about the question of cost are the patients that are self pay or have a high deductible/HSA plan. They are the patients that work in the functioning price system. Hardly anyone else does. The “I have ‘good insurance’, so it doesnt matter how many times I come to therapy” comes to mind, with some of them being medicare. They are some of the hardest people to treat because they think their insurance will pick up the tab for everything they want. I hope part III, IV, or V of the series is titled “Reducing health care costs by kicking out the lawyers– The overtesting/treatment of patients to CYA”

  • Vast

    When your suffering from cancer and their is a treatment for it, the last thing on a persons mind is going to be the cost. Living would seem to me to be a tad bit more important.

  • Mike Foster

    > Barack Obama, like many before him, is proceeding with good intentions…

    Do you really believe that?