Sunday, September 18, 2011

You Need New Medicine

For every new, innovative health care plan that's offered, we still seem to faced with the same choice. Disguised in many different forms, the question continually remains: "Do you want more choice?" If you answered "yes," then open up your wallet and pay more.

What's important about this question, and why it always reappears, is that it is the easiest cost control measure for private sector healthcare. In this private market, we have insurance, HMOs, and all these other proposals for healthcare plans competing. For the most part, they offer identical services. While there are differences between hospitals, primary care physicians (PCPs), and specialists, it's not like comparing Yugos and Ferraris. So, the pricing mechanism in the market does not become quality of care. Certainly, there isn't really any monopoly power: this market is probably monopolistically competitive. Anyway, point being, different providers have to differentiate. Thus, our market comes from choice. That's why every plan doesn't cost the same, obviously. And that's the difference between offering identical widgets and, essentially, identical healthcare. I can't sell you a widget for a higher price than my competitor's widget. Why would you buy it? However, I can say, "My plan is more expensive, but you can go to many more hospitals and specialists without paying extra on your co-pay."

The point I'm driving to is, "Clearly, HMOs are losing popularity. Isn't it time to change the medicine?" This  article offers some good data to that point:

http://thinkprogress.org/yglesias/2011/09/18/321861/reinventing-the-hmo/

Perhaps, it's a good time to reassess why having a public healthcare plan is a nice idea. Standard health insurance doesn't impose as strict a set of rules as HMOs do. When it comes to their doctors, apparently people are willing to pay up for more options. Right or wrong, people are "angry" that they have to choose between choice and cost. But that's what you get with a private market. I realize this is a massive issue in the world today, with many different viewpoints and arguments. This is merely one more in favor of a blanket, government plan, eliminating this market that people don't really like anyway.

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