Please Critque these informally presented ideas about fixing the rising health care cost problem
- From: "Peter Olcott" <olcott@xxxxxxx>
- Date: Sun, 9 Apr 2006 13:56:38 -0500
Health care costs are rising way too fast simply because the incentives are out
of whack. Since the health care consumer does not bear the full, immediate, and
direct brunt of their health care choices, they lack sufficient reason to make
the most cost effective health care decisions.
The most effective way to fix this problem is to provide the key decision maker
(the health care consumer) with sufficient reason to make the most cost
effective choices.
When health care providers begin to lose business because their costs are higher
than their competition, they will be forced to look for ways to lower their
costs. This will begin a cycle of increasingly greater efficiency as the initial
incentives propagate throughout the health care industry.
The key to making this all work is to find some incentive system whereby the
healthcare consumer receives the full impact of the weight of their health care
choices. In other words if a set of choices results in an extra $5,000 of
expense, then this extra $5,000 expense must immediately and directly cost the
consumer $5,000. Unless and until the incentives are changed to this degree,
health care costs will remain a problem.
If the health care consumer is insulated from the immediate and direct impact of
their health care choices, they will continue to lack sufficient incentive to
economize. If the health care provider continues to be presented with health
care consumers that are not sufficiently motivated to economize, they lack
sufficient reason to seek increasingly more cost effective solutions. In fact
quite the opposite. The rational health care provider becomes increasingly more
profitable the more they raise their prices, there is no feedback loop of a drop
in demand stopping them.
Only by instilling vigorous price competition in the health care industry will
the most effective solution to the problem of rising health care costs be fully
realized.
The model that would effectively implement these ideas would much more closely
resemble health care savings accounts, than the current health care insurance
system.
.
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