The Root Cause of Rising Health Care Costs

The root cause of the problem with rising health care costs is that health care
lacks sufficient price elasticity of demand. Within the free enterprise system a
rational supplier will continue to raise prices until they are stopped by
falling demand.

Within the current way that health care is bought and paid for, this is not
going to happen. This only leaves two possible choices to fix the problem:
(1) Find a way to add price elasticity of demand to health care.
(2) Provide a system for purchasing health care outside of the free enterprise
system.

Here is an option that is NEVER going to work:
(3) Wait until someone else fixes the problem.

My health insurance premiums have grown at the annual geometric average rate of
20% for the last eleven years. If they continue to grow at this rate, (and if
no fundamental changes are made this is inevitable) twenty years from now almost
no one will be able to afford health insurance coverage.

Let's begin by recognizing and directly addressing the actual root cause of the
problem!


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Relevant Pages

  • Re: The Root Cause of Rising Health Care Costs
    ... lacks sufficient price elasticity of demand. ... Find a way to add price elasticity of demand to health care. ... Provide a system for purchasing health care outside of the free enterprise ...
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    ... It couldn't have anything to do with the fact that demand is unconstrained by increases in price? ... What I mean is when one considers the information asymmetry existing between physicians and patients who's really responsible for demand and driving cost? ... This is hardly the case in the health care setting as outlined above. ...
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  • Re: What is the root cause of the rising cost of health care ?
    ... It couldn't have anything to do with the fact that demand is unconstrained by increases in price? ... What I mean is when one considers the information asymmetry existing between physicians and patients who's really responsible for demand and driving cost? ... This is hardly the case in the health care setting as outlined above. ...
    (sci.econ)
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