The war against cross-subsidization

Using the time provided by a trans-Atlantic flight (and the spring break from normal studies), I’m finishing “The Innovator’s Prescription.”  Another great excerpt:

Not surprisingly, we reap the same inefficient results that characterized Communism.  Hospitals aggresively pursue some types of procedures—like coronary bypass surgery, for example—that are highly profitable.  And they often shun money-losing services such as psychiatric and trauma care, as well as services like preventative and primary care, which could save costs in the long run.  Eventually, more and more people lose “access,” as the services that aren’t paid well or must be provided at a loss become harder to find.  But the profits and losses aren’t a reflection of value to their customers, prices, society, or the forces of supply, demand, and competition: they are the phantom result of inaccurately set prices that are grossly ot of line with costs.  Yet as in the communist system, we muddle along because the prices that are set mistakenly high roughly offset those set mistakenly low, allowing most hospitals and physicians’ practices to eke out a modest profit after all cross-subsidization is complete. 

Can anyone provide a logical, believable, and defendable reason for why heart treatment is of more value (based upon treatment cost) than depression?

The free marketeers would claim that an absolutely free market would best distribute health care resources; the single-payer contingent is not comfortable with the fairness of that thought.  Opposite, a completely controlled government system would provide equal care for all; yet the free marketeers are uncomfortable with subjective pricing.

As we continue to debate our next health care reform effort; is an efficient system with limited government intervention fathomable?  The point is moot, regardless.  We’ve got some time yet in the system currently in operation.

As an extra thought, however, why not explore what has worked in Germany.  No, not the health care system; but the country itself and the path it has followed since recovering from Communist rule following World War II.  There are still socialist policies in place; however the country has grown into the world’s third-largest (Europe’s largest) economy and the largest exporter.

The thing to remember is that it’s possible for the free market and goverment intervention to co-exist.  Although far from ideal, it’s the American health system in its current form.   The system is in need of change to asure coexistance is mutually beneficial to all involved.  Easier. Written. Than. Done.

One thought on “The war against cross-subsidization

  1. Drew,

    I though this may be a good place to reach you while out of the country. The IOM is taking public comment on how best to spend the money allocated to Comparitive Effectiveness Research via the “not short-term stimulative, massive debt-financed spending bill”.

    I thought you might like to know what I submitted (rather quickly, don’t hate me for my sentence structure on this one)…………………….

    Compare how much two similar populations spend on healthcare when the only discerning difference between the two populations is the size of their health insurance deductibles.

    This is easy! We all know we spend too much per person on healthcare, so the goal is to reduce that number, the only question is how. If this study states that similar people will spend less on healthcare if they have a higher deductible, then ending the tax deduction for employer-sponsored health insurance and breaking the tie between employment and health insurance is the obvious way to go. This will drive more people to purchase their insurance individually, thus increasing the number of people enrolled in high-deductible plans, thus reducing healthcare spending per capita.

    This is simple! We spend way too much per person on healthcare, so the only real debate is how best to curb that figure. So the question becomes…Do you want the government setting standards to curb these costs, or do you want individuals and families making these decisions and prioritizing for themselves? Since we can’t even afford our current Medicare and Medicaid burdens, why in the world would we look to increase those burdens by driving more people into those programs? That would be idiotic at best. The research is designed to prove that the only good way to curb spending per capita is to drive people into high-deductible plans.


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