Why healthcare doesn't work
I solved it! I figured out what's wrong with our healthcare system (it's not ObamaCare).
I knew something fishy was going on with healthcare, because Nixon had stuck his greasy fingers into the pot.
Partial transcript:
for digging up that clip. Read the full transcript here.
How do we get out of this mess? Some people argue "more regulation," others "deregulation;" the solution is much easier than you'd think.
Here's a hint at the real problem, which you need before you can grasp the solution.
Imagine it's pay day. You log on to your bank account, and it's blank. Just a blank screen. You pull up your budget to figure out how much is left for groceries, but your budget is blank too.
You shrug your shoulders and go to Costco anyway. While walking up and down the aisles, you notice there are no prices for any of the items. You ask an employee how much these diapers cost. He shrugs, and says he has no idea.
You pile the usual amount of groceries into your cart and head to the register. The teller rings up your items, but there are no numbers telling you how much everything costs. There are no totals, or subtotals. When you ask the teller how much it is, she shrugs, and says you'll get a bill in a few weeks or months.
Imagine that you had no idea how much you got paid, how much your rent or mortgage payment were, or how much your other bills, car payments, etc. cost. It would be extremely difficult for you to get by in such a world.
That is exactly what has happened in our healthcare industry. Some doctors argue that price shouldn't be taken into account, people should simply get the best care. But cost matters. There's a reason I don't eat caviar and champagne for lunch everyday, and it's not just because I'm a Mormon.
Genius and economist Ludwig Von Mises described the chaos that follows a destruction of the price mechanism. People aren't able to make rational decisions for their most basic needs. Businesses don't know if they're making money or losing money. Entrepreneurs are unable to figure out which businesses to start or invest in. Destruction of the price mechanism makes economic decisions impossible. If the price mechanism is missing from an economy, that economy tanks. If it is missing from just one business, that business becomes highly wasteful, inefficient, and heads inevitably towards bankruptcy.
So, how do we fix healthcare? Post prices. It's as simple as that. Empower the patient to rationally make decisions depending on how much the services cost.
The price system allows everyone to solve the problem together. Without it, our healthcare industry has become a confusing mass of inefficiency. Some politicians and lobbyists think they're smart enough to fix it. But those same people could not even figure out how to buy groceries without prices, let alone fix a nationwide healthcare crisis.
Further Reading:
Listen to the last This American Life episode.
Read about price controls in medicine.
I knew something fishy was going on with healthcare, because Nixon had stuck his greasy fingers into the pot.
Partial transcript:
Ehrlichman: “Edgar Kaiser is running his Permanente deal for profit. And the reason that he can … the reason he can do it … I had Edgar Kaiser come in … talk to me about this and I went into it in some depth. All the incentives are toward less medical care, because …”
President Nixon: [Unclear.]
Ehrlichman: “… the less care they give them, the more money they make.”
President Nixon: “Fine.” [Unclear.]
Kudos to Michael Moore for digging up that clip. Read the full transcript here.How do we get out of this mess? Some people argue "more regulation," others "deregulation;" the solution is much easier than you'd think.
Here's a hint at the real problem, which you need before you can grasp the solution.
Imagine it's pay day. You log on to your bank account, and it's blank. Just a blank screen. You pull up your budget to figure out how much is left for groceries, but your budget is blank too.
You shrug your shoulders and go to Costco anyway. While walking up and down the aisles, you notice there are no prices for any of the items. You ask an employee how much these diapers cost. He shrugs, and says he has no idea.
You pile the usual amount of groceries into your cart and head to the register. The teller rings up your items, but there are no numbers telling you how much everything costs. There are no totals, or subtotals. When you ask the teller how much it is, she shrugs, and says you'll get a bill in a few weeks or months.
Imagine that you had no idea how much you got paid, how much your rent or mortgage payment were, or how much your other bills, car payments, etc. cost. It would be extremely difficult for you to get by in such a world.
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| Great president, or greatest president? |
Genius and economist Ludwig Von Mises described the chaos that follows a destruction of the price mechanism. People aren't able to make rational decisions for their most basic needs. Businesses don't know if they're making money or losing money. Entrepreneurs are unable to figure out which businesses to start or invest in. Destruction of the price mechanism makes economic decisions impossible. If the price mechanism is missing from an economy, that economy tanks. If it is missing from just one business, that business becomes highly wasteful, inefficient, and heads inevitably towards bankruptcy.
So, how do we fix healthcare? Post prices. It's as simple as that. Empower the patient to rationally make decisions depending on how much the services cost.
The price system allows everyone to solve the problem together. Without it, our healthcare industry has become a confusing mass of inefficiency. Some politicians and lobbyists think they're smart enough to fix it. But those same people could not even figure out how to buy groceries without prices, let alone fix a nationwide healthcare crisis.
Further Reading:
Listen to the last This American Life episode.
Read about price controls in medicine.
Wow, I had never thought about it in that way, but it makes perfect sense. If I had been offered prices and options on what happened with me in the hospital when I delivered my baby, there are probably some things that I would have chosen differently. I'll have to listen to the This American Life episode you referenced.
ReplyDeleteNice analogy. It's a ridiculous plan for any company to operate the way that health care does. But they do it anyway.
ReplyDeleteAnd hear, hear, Beck. The maternity wing of the hospital charged me three bucks for an ibuprofen. Sheesh.