Monday, April 2, 2012

Toothpicks, Tinker Toys and Health-Care: the Non-Price Phenomena

One can not help but read media reports handicapping the Supreme Court’s decision regarding the individual mandate. Will it stay or will it go? Moreover, many of the reports describe a situation of ripple effects within the health insurance sector if only the mandate is struck down -or- if the mandate and certain sections are struck down such as state expansion of Medicaid (which was argued the third day) -or- the entire legislation of ObamaCare being struck down.

“After three days of historic Supreme Court debate, the political world and health-care companies confronted the prospect of President Barack Obama's health law being wiped away, a decision that would upend years of planning by businesses and roil the November elections.

Among those set to implement the law, insurers would have to ditch changes to their businesses designed to bring in millions of new customers. Provisions that have already gone into effect, including letting children stay on their parents' insurance plans until they turn 26, would no longer be required.

Companies facing the law's requirements would be reprieved, including health firms set to pay new taxes and businesses that would have been required to insure their employees or pay a fee.” - Health Care Ripples Outward, The Wall Street Journal, 03/29/2012 (1)

The point the media seems to miss is the underlying delivery system of health-care is the problem. That is, the underlying model is broken. The ripple effects in health insurance due to striking down ObamaCare is not the basic problem. That is, ObamaCare missed the target to begin with as it was a quasi-insurance plan based on coercion and a price fixing scheme that was supposedly going to “fix” the underlying model. Health insurance or quasi-health insurance, the changing of the insurance system thereof, does not change the underlying health-care system in any meaningful way. Thinking that a health insurance system based on coercion and price fixing is going to “fix” the underlying model is confused thinking.

Health-care has become the giant Barking Cat. Health-care is a decades in the making patch work of legislation directing health-care delivery, processes, and requirements that with each piece of government intrusion has merely created a health-care system that suits the sponsor and supporters of the each new piece of particular legislation. That is, each piece of legislation basically boils down to Milton Friedman’s famous quote of: "I would like to have a cat, provided it barked". (2)

The counter argument is the tried and true: it’s a complex issue, and experts say….. Uh huh. Right! Somehow, someway simple solutions can not occur in today’s world as everything from toothpicks to tinker toys are so extremely complex that only extremely complex answers are suitable.

One very simple solution, among several simple first step solutions, is to give the consumer of health-care a price signal. Are prices marked at the grocery store? At the discount store? At the department store? Does the auto body repair shop give you an estimate? Roofing estimates? Would you go shopping at the grocery store where prices are unmarked, then check out at the register with no sales slip, then have the unknown value of your purchase shipped off to a third party to pay because you pay a very high monthly premium to cover those unknown price items you purchase? Rather insane is it not?
The above scenario seems rather silly. Nay, nay! Think about it for a moment. Exactly where does the consumer go shopping where prices are not clearly marked or marked at all? Its called health-care purchases. The public has been duped into purchasing health-care with no price signal. Brilliant! The consumer would never go shopping at a store with no prices marked yet do it everyday in the health-care sector! Dupery at its best!
If one wants to know the price the general rebuff is “..can you put a price on your health?” -Or- you get the “complicated/expert” answer that knowing the price is too complicated as who knows what has to be done regarding tests, screenings, scans, etc.. Yes, you can’t get them to answer the price question as they don’t want you to know the answer to the price question. Why don’t they want you to know price? Because they don’t want to compete on price. More succinctly, the health-care industry doesn’t want to compete, period. It’s a special case where dupery through nitwitery reins supreme regarding “price”.



(2) Barking Cats, Milton Friedman, Newsweek, 02/19/1973

No comments:

Post a Comment