Early in Jeremiah’s career, he was introduced to “Medicare optimization.” Hospitals hire these consultants to review their Medicare claims, and make sure they’re billing the legal maximum. Today, most hospitals have specialist staff and computer systems for this. A cynic might say the hospitals are gaming the system, but – their financial health is at stake.
He also had the opportunity to work with a major health insurer, where the gimlet-eyed “utilization review” team scrutinized their hospital bills. Who do you think does a better job of controlling hospital fees – a government agency with a price list, or a private insurer with a profit motive?
Patients may prefer Medicare where its coverage is more generous, but that’s only because the government has “unlimited” money to spend. Tax-funded generosity only encourages runaway spending. This is the root cause of the housing bubble, the college tuition bubble, and the health care bubble.
But Jeremiah, you ask, won’t the hospitals just reduce their quality of care? Won’t the insurers just pass on their rising costs? Won’t the patient, at the bottom of this hierarchy, still get the shaft? Not if the patient is also the customer.
All the pundits want somebody else to pay for your health insurance, whether it’s your employer or the government , but this is a scam. The money still comes out of your pocket – or your grandkids’ – one way or another. The scam is that you’re not calling the shots. You can’t fire your insurer if they give you lousy service or skimpy coverage. You can’t shop around for better rates, as you can with every other kind of insurance.
A few more reforms are needed to create a free market in health care:
- End the tax deduction for employer-paid health insurance, so that everyone is shopping in the same market. You pay for this “savings” in your taxes, anyway.
- Reform the tort system, so that hospitals aren’t the prey of specialist lawyers.
- Require everyone to buy health insurance. This has recently been approved by the Supreme Court.
- Allow insurers to consider your health when issuing a policy, just as life insurers do. Competition with other insurers will limit the up charge for your smoking habit.
- Allow insurers to compete nationally across state lines.
- Allow prescription drugs to be re-imported, if they’re cheaper in Canada.
- Require doctors and hospitals to publish their price lists on the web, so we can shop around.
Finally, we should subsidize premiums for the poor and the sick. This allows us to help them without distorting the market.
Competition will spur innovation and drive down costs in health care, as it has in every other industry. Health care is only expensive because it is glutted with phony savings, perverse incentives, and special interests. Insert “sclerosis” metaphor here.