Health Care and Competition

Hat tip to the National Center for Policy Analysis for this editorial out of the Investor’s Business Daily:

The solution to the health care problems in this country is not more of what caused the problem – a growing third-party-payer system – but competition.

In markets where the procedures aren’t typically covered by insurance or some other third party, and patients are responsible for paying their own bills, the providers, according to Devon M. Herrick of the National Center for Policy Analysis, “almost always compete on the basis of price and quality.”

“It is primarily in these direct-pay markets that entrepreneurs are creating many innovative services to solve the very problems about which critics of the health care system complain.”

Herrick looked at the markets in cosmetic surgery, laser eye surgery, laboratory and diagnostic testing, prescription drugs, walk-in clinics, telephone consultations and concierge medical services. He found that entrepreneurs competing for patients’ business offer “greater convenience, lower prices and innovative services unavailable in traditional clinical settings.”

Herrick also observed that access to health care is increased where there is competition. Advocates for the uninsured won’t be persuaded because their goal is not increasing competition but forcing the public into a government-run health care system. But their biases do not diminish Herrick’s findings.

It should be obvious that when prices are set and services determined by a third-party bureaucracy, as in most of our medical care markets, the system is headed for trouble. The gross failures of the British and Canadian models are evidence that such a system cannot be sustained.

Well said.  I’ve long maintained that the Medicare/Medicaid/Socialized Medicine versus Private Insurance dichotomy that generally frames the debate about health care is misleading.  Third Party Payor (Public or Private) versus True Free Market Health Care would be a better model for discussion.


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