“It is the cost, stupid”

We have limited our ability to fix the healthcare system’s fiscal woes because we have allowed public discourse to take a wrong turn. So far, the debate over healthcare has centered on the premise that health insurance coverage is a be-all and end-all to our problems. But that is not the real issue. We should have correctly diagnosed the problem (no pun intended) from the start.

So far, public policy discussions have focused on universal insurance coverage instead of on the core issues addressed in this chapter—that is, the unchecked healthcare costs. However, if we introduce competition and transparency to the system, by empowering American consumers we can reduce medical costs by one-third or more.

There are two primary factors responsible for the healthcare system’s current repudiation of capitalist principles:

    (1) The first factor is the fee-for-service model, which requires patients to pay for services regardless of the quality or value of care. This can be compared to taking your car to get fixed and being charged whether or not it actually is repaired.

    (2) The second factor is the third-party payer model (not to be confused with the third political party discussed in this book), fostered by the impact of government programs such as Medicare, as well as by the role of the insurance industry. The inherent problem with this model is that healthcare prices can easily be manipulated for one simple reason — consumers are not used to checking the costs because they are not writing the checks. Putting it another way, consumers lack the incentive to demand accountability because they aren’t personally invested in paying that bill.

National Healthcare Spending

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Munir Moon *** The Middle Class