NCPA - National Center for Policy Analysis


December 12, 2006

Want to know why medical costs keep rising?  Look no further than the federal government.  For decades it has grossly distorted the market to the point where consumers are all but indifferent to the cost of care, says Investor's Business Daily (IBD).

To get an idea of what's driving costs, a Kaiser Family Foundation survey recently asked workers with employer-provided health plans about their sensitivity to the cost of care. The results were stunning:

  • Fewer than half said they consider costs when deciding to see a doctor or filling a prescription.
  • Just 38 percent ask their doctors about lower-cost alternatives for recommended treatments.
  • Less than one-quarter bother to ask about the cost of a visit before making an appointment.
  • And only one in 10 said they chose a lower-cost option for a test or treatment in the past year.

No wonder costs are out of control.  With consumers unconcerned about the costs of their health care decisions, they naturally demand more and more services, says IBD.

Exposing consumers to the direct costs of care, not surprisingly, makes them more careful about how they spend their dollars.  The same Kaiser survey found workers in so-called "consumer-directed health plans" -- which combine high deductibles with a health savings plan to pay routine health costs -- are far more likely to ask about and choose lower-cost options.

For example, about 71 percent said they consider costs when deciding to see a doctor or filling a prescription, and 57 percent always or sometimes ask their doctor about lower-cost alternatives.

Market forces have improved quality and kept inflation in check just about everywhere else in the economy.  There's no reason they can't have the same effect on health care, if given a chance, says IBD.

Source: Editorial, "One Party Too Many," Investor's Business Daily, December 11, 2006.


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