NCPA - National Center for Policy Analysis


January 9, 2009

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, says Investor's Business Daily (IBD).

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:

  • Because they are not trapped in a system that pays for predetermined tasks at predetermined rates, providers are free to repackage and reprice their services — just like vendors in other markets.
  • 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:

  • Entrepreneurs competing for patients' business offer greater convenience, lower prices and innovative services unavailable in traditional clinical settings.
  • Access to health care is increased where there is competition.

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, says IBD.

Rather than promote policies that give us more of what has corrupted most of the medical care markets in the United States, as well as ruined treatment in Britain and Canada, lawmakers need to encourage competition.  Health care is not a right but a service, and like all services, it is best allocated when government intervention is low, says IBD.

Source: Editorial, "All Could Be Well," Investor's Business Daily, January 8, 2008.

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