Under Obamacare we have no free market in medical insurance or in medical care itself. In fact, before Obamacare we had no free markets in those two industries, either: individual States controlled the premiums they would permit (within bands, but it was the States’ bands) and the measures required to be covered within each premium band. Medical care was subject to what doctors and hospitals would be reimbursed by the insurance companies. And insurance policies could not be sold across State borders, for all that insurers like Blue Cross\Blue Shield could sell substantially similar policies in various States: if someone moved, they could not take their original policy with them—even if they’d gotten it through their employer and in the new State they worked for that same employer—they had to buy the new policy.
But what about an all-cash market, where doctors and hospitals name their prices, and patients can shop around—a truly free market for medical care that bypasses health insurance and that thereby pushes a truly free market for actual health insurance rather than the health coverage welfare program we have under Obamacare? Reason had some thoughts on such an outlandish thing a short bit ago.
….costs [as they stand today] are completely contingent on a wide variety of factors, especially what insurance plan you have or whether you have insurance at all. More recently, I’ve had the same problem trying to price out basic blood tests (a lipid panel) in southwestern Ohio, as simple and mechanical a procedure as exists. Without clear pricing, we’ll never get far in radically improving the cost and quality of care for non-emergency services. In areas that are not traditionally covered by insurance—think Lasik surgery, cosmetic dentistry, and plastic surgery—a very different model obtains and you see exactly the sort of market-driven efficiencies that we see in virtually every other part of our commercial lives. The surgeon Jeffrey Singer has written about how various insurance contracts bar him from even discussing discounted cash payments with patients who announce they have insurance.
Regarding that bit about Lasik: my wife had Lasik surgery on both eyes several years ago, pre-Obamacare. Health insurance didn’t cover the procedure, so we paid roughly $2,500 per eye to get the work done.
Today, Lasik still isn’t covered—it’s still a cash-only procedure—there are lots more eye doctors qualified to do the surgery and doing it, even though there was no real shortage of such eye doctors at the time of my wife’s surgery, and the necessarily competitive environment of such a cash-basis product has driven prices down markedly, while improving the quality of the procedure. The procedure can cost as little as $300 per eye, depending on what the patient wants done. Notice two things about that last bit. What the patient wants done, not what an insurer is willing to pay for having done.
What [gets] done: a potful of things available to do today that weren’t available those years ago, driven by competition as forcefully as the price has been. Here are two examples. Bladeless LASIK procedures, which use a second laser not used in bladed procedures with additional benefits like faster and more pleasant recovery. Tailoring the laser that does the actual reshaping of the eye’s cornea to deal with microscopic imperfections in the cornea’s shape rather than older procedures that did a broad-brush reshaping. In those days, vision would be markedly improved, but the tailoring was limited to optimizing one eye for reading and the other eye for distance viewing. A tailored laser procedure today (some procedures are called Wavefront technology) much more accurately reshapes the cornea to improve night vision (remember the night glare/halo effect that used to be a common side effect?).
Hospitals, too, as the Oklahoma Surgery Center is demonstrating. They price their procedures right up front—and their costs are far lower than industry standards. For instance,
$19,000 for [a patient’s] whole-knee replacement, a discount of nearly 50% on what [the patient] expected to be charged at his local hospital. And that price would include everything from airfare to the organization’s only facility, in Oklahoma City, to medications and physical therapy. If unforeseen complications arose during or after the procedure, the Surgery Center would cover those costs. [The patient] wouldn’t see another bill.
Pricing competition, and importantly, pricing competition without the government fetters of regulations that have little to do with the actual medical care being provided. There’s more room for pricing competition—which improves the quality and technologies available as part of that competition—when the medical provider doesn’t have to spend payroll on non-medical folks: compliance personnel.