Economists have told us that the profit motive of privatization comes with an "invisible hand" that automatically corrects inequities in the market. It hasn't worked that way for health care.No, the invisible hand corrects inefficiencies. The horror stories that Mr. Buchheit presents often bundle inequity with inefficiency. To correct the one, however, is not possible without understanding the other.
Start with another reaction to Mr Brill's article, this one from Holman Jenkins in The Wall Street Journal.
"What is so different about the medical ecosystem that causes technology advances to drive bills up instead of down?" Mr. Brill asks. But his question is rhetorical since he doesn't exhibit much urge to understand why the system behaves as it does, treating its nature as a given.It matters not whether a government insurance agency acting as a monopsonist toward physicians, surgeons, and pharmacists, or whether the secretary of Health and Human Services seats a board of Wise Experts. Rents will exist. Rent-seekers will seek rents. Rents will be dissipated. The taxpayers will not necessarily be better served.
In fact, what he describes—big institutions dictating care and assigning prices in ways that make no sense to an outsider—is exactly what you get in a system that insulates consumers from the cost of their health care.
Your time might be better spent reading Duke University's Clark Havighurst in a brilliant 2002 article that describes the regulatory, legal and tax subsidies that deprive consumers of both the incentive and opportunity to demand value from medical providers. Americans end up with a "Hobson's choice: either coverage for 'Cadillac' care or no health coverage at all."
"The market failure most responsible for economic inefficiency in the health-care sector is not consumers' ignorance about the quality of care," Mr. Havighurst writes, "but rather their ignorance of the cost of care, which ensures that neither the choices they make in the marketplace nor the opinions they express in the political process reveal their true preferences."
You might turn next to an equally fabulous 2001 article by Berkeley economist James C. Robinson, who shows how the "pernicious" doctrine that health care is different—that consumers must shut up, do as they're told and be prepared to write a blank check—is used to "justify every inefficiency, idiosyncrasy, and interest-serving institution in the health care industry."
Hospitals, insurers and other institutions involved in health care may battle over available dollars, but they also share an interest in increasing the nation's resources being diverted into health care—which is exactly what happens when costs are hidden from those who pay them.