A recent study published in the Journal of the American Medical Association examines the remarkable cost increases in the healthcare sector over the past two decades. Click on the link below to listen to a cogent, short discussion about the findings of this study. In essence, the reason healthcare costs so much in the US is that prices are set too high. That seems obvious, I suppose. But why should it be obvious that prices for everything in healthcare should be so much higher in the US than in any other developed country? The answer: Americans pretend that market forces apply in healthcare delivery while no other developed nation accepts that premise. Market forces simply don’t work in healthcare. There is no buyer who can beware in healthcare transactions. There are only patients who can not shop, do not know what they need, and have no idea what services they should seek. Thus, pretending that market forces apply simply allows sellers to set their prices at whatever level they desire. They simply ask themselves the question: How much profit do I want to make this quarter?– and then sell at the price that affords them that windfall. As proof in support of this contention, look at the data offered in this study. Demand for health services actually went down in the US over the past two decades, but prices for healthcare went way up. Lower demand in a market always means lower prices because sellers should be competing for the business of fewer buyers. But in healthcare, patients will pay whatever the price for lifesaving care, so sellers are free to gouge by price.
It is time the US changed its approach to health system reform in a fundamental way. Stop voting for anyone of any party who says that everything in healthcare will be fine if we just simply let the market work.