12 May 2009

The Solution to High Healthcare Costs


Competition.

"But," you say, "there is competition already! We are free to choose whatever provider we want to see." Are you, really?

If you are not self-employed, it is likely that your health insurance is provided as a benefit of your employment. It is likely that your policy has a list of providers contracted to provide services at an agreed price. The phrase "usual and customary" really means "the price that the insurance company agrees to pay and the providers agree to accept." In other words, all the providers available to you effectively charge the same price. There is no competition there.

To bring true competition back to the health care marketplace, I propose as a first step that we do away with employer-provided health insurance. Insurers can still offer group plans, including some like the so-called "affinity" plans for social clubs, university alumni, and the like. People can choose to join one of those, or buy an individual policy as some insurers are offering now. The differentiators would be in what is covered and the limits.

To improve those options, I propose that we strongly discourage, if not prohibit, the price-fixing that is now called "usual and customary charges." In fact, I think price-fixing is illegal, and that is precisely what this practice constitutes. People could then shop around for providers they like that charge affordable prices. I realize that many people, especially younger people, make so few visits to the doctor as to make this difficult to do. Sure, one could ask prices over the phone, but that's only part of the story. Talking to friends and coworkers could help, or even referral services.

Please comment on this. And I hope you'll send all your ideas (they must be better than this) to your Congress-critters.