Thursday, March 4, 2010

CNN Provides the Answer to Saving Money on Health Care

And the answer they come up with should surprise no one. Do they espouse a state-sponsored solution, with more government controls on pricing? Nope. Instead, the answer in the CNN health care article is more competition, through comparison shopping. This makes total sense.

The key to affecting any behavior in America is to aim at the wallet or pocketbook of the individual. When you make people more individually responsible for paying for their own care, people will start making better decisions. Thus, removing obstacles between the cost of care and the individual making the decision will help people make more cost efficient decisions.

The key, of course, is knowing what the price of something will be at different locations. The CNN article mentions several resources you can expect to provide information on the cost of different medical procedures. This includes insurance company web sites and social network sites dedicated to the health care industry. So, the more information you have, the better decision you can make regarding your health care.

Lowering the cost for health care consumers should be what any "reform" in Washington is about. To lower the cost, you need to provide more information to people about their options. The internet is a great resource, allowing people to quickly and easily compare providers. In the article, a woman even picks the ER for her daughter based on a web site that provides information about health care facilities.

You also need to foster real competition in the health insurance industry. You can do this by allowing health insurance companies to compete across state lines, similar to car insurance companies. This means businesses would have to offer a better plan than their competitor or risk losing their clients. It also opens the door for people with pre-existing conditions to get a health insurance plan, though this population will probably never get as cheap a rate as a healthy person for the simple fact that they are a higher business risk.

The idea of a 'public option' as the best way to foster competition has some major flaws. Yes, it would provide another health insurance choice for individuals, especially people who cannot get a "high risk" private insurance plan. Unfortunately, the down side to a Federal public option is that every tax payer pays for the plan, not just the individuals enrolled in the plan. Thus it decreases the motivation for people in the plan to price shop services.

The public option idea also duplicates something we already have, Medicare and Medicaid. Both of these medical coverage plans offer services to people who cannot get private insurance. Both of these plans, though, cost a large amount just to support the bureaucracies for each agency. As government run organizations, they have no business need to keep these costs down for the simple fact that they're not trying to earn a profit.

Studies have shown that our current health care system costs too much because we've placed intermediaries, both government and insurance companies, between the patient and the service. We simply need to open the health care market again to bring costs down.

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