An American Sickness

The New York Times has a review of a new book called An American Sickness: How Healthcare Became Big Business and How You Can Take It Back. Here’s an excerpt from the review:

Rosenthal thinks the health care market is different, and she sums up these differences as the “economic rules of the dysfunctional medical market.” There are 10 — some obvious (No. 9: “There’s money to be made in billing for anything and everything”); some humorous (No. 2: “A lifetime of treatment is preferable to a cure”) — but No. 10 is the big one: “Prices will rise to whatever the market will bear.” To Rosenthal, that’s the answer to Scalia’s question. The health care market doesn’t work like other markets because “what the market will bear” is vastly greater than what a well-functioning market should bear. As Rosenthal describes American health care, it’s not really a market; it’s more like a protection racket — tolerated only because so many different institutions are chipping in to cover the extortionary bill and because, ultimately, it’s our lives that are on the line…

The difference between the United States and other countries isn’t the role of insurance; it’s the role of government. More specifically, it’s the way in which those who benefit from America’s dysfunctional market have mobilized to use government to protect their earnings and profits. In every country where people have access to sophisticated medical care, they must rely heavily on the clinical expertise of providers and the financial protections of insurance, which, in turn, creates the opportunity for runaway costs. But in every other rich country, the government not only provides coverage to all citizens; it also provides strong counterpressure to those who seek to use their inherent market power to raise prices or deliver lucrative but unnecessary services — typically in the form of hard limits on how much health care providers can charge.

In the United States, such counterpressure has been headed off again and again. The industry and its elected allies have happily supported giveaways to the medical sector. But anything more, they insist, will kill the market. Although this claim is in conflict with the evidence, it is consistent with the goal of maximum rewards to (and donations from) the industry. As a result, Medicare beneficiaries have prescription drug coverage (passed by Republicans in 2003), but Medicare administrators have no ability to do what every other rich country does: negotiate lower drug prices. In January, President Trump said drug companies were “getting away with murder” because they had “a lot of lobbyists and a lot of power,” insisting he would get Medicare to bargain. Should we really be surprised that the dealmaker in chief dropped the subject after meeting with pharma executives earlier this year?

At the individual level, there are really only two things I can think of to do. One is to attempt to shop around for health care. If you call your doctors office or hospital and ask for the price they charge for a particular service you are considering buying, which is how every other market works, they are likely to laugh at you. Your insurance company might actually help though. I have tried this with Blue Cross Blue Shield with limited success, but it definitely takes time and effort. The second option is to go abroad for checkups, lab work, and elective procedures. It’s not that hard to combine a vacation with a doctor or dentist visit. Insurance companies will generally cover it, because it will almost always save them money, but you definitely have to talk to them in advance. Foreign hospitals (I have experience in Singapore and Thailand) will sometimes bill U.S. insurance companies provided you have a letter form the insurance company up front. Otherwise you might have to front the cash and do the paperwork for reimbursement when you get back.

Like I said, all this takes time and effort, but there are significant savings to be had. So why aren’t third parties stepping into the vacuum to make comparison shopping and medical tourism easier for the masses?

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