Krugman today has a column making the empirically powerful case that there is no clear market consumer-based way to rein in healthcare costs. This simple point is perhaps more graphically made by this actual ER doctor:
HALF of all health care costs in the US is concentrated in only 5% of the population, and 80% of costs are accounted for by the top quintile! (source: Kaiser Foundation PDF)
So the effect here is that with such a concentration of costs in such a small segment of the population, the ability of the larger population to move the market is highly restricted. You can make 80% of consumers highly price sensitive, but they can only affect a tiny fraction of healthcare spending. And for the generally well, their costs are probably those which are least responsible for the spiraling inflation. They're not getting $30,000 stents or prolonged ICU stays, or needing complex chronic disease management.
Conversely, those who are high consumers of health care simply cannot be made more price sensitive, since their costs are probably well beyond what they could pay in any event, and for most are well beyond the limits of even a catastrophic health insurance policy.
Once you are told that you need a bypass/chemo/stent/dialysis/NICU etc, etc, etc, the costs are so overwhelming that a consumer cannot possibly pay them out of pocket. Since, by definition, these catastrophic costs are paid by some form of insurance, the consumer cannot have much financial interest in cost containment. For most, when they are confronted with a major or life-threatening illness, their entire focus shifts to survival, and they could care less about the cost.
I don't want to believe this, but its logic is hard to counter. Any offers? The conflict comes home to me in an acute way. I'm a fiscal conservative with HIV. It's little wonder that this question stumps me.
The Dish 