Dining at the health care buffet

Imagine going to a fine French haute cuisine restaurant and receiving a menu with no prices. When you inquire about the prices, you are told that nobody in the restaurant can really be sure of the cost until after your meal is over and your bill and method of payment are reviewed. In addition, you are told that none of the other customers in the restaurant will pay the same amount—some will pay more, some less. Now, envision ordering the main course and being told by your server that depending upon how your meal transpires, you may (or may not) also receive wine, side dishes, and dessert, but you have no say in it—those decisions will be made by the chef—and you will be expected to pay for any food or wine you receive. Finally, imagine that when your meal is over, you never see the bill, but instead it is sent directly to your credit card company—though this particular credit card company amortizes the costs of your meals over several years and simply bills you at a monthly rate. If this hypothetical dining experience seems preposterous, think about how our third-party insurance-based health care system currently functions. Patients receive services from providers (eg, doctors, hospitals, pharmacies) with little or no knowledge of their cost before receiving them and have few, if any, means of obtaining a price if they so desire (unless they are paying in cash, in which case they can almost guarantee they will be paying more than anybody else). The services they receive might also be much more involved (and costly) than originally anticipated. The system lulls us into believing that insurance companies are paying the cost of health care services when, in fact, we are paying the cost and our insurance companies are simply helping us pay our bills over years instead of all at once. The quality of health care in the United States is excellent—perhaps the best in the world. However, as a value proposition, our system is shameful. According to Bloomberg, of advanced economies, the United States ranked 46th out of 48 countries in terms of efficiency, just edging out Serbia and Brazil, while spending the second most per capita ($8608) and far out-distancing the competition in health care costs as a percentage of gross domestic product per capita, at 17.2% (the Netherlands ranks second at 13%).1 Ironically, with all the dust kicked up about the free-market stifling government takeover of health care masquerading as the Patient Protection and Affordable Care Act (PPACA), few critics have acknowledged that the traditional US health care market is about as opaque and regulated as any economic system could be. As the scion of laissez-faire government, Friedrich Hayek, argued in The Pure Theory of Capital, “… the aim of any successful…policy must be to reduce as far as possible this slack in the self-correcting forces of the price mechanism…”2 By this standard, a system in which prices are essentially invisible should yield the greatest inefficiency. If you believe Bloomberg, it does. Rather than wasting energy seeking to undermine or even eradicate the PPACA, perhaps the leading minds in US health care policy should look to maximizing cost transparency in the system so that, at least, Americans can see the “prices on the menu” and spend their money as they choose without having to rely on a system that clearly is not giving the real payers good value.