An earlier post highlighted who benefits from our nation’s dysfunctional healthcare system. Our system costs twice the average of the 12 countries that belong to Organization for Economic Cooperation and Development (OECD). In 2022 our cost was $12,555 per capita compared to the average of $6,414 according to The Peterson Foundation. In the second highest nation – Switzerland – cost was $8,049. The blog post demonstrated that we do not get better population health outcomes from the higher prices we pay. In this post, let’s look at four root causes of higher spending on healthcare in the U.S. Any hope of finding a solution requires an understanding of these factors. Our system First, we have a highly fragmented system for paying healthcare providers. Medicare, Medicaid, self-insured employers, insurance companies (paying the healthcare bills for insured individuals), and individuals without insurance each require different…
Why changing healthcare policy is so messy: Part One
The market mechanism is a remarkable process. Buyers and sellers exchange money in an open system that produces prices and production levels to equate supply and demand. (Also known as Keynes’ invisible hand, the market mechanism is an alternative to central planning.) Chinese leaders added the market mechanism to its communist political system, and economic growth skyrocketed. In theory, the market mechanism leads to an ideal allocation of goods, services and workers’ efforts for society. In practice, ideal output misses the mark when prices fail to reflect societal benefits and costs, consumers are not well-informed, or monopolistic-like power exists. One area where the market mechanism often fails is healthcare. A healthy population benefits everyone, from employers in need of a productive workforce to the government (and taxpayers) who cover the costs of the social safety net to each of us as individuals…