One of the most interesting articles I have read on the health care cost issue was this one in the New Yorker that I read over the summer.
Overall, I thought it a pretty interesting insight into the issue. But that’s not what I’m concerned about here. What I thought was interesting about it was what an example it provides about the difficulty that people often have in understanding how markets work. The author, Atul Gawande, is a doctor, not an economist. At the end of the article he turns to proposals for reform. And he has this discussion with a doctor:
The third class of health-cost proposals, I explained, would push people to use medical savings accounts and hold high-deductible insurance policies: “They’d have more of their own money on the line, and that’d drive them to bargain with you and other surgeons, right?”
He gave me a quizzical look. We tried to imagine the scenario. A cardiologist tells an elderly woman that she needs bypass surgery and has Dr. Dyke see her. They discuss the blockages in her heart, the operation, the risks. And now they’re supposed to haggle over the price as if he were selling a rug in a souk? “I’ll do three vessels for thirty thousand, but if you take four I’ll throw in an extra night in the I.C.U.”—that sort of thing? Dyke shook his head. “Who comes up with this stuff?” he asked. “Any plan that relies on the sheep to negotiate with the wolves is doomed to failure.”