- While current U.S. health care spending may be more wasteful than that of any other developed country, health care inflation in countries with better systems, such as Canada and France, is almost as bad as in the U.S. No current system is controlling costs effectively. (Though Goldhill may overstate the equivalence. From 2000-2005, he claims, U.S. per capita health care spending grew 40% vs. 33% in Canada. That's not an insignificant difference.)
- The skewed incentives in the U.S. (and presumably other industrialized) systems go beyond those caused by fee-for-service; incentives are distorted primarily by the fact that we the consumers are not the "customers," i.e., the payers to whom the service providers are accountable.
- Health care is the only industry in which technological improvements lead to higher rather than lower costs.
- Health care is the only industry in which pricing is almost completely opaque (see Andrew Sullivan's view from your sick bed series, in which several participants have detailed the impossibility of getting pricing information in advance of service).
- In those few health care markets in which insurance does not kick in -- such as laser eye surgery -- competitive pricing and outcomes information have become a norm.
- Almost all of us are paying more in our working lifetime, via Medicare taxes, lost wage increases and co-pays, than we would likely spend on health care out of pocket, with catastrophic insurance.
What's wrong with this picture? I've always assumed that, faced with major surgery, it would be brutal to be forced to choose among competing surgeons based on cost and outcomes data. That's not necessarily so, if transparent data were to become the norm. Nonetheless, I think we'd all be faced with untenable cost-benefit calculations. A quadruple bypass or an operation for early stage prostate cancer may or may not be the best course of action for different patients. Should the prospect of spending $10k or $40k out of pocket tip the balance? Should such decisions be easier for the wealthy than for the middle class? (The poor would presumably be subsidized more heavily.) Not in what I would consider a civilized society.
As a counter-example to Goldhill's portrait of the laser surgery market, consider dental care, for which very few have insurance. The market is opaque and expensive, with no good outcomes data. There's nary a dentist who will not recommend more x-rays than you need. And in America today, poor teeth are a class marker; the poor generally simply don't get dental care.
Goldhill argues that bureaucratic cost controls can't control prices with the efficiency that a competitive market does. That may be true generally, but the proper comparison for health care is not with other consumer markets. The health care market is in some key ways naturally opaque. We'd be better off knowing what different surgeons charged for a prostate cancer operation. But we often can't know what we'll gain by getting the operation-- or what we'd lose (i.e., potentially, our life) if we abstained. Cost should figure into that equation -- if under certain circumstances "watchful waiting" or chemotherapy is as likely to have a good outcome as an operation. No provider should have an incentive for doing the more expensive thing. But cost shouldn't determine the individual's choice.