Pricing Health Care in the U.S.–Our Failure

Good review of the failure of cost containment in our non-system of health care with suggestions for fixes. 

In case you haven’t noticed there are problems with our “free market” pricing:  (from his paper in Health Affairs)

1. On average, the prices for health care goods and services negotiated by private health insurers in the United States tend to higherabout double or more (medicynical emphasis)— than prices for identical services and goods in other countries of the Organization of Economic Cooperation and Development.

2. It is in good part so because insurers do not seem to have sufficient market power, especially vis à vis hospitals, to resist very rapid price increases.

3. The varying degrees of market power among private insurers in the United States have led to pervasive price discrimination among payers, with prices for identical goods or services varying among payers by factors as high as 10

Reinhardt concludes:

I am persuaded, however, that the opaque, price-discriminatory and administratively unwieldy – and hence very expensive – payment system of individual negotiations over fees has not served Americans well during in the last few decades.

Medicynical Note:  Yet some still maintain our non-system is the “best in the world.”  The question is for whom?

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