Making Health Care More Affordable

Have you ever walked into a doctor's office and seen a list of prices for the services they offer?  No?  Have you ever asked why not?  Every establishment that sells a good or service provides an up-front list of prices, or at least an estimate.  The one exception is health care providers.  The reason is insurance.

When you buy something for yourself with your own money, you naturally look for the highest quality at the best price.  That desire, and competition between providers, drives costs down and quality up.

When you buy something for yourself with someone else's money, you naturally look for the best quality, but not necessarily the best price.

That's what happens with health insurance, and why health care prices keep increasing. 

The "solution" you'll typically hear for this problem is to make health care 100% government-run.  But that makes the problem worse, because it introduces another layer of separation between the customer and the price.  When you buy something for someone you don't know or care about with other people's money, you neither care about the price nor the quality. 

Furthermore, that solution fails to take into account the fact that government caused the problem in the first place by placing price controls on the amount companies could pay employees back in 1942.  Companies then began compensating workers with health insurance packages, and the modern health care behemoth was born.  Believing that greater government intervention will cure a problem government intervention caused is like believing that a poisoned patient should drink more poison to save himself.

So, what's the solution?  Some doctors in Oklahoma believe they've found it.

The Surgery Center demonstrates that it’s possible to offer high quality care at low prices. "It's always been interesting to me,” says Dr. Jason Sigmon, “that in any other industry, tons of attention is devoted to making systems more efficient, but in health care that's just completely lost."

The bill, which is strictly for the hospital itself and doesn't include Sigmon's or the anesthesiologist's fees, totaled $33,505. When Sigmon performs the same procedure at the Surgery Center, the all-inclusive price is $5,885.

How can the Surgery Center offer the same procedure at 1/6 the cost of the hospital?

Three years ago, Dr. Keith Smith, co-founder and managing partner of the Surgery Center of Oklahoma, took an initiative that would only be considered radical in the health care industry: He posted online a list of prices for 112 common surgical procedures. The 51-year-old Smith, a self-described libertarian, and his business partner, Dr. Steve Lantier, founded the Surgery Center 15 years ago, after they became disillusioned with the way patients were treated at St. Anthony Hospital in Oklahoma City, where the two men worked as anesthesiologists.

The following is from the Surgery Center's website.

Transparent, direct, package pricing means the patient knows exactly what the cost of the service will be upfront. Fees for the surgeon, anesthesiologist and facility are all included in one low price. There are no hidden costs, charges or surprises.

None of this should come as a surprise.  Corrective eye surgery prices keep dropping because it's not covered by insurance.

"In every other field of medicine, the price is going up faster than consumer prices in general," said Dr. John Goodman, president of the National Center for Policy Analysis.

"[But] the price of Lasik surgery, on average, has gone down by 30 percent." [this article is from 2006, whereas the chart to the right is from 2009 ~ OS] 

Prices dropped even though doctors pay for advertising. And while the procedure got cheaper, it also got better.

"When the lasers first came out, all they could treat was nearsightedness," Bonanni said. "[Today] the lasers are faster, more precise."

The same is true of most cosmetic surgery procedures.

So, the answer to ever-increasing health care costs is not more government intrusion, but less.  The answer, as usual, is the free market.