The US health care system is massive, primarily because the United States’ market-oriented economy has allowed it to evolve without a concise plan. Rather ironically, the US Healthcare system does not operate under traditional “free market” rules. Instead it operates under imperfect market conditions.

  • In a free market, there are multiple buyers (patients) and sellers (providers) that act independently. In other words, patients can obtain services from any provider. Furthermore, the cost of a service is governed by the free interaction of the forces of supply and demand.
  • In a free market, patients must directly bear the cost of services received. The advent of third party payers has compromised the free market by removing the patient from payment obligations and by establishing usual and customary pricing. The patient usually has no idea what a service will cost, nor is it any of their concern because if they have insurance a majority of the costs will be covered.

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  • A free market requires that patients have information about the availability of various services and to actively decide which services to purchase. In our system, generally, patients do not have the knowledge to diagnose and choose treatment for their ailments. They are dependent upon the health care provider to choose and deliver an appropriate treatment. This dependency and justified lack of knowledge affects the market. Example: A woman goes to the doctor with a sore throat. The doctor diagnoses strep throat, a bacterial infection that is usually treated with an antibiotic. There are hundreds of antibiotics that will effectively treat the infection. The doctor prescribes an antibiotic that just came out on the market that will cost three times as much as an older generic antibiotic. 1.) The patient probably does not know the cost of the medication when it is prescribed. 2.) If covered by a third party payer, the patient probably doesn’t particularly care about the cost of the medicine. 3.)The patient probably does not know of a specific, equally effective alternative to request that will cost less.

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  • For the health care market to be free, there must be unrestrained competition among providers based on price and quality of services. Oftentimes, patients are told they have to use a certain provider “in the plan” and the provider has contracted with the third party payer to charge a certain fee for a specific service. Quality of providers is usually examined by the insurance plan, however, patients rarely get that information and are rarely allowed to use that information to choose a provider.

    • Now for folks that are familiar with healthcare economics and policy, this certainly is not news. Our healthcare economic structure is indeed part of the problem!

    However for individuals in the general public, they are typically unaware of how this creates and atmosphere of unlimited demand for healthcare services in our country. To date, there has always been someone (insurance company, charity, organizational bad debt write off, Medicaid, Medicare) to pay for these services. However with the emergence of the boomer generation and increased number of uninsured in the US, the gravy train is breaking down from the load. If these forces are not corrected, our healthcare system will implode.

    What to do?

    I know this is going to sound very “pie-in-the-sky,” but I think as we move toward a more consumer-driven healthcare system that we need to take the time to educate and emphasize the role of stewardship of healthcare resources. Use what you need, but understand that if you consume services and resources simply because you can that it places undue stress on the system. For example, don’t use the emergency room to get a prescription for an antibiotic to treat a sinus infection.

    Admittedly as a society, we are horrible about stewardship toward Mother Earth. So why should we expect people to be good stewards about the healthcare services they utilize?

    Admittedly, I never thought we would ever see the emergence of hybrid cars or the government funding of research to look into alternative fuels. However, taking a page from the global warming and gasoline/oil pinch we in the US find ourselves in, I think the world around us is giving us clues in the healthcare realm upon which we can capitalize and begin to educate consumers. First from my own personal experience, this year I have seen a big increase in my contribution to my insurance premiums and medication co-pays. I read the paper, so I know I am not alone in this. Second, companies are feeling the pinch. I have friends who work for companies who have had to reduce their health care benefits in order to not let their premium contributions eat away at the stability of their companies. Third, every week a national news outlet publishes something about the skyrocketing costs of healthcare. I see it on the nightly news and I think others see it too. Lastly, our government is always screaming about the cost of medicare and medicaid benefits. Geez…. when is the last time we actually heard about them increasing the benefits? More often than not, we hear about medicaid programs running out of money and the possiblity of increasing taxes to be able to cover the huge costs of medicare and medicaid programs.

    OK– hitting everyone in their pocketbooks is the best way to grab someone’s attention. And you’ve got mine! The next step is begin to educate people on what they can do to help the situation. Right now, every person who receives health services should be asking

    How much is this costing? Total costs, not just my co-pay.

    Are there other cheaper and equally effective treatments for my medical condition?

    Doc’s, healthcare providers, and healthcare organizations aren’t gonna like this, but consumer-driven healthcare is here. We need to be planning on how we are going to grow this movement in a healthy direction.

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