“I don’t think Obamacare is going to drive health insurance costs down.” These words, while common sense to the Right, prove startling when you consider where they were spoken today: at the liberal Center for American Progress, which has historically informed policies made by the Obama Administration. “All the evidence I can tell you as a business person who pays for health insurance is that it’s driving them way up,” continued Steven Brill, journalist and author of Time magazine’s February lead story, “Bitter Pill.” “It’s great, for example, to get rid of preexisting conditions, but it does mean that the premiums go up,” he said. Brill, rather than talking about the high cost of an aspirin at a hospital, attacked the high salaries at non-profit medical centers.
Even more surprising were the comments provided by guest panelist Giovanni Colella, CEO and co-founder of Castlight Health. Colella remarked that the health care system was broken because “we don’t know what we’re spending, we don’t know what we’re buying, we don’t know what we’re paying for, we don’t know what the outcomes is.” In other words, consumers are shielded from the cost of medical procedures; they only see the cost of their premium, which is then spread out among multiple buyers and doesn’t reflect one’s actual medical needs.
“The problem is we don’t understand this is an industry where the entire incentives are wrong,” said Colella (emphasis added). “It just starts from there.” Where does the problem start? With third-party payment, of course. “When we had first dollar coverage, which meant, just so I don’t get too technical, which means when we walk into the doctor’s office we pay nothing because we’re paying with someone else’s credit card,” said Colella at CAP. “I bet you that everybody in this room didn’t think for a minute what we were paying, we just wanted the gamma knife. We wanted–That’s why everybody wants the best technology so every hospital buys whatever they can.” It’s not just the technology, though. Government intervention into the marketplace has muddied the incentives in health care so much that no one can operate efficiently.
Hospitals don’t necessarily make profits because they operate efficiently, said Colella. “They [hospitals] make money because they can command any price they want,” he argued. “If you’re a big medical center you can go to the insurance companies now and ask for any price you want and you’re going to make money.” Perhaps CAP’s panelists should reconsider their stance on free-market health care solutions such as providing health care vouchers instead of the health care subsidies outlined in Obamacare.
Another possibility might be direct primary care, where doctors charge set prices for procedures and avoid the insurance company hassle. “Direct primary care is part of a larger trend of physician-entrepreneurs all across the country fighting to bring transparent prices and market forces back to health care,” Jim Epstein writes for REASON. “This is happening just as the federal government is poised to interfere with the health care market in many new and profoundly destructive ways.” Read more here.