10/15/2010

Capitalism to Cure Healthcare

I agree that with rising costs in healthcare something needs to be done; however, I don’t agree that more government programs and oversight are the solution. In fact I agree with Mitt Romney that many of the problems in healthcare exist because of government’s involvement. Mitt Romney in his book, No Apology: The Case for American Greatness argues that the cure for healthcare is to overhaul it with the tools of capitalism that America has fined tuned over the years. In the current system there are very few incentives to shop around for lower costs while maintaining quality. In the free markets of capitalism consumers make trade offs between quality and costs daily in an effort to decide what they value enough to spend their money on. Value in the free market is created by a willing buyer and a willing seller coming to an agreement and exchanging goods or services for resources or money. Capitalism rewards individuals and companies that are able to improve productivity, innovate, cut costs, and still provide quality at a price that consumers are willing to pay. Competition drives these measures and reduces costs as more competitors enter the market. There is no lack of competitors in healthcare, but because the pay structure is not set up as it is in capitalism to reward and incentivize doctors and healthcare providers whom are able to increase productivity, innovate, and cut costs, then costs continue to rise for the consumer. One example Mitt Romney gives is that once an individuals deductable has been met then they no longer have to pay for their portion of their healthcare for that given year. Consumers at this point are not price sensitive and have no incentives to shop around for quality care that is offered at a competitive price. Another example given is the way that doctors and healthcare providers are paid for the amount of tests and procedures they conduct not the quality they provide in those given tests or procedures or in regards to improving the individuals health. Mitt Romney provides insights as to this problem and how capitalism could correct the problem without big government involvement. I have this book on CD and would recommend it.

1 comment:

Dave said...

Yikes. Mitt Romney? He may not have created "Massachusettscare" but he certainly midwifed it. Having said that, his book is probably more worthwhile than the review of Marx that in a later post.

I'm not even sure where to begin. Certainly not with Baden's post, or Romney's view - these are standard, and OK.

The whole picture with healthcare is messed up, and we're not even talking about the sources of problems. Everything about incentives and how we pay is secondary, and we can fix those constantly, look busy to boot, and not get at the core issues.

For starters, should we have a two-party system, or a third-party payer system? Do we want insurance or coverage of our expenses? How will we deal with the fact that effective care increases future costs? How will we deal with the fact that healthcare is a normal good that people have the money to pay for? How do we feel about people around us who choose not to pay for healthcare we think they need?

If you don't have answers to those, you shouldn't bother talking about it. The problem is, the pundits and politicians seldom have answers to even one of them.