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Health care:  If it’s free, why not?

One of the unfortunate aspects of the way we manage health care in this country is that many people who can’t (or don’t wish to) spend money on routine care put it off.  They then sometimes end up in emergency rooms with urgent issues.

Yesterday, I was working with an amazing group of women CEO’s, one of whom runs a company that manages care for companies, reducing their costs by overseeing the way medical expenses are used (for instance, seeing a general physician rather than a specialist, which statistically has been shown to cost 30% more).  She pointed something out to me that I hadn’t really thought about, which is that if everyone is insured and has ‘free’ access to health care, that utilization rates for all kinds of procedures will dramatically increase across the board.  In other words, cost projections based on current utilization rates are likely to understate actual future costs by a wide margin. 

What a conundrum – on the one hand, you certainly don’t want people failing to look after themselves properly.  On the other, how can you possibly plan for dramatic increases in utilization of medical services without some kind of baseline to examine?  I guess the Massachusetts example will continue to be as good as we can get for the time being. 

Another issue that I find absolutely baffling is that it is nearly impossible to get a price for medical services in advance in this country.  Among the oddities is that the same service is charged differently depending in some cases on the insurance status of the patient—less for those without insurance, more for those who have it, in order to compensate for losses on the uninsured.  I can’t think of any other market in which the price of a good is so opaque. 

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