How markets can help improve health care

David Goldhill, a media company CEO, offers an interesting take in the latest National Review on the topic of improving American health care. Goldhill recommends combining a national plan for catastrophic health coverage with privately funded basic care. One particular passage reminds us why the Affordable Care Act, with its focus on insurance, will fail to make any real difference in improving health care.

Health care will improve only if consumers are empowered to make both private and public actors accountable to the one force capable of disciplining them: a competitive market. The alternative to a public, single-payer system is a private, as-many-payers-as-possible system.

There is no more powerful economic force for good than direct competition for price-sensitive, quality-conscious customers. In any segment of our health-care industry dominated by actual customers paying their own money — dental care, optical care, cosmetic medicine, over-the-counter drugs, clinics for undocumented aliens, concierge care for the rich — we usually see the normal benefits of the consumer economy: clear pricing, transparent service, efficient record-keeping, and value. Apart from these areas, current health-care policy requires consumers to buy medical services through powerful intermediaries, such as insurers and Medicare and other public agencies, even though these intermediaries have either refused or been unable to exercise meaningful discipline.

Advocates of this system criticize calls for normal markets by invoking the very complexity that the absence of markets has created. They say things like “Who wants to shop around when you have a heart attack?” or “How can we ask consumers to navigate our complex system on their own?” One gets the impression these are the only Americans who have never shopped for anything other than health care. Functioning markets would reduce the amount of work consumers need to do and force providers to do more work to serve us. They would make the experience of buying health care more like the experience of buying anything else — in other words, easier.

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