Karl Denninger proposes legislation, including
No government funded program or government billed invoice will be paid for medical treatment where a lifestyle change will provide a substantially equivalent or superior benefit that the customer refuses to implement. The poster child for this is Type II diabetes, where cessation of eating carbohydrates and PUFA oils, with the exception of moderate amounts of whole green vegetables (such as broccoli) will immediately, in nearly all sufferers, return their blood sugar to near normal or normal levels. The government currently spends about 25% of Medicare and Medicaid dollars on this one condition alone and virtually all of it is spent on people who can make this lifestyle change with that outcome but refuse. If you’re one of the few exceptions and it doesn’t work in your case you have the burden of proof. Nobody has the right to light their own house on fire on purpose and then claim FEMA benefits for same. This one change alone will cut somewhere between $350 and $400 billion a year out of Federal Spending and, if implemented by private health plans as well, likely at least as much in the private sector. That’s more than three quarters of a trillion dollars a year that is literally flushed down the toilet due to people being pigheaded and refusing to do things that would not only save the money but also save their limbs, eyesight and ultimately their life.
Pointer from Glenn Reynolds. This is not representative of the entire post. Most of his proposals are intended to bring about more market-based decision-making. Denninger especially wants to improve transparency and eliminate price discrimination in medical billing.
There are many industries in which fixed costs are high relative to marginal costs. Charging everyone the same price would mean either that the price is too low to cover average cost or it is too high relative to marginal cost. Price discrimination can actually be helpful in some cases. In fact, charging lower drug prices in Europe and Canada may actually help lower costs of selling drugs in America, because foreign buyers help to cover the fixed costs of developing drugs. So I disagree with Denninger that ending cross-border price discrimination for drugs would necessarily make us better off.
On the other hand, for hospitals and doctors, price discrimination is not used to find the people most willing to pay but instead is used to punish people with the least negotiating leverage. So there I tend to agree with Denninger.
Overall, I come back to the cultural roots of our health care mess. One of the points in that post is
Americans, and especially health care providers, do not want to think of health care as a commodity. The providers want to be paid, but they do not want to think of themselves as selling their services, so the payment comes from third parties and the price is hidden to consumers.
I believe that helps explain why pricing is opaque in health care, and why Denninger’s attempt to bring market discipline would not be well received, even by patients
Here is another of his proposals that I think would run into cultural problems:
All surgical providers of any sort must publish de-identified procedure counts and account for all complications and outcomes, updated no less often than monthly. Consumers must be able to shop not only on price, but also on outcomes.
The doctor is not supposed to be fallible. This sort of reporting would draw attention to the fallibility of doctors, making them and their patients unhappy.