But wait. Aren’t Americans sicker, more stressed out, less attentive to our health than almost every other society on the planet? Aren’t we more addicted and dependent on the relative proximity and ease of access our health-care system provides and that drives the consumption of health care to astronomical proportions?
A survey released on March 2, 2012 by the International Federation of Health Plans suggests that the cause of higher health costs in the U.S. may, in fact, be that straightforward. The survey found that for 22 of 23 medical services and products, Americans pay more than any citizens of the other 24 countries surveyed.
Source: Washington Post
Perhaps we shouldn’t be so surprised with these findings. After all, in most other countries, prices for health-care services are either set by government edict or established through industry-wide negotiations between providers of services and payers. In the U.S., while Medicare and Medicaid have wide latitude to establish prices, they will pay for services --subject to political pressure from provider groups-- the commercial health-care market operates differently from health-care systems in other countries.
In the commercial market, payers and the providers of health-care goods and services engage in sophisticated negotiations. The result is the establishment of prices for goods and services that often reflect the relative market leverage of the participants. Because these negotiations take place between local, regional and national payers and local, regional and national providers, the result is an array of prices that vary significantly from market to market and among payers.
Is it practical to think that the United States will someday achieve a national market for health care? By that, I mean a market in which the prices for services will be generally equivalent across the country, just as the price of gasoline or milk is today. Without significant change to the way prices are set today, it doesn’t appear so. To the contrary, health-care prices are by and large established locally and regionally, and are often driven by the degree to which health systems and practitioners can exert market power.
Food for thought: The way we establish prices for health care today isn’t working to our benefit, at least if we compare the cost of health care here to other, industrialized countries. As Americans, we resist government price controls. If truth be told, we need a different, better way to price health-care services, one that leads to long-term price stability at a lower proportion of our GNP.
The business community gets this, and so do most American health-care consumers.
The big question in all this is: Why is it so hard to identify leaders within the health-care community who are willing to talk openly about this problem and tackle it head on?
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