John Perr — Why the U.S. Should Treat Health Care Like a Utility, Not a Market

Let's start with the conservative free-market nirvana, where buyer and seller each armed with perfect information come together in a voluntary transaction. But from the get-go, the patient-as-consumer faces a knowledge asymmetry almost impossible to overcome. Americans' general deference to physicians isn't just a cultural trait, it simply reflects the expertise and training regarding diagnoses, possible treatments, and likely outcomes doctors possess and their patients do not. For some cases and for some conditions, the layman can narrow that yawning information gap. But WebMD or no, it can't be eliminated. "Health" is not a commodity. Those who believe that choosing a health care product or service is no different than buying a car, television, or cell phone might feel differently after, say, developing colon cancer.

But even if the diagnoses, treatments and cures for heart disease, diabetes or depression could be purchased in a free market, in the United States the buyer simply doesn't--or--can't know what price he or she will pay. As Stephen Brill documented in March ("Bitter Pill: Why Medical Bills Are Killing Us"), hospital prices for drugs, supplies, and procedures are completely opaque. The answer from the so-called "charge master" about what anything costs depends on whether the patient is insured or uninsured (the latter often forced to pay multiple times more than the former) and who the insurer is. As it turns out, that mystery pricing is one of the hallmarks of the American model that spends $2.8 trillion a year (over 17 percent of GDP) on health care, more than Japan, Germany, France, China, the U.K., Italy, Canada, Brazil, Spain, and Australia combined….

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Why the U.S. Should Treat Health Care Like a Utility, Not a Market
John Perr