Thursday, April 06, 2006

Healthcare Economics

The path to true healthcare cost reduction is through the government.
"The Veteran's Administration, through centralized purchasing, gets their drugs for 50-80 percent less than the private insurers participating in the new Medicare Drug Benefit. Canada gets theirs for 50 percent less. Governments are simply bigger than competing insurance companies, and they can thus exert more leverage on suppliers. And, unlike private insurers, the government doesn't have to add in a profit margin atop the price. So they can leverage a larger market and have fewer extraneous costs -- that's why countries with nationalized health systems have lower per-service prices than we do, and why we spend twice as much, per person, as the highest spending universal system. Were the American consumer really such a genius, he'd demand that his country emulate the lower-spending, higher-performing systems of Western Europe and Japan. But the American consumer is not a genius and, worse yet, he has a lot of self-interested ideologues and plutocrats convincing him that the path of wisdom and intelligence is the one that proves the ideologues right and makes the plutocrats rich. And the American consumer is a weakling, because all though he knows better, he ends up listening to them."

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