Of Health Care Villains, Political Will, and Monopsony Power: Thinking Straight about Health Care Reform

greedy doctor

Josh Barro, Democrats Obsess Over Health Insurers When They Should Fight Doctors and Hospitals

Nancy LeTourneau, The Search For a Villain in Health Care Affordability

I highly recommend these articles. Please read them for yourself, but here are some key takeaways.

One. The main reason health care costs so much is because our hospitals, our doctors, and our pharmaceutical companies charge us a whole lot more than comparable institutions charge in other countries.

Two. Private health insurance may add to our costs, but in an amount that is very small in comparison to the effect of high prices charged by hospitals, doctors, and drug companies.

Three. A single payer system could drive down costs, by virtue of monopsony power.

Four. But a single payer/monopsonistic system will drive down costs if and only if there is the political will to resist the powerful lobbying by hospitals, doctors, and drug companies and have the government actually drive down prices significantly.

Otherwise, we would just get a single payer system with the same high prices, paid for in higher taxes.

Five. But if there is that political will—to resist lobbying and drive down prices—then an alternative approach is just to keep the current system but regulate the hell out of provider prices.