Given the sheer variety and innovation Andrew Sullivan exhibits in an average day's adjective choices, there's little doubt that he's a bright guy. But his understanding of health economics could use a little work. Today, he's been purring with pleasure over Mitt Romney's bill, and doing so for all the wrong reasons:
One reason we have a healthcare cost crisis is that the genius of American consumers is kept at arm's length in the healthcare universe. If you establish a base minimum of insurance, subsidize individuals who need financial help, and mandate a universal requirement, you then force everyone to pick and choose from a variety of insurance plans in an insurance "exchange". Inevitably, in such an exchange, you're going to have intermediaries trying to sell various policies, market them, and provide clear consumer advice about what's in them. You get a real market, in other words, where consumers can see trade-offs and make sane decisions. (The current exchange in Massachusetts is currently restricted for smaller businesses, but the principle holds for a more general application.) Make co-payments a percentage of the actual price of drugs, rather than being a standard lump sum, and you could ratchet up the market impact still further.
The "genius" of American consumers? I had no idea that the enthusiastic consumption of total crap qualified us for membership in Mensa. Alright; let's go through this, but slowly: health care, as it stands, is a supplier's market, which is to say that the suppliers of medical technology and health services exert far more power than individual, or aggregate, consumers of health goods. Sullivan's implication is that this power imbalance is a simple trick o' the light, easily fixed by forcing individuals to bear more risk. Based on that, Sullivan will not qualify for Mensa.
The problem here is that health care is not a traditional good. Unlike, say, tupperware, if I shatter my leg while rock climbing (cause I'm extreme like that), call an ambulance, and find I don't like the hospital's pricing scheme or service explanations, wandering on home is not really an option. Now up the ante. If your wife has aggressive breast cancer, but you think the drug Avastin, which costs $100,000, is excessively priced, you don't get to wait around. Your wife. Will. Die. And Genentech, Avastin's producer, knows that. Genentech can wait for you to come around, but you can't wait for Genentech to be visited by the ghosts of Christmas past. So they will win, and you will lose.
