Monday, August 4, 2008

Bredensen on Health Care Reform

Tennesseee Governor Phil Bredensen recently made an interesting analogy in his July 31, 2008 OpEd in USA Today:
Think gas prices are high? Watch out for health care

...Imagine a trip to a grocery store. You walk up the aisles as usual, while attractive displays compete for your attention. You fill your basket, take it to the checkout, and the clerk rings it up. But you never see any price or total, and the bill is just sent to some anonymous party for payment. A box of oatmeal would cost $20 at that grocery, and that is exactly the way our health-care economy works today.

That grocery store is not going to be straightened out by tax credits for the purchase of oatmeal or by a better grocery information system. America has a wonderful and efficient economic system where competition drives innovation and value; we can and should put it to work in health care.
I believe Governor Bredensen is exactly right on this point. The perverse economic incentives of our employer-based health insurance system lead to rampant overutilization of services, because individuals don't directly experience the financial consequences of their choices as they would if they purchased a new washing machine or stereo. Then when costs run wild, the government offers various forms of rationing as a "solution" to the problem.

Note: I strongly disagree with Gov. Bredensen's proposed solution, which entails more government interference in the free market, along the lines of "Social Security or Medicare" -- hardly models of solvency. Overall, I regard his OpEd as mixed, because he recognizes that market forces are good, but unfortunately he isn't willing to take the next logical step and advocate for a free market as the proper solution.