Competition cure-all?

I never expect much thoughtfulness from North Carolina's business publications, and the Triad Business Journal is no exception. But this lame analysis about the role of competition in driving down healthcare costs is laughable. Like much shallow thinking, it starts with self-serving generalizations, which it then stretches to ludicrous proportions.

Employers and insurers are increasingly pushing "consumerism" as a possible solution to high health care costs. They argue that consumer-driven health plans will lead individuals to be more cost conscious when seeing a doctor or going to a hospital.

I follow healthcare issues pretty closely, and to date, I've seen NO compelling evidence that consumer choice plays any significant role whatsoever in controlling costs. It's a fine hypothesis, of course, pushed by the self-interest of employers and insurers, but the hypothesis hasn't been put to the test . . . and logic suggests it would come nowhere near being a cure-all for our healthcare woes. On the contrary, there's plenty of evidence that high utlization of health care actually leads to better health. Surprise, surprise.

Even more surprising, the Biz Journal actually acknowledges that reality:

Consumerism is still very much an unproven notion in health care, but what seems clear is that the state's decades-old certificate of need laws don't do anything to encourage it.

The column goes on to lament the state's Certificate of Need regulations that control where and when hospitals and doctors can invest in new equipment and facilities, focusing specifically on a conflict between Forsyth Medical Center and Moses Cone in the Kernersville area.

Forsyth Medical Center wants to build an $8.7 million outpatient surgery center, but Moses Cone has filed a petition with the state to stop the project. Though the project was initially approved by the state CON office, Moses Cone's challenge means the case will be decided, ultimately, based on a judge's reading of the state's CON laws.

Looks to me as though the system is working like it's supposed to.

If the state decides Moses Cone is right, the Journal argues, increasing numbers of people in Kernersville will have a harder time shopping around for health care. That may or may not be true . . . but I doubt it. In fact, the whole notion of "shopping around" for health care services seems grounded in fallacious thinking that places the practice of competition above all else. Isn't the good ol' market-based model what has led to the stunning debacle currently unfolding around Medicare D?

At least one expert observer points to our system of third-party payors as the source of much inefficiency and dysfunction in our health care system. They argue that giving people direct control over how they spend on health care could cut out the middle man and create a system more responsive to individual needs. That's probably true . . . but don't expect insurers to jump on board. They're too busy slurping at the public trough to get excited about real free-market dynamics.



With no end in sight . . .

When I wrote this diary, I hadn't read this article on the rising cost of health care in the Washington Post. Looks like things are going from bad to worse. Thank you Mr. "Don't bother me I cain't start a war" Bush.