Imagine for a minute you want to buy a car. There is only onedealership within a reasonable distance to a population. And whenthat dealership opened 50 years ago, they sold a quality car at afair price. Because they were the only ones, and they provided agood product, they became very popular and everyone in the areabought and serviced their car there. Because of the unending trust,and the monopolistic set up, as the dealership grew over the years,they raised their prices. After all, customers were not priceshopping, so how were they to know if they were being overcharged?One year, the dealership started using cheaper part suppliers, andlower wage mechanics, but again, there was no choice for theconsumer.

You see, when the customers of a business do not demand highquality and fair prices, it doesn’t really matterhow altruistic of a business you are, your quality will go down andyour costs will go up. And this is what has occurred in our healthcare system.

The U.S. is number one in cost (by far) and near the bottom ofevery measure in the industrialized world on quality and outcomes.And I believe this has occurred because the consumer (the patient,in this case) isn’t deciding where their money (or their healthplan’s money) gets spent based on quality services and fairpricing. Sure, we think we are going to a “good” hospital based onit’s reputation or marketing, but rarely do American consumers lookat actual quality metrics. Think of the amount of work and researchthat most consumers put into buying a refrigerator. They look atwarranty, size, features, online reviews, and fit and finish intheir kitchen. Do we look at even half that many metrics when itcomes to health care? What is the hospital’s readmission rate,infection rate, mortality rate? What about that surgeon’smalpractice history, average recovery times, mistake rate? And perhaps most importantly, do we ever take price intoaccount? We often fail to do this even when we have skin in thegame, as when we have a high deductible health plan, but assoon as we have met our out-of-pocket or think we may hit it thatyear no matter what we do, any shred of consumerism we had goes out thewindow.

I know many of you are saying, “Price shouldn’t matter when itcomes to health care!” And you are absolutely right, it shouldn’t;but we have reached a point where it does. Our health insurancepremiums reflect that. The fact that medical bills are the largestreason for bankruptcy in this country and that two-thirds of thosewho went bankrupt had health insurance should disgust everyone! Sonow that it does matter, what do we do?

The conventional wisdom has been to regulate and attack theinsurance industry. Understandable. They are the first linerepresenting the frustration we have. After all, they are the onesto whom we pay ever increasing premiums, and they are the ones whokeep raising our deductibles and out-of-pockets (although, in allhonesty, if you are covered through an employer, it’s the employerdeciding that, not the carrier, although the carrier certainly doesdangle lower premiums out there for doing so) and they are the onesincreasing burden and administration with pre-certification,restricted drug formularies, and so on and so on. But getting madat the insurance company for these things is like yelling at thepostal carrier for delivering a larger electric bill. You (or thepeople in your “group”) consumed it, BCBS or United is justdelivering the bill. There was a recent article that indicated ifwe returned the entire profit of the insurance companies to thepeople they insure, each person would get back between $30 and $60per year. A drop in the bucket compared to the $5,000 per personper year average in premium paid. And it was pennies if we did thesame with the CEO compensation of thatcarrier.

Under our current health care system, providers are rewardedfinancially for delivering lower quality care. After all, the moreinefficient they are at diagnosing the problem (in other words, themore tests they do to get to the right diagnosis) the more moneythey make. And if they do a procedure or even surgery that doesn’tfix the problem, they get paid again when they do the right thing.So they are rewarded for inefficiencies. You know those big fancyhospitals that have awesome amenities and the nicest patient rooms?Those are often the most inefficient and/or highest pricedproviders, yet we often view them as best in class. And they areoften “non-profit” systems, which means you and I and every othertax payer are subsidizing their non-profit status with the taxes wepay. Hospitals are not supposed to be luxurious and chock full ofamenities. They are where the sickest people should go to getwell as possible as quickly as possible and then get the heck outof there! They are the most dangerous place to be!

Let me give you another example of how backwards our health caresystem has become. The pharmaceutical industry loves to tout thatwhen drugs go generic, the pricing drops by 80 percent on average —and that is absolutely true. What they have failed to address,however, is why the name brand goes up in price, sometimes by 1,200percent or more, from when it first goes to market until the patentexclusivity ends, and then, why the generic drug does the same thing as itages. The pricing of generics usually go up faster as moremanufacturers of the same generic come to market. And oftentimes,the same generic from different manufacturers cost exactly the sameprice, to the penny! Please show me another economic model in which1) pricing goes up as the product ages and 2) as more competitionenters the market, the pricing goes up further!

I know health insurance is low quality and high cost. I am nothere defending it. But I ask this question over and over and no onehas been able to deliver an answer: How can we ever have highquality, low cost and efficient health insurance, when the verything it is paying for is low quality, high cost and highlyinefficient?