Health Care BS

It’s interesting that so many bloggers and journalists have ignored the primary finding of the Mckinsey study:

MGI found that the overriding cause of high U.S. healthcare costs is the failure of the intermediation system—payors, employers, and government—to provide sufficient incentives to patients and consumers to be value conscious in their demand decisions, and to regulate the necessary incentives to promote rational use by providers and suppliers.

In other words, the primary culprit is excess demand caused by perverse incentives such as tax immunity for employer-provided health care coverage. To focus on symptoms such as high physician salaries and drug prices is to miss the point. And to blame such things for the high cost of U.S. health care is like claiming red spots cause the measles.

Most of the distorted incentives to which the study alludes can be traced to over-regulation and price controls imposed by Washington. So, the answer is not MORE government intervention, but LESS meddling with the health care market.