Saturday, June 24, 2006

Competition and health care.

The New York Times has an interesting article today regarding how physicians in the US are improving services. They write that "a rapidly growning number of physicians... have streamlined their schedules and added Internet services, among other steps, to better meet the needs of patients." Why? Here is the answer: "Those doctors know that as walk-in medical offices and retail-store clinics pose new competition, and as shrinking insurance benefits mean patients are paying more of their own bills, family care medicine is more than ever a consumer-service business. And it pays to keep the customer satisfied."

There are two important point there. One is that traditional medical services are facing greater competition and the other is that patients are paying more of the bills themselves. And now we get to the secret of rapidly rising health care costs or at least one of them. Yes regulation drives up costs. And law suits by greedy attorneys drive up costs as well. But the effort to provide health care to all also drove up costs. Government programs pushed more and more of the costs onto individuals other than the patients. This meant patient demand for service increased dramatically. If your employer or the government had to pay your food bills you would eat more as well. The "reduced" costs pushed up demand while regulations kept supply strictly limited thus resulting in much higher costs. When it comes to medical care governments have two policies. One is to increase demand as much as possible and the other is to reduce supply as much as possible. Any economist will tell you that if you do that the result will be dramatically higher prices.

Now that consumers are paying more of the costs themselves they are demanding better care and more careful about how they spend the money. The American College of Physicians and the American Academy of Family Physicians are both promoting programs to their members to increase the number of services they offer. And they are doing this to "keep them from going to an in-store clinic".

For decades governments around the world have been diluting market forces in medicine. Each year we saw more and more state control. Each year the "crisis" got worse. And each year the politicians said they need more control of health control. And they got it. And things got worse again. In the US we are now seeing physicians rearranging their schedules, including changing their lunch times, in order to serve more patients faster. In socialised health care systems patients queue up constantly. And when the lines get too long the state just announces they shortened it by taking huge numbers of patients out of line. Not that they are being cared for elsewhere. They just have to join the queue again and if the government is really lucky the patient will have died and can be removed from the listo all together.