Lack of Consumer Psychology is Destroying Health Care

Gary Johnson, former Governor of New Mexico running for President as a third party candidate, said the following about the consumer psychology of medical care:

‘There’s no advertised pricing right now in healthcare. I would not have health insurance to cover myself in a free market system for healthcare. I would have insurance to cover myself for catastrophic injury and illness and I would pay-as-you-go in a system that had advertised pricing that was very competitive. Healthcare is the only place we go where we have no idea what it’s going to cost. And if we ask somebody at the desk what’s this X-ray going to cost, what’s the procedure that I’m undergoing going to cost, they have no idea because it’s all insurance-based.’

He hits the nail on the head. People look at all health care as paid for by “somebody else.” This is probably why it was so easy for politicians to ram the most recent health care controls through Congress, and why the Supreme Court decision upholding them barely generates a yawn in most. Most people think, “Well, it’s going to be paid for by somebody. Why not let the experts figure it out?”

It’s not like this with anything else in our society. We don’t say, “Well, all groceries cost the same. I have my grocery coverage card. Whatever the government does to change things around — who cares?” Those who are cost-conscious comparison-shop and get the best deal for their money. They do it with groceries, houses, computers, smart phones, automobiles, clothing, animal medical care … the list is endless.

If government were to pass any new laws, the laws should consist of opening up the marketplace. It’s amazing how politicians and other advocates of socialized medicine have gotten away with distorting the issue. If you take even two minutes to think about it, you can plainly see that we don’t have a consumer mentality when it comes to health care. Because “somebody else” is paying for just about everything — not just the big things, like heart surgery, but every last pill and every last test — there’s no competition to stabilize prices or bring them down.

In a normal marketplace, increased demand relative to an existing supply tends to lift prices. The desire to make money — yes, that “evil and selfish” motive of making money! — causes an increase in supply relative to demand, bringing prices down. This is how it would work in medical care, if only we gave it the chance.

What’s interesting to me about proponents of expanding government control over medicine is that they don’t want to give the free market a chance. They won’t even let a free market engage in competition with existing government programs. For example, they would never allow people to purchase health insurance across state lines. They want the federal government to determine what’s in a policy, severely limiting if not altogether eliminating the choices people would have. They don’t want people to have responsibility for buying their own health insurance, and they don’t want patients to be consumers in any kind of a marketplace.

Obamacare shifts the responsibility for paying and shopping from a mixture of government/private insurers to predominately government. The absence of consumer psychology is still the same. “Someone else” will be paying. Granted, government will be paying more of the bill and perhaps ultimately all of it, as insurance premiums become too much for individuals or even big corporate employers to afford.

Recently, a lot of focus has been on the outrage of forcing citizens to buy a product they might not necessarily want, such as health insurance. That may be outrageous, but the deeper problem is that people are stuck in this mentality of “somebody else” is paying for it.

The conventional non-wisdom tells us that there should be no consumer psychology when it comes to health care. That may be OK with everything else in society, but not medical care. Medical care is a right, and the government should be subsidizing it and distributing it as the ruling authorities see fit. This is supposedly superior to anyone making a profit and having the incentive to provide excellence. Government is thought to be more “rational,” more trustworthy and more “objective” than anyone in the private sector. Oh, really? When was the last time anybody saw a government official or employee being responsive and committed to excellence?

If people don’t demand or insist on having a free market for medicine, in which they can make their own choices, then they’re not going to get it. Government is going to get more and more involved, and will go more and more bankrupt covering things that people should really be purchasing on a free and open market.

Shopping for medical care and insurance is not distasteful. What’s distasteful, and ultimately dangerous, is having third parties decide everything for you. I don’t doubt that people would willingly choose to have health insurance for catastrophic health events. But health insurance would not be nearly as expensive if people had a range of choices, including how much health insurance to actually purchase at different times in their lives. These government-controlled “collectives” served up by Obamacare are designed to mimic a free market, but they are no such thing. Ultimately, under the new regime, federal officials will be determining reasonable costs on behalf of patients and doctors, and any notion of a marketplace will be replaced by budget fights in Congress. That’s already the case with Medicare and Medicaid, and as more people move to government coverage, these budget battles will have even more relevance for everyone.

Sooner or later, Americans — and the rest of the socialized world in medicine — will have to face hard facts. If it’s quality, access and excellence they want, it will never come from a command-and-control system in the nation’s capital. The opportunity to move towards a free market was there all along, and it will continue to be there, as things worsen for doctors and patients in the years to come.

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