Health Care: The Simple Solution

March 8, 2010

Those who debate insurance reform in Washington and pit public against privately funded care are framing the problem incorrectly. Here’s a better way to think about it: Economists are wrong in asserting that competition controls costs. Most often innovation and competition drive prices up, not down, because bringing better, higher-priced products to market is more profitable. Hospital-vs.-hospital competition causes providers to expand their scope and offer more premium-priced services. Equipment suppliers boost the capability and cost of their machines and devices. Drugmakers develop products that bring the highest prices. It’s because we have such competition, not because we lack it, that health costs are rising by 10% a year. (BusinessWeek)