“Consumer-based” medicine has been a bust everywhere it has been tried. To take the most directly relevant example, Medicare Advantage, which was originally called Medicare + Choice, was supposed to save money; it ended up costing substantially more than traditional Medicare. (PK 4/21/2011)
Similarly, my wife -- who does a substantial amount of healthcare billing at her job -- loves to point out that secondary insurance plans that many Medicare patients have decide what is covered or not covered based on what Medicare covers (at least in the nutrition counseling she bills).* Which raises the question: what is the point of having extra coverage if it doesn't cover anything extra?
(This is slightly different than Medicare Advantage; my point here is that purchasing insurance on the free market sounds nice but doesn't work; main goal of these supplemental policies is to decrease cost sharing on covered services.)
Further, there is clearly something different about "purchasing" healthcare than, say, a new 3D flatscreen HDTV. The choice between spending $12,000 on a new TV or an appendectomy isn't a choice if one of those options involves a pretty good chance of getting septic and dying. I'm not a trained ethicist or anything, but that seems about the moral equivalent of a mugger threatening to stab you in the right lower quadrant if you don't give them $12,000.
Medical care, after all, is an area in which crucial decisions — life and death decisions — must be made. Yet making such decisions intelligently requires a vast amount of specialized knowledge. Furthermore, those decisions often must be made under conditions in which the patient is incapacitated, under severe stress, or needs action immediately, with no time for discussion, let alone comparison shopping. (PK 4/21/2011)Krugman also fails to mention the middleman costs of privatization of health insurance. Overhead for private insurers is close to 30% -- about equal parts profit, paperwork, and effort spent denying claims. Note that most of that overhead is expressly about NOT providing patients with healthcare. Medicare has an overhead of <3%.
*Few insurance plans cover nutrition counseling in any substantive way. It's very difficult to get appropriate counseling for a myriad of medical problems -- such as gestational diabetes. But most insurance companies will cover foot amputations.
Shadowfax's outstanding blog about this topic (referred by BK at emedcentral)