Kevin Pailet says if the free market is going to drive costsdown, consumers need to have 'more skin in the game'


Over time, the cost of most new innovations typically goes downwhile quality goes up. For example, flat screen TVs are better thanthey've ever been, and the cost is far less than it's ever been.With respect to medical care, Lasik and other elective proceduresare more effective than ever before and yet they cost less thanthey did a few years ago. Why isn't this true of the health caresystem in general? The lack of consumerism.
Suppose employers decided to offer a new benefit to employees.Every employee can go out and buy a new car with only a $1,000co-pay and then the employer will pay the balance. Currently, mostof us would probably invest a lot time shopping around for the bestprice on our new car. We'd look at all of the different options andmaybe we'd splurge for a DVD player, a navigation system, leatherseats, or sunroof. Few of us would buy all of those featuresbecause we wouldn't value them enough to justify the additionalcost. But if there was no additional cost we'd buy all of thefeatures. In fact, the manufacturers would probably only make carsthat come fully loaded. Furthermore, say goodbye to the Honda orChevy and say hello to the Mercedes or Porsche. The average cost ofthe cars driven by the employees would skyrocket.
Does this scenario sound familiar? "I'll pay $25 for medicationthat costs $40 and I'll pay $25 for the medication I saw on TV thatcosts $300. Why wouldn't I want the one that costs $300? It doesn'tdirectly affect me."
We all draw the correlation that this drives premiums, butemployees don't. It's our job to educate. While we're at it, manypharmacies charge more than others such as many of the warehousesclubs. If you ask an employee if batteries cost less at the cornerdrug store or a warehouse club like Costco or Sam's Club, they'llimmediately respond that the warehouse club has better prices. Theydon't realize that this may also be true of prescriptions becausethey make the same co-pay regardless of where they purchase as longas it's in the network.
This is why HDHPs and other consumer-driven plans are critical tochanging behavior. We'll spend hours shopping for the best pricefor a new flat screen TV or to get estimates for a damaged fender,but we'll typically go like sheep to the slaughter down the hall toget an MRI without ever questioning or comparing price. This hasgot to change for our health care system to survive. We can rationcare as consumers or we can have rationing imposed on us by thirdparties. I, for one, would rather have us in the driver's seat.

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