The bottom line: As the medical markets competes in Ryan's vision, prices will fall in a dramatic way. But that's the problem. Cutting prices will attract health care "consumers," sure, but it also means providers will be cutting quality and service in a race to the bottom. Discount care brings with it discount clinics and low priced doctors, the Wal-Marting of health care.
That's Ryan's plan, and he doesn't even know it. You'll also love his enthusiastic exceptance of self "rationing." Hey, it's better than insurers or government rationing....wait, rationing shouldn't happen at all. Not according to Ryan:
Washington Post: Klein: Looking at your proposals for Medicare and Medicaid, I’d characterize your approach as privatizing programs and then capping the government’s contributions to them.
Ryan: The whole point I’m trying to make here is that we have to understand these programs are growing themselves into extinction. The question, at the end of the day, is who’s going to be in control of this system. Is it the individual or the government? I don’t want the government more in control of the system.Klein: A word we should bring into play here is "rationing."
Ryan: Rationing happens today! The question is who will do it? The government? Or you, your doctor and your family?Klein: That ends up being the interesting question. The theory of the Medicare system, of the European systems, is that the best way to do this is to have the government fund research to discover the effectiveness of treatments and then use its purchasing power the same way Wal-Mart would – to drive prices down. Medicare, as the CBO said in its report to you, pays less than private insurance.
Ryan: But Medicare is growing at an unsustainable rate. And yet it underpays doctors.Klein: But private insurance is growing that quickly as well. And this question of underpayment is doctors and hospitals making less than they expect to make. What you’re talking about, bringing Medicare spending down very sharply, is even more vulnerable to that critique. You do it on the patient side, not the provider side, but they will feel they’re getting vouchers that aren’t generous enough to keep up with health-care costs.
Ryan: So what I’m saying is that rather than having government ration care to manage decline, let’s take those market signals that work in every sector of the economy to reduce cost and improve competition. I got Lasik in 2000. That’s a cash surgery. It cost me $2,000 an eye. Since then, it’s been revolutionized three times and now costs $800 an eye. This sector isn’t immune from free-market principles.Klein: The Lasik thing is interesting because it gets to the question of whether health care is a market. When I think of getting Lasik, or buying a television, I can walk out of the store. That’s what gives me as a consumer my power in the market. But if I have chest pains and my doctor prescribes a bypass, how do I walk out of the store?
Ryan: In Milwaukee, the price of bypass ranges from $47,000 to $100,000. Nobody knows where to go for quality, or the prices. So wouldn’t it be good for the prices and quality metrics to be publicized? And let people make a decision. There’ll always be some level of co-pay or deductible or co-insurance that’s going to push people towards the best value. Then, when you have those chest pains and you’re being rushed in the ambulance, you’ll be rushed to a hospital that’s all along been competing for business and has been improved by that process. You’ll get better health care than you otherwise would. That’s how you improve the system.Klein: You’re arguing that the benefits of competition accrue, and so even if you don’t choose at the moment of emergency, there’s still an effect from a higher-functioning market.
Ryan: Absolutely.Klein: But take cars. Lots of people buy crappy cars, or bad televisions. I make bad purchases all the time. Liberals and conservatives are together on the publishing of quality metrics. But this stuff is more complicated and diffuse than cars. That’s not to say the consumer shouldn’t have a role.