How to Replace Obamacare

In more colloquial terms, the problem is that consumers have an incentive to spend on health care until it hurts, and they have no incentive to shop around. Even worse, doctors and specialists not only have no incentive to control costs, but they actually have a direct financial interest in spending more. Health care providers have no incentive to compete on price, so they compete primarily on quality and secondarily on convenience.

That explains why the American health care system produces far and away the highest quality care in the world: The rewards go to he who creates the best new innovations and most effective new treatments. It also explains why new technology— which drives down costs in every other field—actually increases costs in medicine.

The only solution is to unite the decision over what health care services to purchase with the economic responsibility to pay for them, so costs can be weighed against benefits. And there are only two ways to do that: either the third-party payer (the government or insurance company) is given the power to decide what treatments the patient is allowed to consume, or the patient is given market incentives to consider the full costs of his health care.

via The American Spectator : How to Replace Obamacare.

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