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Consumers, Not Providers, Are the Key to Health Care Reform


Our health care and higher ed systems have the same root problem, and Obama has the solution to both, says Ezra Klein. The root of skyrocketing costs in both of these industries, says Klein, is the relative weakness of the consumer’s negotiating power. We can decline to buy a television or a computer, but we can’t simply go without health care or education. The lack of one threatens illness, the other poverty. Massive government subsidies exist, then, to help people meet the price demands of providers (demands that then escalate over time).

Klein contrasts two solutions to this ratchet effect: the “conservative” plan, based on the flawed presumption that reducing subsidies will force providers to reduce prices, and Obama’s plan:

The key to the Obama administration’s new higher-ed plan is turning that question around: Perhaps, they think, the subsidies are actually the solution.

The idea isn’t to funnel more money into these sectors. It’s to use the existing money differently. If the government is going to pay, then perhaps it can use its huge market share to do what consumers can’t: Say “no,” or at least be more cautious about when it says “yes.”

This is the core cost-control idea behind Obamacare. The government is using the money it spends for Medicare and Medicaid to try to push the health-care system away from fee-for-service medicine and toward pay-for-performance.

In other words, both the educational plan and Obamacare will work by reforming the provider side of the system, because the consumer has no leverage in the market. How this will work for education remains to be seen, but if the ACA is any guide, it will widely miss the mark.

Klein cites some stats to prove that the ACA provider-centric model is working, mainly that overall health care spending has been slowing down nationwide. But that slowdown has much more to do with consumer restraint than anything the ACA has done, as study after study has shown. Indeed, it seems like consumer-based reform is not only possible, contra Klein, but the best thing we’ve yet seen in the American context for lowering costs.

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  • Corlyss

    One shouldn’t get sucked into discussing anything Ezra Klein natters on about as if it were a serious proposal, or anything other than what it is, i.e., a glimpse of the Obama Administration talking points. If Klein sounds like he’s talking about process, what he’s really doing is selling snake oil for the OFA crowd. IOW Klein is full of purposeful crap. ViaMeadia shouldn’t dignify it with serious analysis any more than it would parse the utterances of Rush Limbaugh.

  • Loader2000

    Not to mention that the for both Health Care and Education, the choice isn’t between have it or not having it, it is between one provider and another. In other words, the whole premise of Klein’s analogy is flawed. He is smart enough to realize this, but for some reason, chooses to ignore it. It is amazing (and you see this on both the left and the right) to see extremely intelligent people time and time again come up with the same old worn out solutions to problems, as if they have a bag of solutions approved by whatever political group they emotionally identify with and only choose solutions out of that bag.

    • Jim__L

      Ezra Klein is no different than any other Leftist commentator — he wants the government to have POWER, and lots of it.

      The more money government hands out, the more power it has. Reducing the money the government hands out, ever, is tragic in his world.

      This country would be better off without the likes of him and Krugman.

  • Parker O’Brien

    Erza’s argument based on a false premise. If he believes consumers have no leverage in their choice of health insurance and college, then how does he explain markets for similarly, if not more, important products, such as food, clothing, and shelter. In reality, government has legislated itself into the dominant market player and is using its leverage to extract political concessions from businesses at the expense of the consumer and producer.

  • Doug

    Klein was the founder of JournoList. ’nuff said.

  • Bruno_Behrend

    The best way to empower consumers is give them vouchers combined with savigs vehicles.

    Do that for P-25 education, and consumers will drain education of it worthless and corrupt bureaucrats.

    • contestjoiner

      While you’re at it the voucher schools will drain the “learning disabled,” ELL and behavor problems. Nobody will take them.

      Last resort? Drop them off at the Heartland Institute, they know it all, they can fix it.

      • Bruno_Behrend

        Nonsense. Where there is a need, there will be some one to address it.

        Further, as you drain the K-12 bureaucratic swamp of its paper-pushing bureaucrats and their fat payroll and pension costs, more money will be available to flow to the people who do the real work – the service providers.

        It is the district-based system that has become the enemy of the needy.

        As an aside, I’ve often suggested that the free-market movement open some schools to prove their theories. Alas, they, much like the public ed bureaucracies that they criticize, have their own paper-pushing make-work issues.

        The difference is that they don’t their fangs in our necks for property, income, and sales tax revenues.

  • NCMountainGirl

    Lots of luck getting that to work nay time soon. Ask any one of the medical staff at a hospital if there is a lower cost alternative and you are likely to get one of these reactions. 1) A blank stare. 2) A referral to a social worker to see about getting you placed on Social Security Disabilty, or 3) a recommendation you start taking an anti-anxiety drug.

    They are quick to call themselves professionals but none of them I have met has any idea what their patient is being charged for any of the services they perform. To make matters worse, increasingly they are being evaluated on how closely they follow the protocols in the computerized record keeping system. Many of these are designed to see the hospital isn’t sued. It’s become medicine by lawyer and risk management consultant.

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