Andy Grove, founder and former CEO of Intel, shares thoughts on health care in Wired.com. It’s a good read, albeit a bit too long for the topic: he narrowly focuses on the obscurity of health care pricing. It’s true: health care pricing is “chaos behind a veil of secrecy”.

But he misses the reason for why that’s the case. He seems to believe that such price obscurity exists just because it does. He believes the solution is legislation similar to that which resulted in the ubiquitous pricing sticker being affixed to cars circa the 1950s.

But there is a reason why health care pricing is so obscure and it’s very different from the reason why automobile pricing was so obscure. Health care pricing is obscure because customers (patients) essentially never pay for their care. Patients don’t care about cost because patients don’t have to care about cost. This will only get much much worse with national health care. Health care pricing won’t become transparent, rational, and under control until health insurance becomes rational. That won’t happen with national health care. It won’t happen until health insurance becomes more like car or home owners insurance – essentially disaster insurance with little or no coverage for routine procedures. And, most importantly, until patients become more directly responsible for paying the costs.

Andy, great article. Too bad it just completely misses the point.

-JD Cross

 

Advertisements