From Dr. John Goodman, writing at Forbes:
By the mid-1980s it was clear to almost everyone that something was amiss. Costs were not only rising at an unaffordable rate, they were getting increasingly out of line with what other countries were paying. So, the concerns of the doctors were pushed aside and, much to the doctors’ future regret, public policy began to encourage the emergence of for-profit hospitals, for-profit clinics and for-profit insurance plans.
Unlike the stodgy non-profits, which tended to be wasteful and inefficient, the new entities competed aggressively. They literally changed the entire nature of their industries in a short amount of time.
And that produced a new set of problems.
Remember, year after year, decade after decade, we suppressed normal market forces in health care. So much so that no one ever sees a real price for anything. No doctor. No patient. No employer. No employee.
When people face artificial prices that are significantly different from real prices, they invariably face perverse incentives. And aggressive competition in the face of perverse incentives can produce outcomes that are even more perverse.
