We should see a lot more advertising like this

SEATTLE, Washington - I snapped a pic of this billboard (with dramatic sunset lighting) in Las Vegas last month, and was going to write about it but forgot:



Notice something unusual about this billboard? It's promoting the price of a medical procedure. Considering that about 16% of GDP goes to health care, we should be seeing stuff like this constantly.

Think about billboards (and other advertising) related to other large sectors - restaurants/food, hotels, consumer electronics, real estate, etc. - we are hammered relentlessly with the value proposition. Here's what you get, here's what it costs.

How many medical procedures do you even know the price of? All I could think of was laser eye surgery, because (at least at first, maybe it's different now) it hasn't been covered by health insurance. So they have to pitch it to you - here's what you get, here's what it costs. You've probably heard those radio commercials with the lifeless monotone of Tiger Woods telling you how great his laser eye surgery was.

The fundamental reason for this, of course, is that you don't pay directly for most of these things, your health insurance company does.

I was reminded of this sign when reading Reason's interview with Steve Forbes. Forbes mentions laser eye surgery, and he also provides the example of cosmetic surgery:

But we see from Lasik what happens when you get a real market. It costs a third less than it did 10 years ago. Cosmetic surgery hasn’t had inflation, like you have in the rest of health care, even though demand has increased sixfold in the last 15 years and even though there have been enormous technological innovations. Why? Because you pay for it.

Amazing, eh? If you have people paying for something out of their pocket, and with a competitive marketplace from which to buy it from, costs keep coming down and innovation continues briskly.

Think about automobiles: if you do the inflation-adjustment math, their cost today isn't much different than in prior decades, but today's cars are vastly superior machines to those of yesteryear.

So a fundamental problem with cost control in health care is that people don't pay directly for things; a third party pays, a third party you're usually tied to through your employer. The goal for health providers simply becomes satisfying a bureaucratic beast:

And you don’t get the kind of productivity you get everywhere else. We use phones and emails for everything now. Do you do consultation with your physician or nurse by phone or email? Rarely. Or hospitals giving warranties, like you have everywhere else, where if they don’t scope your knee right, you go back and don’t have to pay for it again. Why wouldn’t that be their dime? Because it’s not real competition. They know you’re not writing the checks, so therefore they don’t have to please you; they just have to make sure they get a bureaucratic insurance company to approve it.

(You know what I do see a lot of advertising for? Health insurance companies.)

Imagine if a third party (or even worse, the government) was responsible for buying your car and buying your gas? Or, for that matter, your food? It would be a debacle. Health insurance is tied up into every little medical transaction for one simple reason: Employer-provided health benefits were given beneficial tax treatment sixty or so years ago. This situation survives today. Employers will funnel money into anything that gets preferential tax treatment.

This situation needs to be eliminated. In my opinion, preferential tax treatment for health care should be eliminated. Both Forbes and Whole Foods CEO John Mackey (who caused endless hysteria in the granola-sphere with his health care op-ed) call for allowing individuals to receive health tax deductions similar to what employers get. (I suspect Forbes, at least, would also support simply eliminating the tax benefit altogether.)

So here's the simple health care recipe: (1) you eliminate preferential tax treatment for health care (2) employers, upon seeing this, stop offering health insurance. Every last penny they currently pay to health insurers goes right into your paycheck (3) You go out and buy insurance, which for most people would consist of a catastrophic plan, plus paying for more routine stuff out-of-pocket.

(Step 2 would be an effective tax increase; there should be a counterbalancing drop in income-tax rates to compensate).

Hope that's simple enough. Of course politicians are not going to pursue this, as it gives them less control, not more control.

And would Dr Athari be able to handle all the business?

p.s.: Read that whole Reason interview. Where the hell was that Steve Forbes in 1996 when he was running for office? It's amazing the things you can say when you don't have to cater to absurd interest groups and dance around "cultural" issues.

UPDATE: Right on cue, Arnold Kling points out a seven pundit commentary in the New York Times on "how to control health care costs". Some of it reads like parody - one of the pieces, with a straight face, is headlined "Be More Like Medicare".

Kling notes that his proposal has no chance of happening, and that the other six have no chance of actually reducing costs.

Only four of the seven pundits even bother to mention "patients", obviously thinking they can't possibly play a role in reducing the amount of money spent on health care. I feel like getting the email addresses of some of these characters and sending them my picture of Dr Athari's billboard.