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More Health Care for Less Money

Posted by on June 8, 2009

[This post was originally written for my employer’s blog, Show-Me Daily.]

There’s a great piece on the Washington Post website about improving health care at the federal level. Among the wonderful insights, which are quite intuitive, but likely not widely considered, are:

1. Applying the law of demand to health care:

Research shows that if individuals have to pay 25 percent out of pocket for their elective medical services, they will visit the doctor about 20 percent less.

2. Recognizing that increased care costs can lead to diminishing returns:

A hospital’s bottom line often improves when doctors run more tests, even if those tests add little diagnostic information to the clinical picture.

Utilizing this kind of economically minded approach is precisely how to control costs in a way that will maximize the availability of health care for all. Remember that the real problem is not how to pay for health care for everyone, but rather how to make sure that the incentives are structured such that health care is affordable for all.

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