New Health Secretary Offers Bold Vision for Reform. But the Devil’s in the Details. | The Heritage Foundation

The root problem is that health care “prices” are not really prices, in the conventional economic sense, reflecting the direct collision between the forces of consumer demand and provider supply in anything resembling a real market.

They are complex, negotiated payment agreements that take place within a sector of the economy, dominated by third-party, corporate, and government pricing arrangements.

Health care is an aberrant sector of the economy, where consumer control is virtually nonexistent and competition is routinely thwarted by law and regulation.

The secretary is asking medical professionals and drug companies themselves to volunteer and become “more transparent” in their pricing and their medical outcomes, but warning that, if they  fail,  “… we have plenty of levers to pull that would help drive this change.”

It’s not yet clear what those administrative “levers” are, and how Health and Human Services would, or could, legitimately use them to influence commercial sectors of the health care economy, rather than just Medicare, Medicaid, and the Obamacare health insurance exchanges.

Health care pricing and payment reflect radically different conditions from state to state. The secretary should be careful, therefore, not to disrupt price-transparency initiatives that are already underway in several states, such as Maryland.

Maryland, after carefully building a sophisticated database, is spotlighting price and performance for common hospital procedures for the state’s consumers.

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New Health Secretary Offers Bold Vision for Reform. But the Devil’s in the Details. | The Heritage Foundation.