Rx: Competition

What’s wrong with the health care debate?

Public Domain. Source: Wikipedia

I don’t pretend to have a solution. Health care is complex and multi-faceted, with lots of market and non-market elements. And it’s huge: a sixth of our $20 trillion economy. But one thing that’s so disheartening about the debate is that it mostly focusses on the demand side of the equation. Health insurance, Medicare, Medicaid, exchanges – these are all ways that we get access to care. It’s as if we debated food policy by only talking about restaurants and grocery stores – not about crops, farms, and processors.

But the supply side of health care is at least half of the equation. A couple years ago, the Maine legislature passed a reform that allows dental therapists to perform some basic procedures in rural areas and nursing homes without a fully-licensed dentist present. CVS has “Minute Clinics” in 34 states that allow people to get examined and treated by a registered nurse for basic issues like strep throat or ear infections; get sports physicals and routine tests: and receive education. Where are the studies that examine the costs of these basic services across state lines – comparing Nebraska to South Dakota, for example, where these clinics are and aren’t allowed?

There are lots of ways to make health care more affordable. Most hospitals now have advocates that guide patients through the health care funding maze – helping patients make decisions that allows the hospital to access government money. That’s just one more level of bureaucracy, designed to help ordinary folks understand another part of the bureaucracy. We could reform health-care training to make it more efficient and less costly. And we should look at ways to make new drugs less expensive to bring to market – perhaps by streamlining the FDA approval process for certain medicines. But current providers usually resist reforms that would increase their competition.

Source: Wikipedia, Scientific American

I’m not saying that supply-side reforms will solve all our health-care issues. But if we want to make medical care more accessible and affordable, we should try to make it less costly. And the only way I know to reduce prices – if demand is going up – is by increasing supply.

Douglas R. Tengdin, CFA

By | 2017-07-17T16:46:20+00:00 July 10th, 2017|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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