Joe, a lot of what you are writing about here is quite important but to change the industry of…
John Whitling

This is one of the key arguments for a single payer system, that there needs to be a single agency that has the power to force down healthcare costs.

There’s a problem with that vision, though: Imagining a single agency powerful and fierce enough to drive down all these insane prices and push back on the industry means also a single agency able to limit our choices, to tell us no, you can’t have that new knee because you don’t meet the criteria on this list, you don’t qualify for a mitral valve transplant because the cut-off age for that is 75.

If such a system were to result in seriously lower costs overall, it would be telling the doctors what to do and not do, and telling the customers what we can and can’t have. “Stalinist” would not be too strong an adjective for it. As a political system and as a culture, Americans wouldn’t stand for it.

What we would get instead would be essentially today’s Medicare, but for everyone: Somewhat lower cost, but without the real ability to be a fierce customer and force the industry into lower-cost models. The government’s politically-imposed inability to negotiate drug prices is not an aberration, it’s a template for the weakness of a single-payer system in the United States.

So how do we get around that? Instead of trying to impose a top-down solution, open up the system’s ability to cater to fierce customers. Do that with new payment systems, new business models, and vastly more information.

The key change-makers here are not on the government side, but on the private side. Self-funded employers, pension plans and unions not only do not have the political restrictions that government programs have, they have every incentive to be fierce customers on behalf of their employees and members as well on behalf of their own bottom lines.

As more of the private market adopts this fierce customer style, they force healthcare providers to adapt, to make the systemic changes and business model innovations necessary to make money in a different way. It has a ratchet effect. Once they have changed and adapted, they can’t go back, because the environment has changed. Once somebody builds a gas station at the edge of town, and the town council pays to put in a stop light, the livery stable goes out of busines.

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