Plain Sense Economics

This article is for my past students in healthcare economics. You heard me rant that while expanding coverage to millions of uninsured Americans is important, there also needs to be a parallel effort to control costs. The extension of benefits will increase costs significantly, even if we take into account some (minor) savings from earlier treatment and prevention.

Alain Enthoven, recently retired from the Stanford School of Business, has been on the same soapbox for decades. His preferred model uses competition to spur innovation and cost control. Here is a recent article in the Health Affairs blog on his current thinking. It is a good read.

Gawande acknowledges that the cost of health care “…will essentially devour all our future wage increases and economic growth.  The cost problem, people have come to realize, threatens not just our prosperity but our solvency.”  “So what does the reform package do about it? …Does it institute nationwide structural changes that curb costs and raise quality? It does not. Instead what it offers is …pilot programs.”