How insurance distorts the market for health care

John Stossel:

Health-care costs overall have been rising faster than inflation, but not all medical costs are skyrocketing. In a few pockets of medicine, costs are down while quality is up.

Dr. Brian Bonanni has an unusual medical practice. His office is open Saturdays. He e-mails his patients and gives them his cell-phone number.

"I need to be available 24 hours a day," he says. "I want to be there when a patient has questions, and I want to be reachable."

I'll bet your doctor doesn't say that. Bonanni knows he has to please his patients, not some insurance company or the government, because he's paid by his patients. He's a laser eye surgeon. Insurance rarely covers what he does: reshaping eyes so people can see without glasses.

His patients shop around before coming to him. They ask a question that people relying on insurance don't ask: "How much will that cost?"

"I can't get away with not telling the patient how much exactly it's going to cost," Bonanni says. "No one would put up with it. And the difference of a hundred dollars sometimes makes their decision for them."

He has to compete for his patients' business. One result of that is lower prices. And while the procedure got cheaper, it also got better. Today's lasers are faster and more precise.

Prices have fallen and quality has risen in other medical fields where most people pay for care themselves, like cosmetic surgery. Consumer power works -- even in medicine.

When government and insurance companies are kept away from the transaction, good new things happen.

A doctor in Tennessee I talked to publishes his low prices, such as $40 for an office visit.

Most doctors would say you can't make money this way. But Dr. Robert Berry told me you can. "Last year, I made about the average of what a primary-care physician makes in this country," he said.

Berry doesn't accept insurance. That saves him money because he doesn't have to hire a staff to process insurance claims, and he never has to fight with companies to get paid.

His mostly uninsured patients save money, too. Unlike doctors trapped in the insurance maze, Berry works with his patients to find ways to save them money.

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Sometimes the $4 pills from Wal-Mart are just as good as the $100 ones.

Speaking of Wal-Mart, medical clinics are popping up in Wal-Mart stores and in other similar markets. The clinics offer people with simple problems like sore throats and ear infections relatively hassle-free care ... cheap. Almost everything costs $59 or less. And the clinics are typically open seven days a week.

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While Democrats claim that their health care programs requiring everyone to have insurance are not socialized medicine, the effect is not that much different. The main difference is that the insurance companies are rationing the health care instead of the government. It still introduces a layer of cost on the treatment that is extracted through lower income to the doctor and lower service to the patient. Whenever you distort the free market whether by the socialist system or the insurance system, you are transferring the decision making process from the patient to someone else. that is why the health savings accounts where the patient is responsible for the first $1000 helps restore balance to the process.