A Socialist Idea We Applaud

            Inadvertently, of course.  Without any apparent understanding of the implications.  And for all the wrong reasons.  European health care socialists are about to stumble onto a health insurance idea so good it would be worth copying in this country.

            Here's how I think it's going to work.

            As part of the trend toward economic and social integration, a proposal before the European Union would allow citizens of any one country to obtain health care in every other country without needing (as currently is the case) the home country's permission.  As explained in a New York Times study, patients would have to pay whatever the admitting facility charged, but they would get reimbursed for whatever the procedure would have cost at home.

            Suppose you're British, you need a hip replacement, the National Health Service (NHS) has a long waiting list, and you are considering crossing the Channel for care.  The NHS will have to decide what it costs to perform hip replacements at home in order to arrive at a reimbursement figure.  Granted, this will be a Herculean task.  Granted, they will get the number wrong.  All that's beside the point.  Whatever the amount, they will surely cover the bulk of the price of a hip replacement in any other European country and might even exceed the price (in which case, the patient gets a rebate?).  Anyway, what we're talking about is potentially unleashing hundreds (thousands? millions?) of patients-all with considerable buying power- into a European health care market.

            One thing more you need to know.  In the health care tourism market, facilities compete on price.  (Unlike employers and insurers, ordinary people don't agree to expensive elective surgery without knowing what they are going to pay in advance.)  So, in order for a French hospital, say, to attract a British hip patient (and add needed revenue to its cash-starved budget), the facility will have to discover the marginal cost of its own procedure and set a price high enough to cover that cost.  Where there is price competition, there is usually quality competition as well.  And, in order to compete on quality, the facility will need to compare the cost of quality improvements with the additional revenue these improvements will generate.

            Price competition.  Quality competition.  Marginal cost pricing.  Patients paying out of their own pockets for the marginal cost of care.  If you wanted to create a truly workable medical marketplace, what more could you ask for?

            Maybe the old adage about the blind warthog is really true.

John

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