Price transparency for healthcare is not a problem in single-payer

A major concern that people on the Right have raised about fixing the healthcare system is the lack of transparency in pricing.

The drug companies and hospitals don't have a menu posted like they do when you walk into a McDonald's, and if you try to press anyone there for the information, they either do not have it or will refuse to give it to you. Perhaps you'll only find out how much something cost after the fact and they've stuck you with the bill for a $20 cup of orange juice. Then you either pay it, or pay the various costs of fighting off a collection agency, or pay the costs of filing for bankruptcy.

The exact same drug by the same manufacturer in the same quantity may cost orders of magnitude more in America than in another first-world country. We don't know how much it costs here before we get the bill, and we certainly don't know how cheap it is to buy in other countries.

This opacity allows the healthcare providers to drive up prices, just as we've seen over the past several decades.

But is the lack of transparency in pricing a cause or effect of our terrible healthcare system?

The argument on the Right assumes that if we could make prices more transparent to the customer, it would go a long way toward bringing down expenditures. They would now have the information needed to shop around, play competitors off against each other, and so on.

The trouble is that people do not want to even think about prices when it comes to healthcare. Five years or so ago, the libertarian autists at George Mason economics were discussing this aspect of rising healthcare costs. Some of them (Hanson, I think) pointed out that people are in a different mindset when it comes to things like life and death, so they don't apply the same behaviors to navigate their way through healthcare decisions.

If our health is sacred and taboo, especially on the insides of our bodies where we can't really see what's going on, we just aren't going to "go there" and view it like a mundane mechanism. To the human mind, the body is not like a car with its parts and systems, so we aren't going to ask multiple health providers for quotes, ask which provider has the best reputation, haggle about the price, and so on.

It's part of the sacred realm where mechanisms and price haggling are not allowed. So we just accept whatever it costs to get better, and hope it won't cost too much.

Parishioners, sitting in the pews on Sunday morning, are not wondering if the Church scored a killer deal with whatever furniture makers made their pews. They aren't thinking, Is all that money in the collection plate going to waste because the leaders didn't negotiate a good deal on the pews? It's part of the sacred architecture, and is beyond questions of pricing when you're in the worshiping mindset.

So, even when you experimentally give people the kind of information about healthcare that they'd need to shop around, they tend not to make use of it. Those facts, figures, and spreadsheet calculations put them into the profane mindset when they're facing decisions about something sacred like their health.

This will remain a problem as long as the recipient of price information is the end consumer of healthcare. If it's a close friend or relative, it reduces to the same problem. They're too emotionally invested in their loved one's sacred health to even think of getting into the profane haggling mindset.

Single-payer systems solve this problem by making the national health boards the recipient of price information. First as an opening offer, then lowering it through aggressive negotiations by the national board. The board could also demand to see the recent or long-term history of prices for various things -- are prices going up disturbingly quickly?

These board members are in total bean counter and negotiator mode, as they are not the end consumers of healthcare goods and services being considered. Occasionally they'll be using the public system, but not at that moment for those services being examined. This allows them to keep a much cooler and rational mindset while considering prices, and trying to get a better deal from the providers.

It's no different from how those pews got purchased for the Church -- somebody somewhere in the organization looked at how much there was in the budget for pews after the collection plate had been sent around, then they sent out a request for bids to manufacturers, inspected their track record for quality, played them off each other, and negotiated a decent deal. Nobody in the sacred services had to know anything about it -- and would not want to know.

So, relying primarily on a single-payer system not only allows all the isolated little taxpayers to pool their resources and throw their collective weight around at the negotiating table. It also allows them to not make serious financial decisions when they're in sacred mode, where price is no matter, sending it off instead to someone who will be in profane mode.

You could always try to get someone else to haggle on your behalf, while not pooling resources with anyone else to do so. But then you'd have as many hagglers as patients -- why waste all those resources, when it can be consolidated into a specialist team that haggles on behalf of the entire population? Especially when a national haggler can make a more serious threat by walking away, compared to an individual haggler.

Nobody in the first world knows what most of the prices are for their healthcare services -- whether they live in America where they get raped, or in the other rich countries where they do not. Somebody other than the end consumer is thinking about prices, if anyone is at all. So price transparency is not a necessary factor in explaining why our system sucks, and fixing that problem would not be sufficient to deliver good healthcare outcomes at low prices.

The more you look into it, the more reasonable the single-payer system is, whether Canada, Australia, England, France, or wherever.