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February 16, 2017

Healthcare proposal #1: Restore natural prices & make them visible

Things cost more when you can’t see their price. Retweet

Downsize DC is promoting 20 proposals designed to replace Obamacare with consumer controlled, free market medicine. A major effect of these proposals would be to make healthcare costs visible to patients. And that’s because restoring natural prices is the most important issue in healthcare reform. We have a campaign that explains this point, [First proposal to replace Obamacare] and the benefit of it to Congress. Please consider sending this material to your reps.

The hardwired letter to Congress reads…

Restore visible, natural prices to healthcare.

You can copy or edit this sample text for your personal letter to Congress…

A natural price is one that reflects supply and demand, NOT political dictates. A visible price is one a patient sees before agreeing to a procedure, NOT a number viewed on an insurance statement after the fact.

Policies that restore natural prices and make them visible to patients will enable consumer control, foster competition, and reduce costs. Patients currently have…

— No incentive for frugality because insurance companies and taxpayers are paying nearly all of their healthcare bills.

— No means to economize because they never get to see any prices for medical procedures.

Healthcare prices are set in secret by politicians, bureaucrats, and insurance companies. Medicaid and Medicare have the greatest price-fixing impact. Insurance companies take their lead from that source. So-called “cash prices” are set astronomically high to weed out cash customers and to manipulate tax filings with false losses from non-paying cash customers.

>>Natural prices, set by the decentralized forces of supply and demand, are nowhere to be found.

Third party payments and the lack of visible prices disconnect patients from their doctors. Doctors don’t work for patients. They work for the people who control the purse strings — the insurance companies and the big federal health care bureaucracies. This creates several distortions…

— Patients and doctors overuse medical services, pursuing tests and therapies that serve little purpose.

— This overuse inflates the cost of healthcare services.

— Costs increase faster than health outcomes improve.

— Politicians exploit these problems to enact “reforms,” like Obamacare, that are simply larger versions of what caused the mess in the first place.

Americans must come to understand what natural prices can do for them. Natural prices are magic, while prices set by politicians and bureaucrats are a curse. Please understand how natural prices function…

— A higher relative price sends two signals. First, it tells consumers to be more frugal with medical services. Second, it tells medical entrepreneurs that there’s a business opportunity in offering new or expanded services.

— This conservation and increased production combine to expand supply and reduce prices

This is the exact opposite of how tax-funded subsidies and third-party payments work.

— Third party payments reduce the need to be frugal. Instead, they increase demand and increase prices.

— Subsidies tend to increase prices so as to absorb not only the subsidy, but also whatever the consumer is willing to pay on top of that.

— This is why the three areas where politicians have done the most to reduce prices (housing, higher education, and healthcare) are also the areas where prices have risen most rapidly.

Political prices cannot improve upon natural prices. Natural prices create the incentives that provide consumers with store shelves that are always full. Politically set prices are what empty store shelves in places like the Soviet Union and Venezuela.

The magic of natural prices can work as well in healthcare as it does in other sectors. Lasik eye surgery provides a good example. All LASIK procedures are paid for directly by patients, NOT by insurance or taxpayers. The result is that the cost of this procedure has constantly fallen while the quality has consistently improved. The same is true for cosmetic surgery. This is something we see in all areas (such as computers) where natural prices hold sway. We must do everything we can to restore natural prices to healthcare and make those prices visible to patients.

Politicians poisoned our healthcare system. They can only fix it by sucking out the politics.


Thanks for being an ACTIVE DC Downsizer,

Perry Willis & Jim Babka

Downsize DC

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