> The opaqueness with which care is paid means that consumers receiving care have little incentive to shop around for prices, quality, value, etc., which means providers can basically charge whatever they think the gov't (through medicare/medicaid) will pay and a percentage above medicare/medicaid for everyone else. Of course, if you are uninsured or go out of network (i.e. your insurance company has no contract with the provider you saw), then you're going to be asked to pay ridiculous retail prices that very few people actually ever pay.
I never find this argument compelling, for two reasons:
1. Things are similar in this regard in other OECD countries, yet the US has prices wildly out of proportion with them.
2. Normal people do not have the expertise to know whether they need medical care. That's why they go to the doctor. Making them pay more out-of-pocket simply leads to them foregoing necessary care. Furthermore, if you're bleeding out and need immediate medical attention you're not exactly in any position to "shop around."
Part of the problem is that three very different kinds of things are being conflated.
If you have an emergency and need immediate care, yes, you can't shop around. That is what insurance is supposed to be for: dealing with unanticipated expenses that you can't pay out of pocket.
However, most health care is not like that. It's either predictable, regular expenses like annual physicals, or unpredictable but small expenses like getting a course of antibiotics if you have an infection. These would seem to be easily bought and sold on a market, yet our health care system insists that we do it through "health insurance", when these items are not even insurable items to begin with.
The third category, and the one that is the hardest to deal with, is non-emergency conditions that require expensive treatment, like cancer. Ideas like having a large risk pool make sense for these kinds of conditions, but again, our health care system insists on doing everything that way, even though it doesn't make sense for other kinds of conditions. And again, this kind of risk pooling is not really "insurance" in the way that covering emergency care is (although there are similarities).
I don’t know what health insurance plan you have, but most (even decent) plans now have relatively high deductibles. My BCBS family plan has $6000/yr deductible before anything gets covered. I doubt that I’m an outlier, and this effectively means many Americans are already paying for non-emergency care as you propose. Prices and premiums still suck. So what’s the actual proposal here?
My current plan does not have a high deductible. Nor did the plan I had at my last employer. So I'm skeptical that high deductibles like yours are typical.
Also, does your plan also allow you to go to any provider for care if you're under your deductible and so are paying out of pocket? If not, you can't shop around even though you are paying the cost. That means you don't really have any market power.
> So what’s the actual proposal here?
I wasn't making a proposal, just highlighting a serious deficiency of the current system. However, the proposal would be obvious: separate out the three kinds of conditions I described and handle them separately.
For emergency care, you would buy insurance, which would work like any other kind of insurance against unanticipated large expenses.
For ordinary predictable expenses and unpredictable but manageable expenses, you would pay out of pocket, just like you pay out of pocket for other ordinary predictable expenses, like food, and other unpredictable but manageable expenses, like household repairs. In other words, it would be just like any other market. And like any other market, there would probably be businesses trying to sell "care plans" where you pay a fixed amount per month and get comprehensive coverage, much like existing plans (and like the extended care plans that car dealers will offer you when you buy a car). But it would be your choice whether to buy them or not, based on your particular circumstances and attitude towards risk.
In such a market there would also be an obvious business opportunity for plans insuring against non-emergency but chronic conditions like cancer. There would also be incentives to widen the risk pool. If there is a place where the power of the government could be used usefully, it would be here: treat all citizens as a single risk pool and negotiate with insurers for coverage of just these conditions based on actuarial data over the entire population. But I'm not optimistic that it would be politically possible to limit the government's involvement to just that.
I never find this argument compelling, for two reasons:
1. Things are similar in this regard in other OECD countries, yet the US has prices wildly out of proportion with them.
2. Normal people do not have the expertise to know whether they need medical care. That's why they go to the doctor. Making them pay more out-of-pocket simply leads to them foregoing necessary care. Furthermore, if you're bleeding out and need immediate medical attention you're not exactly in any position to "shop around."