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Competition in Healthcare, the Only Solution

September 16, 2011

 

Chris Garlasco, Owner & Managing Partner - Founders Insurance Group

American history demonstrates that fierce competition, along with the spoils of victory, has been a huge factor in American prosperity, making our country an economic powerhouse. Competition forces innovation and creativity in the business community. Competitive forces are a major factor in helping to keep prices as low as possible in almost all of American industries.

There are studies that indicate that the farther American’s have been removed from the cost of their healthcare (not to be confused with the cost of health insurance); the faster the cost of the care has risen. Competition in the health insurance industry has been, for the most part, very competitive. Insurance is expensive because the cost of care is expensive.

On both sides of the political spectrum there have been many idea’s but few with any merit simply because they lack the ability to get to what I believe is the true problem with our healthcare delivery system. Most, if not all, political solutions deal with the limbs of the tree rather than the roots. Add to that misguided and misleading rhetoric and the waters of the debate have become very muddy.

Can insurance companies do things that would help to lower the cost of care? Can the government play an important role in lowering the cost of care? Will tort reform help in lowering the cost of care? The answer to all of these questions is yes. However, none of these organizations, in themselves can do very much to reach the underlying problem. The cost of the care is simply too expensive. Whether insurance companies or the government is providing the product (insurance) that helps to pay for the care, the high cost of the care will remain.

As a nation, we have somehow gotten away from the very things that make our economy great. How can something so simple be forgotten? Doctors, hospitals and other medical providers have somehow avoided the natural scrutiny that a competitive environment offers.

Pick up a subscription to Consumer Reports and you will find thousands of products compared on a price and quality basis. We have piles of information on who makes the best products and the fairest prices. McDonald’s offers a “dollar menu” and soon other restaurants are scrambling to compete. It happens all over our society and most often to the benefit of the consumer.

Try to compare the cost of medical services and the quality of the care and we suddenly find ourselves lacking the information that is so readily available in all other industries. It is very hard to find, if it can be found at all!

I recently was reading some comments about insurance following an article on Hurricane Irene. One angry post exclaimed, “We should do away with all insurance companies!” Maybe the person that posted the comment, without knowing it, was really on to something. Bring the actual cost of the care to the consumer rather than the cost of the insurance and watch how quickly the medical industry would be forced to start competing on a price and quality of results basis. Consumers would demand to know what they are paying for and why.

Think about it.

Chris Garlasco

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