Paul Jacob

This was related with utmost clarity by Dr. Jeffrey A. Singer in his recent Wall Street Journal commentary “The Man Who Was Treated for $17,000 Less.” A patient got an astoundingly better price for a surgery by simply setting aside his insurance program and paying in cash. Singer explains why:

  1. “Hospitals and other providers make their Ôlist’ prices as high as possible when negotiating contracts with health plans and Medicare regulators. No one is ever expected to pay the list price.”
  2. “[M]ost people these days don’t have health Ôinsurance.’ They have prepaid health plans. They pay premiums to take advantage of a pre-negotiated fee schedule arranged for and administered by a third party.”
  3. “It is the third-party payment system that interferes with true price competition, so Ômarket clearing prices’ can’t develop.”

Singer reminds us that specialty services like Lasik eye surgery, which tend not to be covered by insurance policies, have improved in quality and gone down in price.

Alas, as he laments, the United States is “headed in the exact opposite direction” from a real, cost-reducing solution.


We’re addicted to convenience. That convenience, coupled with a controlled lack of competition, lets hospitals engage in absurd cost-plus pricing and trumped up fake pricing. We no longer act as consumers on a market, but beggars with rich uncles or Big Brothers. The market cannot work properly. Medicine has been allowed to become a “mixed economy” with few of the advantages of free markets. Progress in quality while prices decrease — the miracle of modern capitalism — has been left to other industries.

The reason lies not in markets as markets. It lies in government. And our addiction to it.

Yes, we are addicted to government — which common sense should tell us is poison in large doses.

To a nation addicted to third-party payers in medicine, Obamacare is nothing more than upping the dose of the same old drug.     [further reading]

Paul Jacob is President of the Liberty Initiative Fund which works with citizens nationwide to put freedom-enhancing initiatives on the ballot. His daily Common Sense commentary appears on the Web and via e-mail.

©2013 Paul Jacob

Paul Jacob

Paul Jacob is President of Citizens in Charge Foundation and Citizens in Charge. His daily Common Sense commentary appears on the Web and via e-mail.