The 3 (Actually, 2) Problems with the U.S. Healthcare System

problem
Image credit: Gary Larson

Before something can be fixed, the problem must be defined and the causes of that problem diagnosed.

The generally accepted problems with the U.S. healthcare system are that its prices are too high, its quality is too low/patchy, and not enough people have insurance coverage.

I’m going to change that a little bit. Since price and quality are the two variables that determine value, we could combine them into only two problems: suboptimal value and not enough insurance coverage.

The insurance coverage piece is kind of separate from the value piece because solving it primarily relies on government policies that subsidize the purchase of health insurance for those who wouldn’t be able to afford it otherwise. Those government policies are a (purposeful) distortion to the healthcare market. Distorting a market for a good reason is fine, but before you do it, you need to understand how the market should be structured to optimize value so you don’t accidentally ruin its potential to have higher value in the process.

And the nice thing is that value improvements will primarily come in the form of lower prices —> insurance coverage will become cheaper —> fewer people will be priced out of the market. Therefore, fixing value partially fixes the insurance coverage problem too!

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