How Should We Pay For Health Care: Government Or Markets?

THE SOVEREIGN PATIENT

John C. GoodmanJust about every good or service we buy involves bundling decisions. At MacDonald’s, for example, there is no extra charge for pickles, onions, catsup, salt and pepper. These are all included in a basic price. But there is an extra charge for a slice of cheese or an extra beef patty. Or more precisely, these extras are included in a different bundle. How did MacDonald’s decide what to bundle and how to bundle it? I have no idea. But I am very confident their judgment on how to maximize consumer satisfaction is far superior to any bureaucratic committee appointed by politicians would have been.

The same principle applies to medical care. Doctors are the only professionals in our society who are not free to repackage and re-price the services they offer to the market. Medicare, for example, has a list of about 7,500 tasks that it pays doctors to do…

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