John Goodman: “The Sorry State of Health Economics”
…there are no real prices in the conventional health care system. There are only artificial “reimbursement rates,” negotiated or imposed by third party payers. A considerable part of the book (Priceless, by John C. Goodman) is devoted to explaining how this creates perverse incentives for all parties and when people act on those incentives they do things that make costs higher, quality lower and access to care more difficult than otherwise would have been the case.
How does a standard health economics textbook handle this issue? To find out, I consulted Health Economics: Theory, Insights and Industry Studies, by Rexford Santerre and Stephen Neun. I am told that this textbook is pretty run of the mill as far as health economics goes. Here is what it does: It tries to force health care into the traditional toolbox of economic analysis. It starts by analyzing demand, then goes to supply…
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