Uwe Reinhardt Is Unhappy with the Idea That What Health-Care Financing Needs Is More Cost Sharing

Austin Frakt sends us to Uwe Reinhardt on health-insurance cost-sharing:

[T]he often advanced idea that American patients should have “more skin in the game” through higher cost sharing, inducing them to shop around for cost-effective health care, so far has been about as sensible as blindfolding shoppers entering a department store in the hope that inside they can and will then shop smartly for the merchandise they seek. So far the application of this idea in practice has been as silly as it has been cruel.

[…]

In their almost united opposition to government, US physicians and health care organizations have always paid lip service to the virtues of markets, possibly without fully understanding what “market” actually means outside a safe fortress that keeps prices and quality of services opaque from potential buyers. Reference pricing for health care coupled with full transparency of those prices is one manifestation of raw market forces at work…

More and more, I am driven to the belief that the majority of error in the analysis of health care markets comes from paying [insufficient attention to Kenneth Arrow](http://www.who.int/bulletin/volumes/82/2/PHCBP.pdf). So if you have not read Arrow’s 1963 “Uncertainty and the Welfare Economics of Health Care”, you should do so. And if you have read it, talk it up to others.