Two cheers for a health-care transparency proposal

Author: Roger Barris - May 15, 2018 - Updated: May 15, 2018

Roger Barris

Recently, the Colorado House of Representatives considered draft legislation entitled “The Comprehensive Health Care Billing Transparency Act” (HB18-1358). This Act would have, among other things, required health care providers to publish prices so that patients would know in advance the cost of medical treatment.

The Act was killed in committee at the end of April. Advocates for the bill, notably BrokenHealthcare.org, are therefore taking the fight directly to Colorado voters. The organization is petitioning to put the issue on the November ballot. You might have seen them gathering signatures at a Cinco de Mayo celebration.

As the Libertarian Party candidate for the U.S. House of Representatives for the 2nd District, I support this ballot initiative. But even better would be if it weren’t necessary.

To understand this lukewarm endorsement, let’s do a little thought experiment.

Imagine that someone else was paying 85-95 percent of the cost of your dinner. What would you expect the market for restaurants to look like?

Well, people probably wouldn’t shop around much for restaurants offering good value. And the menus would have no prices.

Crazy? Of course. But these are exactly the incentives we have created with our health care and health insurance industries, where 85-95% of the costs are paid by a third party. And it is one of the major reasons behind the biggest problem with health care: the cost is just too damn high and unpredictable.

Probably the greatest myth in American politics is that we have a free-market in health care and that the self-evident failures in our system prove that this cannot work. Nothing could be further from the truth.

Economists explain prices by the intersection of demand and supply. If something is expensive, then it must be because the demand is high, or the supply is low, or some combination of these two. In health care, bad government policy has been working overtime on both factors.

But, for today, let’s focus on the demand side — although the supply side restrictions are at least as horrifying

The original sin in American health care is “insurance” that really isn’t “insurance.” My auto insurance doesn’t reimburse me for oil changes and worn tires. It protects me against something really bad happening to my car (or to someone I might hit). True insurance, by definition, is always “catastrophic.” Insurance against routine expenses is a madcap system where I pay an oversized premium in order to be able to claim back my daily expenses, but only after both me and the insurance company have spent a fortune on paperwork and something economists call “moral hazard.”

Why does something this dumb exist? Here’s a rule that almost always works: when something makes no sense, look for the hand of government. In this case, it is a massive tax subsidy – the biggest “loophole” in our tax code by far – that encourages companies to compensate employees through overly extensive health insurance. This corrupted system – which also created the evil of non-portable, company-provided health insurance; did you ever wonder why your auto and home insurance weren’t also linked to your job? – was then carried over into Medicare and Medicaid, which account for almost 40% of total health care expenditures.

Probably the greatest myth in American politics is that we have a free-market in health care and that the self-evident failures in our system prove that this cannot work. Nothing could be further from the truth.

Now, I can hear what you are saying. Does Barris want families, whose finances are already stretched, to take greater responsibility for their health care costs? No way!

But the reality is that families are already bearing this cost. They just don’t realize it. It takes the form of higher insurance premiums. Or more taxes. Or wages that aren’t growing because employers have huge insurance bills. Or through a rising national debt that depresses our economy and will swamp our children

Families are bearing this cost already, but not in a way that encourages them to shop around, compare prices and insist on billing transparency, like they do with every other expense in their lives!

Now, back to the ballot proposal. It isn’t perfect. Some of the requirements, particularly those relating to the agreements negotiated between providers and insurance companies, are burdensome and unnecessary. On balance, though, it still makes sense.

As a Libertarian, I am opposed to more government rules. I also recognize that, if we had a free market in health care, proposals like this wouldn’t be necessary. The free market would have already delivered the transparency it mandates. As proof, we only have to look at laser eye surgery, a relatively unregulated form of health care that has delivered dramatically lower and completely transparent prices, and higher quality, over the last 40 years.

But so long as we have to contend with health care that is massively distorted by bad government policy, The Comprehensive Health Care Billing Transparency Act is a step in the right direction.

Roger Barris

Roger Barris

Roger Barris is the Libertarian Party candidate for U.S. representative in Colorado's 2nd Congressional District. Visit www.barris4congress.com