The Consumer Comes First
King Henderson
Dr. Jenkins
PS 101
April 19, 2022
The Consumer Comes First
When going to a grocery store, you have an idea of what it is that you're: going to get, the quality of the goods that you're going to buy, and you may even have an idea of how much you're going to spend, as you make your way through the aisles. You start taking products off the shelf and you start placing them in your basket. Once you do that you make your way to the checkout counter, scan your goods, and start to watch as the price continues to increase. Slide in your debit or credit card to buy your groceries and walk out the door. I want you to imagine that same scenario, except this time, as you walk through the aisles of the store, you start to notice that there are no labels on any of the goods. At the same time, you begin to realize neither are there any price tags. But needing groceries anyway you begin to fill your basket you make your way to the counter. You begin to scan but again this time you realize that no price is showing up on the register. Perplexed, you ask somebody that works there, “what is this going to cost me” and even more perplexed when you hear their answer, which is a question, “what credit card do you plan to use?”. After you tell them, they say “well we're going to send the list of goods that you were buying to that credit card company, in one to three months you'll get a bill “. You bag your groceries scratching your head, you walk out the door. Now replace grocery store with electronic store or retail clothing store, it doesn't matter. We wouldn't imagine a scenario where we would actually run our credit card and have no idea what we are going to get billed for, one to three months later. But, if the words grocery store were replaced with the words healthcare system, now all of the sudden, the scenario doesn't seem all that uncommon.
Healthcare has long been the subject of debate here in the United States. The United States is responsible for the vast majority of innovation when it comes to the advancement of healthcare throughout the world. But our problem is not innovation, we have a great healthcare system that is developing new products every day. Our problem plaguing the industry is likely the cost for most. In the 10 years leading up to the passage of the affordable care act, the cost of healthcare rose 130%; while inflation during that same time didn't even grow 30%.
The cost has long been our problem when it comes to healthcare. But what can we do about that when we have differing opinions based on our political affiliation, where we live, our socioeconomic status, and even our gender? There's the problem, and so what are we going to do? We can unpackage that and realize that there are things that we can control and there are things that we cannot? If we want to do something about the cost of healthcare, we must first understand who the influencers of healthcare are. First, we have doctors, hospitals, pharmaceutical companies, and medical manufacturing companies. This is the delivery system that satisfies the needs of the people.
A deeper-rooted healthcare industry challenge that we have, is that healthcare here in the United States it's not run by medical professionals anymore. Since we start to think about the solution to healthcare being found in the delivery system itself, it's not likely that they're going to turn away from the massive profits. Now before we get all self-righteous let's recognize the power in that thought again. It is business that propels the healthcare system to innovate, to create, but nonetheless, it's a business.
The second influencer is the insurance system, and this is the way that most Americans access the healthcare system. Companies in the US today, most of which are publicly traded. Their average stock price over the last decade has risen over 200%. By the way, their fiduciary responsibility includes people buying their policies but answering to their shareholders. So, it's not likely that they're going to wake up tomorrow and say, “you know what, let's go ahead and reduce our profit margins”.
Then the third influencer, which we hear a lot of talk about these days, is the US government. Some arguments have been made about things like Medicare for all or advanced socialized medicine. Those arguments have merit because we can look at the rest of the world and see how healthcare is run in other countries; and say,” maybe there's something we can learn here”. What most politicians either know or come to know, is that while the government-run and controlled healthcare make for good politics: in the US free-market system, it doesn't always make for a good policy. The reason is that healthcare is sixth in the US economy and if we fundamentally ship that into a government-run system, we risk the possibility of economic collapse. What most people that dive into the information recognize is, that while socialized medicine works in many parts of the world, it does so because we don't have socialized medicine in the United States. Our system is the one that innovates in advance. Healthcare in the US is an entrepreneurial free-market system that promotes the three influencers mentioned.
The fourth influencer is the one we can't control, you. In a free market system, you have the power to change it. Consumers in a free-market system control things like which TV shows get renewed, in which town sports teams reside, and which new flavors of Ben & Jerry's ice cream come out. We have the power, but all too often when it comes to healthcare, we are quick to yield that power.
Economic principle is the cost of what we spend is equal to the number of units we consume, multiplied by the price. Go back to the grocery store, the number of items we put in our cart multiplied by the price and what those goods cost, was what our total bill was. At the end of the day, Americans know the electric bill is too high, maybe we turn down the thermostat. The cable bill is too much, we turn off the sports package off. In times of increased fuel prices, the US consumer will do amazing things. we'll carpool, take public transportation, ride a bike, or take a walk. we don't have to do that.
We must apply the economic principle in our approach to the healthcare system if we want to do anything to begin to curb the cost. Be proactive, don't wait until the heat of the moment to start to research healthcare, it’s too late. In the United States, an MRI cost as little as $500 whereas 30 feet away it could be as much as $3000 for the same MRI in the same hospital. We need to know which hospital should be our hospital, which doctor should be our doctor, and which drug is biosimilar or a generic alternative when we're being told that we need to take it. The information is out there, researching how we can change the way that we approach it; you can change the way that you approach it.