Introduction

It almost goes without saying that the US health care system is deeply flawed. It is complex, frighteningly inefficient, and inconsistent in its delivery of products and services. It is equally true that when a patient receives the best of this country's health services, he is, by any standard in the world getting excellent care.

The problem with the US system is not with its capacity for excellence but rather how it is paid for. In truth, there really isn't a single "system" at all, but rather disparate populations of consumers segregated by the manner in which they pay for their care. With the various demands that private insurance companies, government programs and bureaucracies, and individual consumers (especially including the uninsured and underinsured), it is little wonder that the health care market has been profoundly distorted to the detriment of all.

Imagine if other essential products and services were handled in the same way. Food is grown and sold largely by private entities to private entities, who distribute it and retail it to the end user. The variety of competitive actors at each stage of the commercial chain ensures that prices remain relatively stable and relatively cheap. Government does feel the need to play a role, subsidizing providers and consumers that it deems need assistance, but government intervention does not constitute interference. Consider the realworld example of the grocer who accepts food stamps. He is not penalized for so doing by receiving less for his products than he would otherwise charge. He therefore does not have to raise the prices on others to make up the difference. Imagine a grocer pleased with his payer mix because he collects sixty percent of what he bills. As ludicrous as it sounds, this is the daily discussion in the health care market.

Other factors fundamentally disrupt the health care market: the phenomenon of third-party pay which disconnects consumer and provider, the perverse tax incentives that influence where health insurance is purchased, and the arbitrary coupling of health insurance to employment. Each of these virtually guarantee that attempts to repair massive systemic problems without restructuring the "system" itself merely result in stratified layers of complexity being built on top of that which is already not working.

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