March 9, 2010
Ten years ago, MRIs and Lasik eye surgery each cost approximately $3,000. Today, an MRI costs $3,500, but the price of Lasik surgery has dropped to about $500.
The difference? MRIs are covered by insurance, but Lasik is not. As a result, Lasik customers shop carefully, and competitive forces operating in a free market have driven down costs without diminishing the quality of services.
In order to reduce health care costs, consumers must be empowered to shop for and select health care services in a competitive environment, according to Jack Ablin.
Ablin is an executive vice president and the chief investment officer of Harris Private Bank. He was the keynote speaker at the Boston Security Analysts Society’s annual market forecast dinner last week.
Reduced health care costs are a critical need of new and small businesses that can spark renewed economic growth and higher employment, Ablin told his audience.
His talk focused on the tradeoff individuals make between short-term gains and long-term benefits, as in the decision to diet for the sake of better overall health. While individuals are often able to choose the more appropriate path for the longer term, groups of people and society as a whole tend to cater to short-term needs when making decisions. The failure of health care reform to date, Ablin said, can be explained by a lack of broad-based support.
Anti-smoking legislation is one area where society has succeeded in making prudent long-term policy, Ablin said, as the smoking rate has shrunk from approximately 55% to 24% over the last several decades, a decline catalyzed initially by Surgeon General C. Everett Koop’s war on smoking. Legislation to establish clean air and water standards are other examples of long-term policy successes.
Those successes came when the policy had broad public buy-in. For example, at the time of Koop’s reforms, 96% of Americans perceived smoking was hazardous to one’s health.
Broad buy-in for fiscal policies is less likely, Ablin said – 46% of Americans do not pay income tax – and this underlies the difficulty of enacting health care reform.Display article as PDF for printing.
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