In the fury of the healthcare debate most people have come to realize that we spend a lot of money on healthcare in this country, and in many ways, we aren’t getting our money’s worth. “Better health outcomes at lower cost” has become the common theme for efforts to reform the system. The billion-dollar question is, how do we reach that goal? It’s our position that a key element of any effective reform is to restructure incentives so that healthcare buyers and sellers are subject to the same market discipline that shapes most other areas of commerce. Unfortunately, PPACA did not contain any provisions that would meaningfully reshape the system in this direction, so the recent Supreme Court decision upholding the legislation makes little difference.

A market-based model for healthcare would address some of the key dynamics that have created the price inflation and lagging quality that in part characterize what’s currently so broken. These missing dynamics include accountability of sellers for cost efficiency and quality, and accountability for buyers for the cost paid. A corollary is the requisite transparency to enable buyers to evaluate the cost and quality of the services that they are purchasing so that they can begin to make an informed decision.

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