The Problem

This post is part of my How to Fix the American Healthcare System series. The index post containing links to all the articles in the series is here.

Image credit: Gary Larson
Image credit: Gary Larson

Before something can be fixed, the problem must be defined and the causes of that problem diagnosed.

The problem with the U.S. healthcare system is that its prices are too high, its quality too low/patchy, and not enough people have insurance coverage.

But I’m going to change that a little bit. Since price and quality are the two variables that determine value, we could say there are only two problems: suboptimal value and not enough insurance coverage.

The insurance coverage piece is kind of separate from the value piece because solving it primarily relies on government policies that subsidize the purchase of health insurance for those who wouldn’t be able to afford it otherwise. Those government policies are a (purposeful) distortion to the healthcare market. Distorting a market for a good reason is fine, but before you do it, you need to understand how the market should be structured to optimize value so you don’t accidentally ruin its value in the process.

So, in short, this series is going to explain how the U.S. healthcare market should be structured to optimize value.

And the nice thing is that value improvements will primarily come in the form of lower prices —> insurance coverage will become cheaper —> fewer people will be priced out of the market. Therefore, fixing value partially fixes the insurance coverage problem too!


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