Money-Driven Medicine: The Real Reason Health Care Costs So Much

George Bush promised to kill two birds with one stone when he introduced his “consumer driven” healthcare plan. According to Bush, the market based plan would contain spiralling health costs and make insurance more affordable for the 48 million uninsured US citizens.

Maggie Mahar

HarperCollins, $27.95, pp 451 ISBN 0 06 076533 X Also available as an ebook, $19.95 www.harpercollins.com/

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Under the scheme, consumers buy high-deductible plans—insurance plans that cost less each month, but they must pay a higher portion of the bill if they use medical services. The money saved by lower monthly payments is set aside in a tax free “health savings account” held by the consumer, who can use the savings to pay for medical care. Since out-of-pocket payments with high-deductible plans can run up to $5100 (£2696; €3978) for an individual and $10 200 for a family, consumers will have considerable money at stake, or “skin in the game,” as conservatives like to put it. And having skin in the game, according to enthusiasts like Regina E Herzlinger, chair of Harvard Business School, will drive healthcare costs down and quality up, because consumers will comparison shop to get the highest quality care for the best price—much as they do for other consumer goods …