Trust Me, I'll Keep Score

I'm with Megan McArdle on this one. From a free-market perspective we'd like to be able to rely on reputational concerns as a corrective against exploitation in the private health care insurance market (like we do for other kinds of insurance). But I don't think we can, at least not nearly as much. The insurance companies are the only ones who can accurately monitor the financial impact of a course of treatment, and the tempatation to leverage that is and will remain too great. This is a substantial part of the reason why health care economics will continue to be difficult for a while.

I have a hunch that cost reduction in health care won't happen until patients have lots of nasty conversations about money with doctors. Neither party really wants that, so here we are.