In February the Boston Globe (2/22) editorialized that “Fear of intrusion in the doctor-patient relationship so inhibits insurers that they are shunning one of the most obvious ways to cut medical costs: Avoiding costly procedures when they are proven to do no good.” The Globe cited a 2007 study in the New England Journal of Medicine which found that “doctors could save $5 billion a year by treating patients with chest pain with drugs rather than surgically inserted stents” which “has been largely ignored.” The Globe suggested that “the government should give the medical profession the impetus to determine the most effective treatments for a range of ailments by establishing committees to determine the best practices.”

Last month The New York Times reported that Massachusetts insurance regulators rejected nearly 9 out of 10 rate increases requested by the state’s health insurers, something described as an “extraordinary step.” As might be expected, small business welcomed the state’s intervention while the health insurers warned of disruption in the marketplace. The insurance commissioner, according to the AP, said the proposed rate increases were “excessive” and “unreasonable relative to the benefits provided.” The insurers shot back that the caps on charges could only be justified if there are caps on what they are charged by healthcare providers.

The sad truth is that both sides have cogent arguments. Unfortunately, there are excesses in insurance fees, medical spending and government legislation. It’s motivated by greed, fear, ignorance—in other words, all the things that make us human. Neither the regulators nor the insurers are smart enough to regulate the marketplace with more wisdom than the marketplace ultimately regulates itself, but until equipoise is achieved we end up with a lot of bodies, literally and figuratively, in the street. And if the regulation is not spot-on (as it rarely is) or driven by corruption (as it often is), it tends to distort the marketplace and aggravate the problems it purports to solve.

So what’s a patient to do?

We need to preserve the insurance marketplace by increasing competition. Let’s open the state borders. Let’s get the patients more involved in the cost of their own health care and let’s realign physician incentives in an intelligent fashion. I’ve made suggestions in past posts on how to start implementing the latter. And let’s remember—there are no Yodas in government or the insurance industry.


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