In this series, MedPage Today is asking healthcare economists and policy experts the same questions about the high costs of U.S. healthcare. They'll discuss what they believe is working, what's not working, and what else can be done to bring costs down.
In this interview, Brian Blase, PhD, founder and president of Paragon Health Institute in Arlington, Virginia, argues that the path to lowering healthcare costs is less government intervention, fewer middlemen, more free-market forces, and more direct interaction between patients and physicians. "What we need is providers to be competing for patient dollars, not providers and plans to be competing for political influence," he said.
What has been the greatest contributor to high healthcare costs in the U.S.?
Brian Blase: That's easy. It is the rising prices of hospital services. We just did a paper a few weeks ago on the hospital cost crisis. The first figure in that paper shows price increases for major sectors of the economy since 2000. And the sector of the economy with the largest price increase by far is hospital services.
Hospital costs have risen three times faster than inflation and twice as fast as worker wages over the last 25 years. Really, when you look at that figure, any area where government has been heavily involved with regulations and subsidies -- primarily healthcare services and education -- you've seen escalating price increases faster than inflation. Where the government role is less significant and free-market forces function, you've actually seen much smaller price increases, and in some sectors of the economy you've had real price declines.
