Politicians never tire of telling us of how this or that plan will save us money, when, invariably, they always cost more than predicted and never save anybody anything.
Left to their own devices, consumers of health care, like consumers of any other good, will figure out how to save money just fine on their own. Here's an example:
One day a few weeks ago I realized that what I thought was an insect bite on my chest was probably some kind of infection. On a Sunday afternoon I went to a local clinic and within 15 minutes was seeing a doctor. Sure enough, the doc diagnosed it as a staph infection, drained it, and put me on a prescription of antibiotics. For the office visit I was charged $175.00, not bad considering it was Sunday, and I received excellent care with almost no waiting. I paid another $15 to fulfill the prescription (generic, of course).
During the examination the doc took a sample of the discharge and said something about sending it to the lab. A short time after I returned home a nurse from the clinic called me. Did I want to send this on to the lab? There would be an extra cost. How much, I asked? She wasn't sure, but she would call the lab on Monday and find out. And then she added something:
"To be honest, it's not really going to make a difference what it is. If you don't respond to the antibiotics, the doctor will just have to put you on something stronger."
The next day she called me back with the cost: $210. Despite some urging from family members (all of whom, unlike myself, have health insurance), I told the nurse not to send it to the lab.
What do you think just about any other person covered by health insurance would have done? But I pay for my own medical care, and I did a cost benefit analysis, and decided that money would be better off staying with me.
Savings: $210.
Several days later I decided to follow up with the family doctor, as the spot, while it had stopped getting bigger, was not getting appreciably smaller. The doctor said everything looked good, it just takes a while to heal. He drained it a bit more, and then he told me to wash twice a day for a week with Hibiclens (that pink soap you always see surgeons scrubbing with prior to an operation), plus put some antibiotic ointment up my nose.
On the way out I paid my bill. The normal fee would be $130. But since I pay in cash, I received a 30% discount, making the final bill only $91. You see, like most doctors' offices, my family doctor is forced to have people on staff who do nothing put process insurance forms all day. And after he sees a patient, he typically waits 60–90 days (or longer, even) to get paid. I'm doing him a favor by paying him today, and he's doing me a favor by charging me closer to what a doctor's visit should actually cost.
Savings: $39.
At the pharmacy I found that the surgical soap was pretty cheap (about $12), but that the antibiotic ointment was $40. At that point I remembered that my previous family doctor had prescribed some antibiotic ointment for me a couple of years ago, for an inflamed hair follicle right just inside one of my nostrils. (Excuse all the gory medical details here in this essay). I knew I still had almost an entire tube of that stuff at home, so I held off on buying it. When I got home, I saw that the name of the one I had was not what the doctor had prescribed. But I called his office and told him what I had, and he said it works just as well, so I could use it.
Savings: $40.
Let's add it all up:
Item
Cost
First doctor's visit
175
Antibiotics (generic)
15
Second doctor's visit
91
Hibiclens soap
12
Total cost for treating my staph infection: $293.
Here's what I didn't spend, but would have been part of the cost if I was on health insurance.
Item
Cost
Lab analysis
210
Doctor's visit (reverse cash discount)
39
Antibiotic ointment
40
$289, or just $4 short of what I actually spent. A savings of 49.5%! No bureaucrat can match that. No central planner can produce that by waving his wand and making his sweeping pronouncement, "I decree this is how much will be saved!" Savings happen when people spend their own money, and so they care how much of it they spend. When spending other peoples' money, it is human nature to spend more.
