The fundamental deception underlying the President's health care reform pitch is that health care should be getting cheaper even as it continues to get better.
He never detailed his own plan or named a single victim of America’s broken system, and he spoke largely in the abstractions of blue pills, red pills and legislative processes. It’s not easy to turn delivery system reform into a rallying cry for change, but at times, it was as if Obama wasn’t even trying. ...
He added in a puzzling abstraction about cost containment: “If there’s a blue pill and a red pill, and the blue pill is half the price of the red pill and works just as well, why not pay half price for the thing that’s going to make you well?” he asked.
Americans have grown used to products that get better and cheaper at the same time, largely because of the infusion of electronics and computers into many of the industries that touch our lives. However, labor-intensive products like automobiles and health care have gotten significantly better over the past decades without getting cheaper -- or even increasing in price. These industries have benefited from information technology, but because of their heavy dependency on labor they haven't gotten cheaper as they've gotten better.
If there were many inefficiencies to be wrung from the system, why wouldn't health insurance companies do it? The health insurance industry has a profit margin of around 3% which is about average for other industries as well. They aren't rolling in dough with no need to scrape up more. Profits are modest, and if they could be increased by simple gains of efficiency it would already be happening. There's no reason to think that the government will be able to find these mythical efficiency gains if the industry can't.
The fact is that the only way to reduce health care costs is to reduce health care quality. The idea that you can cover more people at the same level of quality for less money is absurd and betrays an ignorance of basic economics.