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December 30, 2005


Trapier K. Michael

Re: "[This] lays open quite clearly that things like high deductible health plans (HDHPs) and other plans to shift cost to consumers won't make a huge difference."

Wrong. HDHPs/HSAs/CDHPs swing the power pendulum back to the demand side by empowering millions of consumers to become informed, active consumers each seeking lower prices and better quality. This is how demand is supposed to work, and does over and over in other industries. If your theory is correct, we need one strong centralized soda purchaser, one strong centralized car purchaser, one strong centralized clothes purchaser, etc., etc. But that is obviously silly. Millions and millions of decentralized buyers and fierce competition from pepsi make it impossible for Coke to leverage "supply side market power" in the way Reinhardt suggests healthcaer providers do.

I agree that healthcare providers are monopolistic. But the answer is to get consumers in the game to induce competition and to reverse policies that legalize medical monopoly, such as Certificate of Need (CON) laws for hospitals.

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