What Health Reformers Could Learn from the Market for Cosmetic Surgery

On January 20, New York Times quoted President Obama, trying to rescue his health bill, stressing the need for “some kind of cost containment because if we don’t, then our budgets are going to blow up…”  Ironically, if the President had read an adjoining article in the same newspaper he would have found the answer to his quest under the heading: “Should surgeons meet patients Online?”

The article describes Board-certified surgeons populating a website, onto which prospective patients upload photos of body parts which they believe would benefit from surgery. Surgeons nationwide reply with explanations of procedures and price estimates. If patients then decide to proceed, they travel to the surgeon’s office for a consultation and, in many cases, undergo the procedure.

These surgeons, of course, are cosmetic surgeons, who work directly for their cash-paying patients — not insurance companies or the government. The result of direct payment is that, even though the variety of cosmetic procedures has exploded over the years, prices for cosmetic surgery rose at about half the rate of consumer prices, from 1992 through 2005. Prices for medical services — most of which are paid for by insurers or government — rose almost twice as fast as consumer prices.

The New York Times equivocates about the benefits of this innovation, because the price might go up a little after the surgeon sees a patient in person, and because providing an internet consultation across state borders often violates state licensing laws. But these state licensing laws are also an unnecessary interference in the freedom of patients and physicians to have consultations via “telemedicine.” Seeing a doctor in person is becoming increasingly difficult, and face-to-face consultations are often curtailed.

I recently attended a presentation by David Goldhill, a businessman who wrote a compelling indictment of the U.S. health care system. Mr. Goldhill described U.S. health care as on an island, separated from the mainland by a body of water which nobody can cross. “In what other sector of American life,” he asked rhetorically, “do we fear technological innovation, accusing it of driving up costs, reducing quality, and limiting access?”

Only on the health care “island” do policy-makers hold such an absurd belief, passing laws and regulations preventing people from using devices like telephones and high-speed Internet in the pursuit of medical services. Cosmetic surgery is a narrow bridge from the health care island to the real-world mainland. If President Obama really wants to contain costs and increase access, he should take a walk across that bridge.

Comments (11)

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  1. Ken says:

    Fascinating. So this is what a real health market looks like.

  2. Tom H. says:

    Imagine what the entire health care system would look like without the third party payer bureaucracies. We would have transparency. Price competition. Quality competition. And the patient would be treated like the real consumer, instead of insurance companies, employers and government.

  3. Larry C. says:

    This is really quite remarkable. Complete transparency without any threats from government or any federal pilot program or any jawboning. Just people pursuing their own self interest.

  4. Bart says:

    Obama: “I would advise that we try to move quickly to coalesce around those elements of the package that people agree on…”

    I think this was the most encouraging remark of the entire debacle. I only wish it were directed at the entire collection of Demo and GOP health proposals, and not just to “the package.”

  5. Dean Clancy says:

    Great post. I could stand a nose job. :)

    PS – I think you meant “adjoining,” not “adjourning.”

  6. Stephen C. says:

    I think Obama should spend more time reading this blog.

  7. artk says:

    The only connection that cosmetic surgery has to health care is that an MD provides the service. It has as much connection to health care as a clothing store that has a doctor as an investor. It’s almost completely optional; it never saves or extends your life. Almost none of it is reconstructive; it tends to be completely cosmetic.

  8. ralph says:

    This does exist for other medical procedures at http://www.MediBid.com, and it in operation today

  9. artk says:

    Interesting web site, but still not consumer focused. They charge $25.00 every time you want to price a service. If you want pricing transparency, this isn’t it. The entire system thrives on secret pricing and price discrimination. If you think that Medicare gets a discount relative to what an insurance company pays, you should see how much more a private payer is charged relative to an insurance company.

    You want a simple reform, require every provider to list what they charge for every procedure to each payer. Make the confidentiality clauses in insurance company’s contracts with providers illegal so you can see what insurance companies actually pay for a given procedure.

  10. Ken says:

    The problem with tradtional (covered by insurance) providers is that they are not competing for patients based on price. Since they are not competing on price, prices have no meaning for patients. In fact in a real sense, the fees they receive are not prices at all.

    What is more directly comparable to primary care delivered by MDs is the walkin clinic. They post their prices (just like cosmetic surgeons) because they are competing on price. And beause they compete on price, they compete on quality (value of the patients time) as well.

  11. [...] No. 1: Whenever patients pay with their own money, prices are always transparent. Cosmetic surgery, LASIK surgery, walk-in clinics in shopping malls — they all post prices. And in the medical [...]