Smart Health Care Industry

http://www.youtube.com/watch?v=nUITFR5gA4I

What is good for the electric utility industry is good for the health care industry. As part of the Energy Independence and Security Act of 2007 and the American Recovery and Reinvestment Act of 2009, the federal government has undertaken to encourage the development of what has been labeled the "Smart Grid." The Smart Grid is a euphemism for technology that will enable a utility to communicate its time of day price for electricity to its customers and thereby introduce price signals into the retail energy market. Presently, in most retail electricity markets, price does not vary depending on the time of use. Therefore, there is no disincentive to use electricity when prices are high. Smart Grid would allow a customer to see a utility's price that varies with the time of day and load demand. The theory is that it would allow a customer to see the price and to shift his use of electricity away from the system peak to a time when prices are cheaper. Price signals are good, to allow a customer to tailor his conduct based on the value of the service provided.

However, in the health care debate, the federal government is doing exactly the opposite. There are very few price signals in the health care industry today because of Federal Income Tax policy. Federal Income Tax policy encourages employers to provide health insurance to their employees. Broad health care policies to large groups of individuals mask price signals, thereby limiting a customer in his ability to make judgements about the value of the service provided. Pricing does not create a disincentive to use service when costs are high rather than when prices are low. The federal health care proposals would further these distortions. With federally subsidized (subsidized through federal taxes) there would be distorted price signals making them artificially low, further reducing the disincentive to use services when prices are high. You think health care costs are expensive now. Wait until health care is free.