[jyl]

Oh, and I think that currently, the "consumer" aka patient doesn't usually make a "choice" on whether to take an expensive drug. You're sick with cancer or whathaveyou, you go to the doctor, with his decades of training and experience he says you must take XYZ drug if you hope to recover, and under your plan that will cost you $25/month co-pay. What are you supposed to do - say no thanks, doc, I stayed in a Holiday Inn last night so I know that ABC drug is preferable? And why do you have any rational reason to play doctor like that, to save $25/month? The system is not designed to give the consumer a big incentive to hold cost down, and he doesn't have the knowledge required anyway. The system is also not designed to give the doctor, the hospital, the lab, etc a big incentive to hold cost down either. I would argue the system is also not designed to give the insurer a big (enough) incentive to hold cost down, not when they are able to pass on annual healthcare cost inflation of 2-3X GDP and still make 4% net profit. The player who has the most incentive to hold cost down is the ultimate payor - for the most part, employers and Medicare. As you'd expect, their ability to do that is proportional to their size and muscle. Medicare, the biggest payor, does the best job of holding costs down - obviously, since healthcare providers complain about making the least money on Medicare patients. The big employers have some ability to hold costs down - they have some bargaining power with medical insurers. The small employers have little ability to hold costs down - and the facts bear that out, healthcare costs for small employers is rising faster than for large ones. The individual who buys his own medical insurance has the least ability to hold costs down - he either sacrifices in other parts of his budget, or goes without healthcare coverage, or buys less of it (a catastrophic policy rather than a full-coverage one, exclusions for pre-existing conditions), or finds ways to freeload on others (go to the ER, etc).