Bending the Health Care Cost Curve - Forbes (blog)

One of the great hopes of the recent health care changes was that they would bring about a "bending of the health care cost curve". That having bureaucrats and government deciding upon prices, negotiating with suppliers, using the sheer weight of money at their disposal to get better prices, would curb the way that health care seems to have its own, higher, inflation rate.

Well, yes, perhaps this might happen:

THE NHS is spending more than £20 for a loaf of gluten-free bread, 10 times more than the £2 charged for a standard small (400g) gluten-free loaf in Sainsbury's.

The blame is to be laid at the door of:

Sarah Sleet, chief executive of the charity Coeliac UK, said the high costs resulted from bureaucratic supply chains in the NHS.

It may well be true that in theory that health care cost curve can be bent by acting aggressively as a buyer. But calling on government to act aggressively as a buyer is easier to call for than it is to ensure actually happens. The reason being of course that those bureaucrats are spending other peoples' money on other people, the least efficient of Milton Friedman's four ways to spend money.

One of the great advantages of competition in the supply of anything is that these sorts of idiocies get punished: those who commit them go bust. That might be a harsh outcome from over-paying for a loaf of bread, but if they're over-paying this massively for the simple stuff, how much are they over-paying for everything else?

Another way of putting this is that those who look to bureaucracies to be efficient are probably being a little optimistic. A little too optimistic perhaps.