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November 26, 2004
Fall in Health Costs: Eye Laser Surgery, an Uninsured Item
Alex Tabarrok has a good post at Marginal Revolution on how one kind of health care cost has actually fallen:Laser eye surgery has the highest patient satisfaction ratings of any surgery, it has been performed more than 3 million times in the past decade, it is new, it is high-tech, it has gotten better over time and... laser eye surgery has fallen in price. In 1998 the average price of laser eye surgery was about $2200 per eye. Today the average price is $1350, that's a decline of 38 percent in nominal terms and slightly more than that after taking into account inflation.I don't know that there hasn't been decline in the price of other procedures-- or every procedure-- as they become better known, but this is still a striking example of how competition drives down price.Why the price decline in this market and not others? Could it have something to do with the fact that laser eye surgery is not covered by insurance, not covered by Medicaid or Medicare, and not heavily regulated? Laser eye surgery is one of the few health procedures sold in a free market with price advertising, competition and consumer driven purchases.
There is another example of falling health costs which is so obvious one might miss it: the fall in the price of drugs when their patents expire. One reason to be nervous about the Bush Medicare drugs bill is that pharmaceuticals have been such a successful part of health care.
Posted by erasmuse at November 26, 2004 10:27 AM
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