What If Grocery Stores Were Run Like Healthcare?

November 26, 2013
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healthcare groceryThis is a rather disturbing question.

John Goodman of Southern Methodist University is a leading US analyst of what is commonly called healthcare, which employs one in ten American workers. He asks us to imagine for a moment a grocery store run along healthcare industry lines. In this case, he notes:

  • Product prices will not be posted.
  • The price will vary even within the same store, depending on who is buying and paying.
  • You won’t be able to shop during evenings or weekends.
  • If you need something, it probably won’t be there in the store. You may be told to come back days or weeks later.
  • Even if you find the item, you may have a long wait to be able to buy it.
  • If you want to charge your purchase, it won’t be at an automated machine; the transaction may be rejected; the necessary records may be missing; and someone from outside the store will have to approve the amount of the purchase. Since this all takes time, you may not be able to charge at all.
  • You won’t have the right to return anything. Even defective merchandise will not be reimbursed. As a result there will be no incentive to maintain product quality.
  • Your degree of satisfaction will not matter much to the store. What will count is the satisfaction of third-party payers, and the store will focus on how to get the most from their formula. If the third-party payer formula says you may not buy cherry pie and ice cream on the same day, you may grumble, but most likely you will have to return to get what you want.
  • There will be very few brands to guide you in your selection. Labels and quantities will be all over the map, so direct comparison shopping will be impossible.
  • Your chief protection against injury or death from what you buy will be hiring a lawyer to sue. These suits will in turn greatly increase the cost of the food you buy.
  • The purchase of many food items will require permission from a licensed professional. The professional, fearing a lawsuit, will require you to buy items you do not need or want.

We could go on and on in this vein, but the point is clear. The grocery industry somehow manages to organize thousands of products, many coming from thousands of miles away, and have them on the shelves whenever you want them, at prices that in total represent a small proportion of national income. There is also tremendous consumer choice. Yes, many grocery and drug stores seem to be primarily junk food stores, but this is the consumer’s choice, and there are health food stores as well.

The healthcare industry is in complete contrast to this. Costs keep rising, consuming more and more of national income; quality of service keeps declining; and outcomes are surprisingly poor. It is not widely known, but research in respected medical journals suggests that healthcare mistakes are the leading cause of death in the US, ahead even of cancer and heart disease.

John Goodman argues that one of the main reasons for systemic failure is the lack of transparent pricing. He asks: Why is it that prices are so difficult to discover in healthcare?

Goodman continues:

The problem of the Soviet economy writ large is exactly the same problem we have in our healthcare system. Should we train one more doctor? Or would our money be better spent training a nurse or two? If we choose the doctor, should she be a primary care physician? Or an internist? Or some other specialist? How on earth would anybody ever know? No one in healthcare ever sees a real price. No patient. No doctor. No employee. No employer. In the absence of real prices, we have no way of knowing the marginal value of one more doctor, one more nurse, one more technician, or one more anything.


This article was adapted from chapter 13 of ANH-USA Board President Hunter Lewis’s new book Crony Capitalism in America 2008–12.

13 Responses to “What If Grocery Stores Were Run Like Healthcare?”

  1. Ethan says:

    The issue of economic calculation is one that communists failr to account for time and time again.

       2 likes

  2. jose davila says:

    First you need the food there… how??
    Who will grow and make the food??
    Who will transport the food there??
    Communist people in the govt??
    You betcha. .

       0 likes

  3. Fred Deakins says:

    The grocery store will tell you what you have to buy whether you can afford it or not. If it costs your house, your bank account or your job you still have to take it. Or you can die. If you still don’t pay for it, they will just bill the next customer for what you got. And part of the cost you are charged is for the last person that didn’t pay.

       1 likes

  4. Disappointingly predictable and political assessment of a complex situation.

       0 likes

  5. most of the observed problems are what motivated the details of ACA.

       0 likes

  6. PlasticMoney888 says:

    When prices are transparent prices come down 70% .

    https://www.youtube.com/watch?feature=player_embedded&v=0uPdkhMVdMQ

       0 likes

  7. Artie says:

    When you arrive at the store, you are given a cart pre-filled of one of every product in the store. Even though I’m allergic to milk, I still can’t select a cart without a gallon.

       1 likes

  8. Alex Z says:

    Want better and cheaper health care? Avoid Health Insurance and negotiate it away in exchange for more cash from your employer. By paying for medical services in cash, you can expect a 30% – 40% discount from physicians and hospitals. If you live near the US – Mexican border you can meet all of your medical and dental needs for a fraction of what it would cost you in the US, even with a 40% discount, and the quality of care is just as good if not better.

    Keep in mind that “Medical Mistakes,” including deadly reactions to prescription drugs are the number two, three or four leading cause of death in the US, depending on which statistics you use. So how will mandating third party payment improve your outcomes?

    You’re generally better off without Health Insurance. If this was not the case, it would not be such a profitable business model. Do the Math:

    $1200/month – typical cost of Health insurance for a “family” that includes both employer and employee contributions (as of ten years ago, the last time I had third party health care). $259,000.00 is what you will spend for this insurance over 18 years. If your family consumes 90% of that amount for health care over the course of 18 years, you’re buying insurance you don’t even need.

    But wait! We aren’t done with your costs – Deductibles and co-pays! You’re paying $14,400 a year for the privilege of paying most of your medical costs anyway, and at the highest price! Care providers charge more for insurance covered services because of all the administration involved in submitting claims and getting paid. And they may have to wait six months to get paid by Health Insurers.

    “But what about catastrophic situations?” The fact is that even with the best health care insurance available, a catastrophic illness or accident will bankrupt you, they simply do not cover all the costs. 60% of all bankruptcies in the US are caused by medical expenses.

    So why are so many people clamoring for health care? Because they’ve been trained to believe that they need it, even though in most cases they don’t. And let’s not forget the Insurance Lobby that never misses an opportunity to make their product mandatory by law. Guess who actually wrote the Obamacare legislation…

       2 likes

  9. Frances says:

    I have been self pay for many years and trying to get the price of any test, treatment or anything else a doctor wants done is like pulling teeth on a wild animal while it is wide wake. No one has any idea. No price what ever they want does not happen. It is my money and I need to make sure it is spent in a responsible manner.

       0 likes

  10. So true!

       0 likes

  11. Patrick Carraher says:

    Please read, understand and act upom the problems and challenges outlined in this essay in a positive manner:
    http://d21uq3hx4esec9.cloudfront.net/uploads/pdf/2013_11_5_OTB.pdf

       2 likes

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