HJNO Mar/Apr 2026

WHAT’S WRONG WITH HEALTHCARE 22 MAR / APR 2026 I  HEALTHCARE JOURNAL OF NEW ORLEANS   For consumer-directed purchasing to dis- cipline costs in a meaningful way, healthcare would need to function like a normal market. Why Healthcare Can’t Currently Behave Like a Normal Market A central reason healthcare fails to function like a normal market is the profound asymmetry of information between those who deliver services and thosewho consume them. Patients, by definition, lack the technical expertise to independently assess what care they need, whether a recommendation is appropriate, or whether a proposed intervention is truly necessary. This is not unique to healthcare — it emerges in any industry where complex technical decisions are coupled with third- party payment. Consider a hypothetical but entirely plausible parallel: a world in which most people carry comprehensive insurance for automobile repairs. In such a system, repair shops would quickly learn that the person authorizing the work is not the person paying the bill. Free “inspection days” would appear as loss leaders. Minor abnormalities would be labeled as urgent problems. Preventive replacements would be justified “just to be safe.” And because the average driver lacks the expertise to challenge a mechanic’s diagnosis — and because someone else is covering the cost — overdiagnosis and overtreatment would predictably follow. Over time, third-party auto repair insurers would respond exactly as health insurers have: by introducing prior authorizations, utilization management, approved parts lists, and pre- ferred repair networks to protect themselves from fraud, waste, and abuse. None of this would be because mechanics or drivers are in- herently unethical; it would be because rational actors respond to incentives. When information is asymmetric and costs are externalized, utili- zation rises. The resulting administrative fric- tion would not be a design flaw — it would be the system working exactly as designed under those economic conditions. Healthcare’s strug- gles with overutilization, overdiagnosis, and administrative burden are not moral failures or policy accidents. They are the predictable con- sequence of third-party payment layered onto a complex service delivered under conditions of deep informational imbalance. Markets Don’t WorkWithout the Right Product The deeper problem is that healthcare can- not behave like a free market until it is de- signed to produce the thing we actually want: better health and better health outcomes. Today, the system is architected to deliver ser- vices, procedures, tests, and encounters — not health. In that environment, asking consumers to shop their way to lower costs is like asking drivers to engineer fuel efficiency one fill-up at a time or to navigate a diverse network of au- tomobile repair shops to diagnose what might be ailing their automobile. Diverting subsidies from insurers to consumers may be a small step in the right direction, but it is not remotely sufficient to realign an industry this large and complex. Free markets discipline costs when competitors win by delivering better outcomes per dollar; healthcare still rewards those who deliver more units of care. Until we rebuild the delivery system and payment structures around improving health itself, consumerism alone will remain a blunt instrument — well-intentioned, ideologically appealing, and ultimately incapa- ble of bending the cost curve in a meaningful or lasting way. A Call to Action: Build the Market, Don’t Pick theWinners If meaningful change is ever going to hap- pen, it will not start with individual consumers acting alone; it will start with the entities that already shape the rules of the game. Large pur- chasers — especially the Centers for Medicare & Medicaid Services, but also state Medicaid programs, commercial payers, and self-insured employers — are the only actors with enough scale to redesign incentives across the delivery system. They already determine how hundreds of billions of dollars flow through healthcare, what gets paid for, what gets measured, and what gets ignored. When those payers choose to reward volume, the system organizes itself around volume. When they reward coding in- tensity, the system gets very good at coding intensity. And when they reward health — ac- tual, measurable improvements in outcomes — the system will reorganize around that just as quickly. History shows that providers and health systems adapt rapidly when the economics change; the problem has never been a lack of innovation or effort, but a lack of alignment. This is why improving population health and individual health outcomes is not a moral aspiration layered on top of cost containment — it is the only durable cost-control strategy we have. Healthier people simply consume less care over time: fewer emergency visits, fewer hospitalizations, fewer procedures, fewer complications. No amount of subsidy redesign can compete with that math. As long as our system is built to respond to illness rather than prevent it, to intervene late rather than early, and to monetize complexity rather than reduce it, spending will continue to rise regardless of how cleverly we route the dollars. If we want healthcare costs to stabilize — or even decline — we must build a delivery system whose primary job is to keep people healthy in the first place. Everything else is downstream. Everything else is noise. The question, then, is not whether we should trust markets or government, Republicans or Democrats, but whether we are willing to redesign the market so that it actually produces health. A health-producing system would look fundamentally different from the one we have today. Its center of gravity would shift away from episodic, reactive care and toward longitudinal relationships, early intervention, and risk reduction. Primary care would no longer function as a referral hub for the true revenue generating service lines, but as the organizing engine of the delivery system— responsible for coordinating care, managing chronic disease, addressing behavioral and social drivers of “Healthcare is not a truly competitive market — and pretending otherwise does not make it so.”