Thursday, June 27, 2013

(Related update): Cosmetic surgery: The power of competition

Related Update:  Mark Perry at Carpe Diem occasionally posts on the power of competition to produce both higher quality and lower prices (the opposite is, alas, true also: less competition = lower quality + higher prices.  Think cable TV or utilities).  Here's an update to one of the very first OLS posts back in January of this year.  In it, I highlighted a CD post involving competition in the cosmetic surgery field.  Today, CD has a related article that contains this interesting piece from a recent report comparing cosmetic surgery to medical services in general:
Thus, the real (inflation-adjusted) price of cosmetic surgery fell over the past two decades — despite a huge increase in demand and considerable innovation. Since 1992:
  • The price of medical care has increased an average of 118%.
  • The price of physician services rose by 92%.
  • All goods, as measured by the inflation rate, increased by 64%.
  • Cosmetic surgery prices only rose only about 30%, meaning that the real price of cosmetic surgery has fallen by 21% since 1992.
Original Post: Carpe Diem has an interesting post today on the topic of cosmetic surgery and how it's one of the few areas of medical treatment that has seen a decline in cost over time.  Why? In a word, competition.  Since most instances are elective, insurers will frequently not cover cosmetic surgery.  Consequently, consumers typically pay for it out of pocket, forcing providers to compete for clients.  And where there's competition, there's better quality and cheaper prices. Oh, that the entire medical industry was subject to free-market competitive pressures!