One way to reduce costs is to let people make choices up front. For example, an insurance company could offer a 20 percent discount on the understanding that a medical treatment or test has to be proven to lengthen life by an average of, say, three months before it’s covered.
it would mean the patient wouldn’t be eligible for a lot of things, such as PSA exams, annual physicals, and stents if they haven’t yet had a heart attack. But you know what? Albanians, with almost no health care infrastructure, only have an average lifespan of 16 months less than ours. If one exercises and eats right, odds are they will live a long time. And if your genes are going to give you an illness that will make you die young, odds are medical intervention would just give you a nasty extra few months anyway. The data strongly suggest people use a lot more health care than they really need.
In general, your observations and suggestions all make sense, and the more “rational” the consumers of healthcare, the more since they make.
The problem of course is that consumers of healthcare are often irrational (for example in their perception of relative risks and benefits) and are also in a situation where it’s difficult to accurately assess the outcomes of various choices.
PSA testing is an excellent example of the latter problem: at the moment a man attempting to make a decision about whether to have a yearly PSA test is confronted with dueling experts: “There is little if any evidence that PSA testing reduces average life expectancy “ vs. The studies which show no increase in expectancy are ignoring the efficacy of the newest treatments”.
In this situation it’s pretty much impossible to make a “rational” decision to test or not, and this means it’s going to be highly controversial politically to make a decision about whether to pay for testing.