Yglesias compares health care innovation to cars and HDTV. He concludes:

The current market creates strong incentives for people to develop “better and more expensive” methods of treatment, but almost no incentive to develop “as good but cheaper” methods of treatment. 

I still fail to see why a simple reform - requiring patient co-pays to be a percentage of the actual cost of the drug - cannot be deployed.

It would unleash the market power of consumers to keep healthcare costs down in the pharmaceutical area, which is one of the most expensive. I just switched HIV meds because one of my previous ones had been shown to dramatically increase the rate of heart attacks. But the new ones are almost certainly more expensive - they're newer, a new type of drug, etc. But I had no incentive to weigh the risks of a heart attack against the costs of the new meds, which might, after a few years in use, show similar side-effect problems.

One key issue is taking power away from doctors and giving more to patients. As an aggressive HIV survivor, I long ago learned to treat doctors with respect but not deference. But the system prevents me from managing the costs of my own care in even the slightest way. I pay $20 co-pay each time. It's madness.

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