David Cutler asks this excellent question. His answer:
I identify two factors as being particularly important in organizational stagnation: public insurance programs that are oriented to volume of care and not value, and inadequate information about quality of care. Recent reforms have aspects that bear on these problems.
Not once in the 43 pages of the paper does the word “regulation” appear. Not once in the 43 pages of the paper does the word “license” appear. Not once in the 43 pages of the paper does the term “American Medical Association” appear. In regard to the second of his observations – just think of how massive an opportunity “inadequate information about quality” would represent in any other market. Would it not be moderately academic to ask why such an inadequacy exists? It must be because he is smarter than us – being on Team Obama and from Harvard and all that. When I grow up perhaps I too will understand the complexity of the health care system.