Wednesday, October 7, 2009

How to Fix Health Care

Here's an interesting take on the health care debate.  Basically, this guy has figured out what many of us have been saying all along, that we need to restore free market health care!  (As an aside, there’s also a link in the article to the “Checklist” article I’ve mentioned before and continue to highly recommend.)   

About a week after my father’s death, The New Yorker ran an article by Atul Gawande profiling the efforts of Dr. Peter Pronovost to reduce the incidence of fatal hospital-borne infections. Pronovost’s solution? A simple checklist of ICU protocols governing physician hand-washing and other basic sterilization procedures. Hospitals implementing Pronovost’s checklist had enjoyed almost instantaneous success, reducing hospital-infection rates by two-thirds within the first three months of its adoption. But many physicians rejected the checklist as an unnecessary and belittling bureaucratic intrusion, and many hospital executives were reluctant to push it on them. The story chronicled Pronovost’s travels around the country as he struggled to persuade hospitals to embrace his reform.

It was a heroic story, but to me, it was also deeply unsettling. How was it possible that Pronovost needed to beg hospitals to adopt an essentially cost-free idea that saved so many lives? Here’s an industry that loudly protests the high cost of liability insurance and the injustice of our tort system and yet needs extensive lobbying to embrace a simple technique to save up to 100,000 people.


Indeed, I suspect that our collective search for villains—for someone to blame—has distracted us and our political leaders from addressing the fundamental causes of our nation’s health-care crisis. All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer of value.

The problem with our current system is that the government or some heavily regulated insurance company is our health care provider’s client, not us.  Not only can we not pick and choose what health care services to buy, once we are at the provider for service, we are not their customer.  By allowing individual customers back into the equation, now you’ve got a business serving the needs of its customers, not big government.

Now I do disagree with Mr. Goldhill on how to fix the problem.  He wants to mandate HSAs.  I want to get rid of all mandates.  The government should not be involved in health care.  Period.  Here’s a great blog by my friend over at FIRM that talks about just that.

Most of his proposed changes are free market reforms or would be happen naturally in a free market. (I disagree with some of his ideas, such as requiring everyone to own a Health Savings Account. But I agree with repealing legal obstacles to purchasing HSAs and catastrophic-only insurance plans.)

And most importantly, he's willing to challenge the idea that "reform" is synonymous with government-run "universal coverage", especially given that he identifies himself as a Democrat. More politicians need to hear this message.

If someone identifying himself as a Democrat can realize this, perhaps there’s still hope after all.


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