For the health care policy wonk on your Christmas list, David
Gratzer’s
The Cure: How Capitalism Can Save American Health
Care, and Arnold Kling’s
Crisis of Abundance: Rethinking How We Pay For Health
Care are must-haves. However, most health care policy
wonks probably already have them, so that leaves the people on your
list who have an interest in, but are not obsessed with, health
care. Fortunately, these books are not as wonkish as you might
think and so will be popular with them too.
Gratzer is a psychiatrist who grew up in Canada. Having seen
Canada’s dysfunctional single-payer system first hand, he notes
that Canada is now moving toward more privatization. He points out
the shock that, at the same time this is happening, “in the United
States they have been moving in exactly the opposite direction.” He
warns that moving toward more government intervention in health
care is like watching a car accident unfold, “a series of small
events, leading to a spectacularly disastrous end.”
From there, he turns his critical eye on insurance in America,
Medicare and Medicaid, with each chapter showing how government
intervention makes the health care costs more expensive. In his
chapter on prescription drugs, Gratzer notes that the number of new
drug approvals by the Food and Drug Administration has barely
increased since the 1970s despite billions more spent on research.
While critics blame this on the pharmaceutical industry supposedly
pursuing easy, profitable drugs at the expense of more innovative
ones, Gratzer lays the blame squarely where it belongs — the
FDA.
Since 1964, the approval process for a new drug has more than
doubled. While the FDA slows down the process in the name of
safety, Gratzer notes that the delays result in needless death, as
thousands are annually deprived of life-saving medications. He
offers common sense solutions such as bypassing the FDA process for
drugs that have already gone through the approval process in Europe
and farming out some of the FDA’s statistical work to private
nonprofit institutions. He also calls for congressional hearings
looking into the why the FDA is so cumbersome. Unfortunately, we
seem headed in the wrong direction. Next year, Congress will hold
hearings on the FDA that focus on safety. Expect ever more
burdensome regulations as a result.
In his second-to-last chapter, Gratzer offers a glimpse of what
will happen should we in the U.S. decide to go down the road of
Canadian health-care. We will end up with a system where medical
care is “free” but not readily accessible. Canada is plagued with
long wait times for surgeries, medical tests and appointments to
see specialists, often with deadly consequences for the patient.
While Gratzer provides a doctor’s eye view of health care,
Kling’s approach is that of an economist. While that makes Kling’s
book the more technical of the two, Kling has the wonderful talent
of making economic concepts readily understandable to the layman.
Like any good economist, Kling presents trade-offs. If we want a
health care system with unfettered access and affordability, then
we cannot continue to let insurance companies and government
insulate us from the cost. If we want a system that insulates us
from cost, however, then we will eventually face rationing.
Crisis of Abundance is full of useful insights, the
best being Kling’s schema for understanding the value of medical
care. His schema has three categories: black, white and gray. Black
is the area where medical care provides no benefit. White is the
area where the care is essential. Gray is the area where it is
uncertain if the care will provide any benefit. Kling states that
there “is a large gray area in health care” and provides the
example of how often a person with a heart condition should visit a
cardiologist at a cost of $200 per visit. Seeing the cardiologist
once a year surely provides benefit (white area), while seeing him
once a day at a cost of $75,000 per year would not likely provide a
benefit worth the cost (black area). But what about seeing the
cardiologist once a week, once a month, or once a quarter? That
falls into the gray area.
There are two implications to be drawn from this schema. The
first is that our current health care system wastes resources
trying to police the gray area. Kling states,
In practice, third-party payers face enough of a
challenge in policing the black region where providers attempt to
profit from services that are totally unnecessary. It is
considerably more difficult for third-party payers to decline to
cover procedures that offer definite positive benefits, however
small.
The second implication is that there is a lot of room in health
care for consumerism. The consumer, spending his own money, is the
proper agent to police the gray area. It is the consumer, in
consultation with his doctor or other health care professional, who
is in the best position to judge if a certain medical procedure
produces enough benefit to justify the cost.
Kling offers some innovative ideas on how to introduce more
consumerism into health care. One such idea is purchasing a plan
that gives five-years of coverage with a $30,000 deductible. You
would only pay premiums on the plan for one year, enabling you each
year to purchase a new five-year plan, so that you have overlapping
coverage. If, in each five-year period, your health care expenses
are more than $30,000, then the policy you purchased five years
earlier would cover the difference.
It is ideas like these that will move us toward a more
market-based system of health care and save us from the disaster
that is a single-payer system. To learn more about them, put both
Gratzer’s The Cure and Kling’s Crisis of
Abundance on your Christmas list.
David Hogberg is a senior analyst at the National Center for
Public Policy Research. He also hosts his own website, Hog
Haven.
