Barry Fagin, Health Care, Uncategorized

Book review: How capitalism can fix health care, if we let it

I’ve just finished “How Jeff Bezos Can Fix Health Care”, written by a Colorado author and all-around swell guy. It ought to be read by every doctor, nurse, hospital administrator, and health insurer in America. If you’re a patient or might someday be one, you should read it too.

The book’s author, Steve Hyde, has lived in Colorado Springs for over 40 years. Armed with a Harvard MBA and a stint as the government’s chief HMO financial regulator, he started Colorado’s first for-profit HMO, expanding it to a multi-state operation and then taking the company public. On the way he saved his clients and their employees a bucketload of money. And yes, he kept some of it for himself and his fellow wealth creators. That’s what entrepreneurs do.

We know that health care in America is broken. We disagree on how to fix it. National health care. Single payer. Medicare for all. Obamacare. Price controls on prescription drugs. These ideas are terrible, but even worse they’re terribly lame. We need something radical, something revolutionary, something that will disrupt and overthrow the status quo. We need health care to get better and cheaper. Relentlessly. Day by day. Year by year.

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Decade by decade. That is what Hyde’s book is all about.

There’s no mystery in why things get better and cheaper. You need markets, property rights, rule of law, and competition. In other words, you need capitalism. Pick any good or service, and take a long enough time window. You’ll find thanks to the remarkable dynamism of human progress, it gets better and cheaper. Capitalism and a market economy are by far the most effective anti-poverty programs on the planet.

So what’s the deal with health care?

There are lots of reasons why medical care doesn’t get better and cheaper as quickly as other goods and services. Tragically, they’re the results of deliberate policy decisions to prevent markets from operating in the first place. “Patients don’t have enough information to shop for medical care.” “Someone who’s being wheeled in on a gurney can’t be expected to haggle over price”. “Health care is a right, so capitalism can’t be counted on deliver it”.

Hyde has spent his entire career proving these objections wrong. There’s no reason, in an era of cloud computing, networked smart devices, and large companies with health insurance payrolls to meet, why patients can’t shop for the best deal on an MRI, why hospitals can’t post their prices in advance, why payments for medical services can’t be adjudicated in real time, or why doctors have to waste time on paperwork that could be better spent on patient care.

Nor is there any reason why patients can’t become smarter consumers of medical care, provided more health insurance dollars are under their control. High deductible health plans (I have one, so does Hyde) empower patients to make sure they’re really getting the most for their money.

Hyde draws from experience to show when patients spend their own money for preventive and routine procedures (as they should be), they get the same care for less cost.

But what about people with no insurance? Who are unemployed? Who are on the bottom rung of society’s ladder? What about those who need lifesaving procedures that are prohibitively expensive?

Hyde points out these kinds of situations are precisely the reason we need markets and competition in health care. Health care is a roughly $3.6 trillion dollar industry. Achieving cost savings of 33% percent (Hyde argues that figure is too conservative) frees up a lot of money to help the destitute and desperate.

It’s one of the sad ironies of public policy that, by focusing on the cases that tug at our heartstrings and make the best political soundbites, we produce results that make things worse for everyone, including the people we’re supposed to help. If instead we focus on making things better for the far more common but boring cases, we’d have health care that gets better and cheaper every day. That helps everybody. But don’t take my word for it. Hyde’s book is chock full of facts and footnotes.

As of this writing, over 90% of the book’s Amazon reviews are 5-star. Drop a few bucks and decide for yourself.

Then drop him a line, he’d love to hear from you. Like I said, he’s a swell guy.

Barry Fagin is Senior Fellow at the Independence Institute in Denver. Dr. Fagin’s views are his alone. Readers can contact him at barry@faginfamily.net.

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