The Reasonable Road to Reasonable Health Care

Published June 20, 2016

Review of Reviving America: How Repealing Obamacare, Replacing the Tax Code and Reforming The Fed will Restore Hope and Prosperity (2016), by Steve Forbes and Elizabeth Ames, McGraw-Hill Education, 2016, 224 pages; ISBN-13: 978-1259641121: $17.77 on

Most intelligent people stand befuddled by how our country’s health care system transmogrified from the simplicity of our youth into the complexity of today.

The reasons are many and not so complicated. Start with technological advancements, which are indeed great but sometimes unnecessary and almost always too expensive for the common patient. To this add fear of litigation, which causes doctors to request more tests than common sense would dictate, to cover their tails. Next, figure in the power of insurance companies and lawmakers who have colluded to lock people into noncompetitive state programs. Top these off with opaque pricing and, finally, federal and state governments’ desire to amass total control of their populations by dictating how they obtain health care, who may treat and provide treatment, and, in some cases, who may live and who shall die.

Special interests make it difficult to implement easily made improvements to our country’s health care system, including cutting costs and boosting quality, Peter Ferrara notes in Power to the People: The New Road to Freedom and Prosperity for the Poor, Seniors, and Those Most in Need of the World’s Best Health Care, a book produced by Health Care News publisher The Heartland Institute and reviewed in Budget & Tax News in September 2015.

In similar fashion, Steve Forbes and Elizabeth Ames explain how Obamacare can and should be replaced by mechanisms everyone but the power brokers in our present government regime should be able to support in Reviving America: How Repealing Obamacare, Replacing the Tax Code and Reforming The Fed will Restore Hope and Prosperity (2016).

The authors masterfully dissect all three of the title’s subjects. I limit this review to their health care analysis.

Regulations Stifle Medical Innovation

In a free market, the quality of products improves and prices decline over time, the authors note. Yet today’s pundits say this axiom does not apply to health care. They’re wrong. One need look only to LASIK eye surgery and cosmetic surgery, two areas of our health care industry government has left largely unregulated, to see cost-saving, quality-improving market principles at work.

In contrast to these bastions of free-market health care, more than half our states require health care providers and administrators to obtain a certificate of need from a state-appointed bureaucracy before they are allowed to build a new hospital or nursing home. Meanwhile, the authors write, obtaining U.S. Food and Drug Administration approval of a prescription drug costs 10 years and $2 billion dollars. (The authors’ estimate is lower than the Goldwater Institute’s estimate obtaining FDA approval for experimental drugs can take up to 15 years.)

These problems have plagued American patients for decades, and Obamacare has made them worse, Forbes and Ames write. As a result, a doctor shortage looms on the horizon. Reduced income potential and stifling regulations are making talented young students think twice about embarking on a career in medicine, and experienced doctors are leaving medicine earlier than they might have.

Reforms to Revive America

Reviving America lays out several specific reforms that could restore sanity and efficiency to the nation’s health care system.

One, Medicare should require healthcare providers, including hospitals and clinics, to post their prices for all procedures and services. Where else in life do you engage in an activity without knowing the cost in advance? We should shop around for the best value in health care as we do for every other service and product.

Two, create a national market for insurance and consequently larger risk pools by allowing people to shop for coverage across state lines. Segmenting the market into small, inefficient state risk pools defies reason.

Three, give individuals direct tax deductions for buying health insurance. Currently, only businesses and the self-employed enjoy this benefit.

Four, encourage the growth of Health Savings Accounts (HSAs) and remove caps on how much one may contribute to an HSA. In 2016, individuals may contribute up to $3,350, and families may contribute up to $6,750. HSAs enable people to set aside tax-free dollars to pay for their health care. The use of HSAs has been shown to make people more cost-conscious.

Special Accountability for Medicare

Two of my favorite ideas from Forbes and Ames would hold Medicare providers to higher standards:

One, Medicare should require hospitals to post each month how many patients have died from hospital-based infections.

Two, Medicare should require health care providers to post each year how much they have received in Medicare payments.

Health Care, Not Rocket Science

None of these suggestions is rocket science, and in fact if you sat down with a few friends you could likely come up with the same ideas.

Obamacare should be repealed, the authors write. If that doesn’t happen, they argue for jettisoning (at the very least) the employer mandate, individual mandate, and cap on insurance company profits, which perversely incentivizes insurers to expand revenues, thereby removing insurers’ incentive to control costs. The cap on insurers’ profits also blocks competition by deterring insurance start-ups from entering the market.

As Forbes and Ames put it, the path to better and more affordable health care is not a tortuous maze, but a simple route, albeit one strewn with special interests created by government’s efforts to exert greater control over its subjects.

Jay Lehr ([email protected]is science director at The Heartland Institute.

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