Health Care Problems And Solutions

Perhaps the most important policy issue in this young century is what to do with the health care mess. Even as popular support for greater choice in primary education and free trade grows, the demands for even greater regulation of the health care industry become louder and louder. The medical community itself is, on the whole, supportive of this clarion call. There are many reasons why this is misguided, most having to do with excess regulation. Regulation creates monopolies for medical licensing and drug approval, sets up third party payment structures that fail to minimize costs, decreases patient autonomy, creates incentives for rational ignorance among patients.

Medical education is too firmly rooted in tradition and has failed to adapt to the knowledge gained from other fields such as law, economics, and political theory. In particular, the economic way of thinking is largely ignored during the four years of medical school. Most medical students graduate without an understanding of basic economic concepts such as subjective value, marginalism, opportunity costs, comparative advantage, and competition. The costs of particular patient management decisions are rarely considered when making them. While we may wish to do away altogether with the idea of determining the costs of something as precious as our health, we live in a world of scarce resources, and efficient allocation of these resources must be a priority to get the most of the means at our disposal.

Even though evidence-based medicine is making in-roads into the medical management philosophy, much of patient care consists of wasteful unnecessary interventions that have been passed down by tradition but have little scientific basis to back them up. Skepticism and rational inquiry should prevail over tradition for tradition's sake, not only because scientific evidence provides a better description of reality, but also because it helps us allocate our scarce resources more wisely.

Licensing and monopoly privilege have harmed the growth of medicine as a field, lowered the quality of care patients receive, and degraded the working environment for many health care professionals. The primary economic effect of licensing is to artificially limit the supply of a good. There are less physicians practicing medicine than would be without licensing. Though such measures are usually justified for safety reasons, there is no reason licensing cannot be supplied privately as it is in other fields. Greater openness would allow different approaches to medical care to compete with each other, result in a more adequate supply of house staff, and produce better overall patient care.

Though patient autonomy is often spoken of as an obvious goal in any discussion of medical ethics, the reality is that practices such as licensing deprive the patient the fundamental autonomy of control of his or her own body. The result is a medical establishment that gives implicit support for the Drug War. The physician can be an educator and advisor, but ultimately patients must be allowed the self-determination to make decisions about their health.

The drug approval process itself is suffering from stifling regulations and a one-size-fits-all approach. While thalidomide babies make front page headlines, few notice the thousands of lives lost because of the slow FDA approval of timolol. The expense and time needed to bring a drug to market creates a huge "Not Seen" downside to the monopolistic drug certification regime currently in place. It creates the unintended consequences of weeding out smaller companies that may not have the resources to clear the regulatory hurdles while giving larger corporations more power in the marketplace.

Insurance works best when it is used to pool risk for coverage of catastrophic events. We do not buy clothing, food, televisions, car maintenance, or cars with insurance. Instead we protect ourselves against the risk of fire, flood, death, and car accidents with insurance - events that happen rarely or never to many of us. Yet, why do we pay for a $40 checkup with insurance? The source of this nonsensical payment structure are the unintended consequences of legislation from the WWII era that gives employers tax credit for providing health benefits. The downside of this scheme is that it both reduces the incentives of customers to seek cheaper alternatives and of providers to make the fullest effort to reduce prices. It also creates a disincentive for customers to become knowledgeable about the product. Patients have little reason to learn about the differences between various health care options if they are not the ones directly paying for them.

Outrageous lawsuits have created a stifling atmosphere for medical practice. Many times, the potential legal consequences of an action are of greater consideration than the medical consequences. "Cover-your-ass" medical care raises health care costs in ways that are difficult to measure.

Some lessons for healthcare professionals -

* Realize that by trying to protect your turf through monopoly privilege, you are hurting yourselves, your future colleagues, and the healthcare of patients.

* Attempt to utilize evidence-based medicine as much as possible in everyday care.

* Give your patients the respect and autonomy they deserve as rational adults with their own unique, subjective outlook on life.

Some lessons for anyone who might someday be a patient -

* Realize that greater autonomy comes with greater responsibility. Your doctor should serve as your advocate with you as his client, but he is neither perfect nor omniscient. He provides an important service, but he cannot overcome the harsh realities of this Earth.

* Seek to change the way in which torts for inadequate care are meted out. Support the right of contract and freedom of association as the primary means of conflict resolution instead of uninformed runaway juries and politically ambitious attorney generals.

Some lessons for everyone involved -

* Realize that there is no "free market" in health care in the United States. There is monopolistic drug certification, perverse incentives for third party financing of basic health care, a distorted payment structure in which non-catastrophic goods such as office visits are paid for by 'insurance', entrenched license privileges, extortionate lawsuits, and lack of basic patient autonomy.

* The solution is not greater top-down bureaucracy. Regulation has created the mountains of red tape and perverse incentives that currently exist. More regulation would only worsen the problem and leave the most vulnerable among us with even less clout in the health care arena.

There has to be compromise between all parties involved - health care professionals, patients, bureaucrats, lawyers, and businesses. Greater autonomy for patients will mean greater responsibility in making their own healthcare decisions. With protection from outrageous lawsuits will come a greater onus on physicians to remove barriers to entry to health care provision. With decentralized drug approval will come the opportunities for entrepreneurs to fill the void, though unlike the FDA, they will have to compete for patronage. But in the end, this is the path we must take if we are to find a way out of this mess and fully realize the benefits of the coming biotech revolution.