The Cure: How Capitalism Can Save American Health Care

by David Gratzer

Drawing on personal experience in both the Canadian and U.S. systems, Dr. Gratzer shows how paternalistic government involvement in the health care system has multiplied inefficiencies, discouraged innovation, and punished patients. The Cure offers a detailed and practical approach to putting individuals back in charge. With an introduction by Milton Friedman, The Cure will be required reading for anyone who wants to know what is really wrong with the modern health care system.

Genres: Economics, Nonfiction, Health Care, Politics

233 pages, Hardcover

First published September 20, 2006

Reviews

[Lobstergirl · Rating 1 out of 5]

A typical sentence in this pre-Affordable Care Act, pro-market book is: "Give consumers more control by giving them health dollars to spend, and good things such as innovation will follow." The author doesn't actually mean giving people money, which he would probably think is socialist. He means that people who already have money should have that money designated as healthcare expenditure money. He believes the thrust of healthcare reform, savings, and efficiency should be Health Savings Accounts.

His other big push for savings is allowing insurers to sell plans across state lines. He argues that the competition will lower prices. This was a Republican talking point for years. The idea is debunked in a 2015 New York Times article titled "The Problem with G.O.P. Plans to Sell Health Insurance Across State Lines" which I'll quote from liberally:

The idea is that by eliminating the red tape associated with state insurance regulation, insurers will be able to offer national plans with lower administrative costs. That would expand consumers’ choices and reduce the price of insurance. The proposals also all assume that, in place of expensive regulations in some states, insurers would have the option of choosing to base their companies in a state with fewer rules. In some versions of the plan, they would have to comply only with basic federal requirements that would apply everywhere.

(snip)

...Some states require much more of insurers than others, and following the many and varied state rules may drive up the cost of insurance in some markets. Customers in a state requiring insurance to pay for chiropractic care or infertility treatments, for example, might prefer to buy a cheaper policy in a state that doesn’t require such benefits.

The trouble is that varying or numerous state regulations aren’t the main reason insurance markets tend to be uncompetitive. Selling insurance in a new region or state takes more than just getting a license and including all the locally required benefits. It also involves setting up favorable contracts with doctors and hospitals so that customers will be able to get access to health care. Establishing those networks of health care providers can be hard for new market entrants.

“The barriers to entry are not truly regulatory, they are financial and they are network,” said Sabrina Corlette, the director of the Georgetown University Health Policy Institute.

In 2012, Ms. Corlette and co-authors completed a study of a number of states that passed laws to allow out-of-state insurance sales. Not a single out-of-state insurer had taken them up on the offer. As Ms. Corlette’s paper highlighted, there is no federal impediment to across-state-lines arrangements. The main difficulty is that most states want to regulate local products themselves. The Affordable Care Act actually has a few provisions to encourage more regional and national sales of insurance, but they have not proved popular.

Insurers have been muted in their enthusiasm for G.O.P. across-state-lines plans. Neither America’s Health Insurance Plans, the lobbying group for most private insurers, nor the Blue Cross Blue Shield Association have endorsed such a plan when it has come before Congress.

There’s a part of the health insurance market where regulations are largely identical around the country: the one for private Medicare Advantage plans. If uniform rules alone could ensure a broad array of competitors, you might expect to see many insurers participating. But that does not seem to be the case.

A recent report found that, in 97 percent of counties, the market for Medicare Advantage plans was “highly concentrated,” meaning very limited choices.

Beyond regulations and doctors, demographics help explain why insurance is cheaper in some places than others. Insurance tends to be less expensive in states like Utah and Colorado, where more people are young and healthy. If customers in New York wanted to start buying Utah plans, they might face two surprises: fewer local doctors and higher costs related to the health of the local population.

“I’ve tried for 10 years to explain this to Republicans; it is a big problem,” said Merrill Matthews, a resident scholar at the Institute for Policy Innovation, which focuses on free-market solutions to policy problems. “Just because a good affordable policy is available in another state doesn’t mean that I would be able to get the network of physicians and the good prices that are available in that other state.”

(snip)

Critics of the across-state-lines plan worry about negative consequences of letting insurers shop for the state regulator of their choice. Just as many businesses tend to incorporate in Delaware, or credit card companies have headquarters in South Dakota, insurers may end up congregating in whatever state offers the most lenient regulations. That could mean that customers who get sick could be harmed because there are few comprehensive policies available, or because consumer protections are weak when things go wrong.

(snip)

The across-state-lines issue affects only individuals and small businesses....nearly every large American company is what’s called self-insured. That means it is not subject to state insurance regulation.

Truly national health insurance companies are still rare, in part because building a national provider network is so difficult.

[Derek · Rating 4 out of 5]

A concise, rather compelling case for free market health care reforms. As a doctor, Gratzer shares plenty of anecdotes, but the arguments are pretty well supported by quantitative data. He doesn't go too far in free market orthodoxy, freely admitting to the need of government to aid the less fortunate in regards to health care, but through a different model than the current one. His model deserves a great deal of discussion.

[Moses · Rating 4 out of 5]

This was excellent and a great view-forming book. I think the good-health-care-through-capitalism approach is the most sensible; certainly better than letting the government get its diseased hands on it.

[Shelly · Rating 4 out of 5]

Gratzer uses statistics as well as anecdotes to convincingly make his case that our current system of employer-paid insurance was designed for a health care system in which penicillin was state-of-the-art. It is outmoded and no longer serves us well. Consumers are insulated from actual costs in this system and it also allows private insurance to pick up the slack from Medicare and Medicaid's chronic under-reimbursement to physicians. A plan to put consumers in control is a viable solution. Health Savings Accounts are a good start but there are other ideas discussed in the text which would also be beneficial. Ultimately, the goal should be to put people back in control of their health-care.

[Marshall · Rating 4 out of 5]

Reality based policy that would without a doubt lower the costs of healthcare while raising quality and accessibility. Too bad Washington thinks they have it all figured out. Down the road to serfdom we go..

[Jennifer]

I bought this book along with a book about how socialized medicine can solve health care. I figure between the two maybe I can come to some conclusions.

[Lyndsey · Rating 5 out of 5]

This book breaks down the history of how/why health care costs are so elevated and how we can change it without governmental control.

[Griff · Rating 3 out of 5]

How Capitalism can save American health care. Good info on Health Savings Accounts (HAS)