Trump’s New Vision for Health Care

 

John C. Goodman,

CONTRIBUTOR

 

January 14th, 2019

A version of this article first appeared on Forbes.com HERE

Have you ever wondered why you can’t talk to your doctor by phone or by email? Or why a doctor can’t examine you in your own home using a phone app? Or why specialists at our top hospitals aren’t using telemedicine for long-distance examinations of patients all over the country? Or why it’s so hard to combine ordinary health insurance with a concierge doctor?

In each of these cases normal market processes have been suppressed by unwise government policies.

And, that’s just the beginning. It turns out that the most serious problems in the health care marketplace are almost always the result of ill-conceived public policies. Yet this observation is very rarely made in health policy circles.

For most of the past half century, health economics has been dominated by the idea that private sector medicine has numerous flaws – flaws that must be corrected by government.

Fortunately, the conversation is about to change.

The Trump administration has produced an astonishingly bold document:  Reforming America’s Healthcare System Through Choice and Competition.This is the first time any administration has explicitly acknowledged that the most serious problems in health economics arise not because of market failure, but because of government failure. It is also the first time the federal government has committed to the idea of liberating the medical marketplace. In many ways the document builds on and extends ideas I first discussed in Regulation of Medical Care (Cato) almost four decades ago and that Gerald Musgrave and I discussed in Patient Power (Cato) almost three decades ago.

Although cooperation from Congress and state governments is necessary and desirable, the Trump administration is accomplishing a lot through executive authority alone. I described some of the most important of these changes in a recent post.

In every  profession outside medicine – law, accounting, engineering, architecture, etc. – providers are able to repackage and reprice what they offer to the market. If technology changes, or if demand changes or if the economy changes, other professionals change the services they offer and the prices they charge. Doctors by contrast are slaves to a third-party payer system that has been shaped and molded by government.

Many of the problems begin with Medicare, which pays doctors today the same way it paid in the last century – long before there were emails or iPhones. Most private insurers and most employers pay the same way. State governments pile on. Sometimes they make consultations with patients by phone or by email or by Skype illegal. In most places, doctors can’t freely practice across state lines.

Texas, where I live, is one of the worst states. Nurses in walk-in clinics, following computerized protocols, have been shown to follow best practices more often than traditional primary care physicians. Yet in Texas, they must be regularly visited and counseled in person by a licensed physician.

Texas has large rural areas where many people live hundreds of miles from doctors, who have no more interest in traveling to there to supervise nurses than they to do to see patients. The practical effect is less health care. Rural citizens not only have no easy access to a doctor, they don’t have nurses and walk-in clinics either.

Telemedicine would be a godsend to citizens in rural Texas. In principle, rural patients could consult with physicians at such prestigious institutions as MD Anderson Cancer Center in Houston or UT Southwestern Medical School in Dallas. But until recently, the Texas Medical Association tried to prevent all doctors in the state from teleconsulting with any patient they had not previously seen face-to-face.

After years of resistance, Medicare will now pay for telemedical services to rural areas. But it won’t pay for the same services in urban settings. That means that the hip replacement patient, recuperating at home, must get out of bed, travel to the hospital, wend his or her way to an examination room and then reverse that whole process – if Medicare is going to foot the bill. The patient must make that agonizing journey for an examination that could have been completed with the click of a button at home.

Federal regulation of health insurance is another source of waste and inefficiency. For most of the post-World War II era, tax laws encouraged group insurance purchased through an employer, but they offered almost no tax relief for individually owned insurance that travels with a worker from job to job and in and out of the labor market.

Federal policy also has encouraged third-party insurance, at the expense of individual self-insurance – denying people the opportunity to manage their own health care dollars with accounts they own and control.

The opportunity to have Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs) has been a huge step in the right direction. But regulation of these accounts is way too limiting. For example, employers cannot fund the accounts and then let employees choose a concierge doctor, who is available 24/7 by phone or email and provides all primary care. That makes no sense, especially when the cost of high-quality, concierge care these days is no more than $50 per month for a middle-aged adult.

Space does not permit a full discussion of all the issues raised in the new report. (It’s 124 pages long). But I would be remiss if I didn’t mention the role of government in promoting monopoly.

  • State certificate-of-need laws are preventing new hospitals and other facilities from entering the market and competing with established ones.
  • Federal law is preventing doctors from opening specialty hospitals that compete against traditional, full-service hospitals.
  • Because Medicare and Medicaid frequently pay more for physician services performed at hospitals than the same services in doctors’ offices, an increasing number of doctors are becoming hospital employees.
  • The same anti-trust laws that prevent doctors from combining and colluding on price are being disregarded as hospitals gobble up their competitors through mega mergers.

If health care functioned like a normal market, there would be centers of excellence for cancer, heart care, diabetes and other chronic conditions. Patients managing their own accounts would benefit from competitive provision of services and they would be able to use the money for other purposes if they got better and reduced the costs of their care.

The only thing standing in the way is unwise public policy.

In health care, Ronald Reagan’s aphorism is more apt than ever: Government is the problem, not the solution.