Robin Smith / January 8, 2018

Excellence for Health Care? Try the Free Market

Let’s look at ways that real reform can come to health care and not just address health insurance.

Why does health care in America cost so much and increase annually? Why do medicines, even generics, get more expensive? It’s primarily because the practice of medicine is not a service delivered in a free market driven by economic principles. Other goods and services sought by the public feature known prices and the consumer is both the payer and the decision-maker. Not so with health care.

In American health care, we have managed health insurance, not care. Almost all of the debate about policy revolves around the current system that empowers the insurers and/or the government as the decision-makers, the payers and, in reality, the customer — not the patient.

So, while some have really well-intended discussions and policy debates, unless the consumer is in control of making informed decisions and holds the responsibility of payment, there will not be authentic health care reform. There will be little more than tweaking policies that address the actual customers — the insurance companies and/or the government.

We need insurance policies. But we need insurance policies that pay when we have catastrophic events or expensive procedures, not the average wellness check-up or routine physicals. If Americans used their homeowners insurance policy or their auto insurance just as they use their medical insurance policy, the rates would be unaffordable and out of control too. The time for Health Savings Accounts is now. The time for price transparency of medicines and procedures is now. If Americans want to see the cost of care and medicines decline while simultaneously increasing access due to affordability, true reforms must be made to return the service of health care and medicines to a free market.

We also need the innovation of new medicines, devices and procedures. As long as a third-party payer controls the terms of coverage, care delivered and medicines on a formulary, the decisions are not made by patients, but by insurers or a government agency. A horrible side-effect is that those who are uninsured get hammered by the cost of care that is delivered outside a contracted rate, and they pay exorbitant costs.

So let’s do as Dr. Tom Coburn, former U.S. senator from Oklahoma, did in his recent Washington Examiner analysis. Let’s look at ways that real reform can come to health care and not just address health insurance.

Dr. Coburn focused primarily on the cost of pharmaceuticals, or prescription drugs. His simple solution is to reintroduce actual free markets to the sale and purchase of medications. Chiefly, Coburn says, just make the net price of all medicines available in the public domain and easy accessible by the consumer, the patient, not a contracted formulary of tiered/approved medicines by an insurance company. As it relates to insurance reimbursement for health care items ranging from very specialized medicines that cost upwards of $10,000 per month to the average wellness checkup, allow value-based payment with data on cost and efficacy made available. Simpler, if a hammer will do, there’s no need for a sledge hammer.

Throughout the former senator’s analysis, he refers to an extensive report by the National Academies of Sciences, Engineering, and Medicine entitled, “Making Medicines Affordable: A National Imperative.” Take one guess what recommendations are offered by a government-funded study by a government-run group? Bingo! The study’s sponsors recommend more bureaucratic, centralized control. That government report, by the way, will cost you $67.00 to read online.

Coburn argues for the pharmaceutical market what should be argued throughout all of health care: Transparency and the free market work; government control does not.

In health care, we routinely pay for services that are very important without knowing their cost, thanks to the control of government and insurers. Not only does the American consumer need to demand price transparency, the debate surrounding “Big Pharma” must also address the unbelievably lengthy and costly in place for new medicines. A published study by the renowned Tuft’s University recorded that “the average cost to bring just one drug to the market is about $2.6 billion. It takes an average of 15 years from the time a drug developer first begins testing a new formula until the FDA approves it. Only 1 in 1,000 drug formulas will ever enter pre-clinical testing, and of those, roughly 8 percent will ultimately receive FDA approval.”

Fifteen years and $2.6 billion are averages for a new medicine to be approved. Without argument, the safety of patients is absolutely mandatory. Yet the U.S. government process is not constructed to respond to the needs of patients in the here and now. Can you imagine if the smartphone or computer industry was controlled in a similar manner? Would Apple find it profitable to be able to bring a new product to market only every 15 years? The first iPhone was advertised on June 29, 2007. Look at the improvements to the technology, the innovation and the response to consumer needs while keeping the costs within range for mass consumption during that decade-long window.

Summing this up, America does not have a health care problem rooted in the actual delivery of medicine. We have a health care billing issue that hides information that would create competition, provide a patient-centered approach and permit control by the actual consumer. Just take a look at the National Health System currently in England. Up to 50,000 surgeries have been canceled due to the onslaught of influenza that has hit a system understaffed and ill-prepared to be responsive to sudden change. You see, when you socialize the health care market, everyone gets a little with no incentive for excellence or to prioritize the patient experience.

If you want the best health care, then return to free markets and the characteristics that truly empower the patients.

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