By Fareed Zakaria
I have long argued that cutting government spending in the midst of a weak recovery is not a path toward growth. But I have also argued that America does have a debt and deficit problem and we need to take it very seriously.
The fact is the vast majority of our debt problems relate to the costs of health care in America. Now that the debate over Obamacare is over, we should start thinking seriously about how to get America's health care costs under control. As it turns out, two new works – a book and a magazine cover story – provide some very useful ways to think about this.
The central debate between Democrats and Republicans is over whether the free market works well in health care. In a new book, Catastrophic Care, David Goldhill makes the case for the market, arguing that people need to become consumers of health care so that they, not insurance companies, not the government, actually see, feel and pay the bills. That will force producers of health care – doctors and hospitals – to push down prices and drive up quality. That's what happens with groceries or television sets or computers.
In fact, Goldhill argues LASIK surgery, which is not covered by health insurance, has seen a 90 percent drop in price and a huge increase in quality since it was introduced in the early 1990s. That's what happens when consumers pay for a product.
Steven Brill makes the opposite case in a recent cover story in Time magazine. He painstakingly went through the actual bills that hospitals put out and found that they charge massively for routine procedures and medicines. He found, for example, a routine blood test, prophyrin (ph) 1, was billed to patients at a hospital at the rate of $199.50. Medicare pays for that same test, $13.94.
Brill agrees that America's health care industry's not a real market, but for different reasons than many on the right. He says that there is so much collusion, so many monopolies and so much disinformation that it cannot function as one.
"Most important," he says, "Is that the consumer, when buying health care, simply does not have the power to act as he or she does in other markets. When a doctor tells you that you need a CT scan, you are unlikely to say 'No, thanks' or to start haggling over the price."
I think you should read both Brill's essay and Goldhill's book. There are actually some points of agreement about how to reform what everyone accepts is a badly functioning, almost crooked, marketplace for health care. (Goldhill, by the way, wants universal health care and thinks the government has a big role to play, so this is not an argument for the poor to fend for themselves).
My own views on this difficult issue are open. I want to read more and understand better what seems to be working in cutting costs and improving quality across the country and the world. But I do think that Steven Brill points to a very real problem in health care as a market and that these are inherent in the nature of health care. The consumer does not have the knowledge or the power to act as he or she does in other markets.
Perhaps that's why in every other rich country in the world, we have found that markets don't function properly in health care – and that includes very free market nations like Singapore and Switzerland, both of which score higher than the United States on the Heritage Foundation's Index for Economic Freedom.
And yet all of them provide universal health care at no cost at much, much lower costs than we do with in many cases much better health care outcomes than we have.