March 29th, 2013
01:29 PM ET

Why we need to fix our health care

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.

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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.

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Topics: Health • United States

soundoff (139 Responses)
  1. Constance Prudence

    Has anyone else ever listened to the earnings calls of major pharma companies? Occasionally you'll hear them mention that their global research programs are made possible only by the prices Americans are willing to pay for the drugs the pharmacos sell cheaper everywhere else.

    We are subsidizing the drug research for the entire world. It is only one of the many ways we are being screwed over by a vicious, for-profit healthcare system. All of us are just one health disaster away from bankruptcy - one terrible cancer, one massive accident, from either surrendering our life or the life of a loved one, or pledging indebtedness for the rest of our lives.

    My Canadian and Swiss friends can't understand why Americans continue to put up with this. I, of course, understand why the super-rich put up with it, but I can't for the life of me understand why the average American does. What circle of hell did that billionaire tell you Socialism was cooked up in? He hopes you continue to believe it. My Swiss friends already know better.

    April 2, 2013 at 10:47 pm | Reply
  2. Milagros

    For a 50+ American citizen with one or more of the common ailments most of us have, it is nearly impossible to buy health insurance. I was rejected by two major health insurers. They refused to sell me any insurance at any cost due to my medical history. We'll see what I can do when open enrollment starts in October for January 2014 coverage. Will folks with pre-existings really be accepted by the insurers at reasonable cost. I'll believe it when I see it !

    April 3, 2013 at 1:46 pm | Reply
  3. josh

    This is why

    April 4, 2013 at 1:33 am | Reply
  4. Gwenn Andre Lafayette

    And to think that most of you who have commented have the right to vote... By my count, only 28% of those who have commented have some knowledge of what they speak... while the remainder wish to voice an opinion of which they know little about... are angry.... cynical... or are simply ignorant... My sympathies go to those who care and matter... and particularly... the health care industry...

    April 4, 2013 at 1:07 pm | Reply
  5. manik

    A Medical Assistant (MA) is an integral member of the health care delivery team, qualified
    by education and experience to work in the administrative office, the examining room and the
    physician office laboratory. The medical assistant
    , also a liaison between the doctor and the
    patient, is of vital importance to the success of the medical practice.Nature of the Work

    April 6, 2013 at 2:14 am | Reply
  6. ChrisClark

    Cost billing for a hospital is much different than the Medicare negotiated contract billing for the patient. Cost analysis needs to be responsible and accurage, not naive!

    April 6, 2013 at 1:11 pm | Reply
  7. JOSH

    There is a third country in Latin America with an excellent health system subsidized by the government. Do your homework boys. No health insurance companies, no burocracy.

    April 6, 2013 at 10:59 pm | Reply
  8. DaveW

    Our healthcare system is well and truly broken. Fixing our healthcare system will test our democracy to the limit. There is a lot of money being made by people who have now become very powerful. I sincerely doubt that our legislative process will be able to fix this problem. People who really want better healthcare should move to another country it's unaffordable here.

    I've read both the Time magazine article and the book. Both are very well written – and so is Fareed's article here. Don't get sick in the USA.

    April 10, 2013 at 12:04 am | Reply
  9. Andy Armstrong

    It's no wonder to me why small businesses aren't popping up all over this country. Nobody can afford the insurance costs to start one. This country is destroying because the cost of starting a business is way out of reach for the average citizen. If you took a look at the number of small businesses in Europe compared to the US it would be a joke!

    April 25, 2013 at 9:35 pm | Reply
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    My brother recommended I may like this blog. He was entirely right. This submit actually made my day. You can not imagine just how much time I had spent for this information! Thank you!

    May 4, 2013 at 9:15 pm | Reply
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