As health care reform rises up as a national priority once more, here’s a question too few people are asking: Where’s the innovation?
In an era where innovation and disintermediation are revolutionizing so many services and industries, why does it seem like medicine is stuck in time?
Much of that answer lies in the lack of a free market in health care, a field that might qualify page-for-page as the most over-regulated, government-distorted industry this side of energy production and banking. The calcification of the health care industry — its restraint the result of both government interference and anti-competitive business practice (the line between the two is blurry at times) — is the subject of a masterful study, “Fortress and Frontier in American Health Care,” by Mercatus Center Senior Research Fellow Dr. Robert Graboyes.
Fortress and Frontier has been out since 2014, but clearly more lawmakers and policy wonks need to read it. Driven by a combination of lobbying, ideology, and pure force of habit, most of the attention on health care — at both the national and state levels — tends to center around insurance i.e., how to get everyone covered under a semi-affordable plan. Dr. Graboyes examines the delivery of health care more holistically. Certainly, the distortion in the health care market caused by government preferences for employer-sponsored health care benefits is a problem, but restoring a free market in the insurance industry still leaves a mess of other issues and wouldn’t fully address the issue of costs and access to high-quality care.
The core observation that fuels Dr. Graboyes’ essay is that rapid, radical innovation to improve health care is only lacking because we forcibly contain it. The “fortress” in his metaphor is the network of state and federal laws and regulations dedicated to protecting the existing health care system from competition and disruptive innovation.
Even the rampant overregulation and cronyism of our current health care industry cannot fully stifle progress and entrepreneurship.
This is a crucial theme to pursue, because in an industry that has been dominated by the government-preferred, third-party payer model for generations, real reform requires some faith that markets will actually create a higher quality of care. Change is frightening, uncertainty is scary, and even those who abhor government in other cases may be tempted to hold on to the familiarity of subsidized insurance as the only safe way to provide adequate care for all. In an industry that involves our well-being, our life and death, it can be difficult to trust the chaos of markets, competition, and free enterprise.
And yet, even under the oppressive thumb of anti-competitive regulations and mandates, some hints of what the future of health care could look like manage to escape the fortress. Medibid lets you comparison-shop among doctors who actively bid for the opportunity to perform whatever procedure you need at the best cost. Telemedicine apps allow you to contact a doctor without the delay of scheduling an appointment. Wearable devices can track your vital signs in real time and notify you and your doctor if something is amiss. Amazing new drugs and treatments are created all the time that hold the potential to save lives, but are kept from patients for years by over-cautious regulators — even if patients are willing to risk trying them.
Even the rampant overregulation and cronyism of our current health care industry cannot fully stifle progress and entrepreneurship. But it can keep that life-saving progress from being affordable or accessible to the masses.
You can see the opposite principle in action in India, where the relative dearth of regulation or a welfare state have led their health care system to be, as Dr. Graboyes would say, a “frontier.” There, as the Economist wryly observes, a “happy collision of need and greed has produced a cauldron of innovation.” Forced to compete in a real marketplace and faced with a real market need for delivery of affordable care, India’s health care system is displaying a trend toward higher quality of care for lower costs, in stark contrast to our system here. It has become almost a cliché, but you can see this sort of entrepreneurship and positive result in the U.S. as well — in areas that are typically not covered by insurance, like laser eye surgery and cosmetic surgery.
To escape the deadly trap of grey-suited bureaucrats (insurers and regulators alike) deciding our health care options for us and rationing our care as they see fit, we must embrace the power of voluntary exchange and markets to create new structures and services to fulfill people’s needs. To get there, we have to convince people at large that the freedom of the frontier is more appealing than the austere familiarity of the fortress.
Josh Withrow is an Associate Editor for Conservative Review and Director of Public Policy at Free the People. You can follow him on Twitter at @jgwithrow.