Citing statistics that have been known for decades that health care costs are rising faster than general inflation, that measures of health are declining despite increasing health care spending, and that families are more often bankrupted by health care costs than any other expenditure category, Gov. Cox is convinced that business as usual in American health care is unsustainable.
He’s right of course. But then, so were governors Leavitt, Huntsman and Herbert when they, too, announced health system reform initiatives and referenced the same sorry facts about the failures of U.S. health care delivery. It is simply the case that Americans pay more for health care, mostly through world-leading health care tax rates, than do citizens in any other country, by far. Yet, in the First World, no one experiences poorer quality health care than do U.S. patients.
And we have the least efficient health care financing business model. Private, for-profit health insurers waste $500 billion per year on overhead. We need simpler health care delivery and better care, which Utah’s previous governors all recognized and strived to achieve, without success. Will Cox be able to make progress where his predecessors failed?
He will if he leaves his biases behind, to use his own words. The principal bias of American health care delivery that keeps setting American health care reform up for failure is a bias I am sure Cox shares with his predecessors, and with the leaders of Utah health care systems. They all share the common belief that market forces will somehow magically bring rising health care costs under control.
That is not and never has been true. Kenneth Arrow won a Nobel Prize in economics 50 years ago for describing how market forces fail to function in health care delivery, but Americans, unlike the citizens of every other First World country, continue to stubbornly try to fit the square peg of market competition into the round hole of health care.
The prerequisites for optimal competitive market function have been known since Adam Smith’s publication of “The Wealth of Nations” in 1776: Buyers must be able to know for themselves all about the products and services they “shop” for; sellers must have no other interest than in making the best deal possible for themselves; transactions in the market must not have meaning or implications for anyone other than the buyer and the seller; and there must be an inverse relationship between price and demand.
None of these prerequisites are true of health care delivery. Buyers can’t shop because they are patients not consumers; they are sick, sometimes incapacitated. They don’t know what they need, or how to recognize excellent quality in health care. Sellers of health care are under ethical obligation to place their patients’ needs first before their own interests. Every health care transaction has implications for everyone else in the community, whether treating a case of infectious tuberculosis or making sure that trauma care providers are constantly able to “practice” their craft. Demand for health care goods and services is determined by epidemiology, the frequency of disease and injury, not price.
If Cox wants to become the Utah leader who fixed our health care woes, he must jettison his market bias and lead us all to a different model of health care delivery, where cooperation and the needs of patients come first. The pretense of markets in health care creates perverse incentives inducing health care delivery to provide mediocre care financed inefficiently, because that is how business as usual in American health care makes maximal profits.
We can either have the most profitable health care system, or we can have better, simpler, cheaper care. We cannot have both.
Joseph Q. Jarvis, M.D., is the author of “The Purple World: Healing the Harm in American Health Care,” and the forthcoming book “For the Hurt of My People.” He is a public health physician, former family doctor, and one-time academic occupational medicine specialist.