December 7th is a date that has lived in infamy for 76 years, as a remembrance of the day the US entered WWII following the attack on Pearl Harbor, and it always will. Last Thursday, I hope that we gave December 7th a positive reason to live on historically. December 7, 2017, is the day we took the first step to put the American healthcare system back on the right path. 2,403 people were killed on that fateful day in 1941. Seventy six years later, it’s estimated that our healthcare system is killing approximately that many people EVERY day. Medical errors, uncoordinated care, poor preventative care, and people going without care are among the leading causes of death in the United States. Our healthcare system is in crisis, and it’s up to us to fix it.
Healthcare accounts for approximately 17 percent of US GDP, which is about double what other developed nations spend as a percentage of their GDP. At the same time, our healthcare outcomes rank among the worst. We are kidding ourselves when we look at our Harvard, Stanford, and Johns Hopkins-trained doctors and conclude that we have the best care in the world. It’s true that we might have many of the best trained doctors in the world, but the system they operate in (pun intended) is so bad that their extraordinary education can’t compensate for it.
There’s been much debate about how to fix the American healthcare system. The Affordable Care Act (aka Obamacare)? Universal Healthcare? Putting more people on high-deductible insurance plans with Health Savings Accounts (HSAs)? These are all ideas or experiments. None are rational; they may all be well-intentioned, but none can fix the problems that plague our healthcare system.
The reason that current thinking can’t fix the problem is that the system we are trying to fix is truly dysfunctional. Yet none of the “fixes” proposed are designed to restore normal function. This is America. And in America our best systems are based on the principles of markets. I know, I know…many believe that “capitalism” is an evil word. Especially in healthcare. But that’s simply naiveté or bluster. There’s no doubt that everything great about America is derived from two things: democracy and capitalism. And the two go hand-in-hand. Neither is perfect, but there can be no doubt that the reason for American dominance of the global order is that our institutions are built on the foundations of democracy and capitalism. And there’s no doubt that without democracy, there is no capitalism, and without capitalism, there is no democracy. That’s why fixing the American healthcare system is about more than simply our physical and mental health. It’s also about our economic health, and thus, the health of our democracy.
If we consider the most important roles of Government to be “promoting the common defense” and “securing the blessings of liberty,” then we have to ask ourselves what it takes to do so—to provide for national security and freedom in today’s vernacular. The answer is that it takes a strong and robust economy, something that is looking brighter these days but that also seems very tenuous at times. So, ask yourself, “What is the greatest risk to our economy, and thus, our national defense and our freedoms?” The answer usually comes back: the national debt or debasement of our currency. Then ask yourself, “What is the greatest cause of debt (or driver of debasement) these days?” The answer is clear. It’s healthcare.
At present, 50 out of every 100 dollars spent on healthcare is paid by the Federal Government. Healthcare spending also accounts for about 25 percent of the Federal Government’s overall budget. And healthcare spending (by state and federal governments, employers, and patients) is rising at twice the rate of inflation. You do the math. It’s a train wreck waiting to happen, and it’s not just a financial burden. It’s our entire way of life that’s at risk, because if healthcare bankrupts us, everything we know as America will change.
The First Step Toward Fixing Healthcare
There is one thing we MUST do to put our system back on the right track and give it a chance. We MUST return healthcare in America to a functional, market-driven system. While this won’t fix everything, nothing can be fixed if we don’t do it. The reason nothing can be fixed without restoring normal market function to healthcare is based in economics. Economic systems that are dysfunctional do not respond to change in predictable or manageable ways. And if we cannot anticipate the response of a system to change, how can we make intelligent changes?
So how do we restore our system to functionality? One word…ok, two words…price transparency. That’s right: simple price transparency. That’s the key to creating a functional market. And while it won’t fix everything, nothing can be fixed without it. Price transparency is the key to a functional marketplace.
Now let’s be clear. Pure, unadulterated capitalism sometimes becomes capitalism run amuck. But we know how to manage that. There IS a role for Government to play in healthcare, just like it plays a role in so many other markets. The role of Government is to strike a fine balance by protecting consumers (patients) and protecting the forces of competition at the same time. It’s just that Government can’t do that in a dysfunctional system, because rational and effective policy is impossible when the effect of policy cannot be predicted.
Price transparency also won’t answer the question of how we will pay for healthcare as our population continues to age. My parents are well on their way to spending more years in retirement than they spent in their entire working life. We need a new approach to how we pay for that, but we will never figure out what that new approach should be if we don’t have a functioning system to work on.
Many ask me, “What’s so dysfunctional about our system, David? Why does price transparency matter SO much?” It’s not a simple question to answer; or at least it didn’t used to be. It’s taken me a few years to really understand the healthcare system, and that’s after more than a decade of running a management consulting firm that works with hospitals and insurance carriers, among others. But I finally figured out how to articulate it, and I’ve done that in a short video if you care to watch it. The video explains the basic economic failing of America’s healthcare system—a dynamic that doesn’t exist anywhere else in the world.
I’ve also started a podcast that I will be adding to often. The first three short episodes are already available on iTunes and at brokenhealthcare.org/podcast. In the coming weeks, I’ll release many more: episodes that really explain how healthcare works and episodes that explain why all of the arguments about why price transparency doesn’t work in healthcare are just nonsense. Healthcare is NOT different, and we need to stop believing it is if we want to fix it.
The legislation we have submitted in Colorado is also on our Legislation page. It’s been drafted with the help of dozens of people, some literally operating under code names to protect their identity. We needed to really borough deep inside the system to ensure we would get things right, and I’m grateful to all of the people that helped.
I’d also like to thank my fellow sponsor (we’re technically called “proponents” of the Colorado ballot measure). Andrew Graham has been terrific, and together, we are committed to ensuring change starts in Colorado.
Leading the charge in the Colorado legislature is my other terrific partner—Representative Mike Foote. Mike spends half the year working the Boulder County DA’s office and has developed a deep understanding and real passion for this issue. He and I are committed to getting this done one way or another.
I hope you’ll join me in this journey. We need moral support. We need to raise a lot of money to ensure laws are changed. And in Colorado, we need volunteers who will help us ensure that Colorado makes real change in 2018 by letting the state legislature know that if it doesn’t do it, we will do it ourselves by bypassing the legislature on the November 2018 ballot. To do that we need to collect 150,000 signatures in the spring.
Please sign up at the bottom of our homepage to stay informed. Please send us your ideas. Please share your stories and experiences with America’s broken healthcare system. And please donate money and let us know if you are ready to volunteer. There will be more information about how to volunteer in the coming weeks and months, so check back often.