How Free Markets Advance Health Care

My brother Ron is an eye surgeon in Dallas, Texas. He performs a wide variety of procedures including “Lasix.” This type of vision correction surgery was discovered by accident in 1974 in Russia. There, a prominent eye surgeon was treating a severely nearsighted boy with shards of glass stuck in his eye. 

A sliver had penetrated the boy’s cornea -- the clear tissue that forms a protective layer over the eye itself. Rather than the injury impairing his vision, the boy noticed a vast improvement. The glass had actually reshaped the cornea and changed the focus of the child’s eye.

A few American doctors became aware of the Russian discovery and began their own research. Eventually, LASIK vision correction procedures came into wide use when the scalpel was replaced with the cutting precision produced by a beam of focused light -- the laser.

Over the years there have been further advances in vision correction surgery techniques as the cost has been steadily reduced. I believe this has occurred, in part, because vision correction surgery is not covered by medical health insurance. Without the restrictions usually imposed by insurance companies and government regulations on medical procedures, competition and consumer demand have improved the quality of this procedure.

There are many other examples of improvements driven and developed by free markets in healthcare fields: Breast augmentation and rhinoplasty, weight loss surgery, dental implants and teeth whitening to name just a few. Even the advent of concierge primary care -- the area where I practice medicine -- was created out of patient demand to escape crowded groups practices in order to have a closer relationship with a doctor -- even if it meant at higher cost.

But most American healthcare is not subject to free market forces. As a result, the cost of health insurance and medical care has skyrocketed over the past several decades despite the government's best regulatory efforts to try to control costs. Worse, senior bureaucrats in the government, know-it-alls in the media, and intelligentsia pontificating from the academic sidelines have romanticized the socialized medical systems of Canada and the United Kingdom in an effort to duplicate them here. Big mistake. 

In Canada, every citizen is covered by the government healthcare system that produces some of the highest taxes in the western world. It is also not uncommon to wait months and sometimes years for routine, non-life-threatening procedures, operations and tests such as an MRI, joint replacement surgery or cataract removal.

Many medications available in the United States are not available to citizens of Canada. As a result, many affluent Canadians travel south to escape their delayed and inadequate healthcare service. Then a Canadian Supreme Court decision found that having people die while on waiting lists violated Quebec Province’s Charter of Human Rights and Freedoms. Soon alternate Canadian healthcare systems began growing across the nation. According to David Gratzer: “Socialized medicine has meant rationed care and lack of innovation. Small wonder Canadians are looking to the market[place] for solutions.”

The system in the United Kingdom is no better. If you have money you can purchase private insurance and access private physicians. For the rest of the country, the National Health Service (NHS) offers coverage through a government-run, taxpayer-financed system. Under the NHS, all Brits are required to register with a local GP (general practitioner). The GP, then, becomes the gatekeeper to referring patients to a specialist in the system and/or to authorizing sophisticated testing.

This was designed to prevent abuse of the system with unnecessary tests demanded by pushy patients rather than medical care administered by dispassionate professionals. Unfortunately, the reluctance to use and expand medical services has resulted in excessive waiting times for even routine tests. 

The NHS has its own hospitals and clinics to service the vast majority of the population. A private system in the UK competes directly with the NHS. Many doctors work both sides of the street. The UK is a good example of how a two-tiered system of haves and have nots arises. Routine surgeries and procedures -- teeth cleaning, eye exams, wart removal -- are performed at NHS hospitals and clinics for the poor and wealthy alike; when specialty surgery is needed -- an open-heart procedure, cancer cell removal, hip replacement -- the Brits often turn to private providers for treatment.

It isn’t that the rich necessarily get better treatment in the UK; they just get what they need on a much more timely basis. Think about someone waiting 6 months or longer for a hip replacement: Medical care delayed is no care at all, especially while enduring excessive pain and a deteriorating way of life. 

If we were to design a healthcare system from scratch, we probably would not choose either the UK or Canadian systems as models.  One reason is that neither takes advantage of the efficiencies of a free market system.  If government-run healthcare is so superior to what the private sector can produce -- in cost and efficiency -- why not have government-run supermarkets, restaurants, and clothing stores as well? Ask Cuba, China, Vietnam, or any of the other Soviet-style socialist economies that have allowed private businesses to operate next to state-run enterprises to get better products, services, and pricing. Ask Venezuelans why their socialist economy has failed at the hands of Chavez and Maduro.

We currently have three examples of government-run healthcare in the U.S. and they are all in trouble: The VA Healthcare system is notorious for its long waits and inefficiencies -- veterans literally died while waiting for proper attention; Medicare is slowly going bankrupt and is seeing more and more physicians opt out of participating in that program; the Indian Health Service has long been both corrupt and ineffective. If we cannot put our own socialized systems right -- and can’t figure out how to make the prison health system work effectively -- why would we want to emulate them for all Americans? 

In 2003, I co-founded PersonalCare-Physicians, the first primary care concierge practice in California. Concierge medicine is now a growing free market movement where patients pay a membership fee to become part of a medical practice. This membership fee allows doctors to take care of a smaller cohort of patients and provide a much higher level of personalized medical care and customer service. 

If American healthcare is to regain its reputation as the best in the world, free market forces must be allowed to operate to bring down costs, improve quality and innovate treatment. In short, we need to rethink how government bureaucracies and medical health insurance have gummed up the works. I also hope my brother, Ron, keeps innovating his techniques in eye care in his private practice; I may need his vision correction surgery services myself soon!

Image: Picryl

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