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Will Healthcare Innovation Survive Fannie Med?

“If you think healthcare is expensive now, just wait until it’s ‘free’.” If current trends continue, national health spending will …

“If you think healthcare is expensive now, just wait until it’s ‘free’.” If current trends continue, national health spending will nearly double over the next decade—rising from $2.4 trillion, or 17 percent of gross domestic product (GDP) in 2008, to more than $4.3 trillion, or 20.3 percent of GDP in 2018. Healthcare spending is projected to grow at an average rate of 6.2 percent a year, about 50 percent faster than growth in the economy. By 2035, total health spending could exceed 30 percent of GDP.

Yet the President wants lawmakers to pass a 1,000-page piece of legislation that they haven’t read, don’t understand and can’t possibly have given adequate consideration. We can’t seem to get a straight answer on what the final price tag will be, not just this year, but in the second, third, fifth and 10th years down the road. However, the best estimates peg the true cost at more than $1 trillion over the next 10 years without any of the advertised cost savings, according to CBO director Douglas Elmendorf.

As a matter of philosophy, President Obama wants to provide government health insurance as an alternative to private insurance—the “public option.” He wants to be “absolutely clear” that if you have a health plan you like, you can keep it. Of course you can keep it. But will you? Congressman Barney Frank gave the game away when in an unguarded moment caught on YouTube he said the public option was the best “way to get [a] single-payer” system—one that he said he very much favored.

Before we nationalize one-seventh of the U.S. economy, it is useful to keep in mind that the quality of health outcomes is comparatively better here than with the European-style nationalized systems we are attempting to ape. It is widely argued that Europe generally outperforms the U.S. in life expectancy, but this is misleading. When one adjusts for such things as our murder rate and demographic diversity, life expectancy is comparable. (Consider the nearly three-year disparity in life expectancy between Utah (78.7) and Nevada (75.9), in which the health care systems are essentially the same.)

When one drills down into many diseases, a different picture emerges. According to the respected British medical journal The Lancet, the U.S. outperforms all other countries when it comes to surviving cancer. Among men diagnosed with cancer, 62.9 percent survive at least five years; for women it is 66.3 percent. In Great Britain, for example, the numbers are a dismal 44.8 and 52.7 respectively. When Italian Prime Minister Silvio Berlusconi needed heart surgery he didn’t go to an Italian, French or a Canadian hospital to have it done. He went to the Cleveland Clinic in Ohio. Johns Hopkins University Hospital treats 6,000 foreigners a year, the Cleveland Clinic nearly 5,000, the Mayo Clinic, 7,200!

Innovation is one of the hallmarks of American healthcare. U.S. companies have developed half of all major medicines introduced over the last 20 years.Most European systems piggyback on new drugs and medical technology developed in the U.S. Even when a medicine or a technology is discovered elsewhere it is usually developed and made available to patients initially in the U.S. New treatments don’t just pop out of nowhere. They are developed by drug companies and device-makers who think they have a good market for things that will improve people’s lives.

The key to reducing the U.S. healthcare system’s excessive cost without damaging its ability to innovate is to allow competitive market forces to continue to operate. These forces have worked in every other market to keep costs low and improve quality. There is no reason why they won’t work in healthcare. A market-based health reform would promote innovations in medical science, healthcare delivery and financing that might never emerge from a regulation-heavy system driven from Washington.

About humorist p.j. o’rourke