PATIENT POWER - Solving America's Health Care Crisis by John C Goodman, PhD and Gerald L Musgrave, PhD. Cato Institute, Washington, DC © 1992, ISBN: 0932790917, 673 pp, $24.99.
PATIENT POWER - The Free-Enterprise Alternative to Clinton's Health Plan (Abridged ) by John C Goodman, PhD and Gerald L Musgrave, PhD. Cato Institute, Washington, DC © 1994, ISBN: 1882577108, 134 pp, $1.00 (from Cato Institute).

Review by Del Meyer, MD

In the Preface, the authors state that a thorough economic analysis of the health care system in the United States is complex, not because special theories are needed, but because health care is the most regulated and most politicized sector of our economy. It takes considerable understanding of economics, medical care, politics, ethics and emotions before anyone can obtain a unified view of health care. Patient Power is a synthesis of those aspects. The abridged volume is a further condensation of that synthesis.

The thesis of this book is simple: if we want to solve the nation's health care crisis, we must apply the same common sense principles to medical care that we apply to other goods and services. The irony is that health care costs are rising because, for individual patients, medical care is cheap, not expensive.

According to Patient Power, patients pay on the average only 5 cents out-of-pocket for every dollar they spend in hospitals. The remainder is paid by private and public health insurance. Patients pay less than 19 cents out-of-pocket for every dollar they spend on physicians' services, and they pay less than 24 cents for every dollar they spend on health care of all types. Patients therefore have an incentive to purchase hospital services until, at the margin, they're worth only 5 cents on the dollar and to purchase physicians' services until they are worth only 19 cents on the dollar. The wonder is that we don't spend even more than what we do.

Health care, like other necessities such as food, clothing, housing and transportation, is said to be a necessity. If we paid for any of those items the way we pay for health care, we would face a similar crisis. If we paid only 5 cents on the dollar for food, clothing or housing, for example, costs would explode in each of those markets.

If we are to control health care costs, we must be prepared to make tough decisions about how much to spend on medical care versus other goods and services. So far, we have avoided such choices, confident that health care spending can be determined by "needs," rather than by choices among competing alternatives. In that respect, the U.S. health care system is unique. The United States is the only country in the world where people can consume medical care almost without limit, unconstrained by market prices or by government rationing.

Consider the case of an 80-year-old man who suffered from the condition of "slowing down." Despite the physician's counsel that the condition was perfectly normal at age 80, the patient and his wife went on a literal shopping spree in the medical marketplace. As the physician explained to the New York Times:

A few days ago the couple came in for a follow-up visit. They were upset. At their daughter's insistence they had gone to an out-of-town neurologist. She had wanted the "best" for her father and would spare no (Medicare) expense to get it. The patient had undergone a CAT scan, a magnetic resonance imaging, a spinal tap, a brain-stem evoke potential and a carotid duplex ultrasound.

No remediable problems were discovered. The Medicare billing was more than $4,000 so far. . . . but they were emotionally exhausted by the experience and anxious over what portion of the expenses might not be covered by insurance.

I have seen this Medicare madness happen too often. It is caused by many factors, but contrary to public opinion, physician greed is not high on the list. I tried to stop the crime, but found I was just a pawn in a ruthless game, whose rules are excess and waste. Who will stop the madness?

The potential demand for health care is virtually unlimited. Even if there were a limit to what medical science can do (which, over time, there isn't), there is an almost endless list of ailments that can motivate our desire to spend. About 83 million people suffer from insomnia, 70 million have severe headaches, 32 million have arthritis, 23 million have allergies and 16 million have bad backs. Even when the illnesses are not real, our minds have incredible power to convince us that they are.

If the only way to control health care costs is to have someone choose between health care and money (that is, other goods and services), who should that someone be? There are only two fundamental alternatives: the choices must be made either by the patients themselves or by a health care bureaucracy that is ultimately answerable to government. This book makes the case for the patients.

Almost all arguments against empowering patients are variations on the notion that individuals are not smart enough or knowledgeable enough to make wise decisions. But if that argument is persuasive in health care, why isn't it equally persuasive in every other area of life?

The case for empowering patients rests on a different assumption. No one cares more about us than we do. Thus, while prudent people seek and get advice from specialists before making many decisions, it does not follow that we should turn control of our lives over to the experts. In the long run, more good than bad decisions are made when self-interested individuals are free to accept or reject advice from many quarters.

A corollary to the goal of empowering patients is the goal of creating competitive markets in the health care sector, including physicians' services, hospital services, other services and health insurance. Individuals pursuing their own interests in a market are best served by suppliers who compete vigorously to meet consumer needs with high-quality services produced at the lowest possible cost.

As the authors emphasize, this book represents a radical departure from the conventional wisdom in the field of health policy. Whereas the vast majority of health policy commentators take a bureaucratic approach to health care, the authors' approach is individualistic, focusing on the decisions that individuals make and the incentives they face when they make them. Whereas the vast majority of health policy proposals call for more regulation and more government spending, the authors find that government is the problem, not the solution–that solving America's healthcare crisis requires undoing the harmful distortions introduced by government and that only a market-based system will work.

The dominant view of what's needed in health policy, as regularly reported in the national news media and parroted by syndicated columnists, editorial writers and politicians, is not competition but monopoly. Instead of empowering individuals, they assert, we should empower the bureaucracy. Rather than look to the private sector for solutions, we should look to government. When speaking to the general public, the socialism-works-in-health-care crowd points to national health insurance in other countries, arguing that the quality is high, the cost is low and the vast majority of people like it.

It is no surprise that most people who live under national health insurance like it. For minor aches and pains, they have no difficulty seeing general practitioners and they perceive such services to be "free." But that's not a useful test of a health care system. In any given year, only about 4 percent of the population require access to the remarkable advances made possible by modem medical science. The better test is when people need such services; can they get them? And if they do get them, how long do they have to wait? It is in answering those questions that we uncover the worst tragedies of socialized medicine.

The authors cite the case of Joel Bondy as illustrative of what we could be facing. Joel was a two-year-old child with a serious congenital heart defect that urgently needed surgery. It was a serious operation, but one that was performed many times in hospitals across the United States. Unfortunately, Joel did not live in this country. He lived in Canada, where the country's national health care system has resulted in a severe shortage of cardiac care facilities. In fact, Canada has only 11 open-heart surgery facilities to serve the entire country, compared to 793 in the United States.

Joel's operation was repeatedly postponed as more critical cases preempted the available facilities. Alarmed at their son's deteriorating condition, Joel's parents arranged for him to be operated on in Detroit. When word of this case reached the Canadian media, embarrassed authorities told the Bondys that if they would stay in Canada, Joel would be moved to the top of the waiting list and could have his surgery immediately. Joel was taken on a four-hour ambulance ride to the nearest hospital equipped for the procedure, but there was no bed available. The family had to spend the night in a hotel. Del Bondy died the next day without ever reaching surgery.

The authors state that such a tragedy could easily become commonplace in this country if we make the wrong decisions on how to reform our health care system. The examples given are somewhat dated, but they are as valid today as when this book was written. Even a decade ago, 793 hospital communities in our country would be able to provide cardiac surgery–frequently the same day as they do now. However, in Canada and other socialized countries, the delays are even longer than they were in 1994. We must not let the United States become a third-world country in regards to health care. With a price of only a dollar for the abridged edition of Patient Power, we should all order dozens of copies to give to our friends, neighbors and especially our doctors and dentists before it’s too late.