Health Care Needs Market-Based Reforms

In part one, we discussed the trillion-dollar obesity epidemic. It must be addressed by making the obese pay more for health insurance, mandating wellness and prevention programs, and employing shame, especially because a study found that many overweight Americans have abandoned efforts to become healthier.

But that is only part of the solution. If proven, market-based reforms are enacted, Americans will enjoy significantly better health care. The fact that we don’t have them is an indictment of Washington’s do-nothing culture. Hopefully that will change.

Some ideas:

1) Lengthen patent periods for prescription drugs. Critics will claim that throws a bone to the "Evil Empire" – the pharmaceutical and bio-tech industries – but they would be wrong. It’s common sense, and one of the only ways to reduce drug prices.

At face value, it costs billions to bring a single drug to market. But the true outlay is much higher – as much as $11 billion when factoring in drug failures. In other words, pharma companies often spend billions on a drug’s development, only to see it fail (fewer than one in 10 medicines that begin clinical trials succeed). Those massive sums aren’t simply shrugged off, but made up elsewhere so that research on other life-saving drugs can continue. Thus, the primary driver for high drug costs is the desire to stay profitable, so that more miracle medicines can be discovered.

That’s the whole point: There isn’t a person in America whose life hasn’t been saved, lengthened or enhanced by a pharmaceutical drug, from ibuprofen to chemotherapy. The industry’s advances are mind-blowing – they can now enter cells, repair damaged DNA, and fix disease-causing mutations (CRISPR gene editing) before they become a problem. But if such innovations are to continue, patent extension is needed. Yes, patents are 20 years, but that’s a misnomer, because the clock starts when the drug is invented – not brought to market. Since it can take eight years of further research and clinical trials before a drug reaches consumers, the effective patent period is substantially reduced.

Companies not forced to recoup their development costs so quickly could lower prices. Obviously, the industry must be wary of greedy pricing practices (evidenced by the Epi-pen saga), but lengthening patent periods is a win-win.

2) Take on the trial lawyers. Because Donald Trump isn’t beholden to the trial lawyers and their deep pockets, he is uniquely positioned to spearhead medical-malpractice reform, which would give the cowards in congress the "political cover" they crave. Let’s not forget that it was President George W. Bush and the Republican majorities in Congress who not only didn’t have the guts to oppose the trial lawyers, but were in bed with them. Too bad, because the trial bar, as much as anyone, has been responsible for astronomical insurance increases.

No one is saying the aggrieved shouldn’t receive fair compensation, but jackpot jury awards, resulting in skyrocketing malpractice premiums, have forced doctors to order needless (and expensive) tests solely to cover their derrieres. That must end.

3) Allow the purchase of health insurance across state lines, which is currently illegal. So we are permitted to buy auto insurance from anywhere in the country, but not health insurance. Why the stranglehold on the free market?

Because it’s not in the interests of the major insurance companies to have consumer choice, since that would end their gravy train and force them to become competitive. Thankfully for them, they have deep pockets. Result? Nothing has changed. Big insurers continue to blow smaller, niche firms out of the market and carve monopolistic kingdoms for themselves. Consumers are held hostage to skyrocketing rates and decreasing coverage, while insurers laugh all the way to the bank. Enough is enough.

Until competition is implemented, true health care portability will remain unattainable, and job-creating companies will be stifled as they remain pawns in a corrupted system. Mr. President, tear down those walls!

4) Eliminate the "use it or lose it" regulation on flexible spending accounts. Instead of incentivizing savings, such plans encourage wasteful spending as millions buy 27 bottles of aspirin at year’s end rather than see their money disappear. But if people had the ability to roll balances year over year, there would be huge cost savings.

Likewise, increase the cap on health care savings accounts. HSAs significantly reduce costs because they shift much of an insurer’s risk to individuals, incentivizing wise choices. Money invested in an HSA is pre-tax, grows tax-free, and is distributed tax-free. Bottom line: No taxes for HSA medical expenses are ever paid. What’s not to love?

5) Make America’s hospitals more accountable for the billions they receive from the federal government. Above all, they must reduce their unacceptably high rates of preventable hospital infections and deaths. At the risk of appearing cynical, there’s no incentive to reduce infections, because they keep hospital beds occupied, generating additional millions. Time to get tough by placing stringent accountability standards on taxpayer monies allocated to hospitals. Reduce preventable errors, and you’ll receive full funding, possibly even a bonus. Keep running a sloppy ship where people needlessly suffer and die, and you’ll lose big time. Threaten to yank funding, and they’ll quickly improve, while health care costs decrease. Another big win.

And mandate hospital workers use soap and warm water rather than hand sanitizer, as it’s more effective in killing germs that otherwise could be spread to patients.

6) Keep the pre-existing conditions element of Obamacare, and retain children’s ability to stay on their parents’ plans until age 26. Medicaid payments to states should also continue since it’s 45 percent cheaper than insuring people privately ($5,000 vs. $9,000 per person, per year). But how health care is administered through these block grants would be better left to states rather than federal government mandates. States would do things differently, so we would discover (and emulate) the most efficient programs, while discarding those that don’t work – the market at its finest.

7) Mandate that food stamps cannot be used to purchase junk food or soda. And no welfare for those failing drug tests. Our money, our rules. Take it or leave it.

8) Require bathroom doors in businesses (especially restaurants) open outward, which would significantly decrease illnesses contracted by others’ poor hygiene. Hyper-partisanship has clouded judgment on health care. Obamacare was the nation’s most expensive health program, but right behind it was George W. Bush’s Medicare Part D expansion, another failed government foray which added hundreds of billions to the deficit.

Let’s reform health care by treating it as we do other market-based insurances. Will older and unhealthy people pay more? Absolutely. Different criteria determine different financial outlays – the way it should be.

People living in a flood plain or hurricane zone pay higher insurance premiums. But there are discounts incentivizing better home ownership: Burglar alarms, smoke detectors, and strengthened roofs that mitigate hail damage.

Young drivers pay more for insurance, but their rates decrease with age as they become better motorists. Discounts incentivizing safer driving abound: Air bags, good credit scores, stable jobs, and avoiding accidents, tickets and DUIs.

Smokers and unhealthy people are charged higher life insurance premiums, for obvious reasons.

So, if we incentivize people to drive more safely and be better homeowners, why aren’t we doing the same to make them healthier?

Why, if we accept these logical, market-based insurance criteria, do some still disagree that older and unhealthier people should pay their "fair share," since they utilize more health care services? How long will we continue covering bad behavior? And why should healthy young people, already facing hardships while starting their careers, be saddled with subsidizing hordes of unhealthy people with self-inflicted medical ailments?

The GOP spectacularly failed to address these ideas, to its peril. If America’s health care system is to get well, the prescription is common-sense reforms.

Chris Freind is an independent columnist and commentator. He can be reached at [email protected].