Now, let me give you just one example of how “getting the incentives right” can solve at least one of the problems in health care, on at least one level, and probably on many more.
If you asked the supporters of this bill here today whether or not they want to take the profit motive out of health care, do any of you seriously wonder what their answer would be? “People before profits” is an often heard slogan at single-payer rallies.
Yet, when I asked participants at an Oregon Health Fund Board community meeting in Portland in 2008 about the then-recent trend toward $4 generic drug prescriptions, their views of the profit motive in health care began to change.
Why did Fred Meyer start offering $4 prescriptions in 2008? Why did Safeway offer to match competitors’ prescription prices that year also?
The answer is that in 2007 Walmart launched an aggressive program offering 30-day supplies of common generic drugs for just $4. Both Fred Meyer and Safeway decided to match that low price rather than risk losing customers to a competitor. Each of these big chains is a for-profit company. Yet, each realized that to make profits in health care, they needed to offer something that would attract and retain customers.
If Walmart or some other private company hadn’t taken the lead on $4 generic prescriptions, who in this room believes that government centralized drug purchasing, or price controls, would have achieved something anywhere near dramatic?
The “profit motive is bad” fallacy is based on the misconception that profit is a cost of doing business. But profit is not so much a cost as it is a signal that consumer needs are being met. Satisfy more consumers, and a business can earn more profits.
So, rather than eliminating profit from our health care system, we need to encourage companies to innovate and to earn profits by lowering prices to consumers.
I don’t see anything in this bill that would have led to such results. In fact, I’m afraid that the “affordable” care it promises will turn into even more unaffordable care than we have now, with all the rationing and long waiting lines that characterize other top-down, bureaucratically controlled health care systems around the world.
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Finally, in 1999 British researcher John Spiers spent a month in Oregon analyzing The Oregon Health Plan. He compared it to Britain’s National Health Service and found that both fail to achieve what he believes most of us want in a health care system. His report is available on our website and I’ve provided a link at the end of my written testimony.** I would like to summarize his findings and concerns, which are particularly relevant to our discussion here today:
Dr. Spiers pointed out that neither the British National Health Service nor The Oregon Health Plan relies on flexible, agile, informed markets. Instead, they’re political fixes. While he was here in 1999, the father of the Oregon Health Plan, Governor Kitzhaber, was proposing an $80 million cut in its budget. Dr. Spiers noted that “Political fixes in health care come unfixed fast.”
He noted that since the British state monopoly system was founded in 1948 it has remained outside the modern, electronic, competitive, open economy. Instead, it asks people to lower their expectations, which is just the opposite of what happens in virtually every open, competitive marketplace.
The British results are grim. From the beginning, the British government made the mistake of suppressing prices — it thought that free supply was the answer to helping the poor. The better way would have been to beef up purchasing power and let markets develop in response to demand.
In the UK, all health services are rationed by government. There are major shortages of staff, low morale and a rising tide of patient complaints. Costs vary by a factor of six between hospitals for standard operations, and government necessarily suppresses information to curtail the demand for choice.
Modern drugs are routinely denied to patients: For example, only 15% who could benefit from Interferon-beta for MS receive it; there is uneven delivery of combination therapy for AIDS. Doctors are told not to prescribe Aricept for Alzheimer’s until the patient asks for it. So patients who have to be reminded who they are have to remember to ask for a drug by name.
Cancer care is a particularly shocking. More than half of all patients do not see a cancer specialist. Britain has only 340 clinical oncologists; in the USA Dr. Spiers thought the figure was closer to 20,000 for a population only five times bigger. Hardly surprisingly, UK survival rates are very poor.
The National Health Service deliberately dis-empowers the individual. It was intended to do so. British citizens are told that only experts − doctors and social scientists − can know how to satisfy their health care needs. So the patient is not seen as a consumer, deciding what he wants and will pay for, but as a passive recipient of whatever the experts decide that he ought to have. Consumer sovereignty would defeat the very purpose of a national, socialized health service. This is an ideologically-driven system, retained for political reasons by governments of all parties despite its results.
The National Health Service has failed in its own terms — it is neither free, nor equitable, not effective, nor efficient. It is, however, cheap — unless you happen to be one of the many who are denied service. Walmart wouldn’t last long selling such a product.
In health care, everything is ultimately rationed. The question is by whom, and how.
These are genuinely big questions. They concern who we are, and who the state assumes us to be. They are about the fundamentals of human nature and social organization.
Dr. Spiers concluded his report with two quotes. Nelson de Mille, the American novelist, once wrote that “It is dangerous to be right when the state is wrong.” But, Dr. Spiers noted, it is our responsibility to believe in the power of ideas, and to argue for them. As the British health care manager Leigh Richardson has said, the ultimate question is…who decides who decides?
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