Deane Waldman MD, MBA, has a simple solution to healthcare reform: StatesCare and market-based medicine. His rallying cry is to get the federal government completely out of healthcare. This post will acknowledge that many of his ideas do have some merit. But it will argue that his key message – less government — is hollowly polemical, and not sound philosophically, pragmatically, or politically, much less economically.
In his proposal we discern that “there is always a well-known solution to every human problem — neat, plausible, and wrong,” as quipped by H.L. Mencken.
This post will also look at the many of Dr. Waldman’s claims that do line up with those of this blog. And we’ll examine which of them are neat, which ones plausible and workable, but then which ones overly simplistic.
Dr. Waldman’s proposal was featured in a recent Thrive Global blog post.
First, let’s start with a few of his general principles, which are sound, but so non-specific or non-measurable as to be virtually mere platitudes (all are taken from the ThriveGlobal post):
- One can never fix anything without knowing WHY the problem exists. Treating symptoms but not the root cause has put us where we are in healthcare: nowhere.
- Medicine is a business. You need to learn all the things they teach in an MBA program.
- Most University Medical Centers have priorities in wrong order. They all put budget first. . . risk management [next] . . . research next, followed by teaching. All med centers have signs that read, patients come first, but their behavior puts patients LAST.
- Medical practice has misplaced (hopefully not lost) its soul, which is the one-doctor-one-patient, “whatever it takes to help the patient” ethos. Efficiency has supplanted effectiveness.
- Our healthcare public policy is determined by people who know nothing of systems theory, [or] went to med school.
We Agree on a Lot
Second, let’s list some of his cited facts and conclusions that describe the healthcare problem, and which largely line up with issues targeted by this blog (all are taken from Curing the Cancer):
- Healthcare costs are eating our lunch, along with breakfast, dinner and the mortgage payment! (p. 1)
- [The United States] receive an average amount of benefit, and yet we spend double what most nations spend. (p. 14)
- The rise of the third-party payment structure eliminated the two free-market forces that keep prices down: buyers’ incentive to economize and competition among sellers. (p 25)
- The symptoms of healthcare system failure are obvious: national overspending, unaffordable care as well as unaffordable insurance, and inadequate access to care. (p. 27)
- In 2017, the United States spend $3.5 trillion on healthcare. At least 40 percent, more than $1 trillion, was paid to support… bureaucracy, administration, rules, regulations, and compliance. (p. 27)
- The number of healthcare actuaries, accountants, administrators, agents, billers and coders, compliance officers, consultants, in-person assisters, lawyers, managers, navigators, regulators, reviewers, and rule writers in healthcare is… certainly more than ten million. (p. 28)
- A part of our healthcare system has gone rogue… This angel-turned-devil is grabbing all the energy (money) it can find and growing at an alarming rate, apparently without limit. (p. 31)
Next, let’s drill down on some of Dr. Waldman’s main supporting claims to find some kernels of truth but some missing nuance.
- Waldman’s claim: Federal healthcare is costly, inefficient, and unresponsive. This blog rebuts that Medicare has administrative costs in the range of 4% compared with and average of 20% in the commercial sector. Medicare patients poll among the highest in satisfaction with their healthcare benefits.
- Waldman’s claim: The root cause of cost overruns is federal bureaucrat salaries and (unnecessary) federal regulations. This blog rebuts his claim as unsubstantiated. Published evidence instead incriminates overtreatment ($226 billion), pricing failure ($178 billion), administrative complexity ($389 billion), and fraud ($272 billion) (See this blog’s post and post.)
- Waldman’s claim: Devolving control of healthcare to states would promote innovation and fiscal discipline. This blog counters that states already have substantial autonomy to innovate. They already enjoy waivers from Medicare and Medicaid to experiment with demonstration programs. Yes, states must balance their own budgets, but that leaves the commercial sector untouched. Yes, states have an important role in innovating and in adapting delivery and financing systems to local circumstances. But this blog argues that even if one accepts a larger states’ role in administration and financing, this role needs to be guaranteed and supplemented by federal power. First is the power over cronyism and monopolies. Second is the power to set quality and interoperability standards. The states are not up to this task because of the immense power of corporate healthcare and the immense fragmentation in the name of the free market.
And Dr. Waldman’s key claim is: “We need to get Washington OUT of healthcare and return authority to We the People in the states.” (p. 50) This blog’s counter-argument is summarized:
- “We the People,” by signing the 1789 Constitution, did ordain and establish the federal government precisely as the quintessential instrument of democratic authority. “Getting Washington OUT of healthcare” thus rings hollow as more a polemical soundbite than as a sound governing principle.
- Waldman repeats a related polemical mantra: “Healthcare is not a right.” That is correct. The Founders viewed “the General Welfare” (in which this blog includes healthcare) not as an “inalienable right,” divinely ordained. Rather the common good is the quid under the social contract exchange for the quo of some individual freedoms. The Founders recognized that, as citizens, we can do some things better together than as separate actors piecemeal. Public-private partnerships have been a key feature of America’s success: banking system, canals, transcontinental railroad, internet, the moonshot, ending the COVID-19 pandemic, not to mentions hospitals, schools, defense systems, hydroelectricity, and more.
- As a pragmatic matter, our $17 trillion economy needs its $3.8 trillion healthcare sector to support a workforce that is healthy, productive, and nimble (not artificially tied to employers for fear of losing critical protection against health risk). Governing this large complex sector is not the job of individual corporations. It is the job of government representing all stakeholders. Corporations, the economy at large, and all individuals in them will, in turn, benefit from stability, predictability, and a floor of health and safety protections that is not set by a “race to the bottom.” Government at each level – including federal – has its role.
- Perhaps we could agree with reformulating Dr. Waldman’s statement as “We need to get Washington politicians OUT of healthcare,” especially those posturing solely for their own political gain as well as those in the thrall of powerful well-financed lobbies. Dr. Waldman does not mention the $622 million spent by healthcare interests on lobbying, nor the $14 billion spent in the general election in 2020, in which healthcare was a pivotal issue. This blog sees corrupted politics and special-interest spending as the true root cause of failings in our healthcare system – propping up high-cost winners at the expense of both losers and the public good. We need statesmen and savvy reformers to lead the way.
Conclusions: Agreements and Disagreements
And so, in conclusion, let us agree with Dr. Waldman that
- Our current healthcare system is failing both to deliver needed care to one tenth of Americans as well as to control costs. This demands action.
- States have an important role in the healthcare system, namely to help adapt the system to local circumstances.
- Market mechanisms (especially working through public-private partnerships) can help healthcare be innovative, efficient, and customer-responsive.
- Innovative ideas, such as Dr. Waldman’s proposed “safety net” publicly subsidized Healthcare Spending Accounts, bear careful consideration. (Note: But how is this different than Obamacare’s subsidized marketplace exchanges, which Dr. Waldman opposes?)
But let us disagree with Dr. Waldman about the role of the federal government. Contrary to President Reagan’s quip, government — especially good and well-functioning government — is not just part of the solution but in fact must be a key part. To make this argument using Dr. Waldman’s metaphor, government is not a cancer, that is, not the simple root-cause of all problems, that can be surgically removed like a tumor.
Dr. Waldman the MD is wrong about that part. Instead, Dr. Waldman the MBA is right that healthcare is a system and needs a systems-based, multi-pronged reform. Moreover, this blog claims that “curing” healthcare will require not precise surgery, though some narrowly targeted measures will be needed. Rather, true reform will require grassroots political will and political power to overcome greed, cronyism, and built-in failures of cost and access.
Now, take action.
Deane Waldman MD MBA, Curing the Cancer in U.S. Healthcare, Albuquerque NM: ADM Books (self-published), 2019.
Title: Deane Waldman, MD, MBA