Healthy Competition: What's Holding Back Health Care and How to Free It [Englisch] [Taschenbuch]

I enjoyed the book and found it presented a well organized argument for why it is so critical to allow the markets and consumers to experiment with new methods of controlling health care costs and improving access. I also appreciated the author's acknowledgement that health care is a special service that is critically important in our lives. That is what makes reforming the system so challenging.

The book makes clear that market based proposals to reform health care are designed to lower the cost of care and increase coverage. These are proposals that are critical to all Americans.

"Healthy Competition" by Michael F. Cannon and Michael D. Tanner of the Cato Institute is a critically important book for both those interested in health care policy as well as for every American as we all eventually consume health care services.

Cannon and Tanner's book starts with a foreword by the Hon. George P. Shultz: "We begin with a riddle. What country's health care system offers the best health services in the world, is consistently criticized for not being accessible enough, and yet is so accessible that overutilization is leading to runaway costs?" The answer is, of course, America.

The following 147 pages offers a detailed analysis of what's wrong with American health care (government and insurance industry policies that lead to overuse of medical services) and what's right (the strong remnants of a free market system that encourages innovation, high quality, at an often lower cost). Both detailed and heavily footnoted, but also very readable at the same time, "Healthy Competition" strikes the right balance between a dense academic paper and a clarion call for action.

In concluding the book, Cannon and Tanner write:

"Despite its marvels, America's health care sector continues to present troubling symptoms: excessive costs, uneven quality, a lack of useful information for patients and providers, extraordinary waste, and enormous burdens for future taxpayers. An accurate diagnosis points to too much government influence and too little choice and competition. Proposals to increase the role of government would aggravate these symptoms. More subsidies or controls would drain from the medical marketplace even more of the dynamics that drive other sectors of the economy toward lower prices and higher quality. The only sure remedy is to restore those dynamics to the health care sector.

"Although there are dark clouds on the horizon, we are heartened by the creation and steady growth of health savings accounts. HSAs have already begun to change private-sector health care from within, and will enable a reexamination of the role of government in health care."

The last citation in "Healthy Competition" comes from a June 1, 2004 Harvard Business Review article by Michael Porter and Elizabeth Teisberg. It deals with the oft-heard argument that we somehow should not apply free market principles to the health care sector:

"It is often argued that health care is different because it is complex; because consumers have limited information; and because services are highly customized. Health care undoubtedly has these characteristics, but so do other industries where competition works well. For example, the business of providing customized software and technical services to corporations is highly complex, yet, when adjusted for quality, the cost of enterprise computing has fallen dramatically over the past decade."

Cannon and Tanner accept this argument while also embracing the argument of many of the proponents of government control of health care because it is special and distinct from other parts of the economy - they just come to the opposite conclusion, concluding in their last paragraph, "...Unlike software, wireless communications, or banking, health care involves very emotional decisions, which often entail matters of human dignity, life, and death. However, we do not see the gravity of these matters as a reason to divert power away from individuals and toward government. Rather, we see the special nature of health care as all the more reason to increase each consumer's sphere of autonomy. The special nature of health care makes it all the more important that we use the competitive process to make health care available to more consumers - and makes it all the more important to get started now."

Two side notes of a personal nature: on February 1, 2007, I introduced AB 245, a bill that would allow the tax deductibility of contributions to HSAs (California is one of only four states that do not treat HSAs as tax deductible); and author Michael Cannon is someone I have grown to respect from our first meeting in 2004 as Lincoln Fellows of the Claremont Institute. I suspect we will be hearing quite a bit from Mr. Cannon over the next few decades - and, if policymakers are smart, they will listen carefully to what he has to say.

Reviewer: Chuck DeVore was a California State Assemblyman from 2004 to 2010, he served as a Special Assistant for Foreign Affairs in the Department of Defense from 1986 to 1988, is a lieutenant colonel in the U.S. Army Reserve, and is the co-author of "China Attacks." He is now a Senior Visiting Scholar for Fiscal Policy at the Texas Public Policy Foundation.

I was most impressed that Mr. Cannon does not fall prey to the usual America-good/Canada-bad posturing that categorizes most "debate" over fundamental health care reform. In fact, the authors are nearly as critical of America's health care system (and even of Republicans' stewardship of it) as they are of other countries.

I do agree, however, with Jonathan Cohn of The New Republic that the authors may have been a little selective in their choice of what data to highlight when comparing the U.S. to other countries. All in all, an insightful and immensely readable assessment of America's health care system.