This article first appeared in The News Journal print edition January 14, 2015 and at Delawareonline.com January 13, 2015. Read the original HERE
When I read Delaware’s proposed Health Care Innovation Plan, I can’t help but think of the German economy under the top-down control implemented in the 1930s.
Other than coal, Germany had to import most of the natural resources that drove its economy. The imports included oil, ore for steel, aluminum and copper, and grain to feed livestock. The German government leaders didn’t trust free markets. They didn’t believe in comparative advantage and international trade. They thought devaluing German currency to stimulate exports signaled national failure.
The strong central government’s solution to Germany’s dilemma was to take over Romania for oil, northern Europe for ore and invade the Ukraine to get grain for livestock. The government then put “experts” in charge of the various sectors of the German economy: agriculture, steel, transportation. It was clear by the end of 1941 that a disaster was coming. Central government “coordination” could not adjust adequately to all the complexities of rapidly changing economic conditions.
Similarly, the Health Care Innovation Plan for Delaware, Jonathan Gruber lite, doesn’t trust markets and believes relying on “experts” is the path to improved health for all Delawareans. Underlying this “philosopher king” approach to Delaware health care are some heroic assumptions.
Following is a brief list:
• Contrary to economic theory and experience, more competition (more independent physician practices) drives up prices and costs.
• Large health organizations (e.g., regional hospitals) with little competition are efficient and examples of “administrative simplicity.”
• Continuing to have two health insurance companies covering 75 percent of the Delaware commercial market will lead to falling insurance prices.
• The data on individual records in a single Health Information Exchange cannot be hacked (think Sony) or used for political leverage (think Lois Lerner).
• The highest at-risk health care population consumes electronic information on health issues and uses apps.
• Outcomes of health care treatment can be measured regardless of all intervening factors (e.g., the patient’s lifestyle, diligence in taking medication, timeliness is seeking professional medical help).
• Delawareans will rally around common health care goals as opposed to individual self-interest (themselves and their families).
• Labor markets for health care workers don’t function like other labor markets and need to be “controlled” (i.e., a shortage of nurses will not cause wages for nurses to rise and induce more nurses to work in Delaware and enter nursing schools).
• Children can be made to favor asparagus over chocolate cake.
Armed with a $35 million grant from the U.S. Center for Medicare and Medicaid Innovation, the state of Delaware and the major players in Delaware’s health care industry are to create a “coordinated team-based care system that delivers better health outcomes.” The special interest foxes can be trusted to guard the hen house.
Markets where consumers and suppliers make choices in the face of cost and income constraints can’t be trusted. And this includes the least advantaged citizens when given the freedom to choose through income supplements.
The arrogance and tyranny of the experts, even when well meaning, knows no limits and apparently never learns from history.
Dr. John E. Stapleford is president of the Caesar Rodney Institute.