Managed Health Care: A Passing Phase

Commentary by Pete du Pont

Somebody has observed that nations tend to base their strategy for national defense on winning the war already past. Thus France built the Maginot Line after World War I. The same might be said of America's health care policy - managed care is America's Maginot Line.

America started down the slippery slope of third-party payment of health care costs more than half a century ago with employer-based health insurance (as a way to get around government wage and price controls by offering health insurance as a fringe benefit). Then, with the introduction of Medicare and Medicaid, the government became more directly involved and started the dizzying rise in health care costs in the 1960s. For the past several years we've been trying to control health care costs from the top down - an approach relatively as effective as nailing Jell-O to the wall. But health care is too personal a matter to lend itself to a one-size-fits-all approach. Every individual should have the opportunity to make personal decisions about personal health care in informed consultation with a personal physician.

Instead we have such ludicrous episodes as a Medicare beneficiary who wants to pay for one kind of artificial hip but is forbidden to do so, and must accept a different one approved by Medicare.

As evidence of the end result of health care command-and-control, you are invited to look at Britain's National Health Service. It has gained 20,000 senior managers and lost 50,000 nurses since 1989 - and almost 50,000 people have been waiting more than a year for operations.

This is not to disparage the idea of managed care as a short-term approach, but to challenge the idea of managed care as long-term policy. Wage and price controls didn't work for the Roman Emperor Diocletian in the fourth century and they don't work today. Managed care is basically wage and price controls in a new dress, whether called HMO, PPO, POS or some other combination from the alphabet.

Managed care doesn't fit well with human nature, but the primary reason managed care is doomed is the progress of medical science.

Today we have drugs and devices undreamed of only a short time ago. Genetic research and new scientific findings hold the promise of future developments that may dwarf what has already been done. Tomorrow there will be thousands of ways we can spend trillions of dollars on health care, all with good purpose.

For all of us, that's good news. To the managed care bureaucrats, it's bad news - another cost to be controlled, limited and managed to make sure it is not too much.

But just for a moment, consider how we live some other parts of our lives.

Today's supermarkets are light years removed from the corner groceries of yesteryear. Anyone anywhere can find thousands of food items every day that weren't available at any price in the past. We could spend trillions of dollars just on food.

New fabrics and new materials make it possible for us to adapt to whatever weather we face in ways far removed from a few decades ago. We could spend trillions of dollars just on clothing.

But we make personal choices. So the providers of food and clothing - these necessities of life - try to get our business by offering an array of varying quality and prices from which to choose.

If we had managed food care or managed clothing care, you can be sure that there would be weeping, wailing and gnashing of teeth every time a new flavor of ice cream was introduced or hem lines changed.

A ridiculous analogy? Not at all. That's exactly where we've gone with health care. Every innovation is viewed as a threat rather than an opportunity. Health care costs go up because we don't have a free market in health care.

What is ridiculous is a health care policy that can seriously pay medical schools not to train doctors as a way of reducing health care costs. The reasoning is that if you have more doctors, they'll attract more patients and run the cost of health care up - the law of supply and demand turned on its head.

The answer to rising health care costs is a new policy approach that recognizes health care as a necessity of life that, like food, clothing and shelter, is best dealt with by individual choice. We now have a tangled web of government interference and employer involvement that must be sorted out so that buying health care is like buying a car - you have a choice of a variety of types at a variety of prices and with a variety of payment options.

The National Center for Policy Analysis is a public policy research institute founded in 1983 and internationally known for its studies on public policy issues. The NCPA is headquartered in Dallas, Texas, with an office in Washington, D.C.