Customer Reviews

Healthy Competition: What's Holding Back Health Care and How to Free It

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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 is a candidate for U.S. Senate in 2010, a California State Assemblyman, he served as a Special Assistant for Foreign Affairs in the Department of Defense from 1986 to 1988, retired from the Army National Guard as a lieutenant colonel, and is the co-author of "China Attacks."

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.

"We begin with a riddle. What country's health care system offers the best health services in the world, is constantly criticized for not being accessible enough, and yet is so accessible that overuse is leading to runaway costs? The first part of the riddle reveals that the answer could only be America. The remainder gives the contours of a paradox that vexes policymakers year in and year out. Welcome to health care, American-style.... To carry the health care debate on its next lap, America first needs a clear, well-informed, and well-reasoned analysis of the apparent paradox of its health care system. And it needs an agenda for reform that respects the wonders that modern medicine has developed and the creative market processes that deliver them. Cannon and Tanner offer proposals that would further tap the power of markets to make health care more valuable and more affordable. That makes Healthy Competition essential reading."
--George P. Shultz, Former Secretary of State, from the foreword

"Surprisingly readable, extraordinarily comprehensive, highly persuasive. Read how the key to improving health care in the United States is to convert the patient from a ward of the state to an independent, self-interested customer."
--Milton Friedman, Nobel Laureate in Economics

This book is logic, well-reasoned, and has lots of footnotes pointing to research studies and reliable sources of data. Even if you disagree with their prescription for how to fix the problem, you will get a lot from this book by following along with their diagnosis of the problems facing our health care system.

The book's greatest strengths may also be it's greatest weakness. This book is "wonkish" -- filled with hard data and logic. If you're looking for entertaining anecdotes or emotional arguments, this is not the book for you.

...but only in the title. A well written book both describing (in surprisingly concise writing) the problem, as well as laying out a path towards fixing it. I can't say I fully agree with his proposals, but I am much better informed, and my views have been altered as a result of this book. In my mind, that is a terrific outcome for any book of substance.

Intellect with humility is hard to come by. Cannon and Tanner define a clear path for all Americans to have health insurance and they have the humility to believe in Americans as wise consumers. Different than politicians who 'know what's best for you,' they trust you to make prudent decisions for yourself. Free markets are healthy and they provide an excellent outline for cost savings and a healthier 'you' by putting you in charge of your own well being. I want to thank Cannon and Tanner for being Americans and loving freedom, especially in the face of fear mongering socialists. God Bless America!