Given the high pedigree of the co-authors I purchased this work eagerly anticipating a very meaty satisfying read. Sadly, I was very much disappointed.
The book is an uneasy combination of the thoughts of two authors coming from very different backgrounds and political vantage points.
Dr. Gibson is a medical professional with little business or economics background. Her focus - as with many other medical professionals - is upon detailed technical aspects of medicine rather than broad policy issues.
Dr. Prasad is a general economist with very little medical or health economics background. As a Wall Street Journal/American Enterprise institute style economist, his approach to health care aims to reduce entitlement spending first, and address other aspects afterwards.
The book therefore alternates between very micro-level specifics on technical medical aspects of health care in America - such as why hospitals keep giving sub-par care to patients - and broad economic generalities, some of them inaccurate and misplaced to explain why the USA cannot afford Obamacare because its international competitiveness is slipping.
To compete with China in future, the USA must forego improvements in health care because the additional costs will cause US firms to offshore more US jobs to China and other parts of Asia. Dr. Prasad seems evidently to believe that the US economy has suffered a body blow during the Great Recession, and that fiscal stimulus was the wrong approach to addressing the immediate macro-economic challenges it posed. The rationale for such view is not given. While the book was published in 2012, it is to be assumed it was written earlier. As is well known now, the US economy has recovered much more strongly from the Great Recession precisely because - unlike in Europe - fiscal and monetary stimulus combined with quick actions to recapitalize US banks and consolidate their debts prevented the recession from deepening but helped engineer a good recovery.
For a book that talks a lot about the private vested interests involved in health care in the USA, it provides remarkably little in-depth analysis of the micro-economics and industrial organization economics of health insurance and health care. Yet both of these are crucial to understanding how US health care got to where it is today. The authors seem to believe that private insurers are the real villains benefitting from large profits and little competition. But they say little at all about the lack of price competition and the rapid rise of health care treatment costs and prices - driven also by lack of price transparency and growing oligopoly and monopoly forces.
The book rightly points out how big private vested interests in the health insurance and health care industries have sought to neutralize or roll back the implementation of the Obamacare reforms. But nothing is said about the effort to bring about competition in the health insurance industry through creation of federal and state-level health insurance exchanges. The book attempts to make the case that the individual mandate coupled with the ending of pre-existing conditions exclusion and parents coverage of children up to age 26 are fundamentally unsound because this will simply enable private insurers to have a bigger market from which to extract high profits. Yet, surely the very purpose of the exchanges is to ensure the opposite?
The book grossly underestimates the number of uninsured in the USA today. It says there are 35 million, when in fact there are now 50 million. It then says that no more money needs to be spent to meet the health care needs of the uninsured. All that is required is to eliminate fraud and waste - estimated at $250 billion, or 10% of total US health care spending. These numbers also do not jibe with the actual per capita cost of health care in the USA of $8000. This yields a total cost for 50 million uninsured of over $400 billion a year! Of course, the costs could be much higher than that, since uninsured folks often pay two to three times higher prices for the same treatment compared with those lucky enough to be insured - a fact not mentioned in this book!
Oddly, having made a big case for abuse of private market power - by private insurers and drug companies - as a major cause of high costs and prices in US healthcare, the book's recommendations make not a single concrete market-based proposal to address this issue. Instead, the book makes ten almost entirely bureaucratic recommendations all of which only address secondary and smaller aspects of the Obamacare reforms and follow-up measures required.
So the book recommends as the most important ten things to be done : (1) keeping the Independent Payments Advisory Board - without explaining how this will tackle the endemic problem of abuse of market power and lack of price transparency by making market work more effectively; (2) diminishing the AMA's role in determining the balance between primary care doctors numbers and specialists - probably a good idea, but is this crucial ?; (3) instead of spending any more money to widen health insurance and health care coverage, just attack fraud and abuse - sounds like the old political chestnut, not clear how this is up to the task, when Medicaid and Medicare rolls are expected to double in ten years ? (4) "privatize the gains, privatize the losses" - don't make the taxpayer responsible for bailing out private manufacturers of defective medical devices. Again, not clear this is a top priority issue?; (5) open up Medicare data to reveal high volume providers - along the Massachusetts model lines. Again, good idea. But will this be enough to bring about market price transparency - doubtful ? (6) create a Harvard School of Regulation - to strengthen healthcare regulation to hold health care providers accountable for safer patient care - Again : is this really a major issue? Will it really turn around the economics of health care? And why more bureaucracy and regulation? (7) create a Health Care Corps of Engineers to advise hospitals on how to become more efficient! This assumes the main efficiency problems of hospitals are clinical and engineering ones, and not managerial, financial and economic ones. Many of us would say it's the other way around! Also, after Hurricane Katrina, it's not clear the CoE is a good model? (8) State governments should follow contracts between insurers and hospitals to check for excessive "clout" driving up prices. This is a good idea. But why only get state governments to do it? Why not require publication of such prices as a way of informing and empowering consumers? Why not anti-trust proceedings to root out market power abuses ? (9) start a "Consumer Reports" for medical devices - Again not clear why this is such a big deal. And anyway, aren't much broader-based market transparency measures needed? Why not an Amazon.com for medical devices complete with Amazon Marketplace? And get Walmart involved too? (10) Have the Federal government become a "prudent buyer" of all drugs - negotiating with drug companies, as is done in many other advanced countries today. This implies price controls by the Federal Government - a very odd recommendation coming from the AEI ? And anyway, would it really be politically feasible or effective? What about competition - from imports and by banning exclusivity deals with doctors?
In short, this is a very frustrating book that appears to promise much, but really delivers little overall light on the big policy issues in US healthcare reform today.
