Health Care for Us All : Getting More for Our Investment

304 Pages·2009·1.4 MB·English

by  Henderson, James, Grinols, Earl L

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HEALTHCAREFORUSALL:GETTINGMOREFOROURINVESTMENT
HealthCareforUsAllchallengesthecommonbeliefthathealthcareproblemsinthe
United States are difficult and possibly insoluble. Americans want to get more for
theirhealthcarespending,includinginsurancecoverageforeveryonethatispatient-
centered,portable,andpermanent.Inadditiontothesetwogoals,theywantasys-
temthatrespectsincentivesforhigh-qualitycare,exhibitsaresponsibleapproachto
thebudget,andissustainable.HealthCareforUsAlladoptsthesefiveobjectivesand
appliesanefficiencyfiltertoidentifythevirtuallyuniqueframeworkthatmeetsall
objectives.ImpedimentstoachievingAmericans’goalscanbesummarizedunderthe
rubricsoftoolittleinsurance,toolittleincome,andtoolittleproperlyfunctioning
market.Theefficientremedyforeachisthesubjectofthebook.Relatedphilosophi-
calaswellaseconomicissues,suchaswhythereshouldbegovernmentinvolvement
inhealthcare,areanalyzed.
EarlL.GrinolshasbeenDistinguishedProfessorofEconomicsattheHankamerSchool
ofBusiness,BaylorUniversity,since2004.HehaspreviouslytaughtatMIT,Cornell
University,theUniversityofChicago,andtheUniversityofIllinois.ProfessorGrinols
workedasaresearcheconomistfortheDepartmentoftheTreasuryandasSenior
Economist for the Council of Economic Advisers. He has extensively published in
thefieldsoffinance,publicfinance,internationaleconomics,andmacroeconomics.
Heistheauthorofthreepreviousbooks,includingGamblinginAmerica:Costsand
Benefits(2004),alsopublishedbyCambridgeUniversityPress.Hehastestifiedbefore
Congressandnumerousstatehouses,andhisworkhasbeencitedbyleadingnewspa-
persandnewsoutletsincludingTheEconomist,WallStreetJournal,LosAngelesTimes,
BostonGlobe,FinancialTimes,ChicagoTribune,PhiladelphiaInquirer,Time,U.S.News
andWorldReport,WashingtonPost,andNewYorkTimes.
JamesW.Henderson,BenH.WilliamsProfessorinEconomicsatBaylorUniversity,
receivedhisPh.D.fromSouthernMethodistUniversity.HehastaughtatBaylorin
Waco,Texas,since1981.ProfessorHenderson’shealthcareresearchondiverseissues
such as alternatives to pharmaceutical patents, cost-effectiveness of cancer screen-
ing, availability of hospital services in rural areas, hospital location decisions, and
thecost-effectivenessofprenatalcareappearsinvariousplaces,includingPharmaco-
economics,HealthCareFinancingReview,JournalofRuralStudies,ExpertReviewof
PharmacoEconomicsandOutcomesResearch,andtheJournalofRegionalScience.His
currentresearchincludesexaminingthecostofstate-levelhealthinsurancemandates.
HisbookHealthEconomicsandPolicy(South-Western)isnowinitsfourthedition.

Health Care for Us All
GettingMoreforOurInvestment
EARL L. GRINOLS
BaylorUniversity
JAMES W. HENDERSON
BaylorUniversity
CAMBRIDGEUNIVERSITYPRESS
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Cambridge University Press
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Published in the United States of America by Cambridge University Press, New York
www.cambridge.org
Information on this title: www.cambridge.org/9780521445665
© Earl L. Grinols and James W. Henderson 2009
This publication is in copyright. Subject to statutory exception and to the
provision of relevant collective licensing agreements, no reproduction of any part
may take place without the written permission of Cambridge University Press.
First published in print format 2009
ISBN-13 978-0-511-57997-4 eBook (EBL)
ISBN-13 978-0-521-44566-5 Hardback
ISBN-13 978-0-521-73825-5 Paperback
Cambridge University Press has no responsibility for the persistence or accuracy
of urls for external or third-party internet websites referred to in this publication,
and does not guarantee that any content on such websites is, or will remain,
accurate or appropriate.
ForShelly,Chris,Kimberly,Tom,Lindsay,Josh,andDaniel,
andLuke,Lisa,andJesse
Help,oratleast,donoharm.
Hippocrates(460–377B.C.)
Contents
ListofTables pagex
ListofFigures xi
Preface xiii
Acknowledgments xix
ExecutiveSummaryoftheTargetedInterventionPlan xxi
PART I: GOALS AND WORKING PRINCIPLES
1 Introduction 3
2 Goals 17
2.1 Goal1:UniversalCoverage 19
2.2 Goal2:Patient-CenteredCoverage 21
2.3 Goal3:RespectforIncentivesforHigh-QualityCare 21
2.4 Goal4:CostContainment 24
2.5 Goal5:Sustainability 24
3 Principles 26
3.1 Principle1:TheInterventionPrinciple 27
3.2 Principle2:IncentiveSymmetry 29
3.3 Principle3:EveryPotSitsonItsOwnBase 31
3.4 Principle4:NoPolittroughing 36
3.5 Principle5:NoGovernmentalizing 41
3.6 Principle6:NoPonziSchemes 44
PART II: BACKGROUND ECONOMICS AND ETHICS
4 Markets,VPOs,Government 49
4.1 VoluntaryPrivateOrganizations 51
4.2 Markets 53
vii
viii Contents
4.3 Government 60
4.4 ImplicationsforEfficientInterventioninHealth 67
5 Education,Charity,andtheAmericanEthicalBase 69
5.1 LessonsfromEducation 71
5.2 TheAmericanEthicalBase 78
5.3 SummaryonPublicProvisionofPrivateGoodsandCharity 87
PART III: APPLICATION
6 WhyGovernmentinHealthCare? 91
6.1 EfficientCollectiveAction:Reprise 92
6.2 PublicProvisionofPrivateGoodsCautions 99
6.3 IsHealthCareDifferent? 105
6.4 Conclusion 107
7 Insurance 109
7.1 What’sWrongwithThisTale? 109
7.2 EssentialInsurance 111
7.3 SummaryandEvaluativeDiscussion 126
8 TheTargetedInterventionPlan 130
8.1 ThePlan 131
8.2 EnablingCompassion 148
8.3 FinancingtheTargetedInterventionPlan 149
8.4 TransitionIssues 151
8.5 MandatesversusIncentivesversusLeavingSomeUninsured 154
8.6 AnswerstoQuestions 156
8.7 HowtheSystemWorks:AParable 159
8.8 Conclusions 161
PART IV: PROTECTIVE MEASURES
9 ForestallingFreeRiders 167
9.1 Background 167
9.2 Massachusetts:LevelingthePlayingField 168
9.3 Switzerland:IndividualResponsibilityinaFederalist
Framework 173
9.4 LessonsfromMassachusettsandSwitzerland 176
10 PreservingPrices 178
10.1 Background 178
10.2 Pricing 179
10.3 RestrainingPricesinTheory 185