The Way to Fix the Healthcare System

In his WSJ piece called What to Do When ObamaCare Unravels, John Cochrane does one of the best jobs in detailing how to fix the healthcare system.  I don’t know if you can read the link due to subscription issues so here are the high points:

  • This fall’s website fiasco and policy cancellations are only the beginning. Next spring the individual mandate is likely to unravel when we see how sick the people are who signed up on exchanges, and if our government really is going to penalize voters for not buying health insurance. The employer mandate and “accountable care organizations” will take their turns in the news. There will be scandals. There will be fraud. This will go on for years.
  • There is an alternative. A much freer market in health care and health insurance can work, can deliver high quality, technically innovative care at much lower cost, and solve the pathologies of the pre-existing system.
  • Regulatory compliance costs, approvals, nonprofit status, restrictions on foreign doctors and nurses, limits on medical residencies, and many more barriers keep prices up and competitors out. Hospitals whose main clients are uncompetitive insurers and the government cannot innovate and provide efficient cash service.
  • We need to permit the SouthWest Airlines, Walmarts, Amazons and Apples of the world to bring to health care the same dramatic improvements in price, quality, variety, technology and efficiency that they brought to air travel, retail and electronics. We’ll know we are there when prices are on hospital websites, cash customers get discounts, and new hospitals and insurers swamp your inbox with attractive offers and great service.
  • The Affordable Care Act bets instead that more regulation, price controls, effectiveness panels, and “accountable care” organizations will force efficiency, innovation, quality and service from the top down. Has this ever worked? Did we get smartphones by government pressure on the 1960s ATT phone monopoly? Did effectiveness panels force United Airlines and American Airlines to cut costs, and push TWA and Pan Am out of business? Did the post office invent FedEx,UPS and email? How about public schools or the last 20 or more health-care “cost control” ideas?
  • Only deregulation can unleash competition. And only disruptive competition, where new businesses drive out old ones, will bring efficiency, lower costs and innovation.
  • Health insurance should be individual, portable across jobs, states and providers; lifelong and guaranteed-renewable, meaning you have the right to continue with no unexpected increase in premiums if you get sick. Insurance should protect wealth against large, unforeseen, necessary expenses, rather than be a wildly inefficient payment plan for routine expenses.
  • Rather than a mandate for employer-based groups, we should transition to fully individual-based health insurance. Allow national individual insurance offered and sold to anyone, anywhere, without the tangled mess of state mandates and regulations. Allow employers to contribute to individual insurance at least on an even basis with group plans. Current group plans can convert to individual plans, at once or as people leave. Since all members in a group convert, there is no adverse selection of sicker people.
  • Sure. We can have a single government-run airline too. We can ban FedEx and UPS, and have a single-payer post office. We can have government-run telephones and TV. Thirty years ago every other country had all of these, and worthies said that markets couldn’t work for travel, package delivery, the “natural monopoly” of telephones and TV. Until we tried it. That the rest of the world spends less just shows how dysfunctional our current system is, not how a free market would work.
  • But it can happen. The first step is, the American public must understand that there is an alternative. Stand up and demand it.


Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  5 comments for “The Way to Fix the Healthcare System

  1. guest746
    January 10, 2014 at 5:14 am

    This is a terrible article. I mean true to WSJ form… they think “free markets solve everything”

    Lets deal with what we know and some bottom lines:

    -walmart amazon and apple bring those particular variables to the table via a practice called “true cost offloading” The TRUE COST of providing those items is paid (or unpaid in many cases) by foreign countries and people via skirting of environmental and wage standards that we personally would never find tolerable (and have in fact made illegal in this country)

    -Unless you think youre going to hire undocumented “illegal doctors” you will NEVER see the level of savings those other industries have nefariously brought to the table. Healthcare isnt just a tech/goods industry its a service industry… Other areas of the economy have cut costs on service because the labor isnt complex but healthcare doesnt have that option

    You simply cant hire nurses from Guatemala and pay them 10$ an hour. It aint going to happen.

    -Almost every other country in the 1st world has gone socialized for healthcare. You can yammer on and on about the US doing all the R&D (which at this point isnt even true anymore) but the bottom line is life expectancy and quality of life: We fail on those we LOSE to countries who have kicked the capitalists in the teeth and said “people dont make a consumer decision to get sick”

    there is no debating that. You can debate -around- the issue, by saying “well thats unsustainable” and blahblahblah…but its clearly at this point more sustainable than our crap system. This isnt about perfect solutions its about best solutions.

    -“Until we’ve tried it” Um…what? WE HAVE BEEN TRYING IT FOR LIKE 30 YEARS… our for profit system has been continuously failing for 30 years… “other countries paying less doesnt mean it cant work” no youre right , us failing at it for this long does… (the hilarious part is I guarantee you those countries look at our system and say “no way jose…let the americans die, we’ll do this the right way” and we do, and they do)

    See this is the difference between someone like myself, a random citizen who just wants the best medical outcome for hisself and his family vs. the WSJ which has a specific philosophical agenda.

    WSJ is a business entity… its job is to MAKE MONEY…its viewpoints are to foster its making money and its declared slant is to take a specific finance approach to answer ANY societal question.

    Im fine with that…but lets do our best to treat it’s “Modest Proposals” within the context of their hidden intent. When the issue is child care, Johnathon Swift is not the person you want deciding who should babysit your children.

    • Doug Farrago
      January 10, 2014 at 7:11 am

      1. Your assumption is that the doctors’ salaries are the biggest cost for healthcare. That assumption is wrong. I think it is about 3% but you could look that up.
      2. You obviously don’t read this blog much because we have debated the life expectancy issue here as well as ALL your other points. Search around for other blog entries.
      3. Those 30 years you mention is when the government got involved
      4. I use the WSJ, MSN, NYT and other sources in this article. All have agendas. So do I. So do you.
      5. BTW, Medicare and Medicaid are broke. A rationed health care system would not work in this country because Americans want what they want, when they want it and want it for free. They would bankrupt this country even quicker than it is now. Any bad outcomes would still have lawsuits. Any denials would still have media intervention (see mammogram recommendations by the USPTF)

      I think the insurance companies are evil and gouge us. Read this blog more to see what we think should be done.

    • Pat
      January 11, 2014 at 2:05 am

      I expect any moment for you to remind me that “you took an oath!” I’m typing from a rural ER, where we just had a perfect representative of the path you advocate. I saw him last year, diagnosed his acute MI, shipped him off for very expensive stenting, so that he could: 1) Get on Medicaid i.e. get me to pay his way; 2) Continue to smoke over a pack a day; 3) Choose not to follow up for the last few months with his doctor, even though, again, I’m paying for it; 4) Run out of his meds for hypertension, diabetes, and anticoagulation (again, all paid for); 5) Come to the ER saying “something ain’t right”, get a big bucks workup and another very expensive stay, all because government, and folks like you who want to force compassion on others have separated this patient from self-accountability.

      If you think that a health care system in which GOVERNMENT has been the largest single purchaser for over four decades has been purely “for profit” then you are willfully self-deluded.

      You want to rag on the WSJ for a profit agenda? Fine! Don’t be so naïve as to believe that government officials, or the wooly-headed altruists that keep them in power aren’t just as interested in their own profits of power and ill-gotten security, gained at the expense of other’s actual work.

  2. mc
    January 1, 2014 at 4:49 pm

    I agree with most of it. But … what group of legislators would want to reign in all the privileges that Insurance Companies and Big Pharma enjoy thanks to members of Congress?
    “Small people” “stand up and demand it”? Medical Societies?
    It’d need a laudable, reasonable version of the unfortunate narrow- minded Tea Party all across the country. Who will finance it? A failed Obamacare would do it? Or just return health care to the big, previous pattern with a vengeance?

  3. Sir-Lance-a-Lot
    January 1, 2014 at 8:23 am

    I don’t even want to imagine the medical equivalent of ever-smaller airline seats, disappearing on-board meals and snacks, and multiplying fees for things such as baggage and window seats would look like.

    Happy New Year!

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