Where is the Steve Jobs of Health Care?

An interesting essay by Robert F. Graboyes begins by asking the following:

American health care has no Steve Jobs or Bill Gates. No Jeff Bezos, Elon Musk, Burt Rutan or Henry Ford. No innovator whose genius and sweat deliver the twin lightning bolts of cost-reduction and quality improvement across the broad landscape of health care. Why not?

Dr. Graboyes claims that the answer is that health care is administered through a centralized, highly regulated system. That is not the case for computers, start-ups, or many other sectors of the American economy. Thus, the author’s solution to the Nation’s health care problems is to decentralize and deregulated health care.

Dr. Graboyes is correct decentralizing health care would have many benefits such as: lower cost, better technology, new innovations, more flexible customizable ways to treat patients. To understand why this is the case, consider the current RVU system Medicare uses to pay doctors. Each service a doctor performs is assigned a fee based on the cost of its inputs. As the cost of inputs change over time and the composition of inputs used to produce the service change, the price Medicare pays for the service is inevitably out of date. Further, pricing new innovations is very difficult since they are constantly changing and there is no precedent of the correct price. A decentralized system would solve many of these issues.

The drawback of decentralization, however, is that the health care system would be much less equitable. In an extremely decentralized system, a safety net for poor individuals who can’t afford insurance is less likely to exist. Centralized systems are good at creating consensus for setting a a minimum basket of health care goods and services that every American should receive.

Of course, the US system should neither be centralized nor decentralized but a mix of the two.  The question of how centralized it should be depends a lot on how much redistribution you want in society and how inefficiently you believe the government is able to provide services.

On Fri, Oct 4, 2013 at 5:32 AM, Bonnie Shafrin <> wrote:

Sent from my iPhone

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