Tuesday, October 21, 2008

Book Review: The Cure: How Capitalism Can Save American Health Care by David Gratzer

The Cure: How Capitalism Can Save American Health Care is an excellent resource on health care economics and the history of health care policy. The author is a free market economist, a physician and a senior fellow at the Manhattan Institute. This book has been endorsed by Milton Friedman so should be of appeal to free market advocates. Like much of Friedman's works, Gratzer's arguments sometimes come off as pragmatic and lack the sound moral arguments for laissez-faire capitalism that only Objectivism can provide. However, like Friedman, Gratzer provides many compelling economic arguments and offers a wealth of useful facts.

Dr. Gratzer persuasively argues that the fundamental problem with U.S. health care is too much government regulation. To argue this, Dr. Gratzer first notes how the employer-based health coverage arose as an unintended side effect of a tax law, which allowed employers to write off health care expenditures for their employees. Moreover, Dr. Gratzer argues that both Democrats and Republicans have both essentially offered more government regulation as the solution to health care, which has not worked. The Democrats, such as the LBJ Administration, promoted enormously inefficient programs such as Medicare and Medicaid. The Republicans, have promoted bureaucratic HMOs, which have led to similar large-scale inefficiencies.

Driving this point further, Dr. Gratzer greatly details the harmful economic consequences of government regulations in health care. For example, the Emergency Medical Treatment and Active Labor Act (EMTALA) forbids hospitals from denying any patient for emergency care. The economic reality is that this leads to hospitals suffering economic losses by being forced to treat patients, regardless of if they can pay for the care, which ultimately leads to the closing of hospitals. Furthermore, insurance mandates, such as benefit mandates, rating mandates and bans on out-of-state insurance, restrict competition and lead to higher insurance premiums. Dr. Gratzer also thorough analyzes the harmful economic consequences of the FDA, Medicare, Medicaid and much more.

This book also dispels many common myths about the quality of U.S. health care. For example, statistics are often cited to argue that Canadians and/or Europeans have higher life expectancies than U.S. citizens. Dr. Gratzer argues that such studies mistakenly compare statistics on *health* when they should be on *health care*. There numerous lifestyle habits that differ between cultures, such as frequency of exercise and diet, which effect health. Dr. Gratzer proposes examining statistics on cardiac arrest patients, to see which country offers better treatment. In these respects, Dr. Gratzer argues that the U.S. system is clearly superior to its universal health care counterparts.

As one can infer, Dr. Gratzer proposes free market solutions to fix American health care. Specifically, he proposes drastically reducing the various regulatory excesses that he delineates throughout his book as well as embracing Health Savings Accounts. As always, Dr. Gratzer corroborates his arguments with real-world success stories, such as the success of Whole Foods' adoption of HSAs for its employees.

I highly recommend this book to all Objectivists with an interest in economics, health care policy or general intellectual activism on matters of politics.

If you enjoyed the above review, please rate it as helpful on Amazon.com. My Amazon version of this review can be found here. The more helpful ratings I receive, the higher my visibility is on Amazon.com. You can access all of my reviews on Amazon.com here.


Paul Hsieh said...

Thanks for the excellent review! You've done a nice job summarizing the content.

I read Gratzer's book when I first started becoming interested in health care policy, and he offers a refreshing alternative to the tired old statist solutions that one regularly hears from most pundits and politicians.

BTW, there's a nice Instapundit podcast interview with Dr. Gratzer, available at:


Doug said...

Thanks for your warm words, Paul.

The positive mention of Gratzer's book on FIRM is actually what caused me to look into the book in the first place.