A chapter in Code Red: An Economist Explains How to Revive the Healthcare System without Destroying It, 2008 from Princeton University Press
The U.S. healthcare system is in critical condition--but this should come as a surprise to no one. Yet until now the solutions proposed have been unworkable, pie-in-the-sky plans that have had little chance of becoming law and even less of succeeding. In Code Red, David Dranove, one of the nation's leading experts on the economics of healthcare, proposes a set of feasible solutions that address access, efficiency, and quality. Dranove offers pragmatic remedies, some of them controversial, all of them crucially needed to restore the system to vitality. He pays special attention to the plight of the uninsured, and proposes a new direction that promises to make premier healthcare for all Americans a national reality. Setting his story against the backdrop of healthcare in the United States from the early twentieth century to the present day, he reveals why a century of private and public sector efforts to reform the ailing system have largely failed. He draws on insights from economics to diagnose the root causes of rising costs and diminishing access to quality care, such as inadequate information, perverse incentives, and malfunctioning insurance markets. Dranove describes the ongoing efforts to revive the system--including the rise of consumerism, the quality movement, and initiatives to expand access--and argues that these efforts are doomed to fail without more fundamental, systemic, market-based reforms. Code Red lays the foundation for a thriving healthcare system and is indispensable for anyone trying to make sense of the thorny issues of healthcare reform.