'Medicare Is a Bank Without Security Guards:' Media Executive David Goldhill Debates Princeton's Paul Starr

Watch or listen to the latest Soho Forum on expanding government-run health care.


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On September 19 at the Soho Forum, David Goldhill, former CEO of the Game Show Network and author of the exceptional 2013 book, Catastrophic Care: How American Health Care Killed My Father—and How We Can Fix It, faced off against Princeton sociologist Paul Starr in a public debate over whether the federal government should offer a Medicare-like health insurance plan to all Americans. Star is the author of The Social Transformation of American Medicine: The Rise of a Sovereign Profession and the Making of a Vast Industry, which won the 1984 Pulitzer Prize for General Non-Fiction and the prestigious Bancroft Prize. (Yale political scientist Jacob Hacker was scheduled to debate Goldhill, but had to drop out because of a medical issue.)

The Soho Forum runs Oxford-style debates in which the audience votes on the resolution at the beginning and end of the event. The side that gains more ground is victorious. ?In this case, Goldhill won overwhelmingly by convincing about 30 percent of the audience to switch over to his side.

Starr, arguing for the affirmative, said that the Trump administration's "war of attrition against Obamacare" has put "us back in the world where people with pre-existing conditions can't get coverage." Expanding Medicare eligibility would provide the much needed "public option" that's missing from the Affordable Care Act, filling in for the inability of the private market to serve all citizens. And it "would not require turning health care in America upside down."

Goldhill, arguing for the negative, made a case that Medicare takes such an expansive definition of a health care "need" that ?it leads seniors to pursue unwise treatments that put their lives at risk.

Another issue is cost. Medicare proponents say that program's low administrative expenses are indicative of its operational efficiency. The opposite is true. "Private insurers say 'no' to things," Goldhill told the audience. "They judge appropriateness…Medicare's mandate," on the other hand, "is to say 'yes' to everything." The result is that there's $70 billion in Medicaid fraud every year, but the government doesn't count that as an expense.

In Goldhil's view, Medicare? is controlled by special interests who've expanded the definition of a health care "need" to drive up costs and enrich themselves. "The degree of industry capture in the way health care policy actually happens in this country is beyond anyone's imagination," he said. The health care industry spends half a billion annually on lobbying to maintain the status quo. The nation's poorly run hospitals are able to operate at 65 percent capacity only because Medicare keeps them afloat.

"Medicare is a bank without security guards," Goldhill said, and this year taxpayers will have to subsidize the program to the tune of $320 billion.

The Soho Forum, which is run by the Reason Foundation, has a two-fold mission: to provide an arena for intellectual adversaries to talk in paragraphs (as opposed to 140 characters), and "to enhance social and professional ties within New York City's libertarian community." It's held at the Subculture Theater at 45 Bleecker Street in Manhattan, and after the debate wraps there's always free food, a cash bar, and everyone's encouraged to hang out and chat. Doors open at 5:45, and the event convenes at 6:30—at which point the party has already begun.

Next up: Yale Professor of Law Peter Schuck vs. New York Civil Rights Coalition President Michael Meyers on abolishing affirmative action. That will be on Monday October 16. Get tickets here. And subscribe to the Reason Podcast or Reason TV's YouTube Channel to catch audio and video of all the Soho Forum debates.

Shot and edited by Martin Kim at Storysmith Productions.

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This is a rush transcript. Check all quotes against the audio for accuracy.

Paul Starr: Thank you very much for inviting me to speak in favor of the idea of providing Medicare and a Medicare-like plan as an option for people buying health insurance. First, we make three points about Medicare. One, among Americans with all types of insurance, those on Medicare are the most satisfied with their coverage. Medicare is, in the United States, the most popular form of coverage. The second, Medicare has done a far better job of controlling health care costs then has the non-Medicare private insurance market. Third, while in general Americans are not as healthy as citizens of the other wealthy democracies. Americans 65 years of age and over do better on health indicators than others their age in peer countries.

So. Medicare is more popular, it has lower growth in costs. The people who depend on it are on average, healthier than their counterparts and many peer countries, all of these I believe good reasons why we ought to make Medicare and a Medicare-like plan available to other Americans as an option. Now, I am not suggesting Medicare is perfect as it is. There are ways to improve it to get a better value for money and some important tests of alternatives are currently underway within Medicare.

I'm also not suggesting Medicare would need no adjustments for people under age 65 and I'm also not saying that the development of a Medicare option could be done overnight, it ought to be done in stages assessing the results as we go along. What I'd like to do this evening in my 12 minutes is outline a couple of concrete steps we could take in that direction and the reasons they make sense.

But first, I want to make several clarifications. First, we're not debating single payer this evening. A Medicare-like option, otherwise known as a public option, is not the same as single payer. As soon as you say option, as soon as you refer to making a plan available as this resolution does, you're not talking about reducing all health care finance to a single payer.

Second, let's understand how Medicare works. Medicare gives seniors a choice between the traditional public Medicare plan and private so-called Medicare Advantage plans. If we could strip away ideological blinders, we could see that Medicare itself is a marketplace. It has multiple plans varying in structure and to a lesser extent in benefits. Medicare however is different from the marketplaces created under the Affordable Care Act for people under age 65 who purchase insurance individually. Medicare is different because it has a public option, a public plan chosen by about two-thirds of seniors.

A plan that actually gives them a much wider choice of doctors in hospitals than most Americans have these days, and the Medicare program as a whole does a good job controlling cost because the public plan sets prices for providers, that the private plans can shadow price, that is they tend to follow Medicare's lead so the advantage of Medicare's price discipline spills over into the private Medicare market.

Third, we're not even talking this evening, at least as I understand it, about Medicare For All. The debate tonight is about making a Medicare-like plan available to other Americans who buy insurance.

I'm going to interpret the resolution as being in the first instance specifically about Americans who need to pay for health insurance, who need to obtain health insurance on their own. That is who don't have an employer-provided plan or coverage through the military or the veterans health care system or any other system. The problems with our health insurance system have long been most acute for people who buy insurance individually or through small businesses and who don't qualify for Medicaid, by the VA, or any other program. They're the people who the health insurance marketplaces and affordability subsidies and the ACA were designed to help.

There continue to be problems in those markets. Problems aggravated by the Trump administration's war of attrition against Obamacare. Problems that will be aggravated even more if Congress repeals the ACA and puts us back in the world where people with pre-existing conditions can't get coverage. One of the core problems, perhaps the most important problem in the individual insurance market, is the lack of competition in many parts of the country. In many of those areas, these are mostly in rural areas and in the South, there is only one insurer and in a few cases, there have temporarily been no insures.

The Trump administration has aggravated that problem by creating uncertainty in the insurance market, uncertainty because of its uncertainty about enforcing the law or about fulfilling certain obligations under the law to insurance companies that are legally obligated to provide certain kinds of subsidies. As a result of that, the Congressional Budget Office has projected an increase of two million people in the number of uninsured for this coming year after the ACA cut the proportion of uninsured in the United States from 16 percent in 2010 to 8.8 percent in 2016.

From the beginning, the ACA should have had a fallback provision for a public option to guarantee adequate competition in those areas where the market failed to respond and that kind of provision is more necessary now, clearly necessary now. Here's the first concrete proposal that I've made together with Jacob Hacker who was supposed to be here this evening. This can be found at the website of the journal Health Affairs. Wherever there are two or fewer options, that is in these specific marketplaces for individuals, Congress would introduce Medicare into those marketplaces.

Now, in other words, not only would the public Medicare offer a plan, we'd also require insurers who already compete in a region's Medicare Advantage market also to offer a plan in the ACA marketplace. It's basically linking the Medicare marketplace to the ACA marketplace. It boosts competition in a way particularly advantageous to enrollees unlike most of the … I'm sorry, is that five minutes? That's all right. Unlike most of the narrow network private plans in the ACA marketplaces, Medicare offers a wide choice of providers because nearly all hospitals and doctors take Medicare and that broad choice is one of the reasons for the high level of satisfaction with Medicare.

Building on Medicare and Medicare Advantage will give people and the individual and small group market more choice and help create competition where it's faltered. The second idea that I've offered for expanding access to Medicare is what I call Midlife Medicare. It would enable people ages 50 to 64 who have not been offered an employer plan and they're not eligible for any coverage to buy into Medicare. Then as in Senior Medicare, the beneficiaries of Midlife Medicare would need to pay premiums although Congress would subsidize Midlife Medicare to the same extent it subsidizes employer-provided coverage compensating also for the effects of adverse collection, adverse selection.

Adverse selection is the tendency only for relatively sick people to enroll when they're not obligated to, just as the Republican bill in the House would have created the Patients Stabilization Fund to cover high-risk individuals. Now, I make these proposals in the spirit of incremental change. As I see it introducing Medicare into the ACA marketplaces would resolve many of the immediate problems that you read about in the press. Midlife Medicare would pull out of those marketplaces the relatively costly, older adult population, reducing premiums for the under 50 population.

Now, if Republicans repeal the ACA as seems a distinct possibility again this week, the case for Midlife Medicare would be even stronger because it's that older adult group, 50 to 64, that will be hit the hardest by the loss of the subsidies and the increase in private insurance premiums that would follow. If we were to pass Midlife Medicare, the question of making a Medicare-like plan available to younger people, that is people under age 50, that is people without employer coverage, would also arise. I could imagine again some incremental extension of this idea of making Medicare available to younger ages. Again, this is not the same as single payer.

This really involves trying to fill in one of the problems in the existing health insurance market. These ideas would not require turning health care in America upside down. But they would advance the cause of providing all Americans with good health care at costs that is subject to stronger discipline than we have historically had. I see I have two minutes left but I will see those two minutes to David and perhaps reclaim them in the second round.

Epstein: Twelve minutes for the negative from David Goldhill.

David Goldhill: Well, thank you Gene and thank you everyone for coming tonight. Paul, it's a pleasure to share the stage with you and truly an honor. The Social Transformation of American Medicine is the first book I ever read about health care and frankly, the first book anyone should read about health care. It's extraordinary.

I want to start with a story, which I think is against the rules. Four years ago, one of my best friend's father was told that his aortic valve was going to fail at some point. He needed a valve replacement and the sooner the better. He consulted the cardiac surgeons at five big New York hospitals and was stunned by how aggressively they pursued him. He was a Medicare patient. He was 83-years-old.

Part of the Medicare argument is that Medicare pays prices so low that hospitals lose money on patients. He didn't experience that. In fact, they pursued him so aggressively that he was interested in a less invasive procedure that was part of a double-blind trial that was being conducted at New York hospitals. One of them said, "We have a way of getting you in the procedure regardless." He had the valve replacement. Roughly, 90,000 Medicare patients a year have a valve replacement. According to Medicare, it was a perfectly successful operation. He was alive 30 days later. In fact, it was miraculous.

He had his valve replaced, was out of the hospital in four or five days, was walking around. Four months later, he was dead. The reason he was dead is because at some point, he banged something for some part of his body on something and he bled to death because everybody who gets a valve operation has to take anticoagulants. Now, the reason I'm telling the story is because it's unbelievably common. The last time somebody looked, and it's about five years ago, of the two million Medicare beneficiaries who die in a given year, roughly 700,000 had surgery that year. Out of every 5 over 90 who die in a given year, one has surgery.

There's almost no surgery recommended for somebody over 90 because the risk reward is terrible. It's very convenient for those who care about politics, to talk about access to health care, money. How do we pay for people to get health care? As if it's some black box, some commodity. Well, I'm going to violate two of the rules of talking about health care tonight. One is I'm not going to pretend it's this black box that we just buy. I'm going to pretend something that we all know is true, which is how we pay for it determines what we get. The second thing I'm going to do is I'm going to leave, not often, the island of health care in which we tell ourselves that all that matters is health care.

There is a hilarious piece in the New York Times talking to five health experts about which country has the best health care system and they all dissed my favorite, Singapore, because not transparent enough, not this, not that. Singapore spends 4 percent of GDP on health care, not a single one of these economist said, "Can you imagine all the social good you can do if you save 14 percent of GDP." Every conversation about health care is, how do we make sure everybody has all the health care they need? In doing so, we have starved our population and particularly our most needy of the other things they need many of which are more important.

Medicare drives a certain type of care. It may be popular, but here's what it really is. It's excessive. It's treatment biased. It's tons and tons of operations And it's no general practitioners. There are 7,000 geriatricians left in the country and eventually there will be 0. As a result, if you are over 75, there's a 50 percent chance you're on five drugs. There's a 50 percent chance if you are that at least two of those drugs are contraindicated. You shouldn't be taking both, This is a totally unregulated out of control system whose biggest beneficiary is a health care industry.

The people who should be most aware of that are least aware of it because they're so busy arguing for more health care, more access and all the rest that they don't realize the system we've built. Now, my interest in health care began with my father's death from medical accident. According to Johns Hopkins, medical accidents are now the third leading cause of death in the United States, 250,000 a year. Most of them are in hospitals, almost all of them are among Medicare beneficiaries. Now it's never listed as a cause of death. Almost no state say "medical error" so you're not aware of it.

It's 250,000 people a year, which means in the 20 years since Bill Clinton proposed health care reform, we've probably lost 2.5 million Americans … I'm sorry, 4.5 million Americans to errors committed while Medicare was their payer. We could say, "Hey, it's all the matter of money." I just can't believe that. Now, one of the key things that we need to understand about Medicare is its illusions and the biggest illusion is that it's cheap. How something that has gone from one billion in spending to 675 billion in spending in two and a half generations is called cheap, I have no idea.

But in understanding how a public option will work and the incentives it will give to our health care system, it's important to understand what Medicare costs you. First of all the biggest thing is, "costs almost nothing to administer." Almost everybody who writes in favor of the public option or Medicare for all says, "Private health insure spend 15 percent of benefits on just administration. Medicare spends 2 percent, that's got to be cheap!" Something wrong with that? Well, here's a hint, private insurers do Medicare as an administration for it as subcontractors.

Have you ever heard of somebody who will pay somebody a housekeeper who will take less for cleaning other people's houses, then he'll pay for having someone clean their own house? That's what you're inclined to believe, that some health insurers are doing administration for Medicare less than they do it with their own money. What's really going on? Well, private insurers say no to things. They judge appropriateness. They judge safety. They judge quality. Medicare's mandate is to say yes to everything. Of course, the great irony is so it costs $13.5 billion to administer Medicare's $675 billion. But Medicare says it has roughly $70 billion of fraud every year.

Now, here's the great thing about government accounting. That 70 billion of fraud, they don't count as an expense, they count is as benefits paid. In the 70 billion of fraud by the way completely eliminates their administrative advantage in cost, what they say is cheaper. We got to remember, Medicare is a political program. Its constituency is politicians or policy analysts, not business people. If you've run a business, you understand what's going on. Medicare is a bank without security guards. It's the nonprofit model. Look how much money we pay out, how little it costs us to do it. Underlying that, and by the way, a bank could run even without security guards. But unlike Medicare, it couldn't tell its board of directors … you know the money stolen counts as revenue.

The second element of Medicare's supposed cheapest style is the most important one which is Medicare pays hospitals and doctors less than private insurance. Well, if you've been in business, you recognize the "make it up in volume" fallacy problem there. Again, who's the constituency? Politicians, policy analyst, academics. Who cares what price you pay a hospital if you let the hospital bundle as many different diagnoses as possible. When we look at how Medicare has grown in cost and where that cost goes, to argue it's cheap is absurd.

Using MedPAC's own words, I love this, "Rapid volume growth may be a sign that some services in the fee schedule for physicians and other health professionals are mispriced." In other words, we pay them so little, they do more of the money shot. That is the story of Medicare. Now, why is it like this? Well, the reason it's like this is because Medicare was based on a very dishonest statement to us and to providers. To us, Medicare says something that no other country on Earth has ever said. We're an entitlement. We will pay for all the health care you need. How did the industry respond to that? By endlessly increasing the definition of need.

It's so obvious that you'd never have to work in a business to do that. Medicare is dominated by special interest. There are 17 medical trade associations whose CEOs earn between $1 million and $5 million a year. It's not to convince Medicare to be more efficient. The health industry spends $500 million a year on lobbying. Our hospitals operate at 65 percent capacity, 20 percent less than the rest of the world. They stay in business because Medicare keeps them afloat. We have so few geriatricians because the specialists run the price-setting mechanism. Really understanding how Medicare works makes you rethink what's a public option.

What is a public option? It's an option that sounds like, what could be bad about an option? Except it's nonsense. The people who originally proposed the public option admitted years ago that what they were really trying to do was get to single payer. We see how difficult it is for insurers to price the type of customers that Professor Starr was talking about. Try to imagine the government saying, "You can take this option, here's the price. How do we set that price? No idea." Now, what Medicare supporters and public option supporters say is, "We'll set it in competition with insurers." Remember what Medicare does. It allows large amounts of fraud, it never says no. No insure can compete with that.

Public option advocates like to say the nice thing about Medicare is as a competitor it doesn't need to make a profit. That's not what makes Medicare a competitor. It said it doesn't care about losses. This year, general revenues, your tax money, will subsidize Medicare to the tune of $320 billion. The price of a public option will be whatever Medicare wants it to be. When politicians want single payer, it will be so low that a private insurer can't compete. If it's too high by the way, we'll just have a high risk pool, it'll be spared no expense. What Medicare has to improve … I mean, real Medicare not the pretend, I wish it were better or we could improve it–it's 51 years old. As a man in my 50s, we don't improve. It is what it is and what it is, is the core feature driving the undisciplined supply pricing and utilization of care that has so undermined the social welfare of the average American citizen. Thanks.

Epstein: You have five minutes of rebuttal. Take it away, Paul.

Starr: We actually have a Medicare Program that involves private insurers although you might never know it from the description that David gave. We have a working marketplace in Medicare. He presented it as if the idea of a public option was just a kind of an insidious way of introducing a single nationalized insurance plan. Actually, private insurers have done very well in Medicare. I mentioned that about one-third of Medicare beneficiaries choose a private plan. Actually among new beneficiaries, that's about one-half. It is a working model. The fact that we have a public Medicare plan doesn't make it impossible for private insurers to compete. They do compete.

That same kind of model can be applied to the population under age 65. Now, I want to come to a number of the points that David made, I didn't write them down in exact order. Yes, Medicare does pay less than private insurers now. The question you might want to ask yourself is, why do private … this is the private insurers outside of Medicare, not within? Within Medicare, private insurance as I said shadow price Medicare. In the employer market, private insurers pay a great deal more than Medicare. The individual market, they pay more than more than Medicare.

Why is that? That's partly because of the monopolies that have developed especially at the local level throughout the health care system. This is a point that I make in the … there's a new edition of The Social Transformation of American Medicine. It's a book that came out in 1982, this one just came out in June and an updated edition. One of the big themes of the additional material that I've added has to do with the growing consolidation of control in local health care markets, the rise of large hospital systems often with what are called "must-have institutions," must have from the point of view of insurers and employers.

Those powerful health care systems have been able to drive up the payment rates to much higher levels than Medicare pays. The industry tells a story that it's cost shifting because it doesn't get as much as Medicare. It has to get more from private insurers. But if that were the case, then those hospitals that had more Medicare beneficiaries would have especially high rates, it's actually not true where Medicare is important, private insurers also pay less. The evidence actually is contrary to what David suggested that Medicare has helped instill cost discipline and that expanding Medicare making it available to other people would help create a greater discipline and cost in the American health care System.

The way David describe the history, It was only Medicare that was driving the economic evolution of the American health care system, that's not just so. The employer-based private insurer system has been a very powerful influence on the way our system has evolved and it has been especially weak in controlling costs. Insurers have been able to pass those cost onto employers, employers have been able to pass those cost onto workers. Employees and their families don't know that money is deducted from paychecks before they ever see them. They have very little way of acting effectively in the marketplace. I believe that extending a public option would have an important role as a countervailing force to this concentrated power that is developed in the health care industry.

Epstein: Thank you, Paul. Five minutes for you, David, for your rebuttal.

Goldhill: Thank you. I didn't forget that Medicare Advantage exists. Describing it as a marketplace is pretty remarkable. Medicare sets the rates, reimburses, describes the policies fairly in depth. In fact, I think Medicare Advantage is just a wonderful example of how extraordinarily corrupting the incentives of Medicare is. The theory was, let's create an option for seniors within Medicare. Medicare Advantage pays slightly more than their fee for service number. It depends. It's changed from year to year. And quickly what it insurers discovered is the key was to define your benefits so that you got the healthier Medicare patients and make more money.

Doesn't sound like much of a marketplace to me, the arguments stays. I just cannot accept that the primary customer of our hospital sector that allows a 65 percent capacity industry to operate at a 7 percent or 8 percent market is great for controlling cost. I get it. The prices look low but any of us who've actually been in business know that the price is low is not the same as genuine industrial discipline. Look at the big numbers and in fact, let's look at the big numbers. There's probably no metaphor used more than the boiling frogs metaphor. Professor Starr is right. Seniors love Medicare. Because the alternative is too frightening.

Let's present somehow that a 65-year-old when Medicare was passed was alive today. Here's what that senior would have found. That the share of health care they pay out of pocket had gone from 10 percent of their income to 18 percent of their income. In an average year, they spend $3,500 of their own money on health care. That Medicare premiums and cost sharing take 25 percent of their social security benefit. Now, just like every other health care program we've had when Medicare was passed it was going to solve all these problems whose going to take care of cost control, give you access and all the rest.

The problem of health cost for seniors now is meaningfully greater than it was in 1965. They don't know it because they weren't alive in 1965. They weren't seniors in 1965. This is how the entire health care system is developed. This is how we get to 18 percent of GDP. All incremental helpful ideas like the public option, all things that are really going to make it cheaper and really make it universal. I believe in universal access to care, but the difficulty with the things like Medicare is because their political programs disguise their true working. They wind up shifting evermore of our dollars from everything else to health care and we are poorer for it.

Health care is the 10th most important factor in health measured by almost anything. You name it, income, education, safety of your community, marital status, having a job. All of these things have a lot more to do with your health. As the United States has uniquely gone to 18 percent of GDP on health care, we have less for that. David Brooks referred to the US government as an emerging health care state. We can afford nothing else. If you believe that this latest great idea to solve the problem, the seventh or eighth will have any different result than the others, then I appreciate your optimism.

I wish I shared it. Because I believe in universal coverage. Over time, like in anything else that matters, the only way we will make sure everybody has affordable health care is to do something meaningful about prices. There's no financial engineering that turns expensive health care into affordable health care. It's just moving the money around. The only way we're going to have health care that has the impact on our lives close to the amount of money we're spending is for it to be good.

And while we focus in the political arena all the time on people who don't have access and the all the rest. The amazing thing is the fatality rate because of excess undisciplined care in the United States far exceeds the fatality rate for people who don't get care. It's not part of the discussion. It's not as much fun. It's much more fun to talk about access and be this wonderful giving person guaranteeing care to everybody. What has it brought? What do we really have? As we think about health care down the road, what is it that we want our health care system to look like?

Epstein: Thank you, David. All right, in this part of that the debate, each side gets to ask each other two questions. Paul, would you be willing to go first and ask David a question?

Starr: David, I was stunned at the end when you said you were in favor of universal coverage. I'm not quite sure how you plan to get there, that might be the first question. Let me also ask you this. You seem to be suggesting that because of the stark character of your criticism that seniors should just go cold turkey on Medicare.

Goldhill: [inaudible]

Starr: Well, I mean, really you said Medicare is killing people, basically. You said the health care system is killing people, that people who don't get treated are better off than people who get treated that …

Goldhill: I didn't said that.

Starr: Well, actually I think … if you could roll back the tape.

Goldhill: I said there were fewer.

Starr: There were fewer people, okay. Well, it sounded to me very similar to a doctrine in the 19th century known as Therapeutic Nihilism which … and actually, if you go back to the 1830s, 1840s, Therapeutic Nihilism was justified because the medicine in that day probably did kill more people. You've got a kind of updated Therapeutic Nihilism. You've a got view that the health care system is so terrible, putting money into it is so destructive that Americans would be better off if they just didn't have it. We should go back to 4 percent of GDP instead of what we're spending now, that would mean closing down a lot of hospitals and letting go a lot of doctors and nurses. Is that what you mean?

Epstein: Okay, that's the question? David, please respond to the question.

Goldhill: Yeah. No, I'm not calling for abolishing health care.

Starr: Oh thank goodness.

Goldhill: What I'm calling for is that we should abolish the term, but that's a different subject. Because talking about 10,000 or 15,000 different services consumed in different ways and different parts of our life as if it's one thing has probably cost this country more value than almost any other political error we make. Let me deal with what I think you misunderstood about what I was saying. My focus is on the incentives to practice health care in the system we've built. As a history major, I respect the history but the reality is, there isn't a health care industry until well into the 20th century in the sense of providing any value and worth arguing over.

The issue is: the incentives on how we buy health care, how does an industry respond? My argument is the unique American politics and the unique American political structure has so warped the incentives on our public programs. That the damage caused by excess care, undisciplined care, lack of the normal responsiveness to consumer need, look, 75 percent of care dollars in this country are spent on chronic conditions. Yet, we have an industry that packages almost everything on a few for service basis and all the experiments that Medicare has done to do something different have wind up creating those very monopolies you talked about.

I am focused on how care is actually delivered for our 18 percent of GDP. I am in favor of universal coverage, have argued, written a book that if we can understand that what we're trying to ensure against, this catastrophe, and not warp an entire industry by trying to include everything in this insurance rubric we will have something that closer serves our social need and is better balanced in society with everything else. Let me just make one last point. One of the key things I talk about when I'm talking about the island is the fact that there can be no tradeoff between what we spend on health care and any of other goals as a society or as individuals.

Putting everything into insurance system, creating Medicare as an entitlement and Medicaid as part entitlement is absolutely unique in the world. No one else has done that, where there's no linkage, once it's health care, it's going to spend on health care. As an employer, it's not surprising to me that the cost of health care goes up every year even though people get off there because that's not what drives it. What drive it is this industrial factor. When I hear yet another idea for doing more of the same, I can't help but notice that Medicare didn't solve seniors financing problem in health care, neither did Medicaid. The Affordable Care Act has extended coverage but it's almost useless because of the deductibles. I also noticed that we've maintained different health care systems for seniors, for poor people, for veterans and all the rest. I don't think that's just about money.

Epstein: David, a question for Paul.

Goldhill: When I started getting interested in care as an employer, I looked at what a young person is going to contribute into our health care system over her lifetime. I took literally somebody starting out for us and I looked at all the insurance premiums that would be paid in her name over her lifetime, her Medicare premiums, the Medicare taxes because as you know we now subsidize Medicare enormously to general tax revenues. The amount you'd spend on Medicaid, everything for the safety net and for health care. I made a couple of important assumptions. One is that she lives her life what used to roughly be the average got married, had kids.

I assume she never gets sick, meaningfully sick. I assume she never got rich and she was solidly middle class her whole life. Using a 0 percent growth rate, the number was $1.2 million. That's what we're asking a 23-year-old today to have put out of her income into our health care system to maintain the safety net and to maintain this extraordinarily centralize care. How do you justify that to her?

Starr: You've taken that number, that number is meaningless since you're projecting somebody's … we do spend a lot on health care in the United States. It's 18 percent of the economy. It's 18 percent of national income and 18 percent of gross domestic product. Of course, those numbers are all going to look big. What surprises me about your approach is that if you wanted to spend a lot less on health care, you'd look at the countries that spend a lot less on health care … the other rich countries I mean, not the poor ones. The other rich countries meaning Britain, France, Sweden, mostly European countries and they have a lot more governmental control of health care than we do.

They regulate, they control prices. They take control employment in the health care sector. Someone who started out with your view that we're just spending so much more of our economy than we should be on health care seems to be, on the basis of the comparative evidence, would be drawn to exactly the opposite conclusion that we need a lot more government control not less because really their … I mean, you may have your Singapore case, but otherwise you don't have a lot of evidence to support your view. Which again, it's hard for me to decide for what your view ultimately is that if government pulled out that the market would operate in such a way that we would be back at a much lower level of expenditure.

Goldhill: Can we treat that as our questions to each other?

Epstein: Go ahead, yeah, go ahead.

Goldhill: I mean, Singapore may be the most government-controlled health care system on Earth, but it uses free market principles to exercise that control.

This is not for me an ideology of whether it's government or not government, that's irrelevant. The examples of other countries are irrelevant because none of them have our political system. Nobody has a Medicare program the equivalent of the Medicare program that is run for insiders.

The degree by which special interests set prices, determine service, prevent regulation in Medicare is absolutely [inaudible]. I remember once at a debate like this someone said we should have Sweden's system. We don't have Sweden's system of government. What we have is a system of government in which you're always allowed to lobby everything and to look at Medicare and that's why I brought it up. And not to understand the extent to which … I mean I would say this to you. You're someone who's been so conscious of special interest over your career, who do you think runs Medicare? This fantasy that there is some … Medicare makes no decisions on appropriateness. When Medicare decided that men over 75 shouldn't have PSA tests, didn't stop paying for them, half of them still do.

When Medicare decided people shouldn't have spinal fusions, didn't stop paying for it, industry wouldn't let it. Let's talk about America because America's problem is unique.

Epstein: Okay. You blew your second question. Paul, you have a second question. Lob a question at the man.

Starr: Okay. If America's political system is so utterly rocked with special interest, how do you propose working with the institutions that we have? How do you propose to change it? It really sounds hopeless.

Goldhill: Don't be pessimistic. No, I hate to say that. No, I'm probably the only real optimist in the room because almost all of our ideas about health care are 70, 80 years old. The NHS is 70 years old. This is an absolute dinosaur. Health care is changing radically.

When the national health systems started and we decided insurance should run everything in health care it was a different thing. Health care was rare and major and urgent and the integration into our lives from birth to death didn't exist. When the big national health care systems were created, almost all care was therapy. It wasn't chronic condition which is the bulk of what we do now. It's already changed in two generations with the system that hasn't changed with it. Going forward we look at a world of personalized cures, something the system hasn't done since we had infectious diseases.

What we need to understand is health care is a dynamic industry and the idea that these 70-year-old systems are what should guide us strikes me as absurd. Health care is an essential like food and we used to insist that food be divvied out by the high priest. It was just too important to be left to the markets. The further you are from that, the more food your people have. We need to reintegrate health care which means we want a safety net for urgent things in health, let's have one. Let's have an insurance system for catastrophes but if each one of my employee is going to put $1 million into health care over her lifetime without her getting rich, her single biggest expen, that's what we have today before this newest plan, today imposed on our young people then we need to stop and we need to think about here's what we want a safety net for. Here's where we want to bring in some market forces, competition. Here's what we want consumers to be empowered.

You don't need a single idea to solve an industry with tens of thousands of goods and services. It's okay to have a hybrid and instead what we've done is we look for a magic bullet. Anything complex, a magic bullet is a foolish exercise and we are not the only country suffering under very rapidly increasing health care cost. All of those other systems are.

Epstein: Thank you, David. Okay, question from the audience now.

Audience member: When ObamaCare was launched I recall that the government-funded co-ops, which were public insurance plans, a public option sort of, to compete with the private insurance companies. My understanding is most of them have imploded and failed. I unfortunately was in one of them, First Republic here in New York State which failed. Since we've already done a program with the government funding insurance companies to compete with private insurance companies, why would this new idea work?

Epstein: Paul, you want to answer?

Starr: Yeah. Well, that provision for co-ops was actually a substitute for a public option. It wasn't a public option. It was a public option that would have been operated by Medicare, would not have had the problems that those little undercapitalized co-ops had. One of the difficulties that many of them had is that they had two little capital to sustain themselves in the marketplace.

Whenever you have a new market, this was true actually in the Medicare market, but when it was beginning, when private Medicare plans were beginning, it's very difficult to estimate risks. There is a lot of turbulence in markets before they settle down. Many of those co-ops, as I said, they had relatively little capital. They made mistakes estimating their cost and they got into trouble. Also, the Republican Congress withdrew a lot of the funding for them.

This is not a question of simple natural mortality. There was an active effort to kill them, to shut them down by the Republican Congress that helps snuff out the survivors. That's a poor example of a public option. It has nothing to do with the Medicare proposal we were talking about this evening.

Epstein: Do you want to comment?

Goldhill: Well, I think the question makes an excellent point missing just one thing. I think you're wrong that most of them went out of business. I think they all went out of business. I don't think there's a single one that survived.

Starr: There are.

Goldhill: Are there still a couple left? It's essentially all of them. It was the point I made in the first debate. The first part of this debate is that the public option is fantasy. There's no way to price this. This is all about the government increasing its role in insurance. By the way, that's a reasonable argument to have.

The idea that the government is going to suddenly act like a competitive insurance company where that in telling Medicare advantage providers that is somehow running a marketplace is absurd. These co-ops were intended to demonstrate in a real marketplace how a public option would work and here's how it works. The government is going to have to be willing to absorb the kind of losses these cooperatives were unable to absorb.

Look, again I think you can …

Starr: It's not the history of what happened.

Goldhill: Okay. Well, they are actually all thriving, I'm wrong.

Starr: No, the idea came from people who were opposed to the public option.

Goldhill: Yes, but we nevertheless have grown since Medicare started from five and a half percent of GDP to 18 and every single policy has saved money. At some point we have to be genuinely serious. These are not the right ways to build a 21st century health care. These are 20th century ideas that have failed. The idea that the only way to fix them is to endlessly do more isn't an appealing one, the reality is, health care is insanely expensive for the average American in short or not in short.

Epstein: Next question.

Audience member: Yes. As a lead into my question, I want to raise the issue of doctor-owned hospitals and how they are treated under Obamacare, which is that there was a strict limit put on the expansion of doctor-owned hospitals unless they refuse to accept Medicare, Medicaid. Doctor-owned hospitals have been controversial within the hospital industry, let's say, because of the supposed adverse selection problem. They tend to attract richer and healthier patients but they're also more innovated and they have much higher satisfaction ratings than the traditional for-profit and so-called nonprofit hospitals.

I just want to use that as an example of how when there's additional regulatory burden put into the system or when there's an expansion of government involvement in setting policy that inevitably response to the … there's regulatory capture. I mean they essentially responded to the for-profit, nonprofit very powerful lobbies to squelch the competition from doctor-owned hospitals.

Why would that not simply be put on overdrive under going from, say, where we are today, 48 percent public spend is government or of health care spend is from government. I'm going to say 70 like it is in Canada. Why would that not further squelch innovation and competition in the system than compared to what we have today?

Epstein: Paul, do you want to answer the question?

Starr: I'm afraid I really don't know anything about doctor-owned hospitals. I think this was a question of self-dealing and conflict of interests and that's why limitations were put on it, but it's really not a subject I know great deal about.

Epstein: Go ahead, yeah okay.

Goldhill: Well, I do know something about the subject because the question was exactly right. Doctor-owned hospitals have been killed almost everywhere including at CMS because they compete with general hospitals. The argument was, oh my God, look at the conflict of interest but I think the general point is a more important one.

I'm on the board of something called the Leapfrog Group which presses for transparency in hospital safety. Our opponent is almost always CMS which runs Medicare. CMS makes the argument that too much transparency is unfair to hospitals. Now, you can imagine if the FAA said announcing which planes crush are unfair to airlines. The degree of industry capture in the way health care policy actually happens in this country is beyond anyone's imagination. Weirdly enough, it so distorts the way health care is delivered that this bizarre superficial external conversations we have about how to pay for it ignores how the way we're paying for it is creating this reality.

I could spend the rest of the night talking about ways in which CMS and the government have prevented competition. Look at accountable care organizations, they're legal monopolies to save money. These people actually believe that if you give someone monopoly status they will be more efficient and somehow past those savings on, and 51 years of being wrong won't convince them it's just about to work.

My fundamental problem is this. I believe in strong government regulation of the health care system. It's dangerous, it's unsafe, there are constantly new technologies and it does an enormous amount of good. You got a choice. The government can be the industry's partner or regulator. It's not going to be both.

Epstein: Next question.

Audience member: Thanks a lot for making arguments concerning the efficacy of Medicare, but I have a more fundamental question. What is so special about health care that we can justify government programs to actually use tax dollars in order to subsidize this? I understand health care, there are benefits to having health care, but there are benefits to other things like my girlfriend loves Chanel bags and the fact, that she's getting taxed for like Medicare means she has less money to spend on Chanel bags. Why don't we get a public option for like expensive handbags? I mean, if you asked her she might even say like she cares about the Chanel bag right now because she's pretty healthy.

Epstein: David, you want to respond to that feminist question?

Goldhill: I think you actually can get Chanel bags under some Medicare Advantage programs but I think the reality is we have a political system to determine social priorities. A lot of us do believe that there are things about health care that is unique, including as a service. That it's not going to work fully with the market like others. I believe that. I don't think that's true of all of health care, but I think it's true a lot of health care. We are a wealthy enough country that everybody in this country should be able to afford high-quality health care and there are ways society can help do that.

The bigger part of your question though is really crucial which is the fundamental reason we and many other countries on Earth have decided that health care is the single most important thing the government should spend money on is probably an old one and probably a political one. Let's face it if you're a politician, it is a lot easier to be arguing about access to health care and look at what I am giving you than to address the nine more important things that contribute to your health. Social structure, marital structure, community safety, education, lifestyles, those are difficult.

Now, it's harder for us to address those without the money. When I see Singapore paying 4 percent and think they've got 96 percent to spend anything else, I like that.

Epstein: Do you want to respond, Paul?

Starr: Well, we are a democracy. People have a voted and I think they have voted in reflection of the fact that if the private market were just left to itself there would be millions of people who would be unable to afford care. That was indeed the situation facing millions of seniors before Medicare was established. That's why there was the demand for it. The private insurance market was not interested in insuring older people who were bad risks and so Americans responded to that reality and the popularity of Medicare reflects the fact that Americans are getting some protection that they wouldn't otherwise have.

Epstein: Next question.

Audience member: Thanks Paul for a great debate. I wanted to get a little more elaboration on the idea of a catastrophic care system. I've read Megan McArdle's proposal on an insurer of last resort system, which essentially would make health care or government-sponsored health care almost a FEMA-like system for health care where individuals pay maybe 15 to 20 percent of their adjusted gross income. If they have health care expenditures that go over that amount, the government pays 100 percent of whatever those fees maybe.

That if you're on the poverty line or something, there are going to be special exemptions and it will be up to the individual then to decide within a private marketplace I'm going to insure myself to take care of that potential 15 to 20 percent accident or emergency that I have that would cost me to go the hospital and have a major procedure done.

I would love both of your thoughts on if that system could work well, what the pros and cons would be and so forth.

Starr: Can I respond to this because I really think there's something a lot of people may not get about this?

Ten percent of the population in any given year accounts for about two-thirds of all of health care cost. There's another 50 percent of the population that only generate 3 percent of health care cost. Why is it that? Because very sick people generate most of the cost and in any given year, a lot of people are healthy and they don't have any cost at all. Maybe I didn't understand this proposal correctly, but if it's that everybody would pay 15 percent and then the government would pick up all the cost over gee, that doesn't sound like a good deal to me.

One of the difficulties that we have in controlling health care cost is that the usual deterrence that people are paying out of pocket doesn't work when people have this very high costs that are over their deductibles if they're in a high deductible plan and so there's very little sensitivity to cause from the consumer side and there's no sensitivity from the provider side. That's effectively why you need some kind of regulation because of this concentration of health costs, concentration of total expenditures and because of the lack of the normal mechanisms that work in the market to control cost.

Goldhill: Okay. When I said that a remarkable amount of our health care system was based on incredibly old ideas I was referring directly to what Professor Starr just said so he's absolutely right. Ten percent of our population use 65 percent of health care costs in any given year. If you plan on living one year that really matters, but by the way that is less concentration than in any other expensive good in service. In any given year less than 10 percent of the population buys 100 percent of the cars, 100 percent of refrigerators, that's 100 percent of marriages, divorces, you name it.

This idea people have been saying in health care for 70 years without thinking of what in any given year means. In any given year, 10 percent of the population uses all of the college education, so what? We live 80 years. This is a question of finance. That has been the argument for having this massively complex, insanely expensive, ridiculously distortive system of insurance, pay for everything. That argument and it has no reference to anything else in human life. It's the island of health care. You go to a health care conference, you say what Professor Starr just said, everybody nods, but nobody says what isn't that true of.

Starr: It's the unpredictability.

Goldhill: Let me finish the point. We know that you're going to use a lot of health care certain times of your life towards the end, at the beginning. We know that your health care demand is going to vary enormously over the years and between. We have tons of things like that. Health care is unique and that being the argument for creating this thing that adds four or $500 billion of administrative cost a year to that argument. It makes no sense if you've ever been in any industry other than health care.

Epstein: Did you want to respond Paul to that?

Starr: Yeah, because that's not really the point that I was making. The point is that when you have that concentration of expenditures the normal mechanisms that people have counted on and that they're counting on even with high deductible plans with your catastrophic coverage that they don't work. They don't work in controlling the cost.

Goldhill: That's a misunderstanding. That's a complete misunderstanding. I must admit, I hear this all the time from traditional health care experts. Every argument you have in health care is if it doesn't work for everybody all the time it can't work. Nothing else in our economy works like that. Some things work for some people sometimes other people we like diversity of services, diversity in the way you charge alternatives for how something is delivered.

Health care every argument is "Oh my God a consumer driven system can't work because if somebody is hit by a bus they're too unconscious to shop for hospital." I get it, but that is not the argument being made. The argument being made is we are now spending a million dollars per person per life on health care. We can take a reasonable amount of that million dollars since most of it will be spent on chronic conditions and we can finance it in any number of ways that make that person a consumer like we do with everything else.

Starr: David, let's be specific. You're favor of catastrophic coverage, is that right?

Goldhill: Genuinely.

Starr: That's high deductible coverage?

Goldhill: Yes.

Starr: Yeah, what happens when people hit the deductible? When they've gone over the deductible how do you control a cost?

Goldhill: How do you control a cost?

Starr: That's right. They now fully covered. Is over the deductible, it's not coming out at their pocket …

Goldhill: Do you know how Singapore does it?

Starr: Well, that's … I'm sorry-

Goldhill: Singapore does it.

Starr: But that's a government-controlled system.

Goldhill: Right but here's how Singapore does it. Singapore as you know has at every single level of health spending. The individual is the actual customer. In our system the insurance, CMS, is the customer you're not actually the guy who buys the service they do. So you're always the customer. There is literally nothing for which you don't have to write some check even tiny which make you sense the total amount.

If your concern is that a system of catastrophic-only insurance in the case of catastrophes is going to lead to mass inflation then let me suggest this. Since massive catastrophes are somewhere in the, depending on how you measure it, 15 to 20 percent health care. Let me run my system for the other 80 percent. You do whatever you want with the other 20 percent and we'll take advantage of the … I don't know if you've ever had a tire blow up on a highway, but if you have tire blowout on a highway when the tow truck comes he doesn't ask to look at your net worth statement.

He charges you more than if you shop for replacement tire but it's government by the fact that there's a normal tire market. You're screwed when that happens, but he ain't taking your net worth. We have a health care system where the argument that … Medicare's most expensive patient cost two and half million bucks it reported five years ago. That sound like a lot of money? It does, right, except for the fact when you think about we spend a million dollars on average on every person of our lifetime now. It's only two and half times.

Are we really going to let that one person that one extreme thing not finance the million dollars sensibly? This isn't 1965 anymore. We're not talking about getting a few hundred dollars from each of the people in the room and saying don't worry we'll take care of the rest. We're taking a million dollar from each of the people in this room.

Starr: I'm not following you. In your high deductible catastrophic coverage what controls the cost in cases that go over the deductible.

Goldhill: The insurer, just like you do now. What do you think controls it now? All insurance, the insurer pays a price to a payer.

Starr: The insurer can say no?

Goldhill: The insurer can say well …

Starr: I mean, are you giving the patient-doctor any control at all that point?

Goldhill: I don't understand your questions. I don't assume patient-doctor. The insurer's not going to perform …

Starr: How are you proposing to control cost in high cost cases that generate a very large proportion of our own expenditures?

Goldhill: What I'm willing to say is … well, it does not generate it. That's no longer true. By the way your 10 percent and 65 was 10 percent and 80 as recently as ten years ago, so that's changing meaningfully.

Starr: Got you. In the most recent figure but I don't …

Goldhill: Yes, no, no, you're right. It comes down. Concentration comes down every year that's my point and yours too.

Here's what I'm willing to say. Is in those worse cases. Keep the current system if you must, but build a market for the rest it's not. So that you actually … look what we have here. You go see a physician, it's insured and it's several hundred dollars and the insurer is going to get several tens … the physician is going to get several tenths of dollars. It's an absurd system adding cost to every transaction.

Starr: You're knocking on an open door. Millions of people have high deductible coverage today if that's what you want …

Goldhill: Forty-five million.

Starr: It already exists.

Goldhill: No, but it actually … actually no.

Starr: By the way if you look at what people think about it, they hate it.

Goldhill: Be honest. You go to a system where you say to somebody you have a $500 deductible today and then next you say you're $1,500 so if the response was enthusiasm I'd be stunned.

The purpose of high deductible plans and genuine catastrophic insurance, which as you know is different from high deductible–we have high deductible, I talked about catastrophic–is to say to people the average family insured policy in America now cost $20,000 a year. $20,000. Now, you may not see it. The government has figured out lots of ways to take it from this pocket and that pocket and over here, oh you didn't see that it's $20,000 a year for your family $20,000. Unless you're wealthy there is … your janitor it's $20,000 so unless you're wealthy that's a lot of money.

The way catastrophic coverage works which is not what we had in the Affordable Care Act as you know is explicitly derivative is to say, I'll tell you what take a $20,000 deductible and insurance is going to cost you six, $7,000. Put $13,000 away a year. You're a year and half away from paying for that deductible. That's how catastrophic insurance works. It's not just, hey, we increase your deductible and you're paying which you are now is we're increasing your deductible enough that we're freeing up the absurd amount of money. We put into the expense and complexity of an insurance system.

Now, here's what we've done in this country. Every year it gets more expensive and every year intervention is evermore necessary so you can afford it.

Here's the latest idea. A public option is going to make it cheaper for you. Just like Medicare made it cheaper for seniors, but the only way Medicare made it cheaper for seniors is they're not still here to compare. You compare it to no Medicare not to life before Medicare.

Epstein: Next question.

Audience member: I guess this is mostly Professor Starr. Veterans Administration provides just freer, heavily-subsidized medical care for qualified veterans so it's basically Medicare for the small subset of people.

Starr: No. That's different. That's actually socialized medicine. The Veterans Administration is like the National Health Service. It's different from Medicare.

Audience member: According to its own records it provides fabulous service. Most of the people who need an operation get them within 15 days, but then it turned out a couple of years ago we discover that in fact that was all a big fraud. They were taking months or even years. They just were fudging the books. But the veterans who are getting the benefits had no control because they weren't paying for them. The taxpayers who were paying for it didn't care because they didn't even know the beneficiaries or weren't getting the services. Why will your universal Medicare be more efficient, less fraudulent than VA was?

Epstein: That should be the last question this evening. Thank you for the question. Paul. You might respond?

Starr: Yeah. Well, that you're talking about a different idea. You're talking about a system in which the federal government actually owns the hospitals, it employs the doctors. As I said at the beginning, and I really I think you ought to know this, I mean, Medicare is totally different, it's an insurance system. Medicare does not own the hospitals, it does not employ the doctors, and in fact it has a system where there's both a public plan and there are private alternatives. It's very different from the veteran system.

Actually the very first thing I ever wrote about health care was a critique of the veteran's health care system. I don't need to go back through that, but really. I mean, it's just, it's two different things

Epstein: We unfortunately have to close the Q&A part of the evening. Thank you for your questions. We're going to the summary portion of the evening and you want to think about how you will vote on the resolution.

Paul, you have five minutes to sum up. You can go up to the podium and do that and that will be followed by David's summation. Five minutes, take it away Paul.

Starr: Well, I have tried to make the case for making available to Americans a Medicare-like plan as an alternative that they can buy. I'm specifically talking about people who buy health insurance on their own. These are the people in the individual and to some extent the small group market. Those markets have functioned very inefficiently and although the Affordable Care Act has enabled millions of people in that position to be able to afford insurance, the options available to them in many parts of the country have in fact been very limited.

Those especially are true in rural areas in the South, in the West. These are regions where there's very little competition. As an additional problem with competition that I mentioned in many big cities, in many urban areas where some hospital systems have achieved overwhelming power where there's been a growth of monopoly power and that has affected prices in those metropolitan areas. It's driven up insurance cost and what we need in both, in the rural areas, in the South, in these areas where there is often only one insurer or maybe no insurers, we need a Medicare to come in.

I suggest that we should have both public Medicare and the private Medicare advantage plans offered in those areas to stimulate competition, and I'd like to see a Medicare play a lot like-plan in many the urban areas where there is monopoly power to be able to have some kind of a countervailing power from a public plan.

These are ideas not for a radical overturning of the health care system, it's not a single payer plan that I'm talking about. It's using Medicare as a way to provide more options, more choices for people and to countervail some of the power that's accumulated in the private marketplace. This is the reality, a reality which I really think David ought to address. The reality of monopoly power that has developed in health care, in provider markets, also in insurer markets and that has distorted what we can expect the market left to itself to be able to do.

Epstein: Thank you, Paul. Five minutes for you, David, to do your summation.

Goldhill: Well, let me start with what Paul said because he and I are in complete agreement of the dangers of monopoly power among health care providers. What he doesn't recognize is that monopoly power has been encouraged by the major buyer of health care: the US government.

There's a narrative in health care that we're used to which is after the war developed countries recognized health care as an essential right to all citizens. Except the United States began addressing that need through a variety of different forms. There's actually quite a mix of health care systems in the developed world but what they have in common is they have an enormous amount of government intervention in the markets.

In America this narrative goes like this. Only the United States because of special interests and because of our unique politics hasn't made this commitment, but it's coming. It's progress. It's the future.

What if that narrative is backwards? What if the fact these ideas were created when health care was fundamentally a one-size-fits-all industry no longer make sense? What if the reason that every developed country on Earth has difficulty paying for ever-growing health care and despite what's often monopoly buying power can't control prices, reflects the obvious mismatch between how health care is paid for and how we need it? What if this idea that everything in health care is like a building burning down and insurance claim is absurd on its face and sentences us to a system that very well serves bureaucrats, GMS, large insurance companies and very poorly serves the customer.

There's 315 million stories of why our health care system doesn't work. Some of them are about cost and access, a lot of them is about absolutely primitive use of electronic health records despite the fact that Medicare gave $45 billion to create electronic health records. Some of it's about the absolute confusion of going from specialist to specialist or hospital to another service. Some of it is about poor care, accident, error, injury, death. Medicare itself says one out of every seven Medicare beneficiaries who goes into a hospital, has adverse health effects because of an error.

What if we have an undisciplined wasteful, expensive, complex, untransparent health care system not because we don't have access, but because in fact the forces intended to discipline it don't? What if the narrative is completely backwards? What if the future of health care is much more like other things actually using information technology to make it work better for the individuals? As we move from 'you have breast cancer' to 'you have you cancer,' is this health care system going to be able to adapt? Is this health care system going to work in an era of cures?

While we've been going on this historic narrative to be like Europe to have real coverage we've missed the numbers. We've missed the fact that the average American young person will be saddled with over a million dollars of health care cost in great part because we built this massive system to protect them from health care cost. We've missed the fact that the average senior now pays more out of pocket than the average senior did in 1965. We've missed the fact that the trillion and half dollars the United States governments, including the states, are going to spend on health care this year could instead be a $20,000 grant to half of American household every year with a $60,000 medium income and all of the issues we have. The island of health care prevents us from even thinking about that, even thinking about the transformation we could have.

Look, there are many people on one side of this debate who are in love with the National Health Service. Apparently they haven't followed very clearly what it's been dealing with in the last couple years, a 70 year old model.

You know a lot of other great ways of running technologically complex ever-changing dynamic industries that are 70 years old? I don't. Everything else got disrupted in the last 25 years. The first rule, the first rule of getting out of a hole is to stop digging.

Tonight's proposition is another shovelful. Thank you very much.