To save health care, focus on protecting patients, not industry

by Hooman Noorchashm, MD, PhD

Published Dec. 2, 2016, 1:42 p.m. ET

Health care is a massive part of our economy, representing nearly 18% of our gross domestic product. On average, $9,523 a year is spent per person on health care.

But medical bills are also a leading cause of personal bankruptcy in America – though the Affordable Care Act appears to be reducing this scourge. So, the economic sector charged with the protection of America's health is also responsible for many peoples' financial demise – and if anyone doubts that the stress of a bankruptcy can cause even bigger health problemfor American families, think again.

So, it is absolutely necessary for the health and wealth of our nation that federal regulators guarantee a fair and well-regulated healthcare market.

Unfortunately, we are very far from a balanced medical marketplace in America.

For starters, the consumer (i.e., the ill patient), likely is in a vulnerable place, willing to consent to any possibility of relief, regardless of cost.

Yet price setting in healthcare, excludes the patients' voice from the supply-demand interaction required for a well-balanced market. Instead, healthcare prices are being set in part by corporate patent rights on life-saving drugs and technologies, by insurance company executives and an opaque process involving the Center for Medicare Services (CMS) and the American Medical Association's (AMA) Relative Value Scale Update Committee (RUC).

Then we have the legal protectionism the healthcare establishment enjoys from years of effective lobbying at the federal and state levels.

Manufacturers of drug and medical devices enjoy generous patent rights, which effectively create time-limited monopolies of up to 20 years, in the name of stimulating innovation and entrepreneurship. But monopolies stifle competition and slow innovation.

The worst imbalance, though, comes when patients are harmed, because there are no efficient feedback signals back to the supply side to eliminate costly health hazards.

FDA-approved drugs and medical devices enjoy strong legal protections from civil litigation when patients claim harm. In fact, when confronted with defects or problems, some cases manufacturer resort to either corporate bullying tactics or they ignore the problem altogether, with blessings from the FDA.

Many states cap the liability damages hospitals are responsible for in civil suits – under the Doctrine of Charitable Immunity. So, no matter the harm done to a patient or its cost, even when proven in court, the hospital corporation may not be held adequately responsible.

And for a patient to successfully demonstrate that he or she was the victim of negligence by a health care provider, the burden is on them to prove that a standard of care was breached by the practitioner. It can be impossible to find another physician willing to testify in a negligence case because of the"wall of silence"the exists in medicine, as in other professions. And, because of this "breach of standard" defense, even if the standard itself turns out to be unreasonably harmful, it still enjoys protection against malpractice liability – irrespective of whether the standard is eliminated from practice.

But, who pays the price of these supply-side focused legal protections? Without a question, it is the patient and our health insurance investments.

Is it a wonder that in an economy where consumers are vulnerable, these legal protections for industry have the potential to break the backs of American families?

Is it a wonder that in such a lopsided economy, insuring more consumers under the Affordable Care Act, though a just premise, threatens to bleed our health insurance investments to death?

President-elect Trump's administration is promising to recover a "free" health care marketplace away from federal imposition on consumers paying what amounts to a health care tax. But if creating a truly free and fair market equation is the goal, isn't it equally important to eliminate the supply-side favoritism that the health care industry enjoys?