John C. Goodman

Health care is a complex system. The key components of complex systems cannot be copied, duplicated or replicated. Most important of all, they cannot be managed from the top, down. Almost everything we are doing to control costs, boost quality and improve access treats health care as an engineering problem—one that can be fixed following a book of rules.

In fact, complex systems rarely ever work unless people are liberated. That means eliminating perverse incentives and freeing the doctor, the patient, the employer, the employee and everyone else in the system—giving them the maximum opportunity to solve each other’s problems.

There is only one reliable way to reduce costs, increase quality and improve access to care: rely on the power of competitive markets. That means giving patients control over health care dollars and allowing providers to compete on price, quality and the convenience of care. Where ever third-party payers are not dominant, we see the power of this approach: cosmetic surgery, Lazik surgery, walk-in clinics, mail order drug houses, telephone and email consulting services, concierge doctors, international medical tourism and in the emerging market for domestic medical tourism. Where the greatest opportunity exists: chronic illness

In 2012, the federal government will require one out of every 10 dollars of general income tax revenues to keep its promises to seniors under Social Security and Medicare. That means to balance the budget, the federal government will have to stop doing one in every 10 other things it has been doing.

By 2020, the federal government will have to stop doing one in every four things it has been doing, if seniors are to get all their promised benefits. By 2030, about the midpoint of the baby boomer retirement years, the federal government will have to stop doing almost one in every two things it does today. There is only one way out of this crisis: move to a funded retirement system in which each generation saves and invests and pays its own way.