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From Chaos to Order: Healthcare Reform in the Digital Age

Original Article

Although unexpected, the unraveling of the Affordable Care Act—more commonly referred to as ObamaCare—may deliver a mortal blow to liberalism.  At the very least, it presents a momentous opportunity for a majority of American people to recognize that dependence on unaccountable government bureaucracies is a loser’s wager.  Since failure is often the best teacher, the ObamaCare fiasco may well catalyze a broad renaissance of appreciation for the power and virtue of self-reliance and choice that only the free market provides.

Additionally, if more people had understood that ObamaCare was essentially a redistributionist entitlement program that would add to the national debt while turning the American healthcare system upside down, it would never have passed.  As it was, without a single Republican vote, several Democratic senators had to be bribed by the Obama Administration before they would join in jamming the bill through on straight party lines.The fact that ObamaCare is prompting early retirement among doctors and reduced medical school applications, while also creating 16,500 new IRS enforcement agents, reveals just how fundamentally wrong-headed this reform was from the get go.

Then there is the recent revelation that the bill would not have passed, but for the biggest lie of all from President Obama himself.  Now everyone knows that if you liked your plan, your doctor, and your deductible you can’t keep them.  Health care insurance companies have also been betrayed by President Obama’s executive orders changing coverage rules after the law was enacted—causing actuarial turmoil.

The result is a genuine crisis for liberalism—not the least of which is that government’s social contract with the American people has been fundamentally broken, with a majority now feeling that Washington under Obama and progressive Democrats is arbitrary, coercive and untrustworthy.

It turns out that it is the entrepreneurial drive and the pursuit of excellence rather than government mandates that compel doctors to deliver quality care to their patients.  And most of the treatment breakthroughs and cost-efficient solutions in healthcare come not from government but from medical technology, biotechnology and pharmaceutical companies driven by entrepreneurs. What the Democratic Party’s effort to remake one-sixth of the economy in restructuring healthcare delivery has totally ignored is the vital role of entrepreneurial input, individual choice and the free flow of information,  which are at the heart of delivering quality and low cost in every industry.

The incentives of a competitive free market are the best way to bring health care costs down while also pushing the envelope of improvement and progress through research and discovery.  Healthcare reform could and should unleash innovation, not stifle it.  The driving force behind low cost quality choices that Walmart and Amazon have brought to retail, that Cisco, Apple and Google have brought to communication, that Priceline and Expedia have brought to hospitality, and that Southwest and FedEx have brought to transportation are all based on the revolution in the application and speed of information.

Things now may look a bit bleak as they did at the end of the Carter Administration—a time characterized by malaise and stagflation. But there is a way forward so long as apolitical and clear-headed economic thinking gets the national audience it deserves.

It was George Gilder more than anyone who helped create the intellectual framework for America’s comeback with Ronald Reagan and the supply side economics revolution with his classic Wealth and Poverty.  Fortunately, Gilder comes to the rescue again, with a new book, Knowledge and Power, which realigns and reinvigorates economics with information theory.

It may turn out that healthcare reform in the digital age can be a lot less political if we fix the problems of the old system and base the new framework on incentives that work and allow choices to blossom through a freer flow of information.

Scott S. Powell

Senior Fellow, Center on Wealth, Poverty, and Morality
Scott Powell has enjoyed a career split between theory and practice with over 25 years of experience as an entrepreneur and rainmaker in several industries. He joins the Discovery Institute after having been a fellow at Stanford’s Hoover Institution for six years and serving as a managing partner at a consulting firm, RemingtonRand. His research and writing has resulted in over 250 published articles on economics, business and regulation. Scott Powell graduated from the University of Chicago with honors (B.A. and M.A.) and received his Ph.D. in political and economic theory from Boston University in 1987, writing his dissertation on the determinants of entrepreneurial activity and economic growth.