Reforming the Health Care Market: An Interpretive Economic History (review)

David Drake reads selectively in secondary sources about history and recent events in the United States in order to justify his recommendations for contemporary health policy. He asserts that the present predicament in health affairs is the result of the absence of direct financial relationships between providers and individual consumers. As a result of this failure, reform of the health-care system cannot be accomplished unless consumers who are financially able are made accountable for their health-care purchasing decisions (p. xii). The proper insurance mechanism to accomplish this reform is a federal guarantee of last-dollar coverage for the financially catastrophic results of illness and injury (p. 180).

Drake has been a close reader of scholarship that justifies his views. He cites standard works in the history of medicine and health care of the 1970s and early 1980s, without noticing subsequent revisions of the findings of these works, even by their authors. He has also examined articles in the literature of health policy and health services research that are consistent with his opinions. He augments his personal reading of scholarship with statistics from government reports, especially information about differences in health-care expenditures between the United States and the countries of the European Union. Unfortunately, he does not notice that the countries whose spending levels he finds satisfactory have effectively removed the cost of most health services from the price system, thus undercutting his thesis.

The author wrote his book in retirement from a long career as an executive with the American Hospital Association. His earned expertise occasionally improves the book, for example in an enlightening discussion of the perverse effects of the dependence of hospitals on tax-exempt bonds for capital (p. 39). However, instead of writing from firsthand knowledge, Drake seeks a lost golden age—not in imagined events in the past, but rather in an oversimplification of the economics of health-care markets.