How to Fix US Health Care

Health care costs should be going down — not up. Innovation and advancing technology should be making us healthier for less and less cost. Why are the costs rising faster than anything else?

The reason is that the power of innovation is not being applied. Patents and incentives are misaligned. Consider computing for comparison: Moore’s Law predicts ever decreasing costs for computing power, driven by market demand for computing. But in health care, systems we have in place have converted the demand for health into a demand is for services — not improved health. We have turned drug companies into pushers who want to keep us dependent on long-term expensive treatment; and we have incentivized care providers to want us to keep coming back.

Here are some solutions to realign incentives:

1. Repeal the Bayh-Dole Act and replace it with a law that places patents for Federally funded research into the public domain. The Bayh-Dole Act has had the unintended consequences that it has corrupted the missions of universities, which were education and pure unbiased research. Now, corporations partner with universities, biasing the work, and pushing it toward ROI-based approaches which favor expensive drug treatments over cures. Universities have become intellectual property factories.
2. Make insurers pay their fair share of the cost of care for patients who are in drug trials. Today, if you are in a drug trial, the trial pays for your entire cost of care. That unfairly burdens drug trials with that cost. Drug trials should only pay for the drugs and procedures that are unique to the trial. This is why phase 3 trials cost billions of dollars, and it contributes to the lack of research on drugs for small patient populations, or cures instead of treatments.
3. Disallow patents on drugs and gene sequences. Gene sequences are chemical formulae. They are like equations. They should not be patented. Patents should only be allowed on processes for making drugs or creating gene sequences. Today, drug companies strive to patent everything they can, locking it up, and driving drug prices sky high.
4. Health care providers and health technology providers (i.e., drug companies) should be non-profit. A profit motive for health care misaligns incentives: the incentive becomes keeping patients dependent on long term expensive drugs, whereas the incentive should be to make us healthy.
5. Get rid of Medicare’s fee-for-service model. Replace it with an HMO-like subscription model that includes incentives derived from health outcomes.