Wanted: A Better Way To Think About Health Care.

• Author: Mcclaughry, John
• Position: John C Goodman's "New Way to Care"

IN THE DEPRESSION summer of 1934, President Franklin D. Roosevelt gradually concluded that the country needed a broad-based, government-led program to assure Americans' economic security. He thus created the Committee on Economic Security, led by such long-forgotten policy mechanics as Frances Perkins, Arthur Altmayer, Edwin Witte, and Wilbur J. Cohen.

The Committee begat the Social Security Act of 1935. The legislation's central feature was billed as "social insurance": Workers would make contributions throughout their working lifetimes, the government would invest the funds in special Treasury notes, the earnings would accumulate, and at age 65 or upon disability the workers would begin to draw retirement benefits. What could go wrong?

Thirty years later, big government had advanced far enough in public esteem for presidents John F. Kennedy and Lyndon B. Johnson to expand social insurance to include government-managed health insurance for retired workers (Medicare) and government-paid health care for the poor (Medicaid). The chief policy mechanic for this great leap forward was Cohen, who ended up serving as secretary of health, education, and welfare for the last seven months of Johnson's presidency.

Let's engage in a counterfactual. Suppose those social insurance plans had been designed by libertarian-leaning policy mechanics. What would they have produced?

In New Way to Care, economist John C.Goodman supplies a plausible answer to that question. Goodman reveals the disincentives, inefficiencies, hypocrisies, astronomical unfunded liabilities, and general absurdities in the programs that currently exist. Then he goes beyond that to lay out the policy alternatives that, he argues, would make the American social security, disability, and health care universe effective, consumer-centered, and, above all, pro-liberty.

Goodman has authored at least 26 books on health and welfare policies since 1980. His most influential work was probably Patient Power: Solving America's Health Care Crisis, written with Gerald Musgrave and published in 1992. That 657-page magnum opus reviewed the evolution of health care policies in the U.S. and abroad. It lucidly explained why competitive markets and informed and empowered patients lead to efficient and beneficial outcomes, while turning over patient care to government bureaucracies inevitably leads to inefficient and sometimes calamitous mistreatment.

At that date, this notion was considered borderline...