Business Healthcare Economics Book Review

Since the passing of the Healthcare Reform Laws in 2010 by the US, many reactions have always emerged to support or oppose  the implementation of the laws commonly known as Obamacare. Many authors have also come up to give their expert views on the implications and costs associated with Obamacare. Some of these include economic authors Jonathan Gruber and John C. Goodman. This discussion presents a comparative review of two books written by these authors – Health Care Reform: What It Is, Why It’s Necessary, How It Works written by Jonathan Gruber, and Priceless: Curing the Healthcare Crisis written by John C. Goodman.

Book Summaries

In Jonathan Gruber’s book, Health Care Reform: What It Is, Why It’s Necessary, How It Works, the author discusses the essentiality of healthcare reforms, and what makes it the best solution to the issues affecting healthcare reform. The author also explains the possible disaster that would happen when the Congress decides to revoke the provisions of the healthcare reform laws. The author points out the poll indications that show more Americans rising against Health Care reforms. He thinks that this is because most Americans are simply ignorant of what is at stake when the healthcare reforms are scrapped off.

The poll show the people have less accurate infromtion on how healthcare reform works, and the intended short and long-term consequences of the program.  The author takes a step to explain the economics surrounding the means, stakes and consequences involved in the implementation of healthcare reform. He uses comic illustrations to demonstrate his knowledge of America’s need to implement healthcare reform. The author is a lead American economist who participated in the architectural design of the healthcare reform.

In comparison, the book by John C. Goodman titled Priceless: Curing the Healthcare Crisis argues against the pursuit of mainstream progressive policies. The author thinks that the desire by low-income households to get free care go against the natural dynamics between quality and prices. When prices are eliminated, quality would also be affected. Removing prices will also cause an explosion of costs in healthcare provision.  Such costs include time, pain and discomfort, and long waits for appointments. The poor end up getting low opportunity costs of time. Goodman thinks that Children’s Health Insurance Program (CHIP) should be handled as part of free market and any related expenditure be made through vouchers where parents can use private or employer’s private health insurance plan to pay for  their children. He also thinks that CHIP and Medicaid can be used to subsidize private insurance to increase the number of household members covered in the program. Goodman also acknowledges that quality may sometimes reduce in US hospitals, with some 187, 000 deaths occurring annually in US hospitals. He notes that removing prices in the healthcare system causes some dangers.


Comparative Discussions

The Emergency Medical Treatment and Active Labor Act (EMTALA) is an act that was passed by the US Congress with a requirement that every Emergency Department in participating hospitals should accept Medicare payments for purposes of providing relevant medical screening examination (MSE) to patients seeking medication regardless of their financial ability to meet the costs, citizenship status and legal status in the US. EMTALA lacks any provisions for reimbursements. Goodman thinks that it also prohibits the hospitals from discharging or transferring emergency care patients unless they have the patient’s consent, the patient demonstrates significant stability, or the transfer is driven by the need to move the patient to better equipped hospital.

Notably, this act only recognizes participating hospitals – those that receive payment from Medicare program (almost all hospitals). EMTALA applies to all patients in the US, whether they are covered under Medicare or not. Considering that the Federal government does not provide funding for the cost of emergency mandated under EMTALA, it has registered some cases of uncompensated care that increase hospital costs. EMTALA was intended to eliminate patient dumping by physicians for reasons such as inability to pay, or premature discharge for fear of rise in treatment costs. It covers emergency conditions – ones characterized by severity and acute symptoms that require immediate medical attention to prevent exposing the patient to further serious dysfunction of organs or ill health (as in the case of an unborn child). Diagnostic protocols are used to determine whether a patient’s condition is an emergency condition before they are covered under EMTALA.

The Food and Drug Administration is a federal government agency in the US tasked with the responsibility of promoting public health by sanctioning regulatory and supervisory actions across varied sectors in the United States. Their action may include controlling food safety, biopharmaceuticals, veterinary products, tobacco, over-the-counter prescriptions, electromagnetic radiation equipment, vaccines, blood transfusion, diet supplements, and medical devices. This agency has the powers and responsibilities to ensure that the Federal Food, Drug and Cosmetic Act and Section 361 in the Public Health Service Act is enforced.  Though its main focus lies in promoting public health by sanctioning food and drugs in the country, it may also act on other laws related to its mandate in the US such as regulating sperm donation, cellular phone use, and disease control efforts such as condom manufacture.

The Food and Drug Administration is headquartered in White Oak Maryland, and is headed by a Commissioner of Food and Drugs. The agency looks into the quality, composition, health benefits and labels of substances sold as food in US. It also classifies substances as food, dietary supplements or additives and establishes standards for the varied categories. The requirement for a drug to be classified as new is that it should have been made by developed by a different manufacturer, has undergone significant change, is used in different purpose, or has different inactive ingredients. Through New Drug Application, FDA vets new molecular materials that are presented as drugs, especially when they are not related or based on already existing medicine. Only those drugs that meet the minimum requirement of being effective and safe when used according to the physician’s directive are approved.  Over the counter drugs must first pass the process of New Drug Application. Generic drugs are those that traded with a name-brand earlier, but their patents have since expired.

The Patient Protection and Affordable Care Act (PPACA) is a US federal law that radically changed the mechanisms for regulation of the entire healthcare system in the country. The Act empowers primary physicians and hospitals to change their health practice clinically, financially, and technologically in order to improve health outcomes, and the logistics within healthcare distribution and access. PPACA intended to make health insurance affordable and beneficial, reduce the uninsured rate across US, and lower costs incurred in healthcare (both for individual patients and the government).

PPACA effectively brings frameworks to implementation such as subsidies, mandates and insurance exchanges. All insurance applicants should be covered under the same rate according to the minimum standards required by the PPACA. The subsidies provided by the federal government are meant to help individuals from all states  to pay their health insurance premiums. Dependents are supposed to be catered for under the insurance plan of their parents until they reach 26 years. Equally, insurers are required to remove restraining limits on the insurance policies they offer. Neither are they allowed to drop policyholders whenever they fall sick. Through PPACA, more people were made eligible to subscribe to Medicaid.

Goodman believes that health insurance retirement accounts (HIRA) can be funded through a model similar to the Chilean system for social security, where the cost burden is evenly shared between the workers and the employers through some 4% tax. The revenue collected through the collective fund can then be invested by private security agencies on a competitive basis to improve their process for accounting and reporting. Those holding HIRA agreements will have accounts to track their benefits and contributions. Upon death, HIRA monies will be redistributed to other subscribers holding HIRA agreements. The government would initially cover the cost or risk adjusted premiums, but as the HIRA gains value, they would be able to pay taxes for purposes of paying up risk-adjusted premiums to cover their HIRA holders.  When HIRA holders reach a certain retirement age, they can opt to give back their HIRA contributions to the government and get a Medicare plan from the government as a return. They can also opt to gain an annuity in exchange for their HIRA. The third option they have is to keep back their HIRA contributions and use them for paying premiums. They can do so within the withdrawal ceilings determined by the government.

Goodman thinks that Medicaid can be handled in three alternatives. First, the policymakers can consider abolishing it together with the CHIP program and moving all their subscribers to private insurance plans. These private plans would then be paid for by giving individuals some government vouchers worth $2000. However, some critics think that this figure is too low. The other option is to expand Medicaid to cater for all households without discriminating some on the basis of income and then proceed to give enlisted individuals the $2000 government voucher to pay for private plans. The third option would be to introduce health stamps to replace Medicaid in making purchases related to primary care.

Goodman considers the idea of free market as unsellable to American public. He proposes a microplan that can be used to go about the issue of funding healthcare reforms. He combines the old idea of casualty insurance with new ideas – centers of excellence that would influence supply, and universal health savings accounts that would influence demand. These elements are more likely to be successful of the healthcare reforms are pegged on market forces rather than regulators. Goodman also supports the use of fee schedules where patients sue out of pocket funds or HISA funds to pay additional expenses such as out-of-plan doctors.






Adashi, E. Y., Geiger, H. J., & Fine, M. D. (2010). Health care reform and primary care—the growing importance of the community health center. New England Journal of Medicine362(22), 2047-2050.

Berwick, D. M., & Hackbarth, A. D. (2012). Eliminating waste in US health care. Jama307(14), 1513-1516.

Goodman, J. C. (2012). Priceless: Curing the Healthcare Crisis. Independent Institute.

Gagliardi, J. (2013). Priceless: Curing the Healthcare Crisis. Biomedical Instrumentation & Technology47(1), 80-80.

Gruber, J. (2011). Health care reform: What it is, why it’s necessary, how it works. Macmillan.

Huntington, W. V., Covington, L. A., Center, P. P., Covington, L. A., & Manchikanti, L. (2011). Patient Protection and Affordable Care Act of 2010: reforming the health care reform for the new decade. Pain Physician14(1), E35-E67.

Orszag, P. R., & Emanuel, E. J. (2010). Health care reform and cost control. New England Journal of Medicine363(7), 601-603.





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