The Government’s Role in Healthcare: Position Paper

By Simona M. Lovin, Andwyrde LLC

The Four Key Governmental Responsibilities

At Andwyrde, we believe that the first responsibility our government carries with regards to the health of its citizens is a moral one. Our country, the wealthiest country in the world, should not allow its people to fall through the loops of the medical safety net. Americans should not die because they cannot afford medical average or because medical coverage is withheld due to preexisting conditions. Market forces alone cannot and do not address this failure; the government will have to step in with corrective measures. Andwyrde believes that it is the government’s responsibility to drive the debate towards a non-partisan solution – with input from the industry and from private citizens – and to initiate the implementation of that solution, whether by means of a public plan option, insurance exchanges, insurance cooperatives, or other alternatives that may emerge.

We also believe that health care reform should go well beyond insurance market reform. Health care reform will have to address a wide spectrum of both medical and societal issues – the spiraling costs of health care; the quality, need, and use of healthcare; the special allowances required to protect certain categories of citizens, particularly the very young, the old and the needy; the effect of affordable and available healthcare as a social stabilizer; and the interconnectedness of healthcare markets with the labor and financial markets. Each one of these issues has at its core a kernel of social justice. A healthcare system based on solid policies and egalitarian practices will foster stability and security, and increase the welfare of our society. Fundamentally, this is what good government is all about.

A prime area where government intervention has been and will remain necessary is in the field of disease prevention and disease control. Past experience has shown that government involvement is critical in improving the public health education – an important ingredient in the creation of healthy living environments and the containment of chronic diseases. While a combination of public, non-profit and for-profit efforts is necessary for a sustainable long-term approach to risk exposure and chronic disease control, the large-scale coordination and disease surveillance mechanisms required for understanding the population’s health and for measuring progress in changing health behaviors and outcomes require both public funding and a high degree of central coordination.

Equally important are governmental functions targeted at food and drug safety. Rigorous pre- and post-marketing testing can prevent not only tragedies such as the thalidomide-induced birth defects and deaths that occurred in several countries[1] in the late 1950’s, but also minimize adverse events and drug errors. We recognize that concerted coordination at the federal level is necessary for the effective surveillance of drug safety records and adverse event interactions, and further improvements are needed particularly in the area of post-marketing drug safety[2]. At the same time, the government should fund research in non-drug approaches, including rigorous evaluations of physiotherapy, surgery, alternative medicine, and educational/coping strategies, which are not of direct interest to the pharmaceutical sector[3].

On grounds closely related to the moral considerations, our government also acts as the ethical compass for our society. The ethical responsibility that the government carries is second only to the moral one. One of the fundamental tenets of American democracy is for all citizens to have an equal opportunity to a successful life. All citizens should equal access to the collective pool of national resources. All citizens should be equal in the eyes of the law. By and large, our education, our financial, our labor and our legal systems are geared towards minimizing egregious discrepancies in the treatment of the various categories of people. The point of fracture (as we witnessed in September 2008 in our financial market crisis) sits at the demarcation between the individual – as a private citizen – and groups of individuals organized into profit-making entities – i.e., companies and corporations. The rights of the individual and the rights of a company – particularly banks and investment firms – are vastly different when it comes to one’s pecking order in the financial system, for instance.

The disparity in the rights and leverage wielded by individuals vs. businesses is nowhere more obvious than in our existing medical system. Businesses, whether small or large, have more flexibility, more options, and get significant better deals on medical insurance packages than do individuals searching the individual plan market (assuming such plans are available in their geographical area!). Companies pass much if their healthcare expenditures on to employees, and have access to credits and subsidies that individuals cannot tap into.

Thanks to the Affordable Care Act (ACA) provisions and resulting regulations, health provider entities are now increasingly compelled to itemize and justify costs, demonstrate quality of service, or offer more cost-effective treatments to the individual consumer. At Andwyrde, we believe that the healthcare system should serve the people’s interests as much as the business stakeholders’ interests. Therefore, we support the [Obama] Administration’s intent to protect the individual rights to affordable quality healthcare, and to move the health care system away from a situation where unregulated markets reward business success but do not punish business failure.

At the same time, we stay away from the mindset of healthcare as “business”. Healthcare is about taking care of people. Labeling and handling people as “consumers” mistakes the issue. The government has an important function to play in breaking down the existing paradigm of patient-as-consumer, and in working with the public, with businesses, health care providers, research centers and non-profits to devise new business models and patient-care models that take both profit and the broader social dimensions of health care into account. We see as immediate priorities the containment of health care costs, instituting a “pay-for- quality” health care pricing mechanism, curbing the incidence of fraud and abuse in the medical profession, increasing the efficiency of our Medicare and Medicaid programs, and streamlining beneficiary eligibility.

Looking at the issue through economic lenses, the question of the government’s role in the health of our nation is the largely the question of how joint-ownership goods (i.e., goods that are both publicly-owned and privately-owned) should be funded and managed. As mentioned earlier, an individual’s state of health is a combination of physical and mental well-being factors; a good state of health generally renders the individual more productive as a worker, thinker, family member, or member of a social network; a poor state of health generally has the opposite effect on an individual’s ability to contribute to the society. As such, one’s health represents a “private good” that yields physical, psychological and economic benefits to its owner.

Aggregated at the societal level, the overall level of health in a population has a direct correlation with its odds of survival. In the United States, unlike in some developing countries, the question of the general health as a survival factor has not yet emerged as a significant issue (although there is increasing recognition that the aging of the American people will have a downstream effect on our economic viability). However, the increased medical costs levied at the individual level already have a measurable impact on the citizens’ buying power, on the level of savings and the amount of money in circulation. The skyrocketing costs forecasted for the Medicare and Medicaid programs will continue place a burden on taxpayers and will increase our national deficit manifold. These are tangible, large-scale economic problems created by our existing health care system; to the extent that we recognize them as such, we also have to recognize that the health of our citizens is as much a public good as it is a private good. Judicious government intervention in the funding of programs intended to tend for, manage and monitor this public good is key to its sustainability.

In fact, Andwyrde sees sustainability as the litmus test for the health care business models of tomorrow. Closely related to and building upon the culture of transparency and accountability promoted by the Administration, the drive for sustainability assumes that the solutions to the problems generated by our health system will be both participative and holistic in nature. A case in point will be the success of the Administration’s initiative to mandate individual coverage, where any sustainable option will have to account not just for the individual’s health risk profile (the health dimension), but also on the individual’s access to credit or finance (the financial dimension), and the individual’s employment prospects (the labor dimension).

As with prior large-scale paradigm shifts, the government will have the economic responsibility to act as a change agent and drive business discourse towards a tipping point, notjust through its legislative branch, but just as much by exercising its executive branch by exercising fiscal, monetary and economic levies. Eliminating the insurance companies’ anti-trust exception will open the door to competition in the health insurance market. Increased access to government-backed loans could spur the proliferation of co-partnering public/private health research and health provider arrangements.   Even changes in the GDP definition, for instance, to reflect the real costs/externalities of public goods and to subtract(rather than add) the value of clean-up activities, could act as a catalyst for the design of new ways to assessing the costs and benefits of health care. 

Last but not least, from a security perspective, with information technology as a critical enabler of the new and upcoming health care policies, the “what” and the “how” of policy implementation are closely coupled. Of immediate relevance is the public debate on the definition of meaningful use of electronic health records, where the definition of the concept – and its corresponding policy-level impact – has evolved in lockstep with the assessments and predictions of technology advancements and technology rates of adoption. The adoption of health information exchange (HIE) and electronic medical records (EMR) technologies are key to the Administration’s health program. At the same time, we see the government’s oversight over the use of such technologies as critical for the quality, integrity and privacy of the information exchanged. When people’s health is at stake, compromised or low-quality electronic medical data can pose more danger than no electronic medical data. At the national level, the protection and preservation of health records and health information exchanges represent key security functions for our government.


One overarching critical question about health care reform has been and continues to be, “What exactly should government’s role be in the American health care system?” Whether we look at the government as a safety regulator, a marketplace regulator, a purchaser of healthcare services or a provider of healthcare services is merely a topic of debate. The fact is, the Affordable Care Act has created huge ripples in the healthcare market, and ensuring that the rising tide lifts if not all boats, at least a majority of the boats, will be largely a measure of the government’s adequately ability to manage the Act’s implementation.

End Notes:

[1] The impact in the United States was minimized by FDA’s refusal to approve the application from Richardson Merrell to market thalidomide, saying more study was needed.

[2] GAO-07-599T, “Drug Safety” Report, March 22, 2007


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