Fareed Zakaria: Health IT is no magic bullet
As Fareed Zakaria sees it, the remedy for America's ailing and expensive health system is clear.
It might be hard for some to swallow, but, in his view, it is sure and proven.
"There's absolutely no question that when we look at the ability to provide good healthcare at an affordable price, lower levels of massive inequality in healthcare outcomes or provision, a single government payer and multiple private providers is the answer. It's absolutely clear that is the only way you can achieve that goal," Zakaria said. "The revolution that's needed here is not an information revolution, it's a political revolution."
Zakaria is a journalist, author and host of Fareed Zakaria GPS, a Sunday morning staple on CNN that delves into global issues and ways to solve them. For purposes of his broadcast "GPS" stands for Global Public Square.
Zakaria spoke to a crowd of more than 600 healthcare CIOs at the annual CHIME Fall Forum, October. 16 in Orlando, Fla.
"There's absolutely no question that when we look at the ability to provide good healthcare at an affordable price, lower levels of massive inequality in healthcare outcomes or provision, a single government payer and multiple private providers is the answer," he asserted. "It's absolutely clear that is the only way you can achieve that goal."
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His remark about a single payer healthcare system drew a ripple of applause from some in the audience.
It wasn't until halfway through his hour-long talk that Zakaria even mentioned healthcare. First he set the global stage, explained what was happening in the world before technology changed so much and seemed to become the answer for all that ails healthcare and other industries today.
Zakaria, an immigrant, grew up in India in the 1960s and 1970s. India was one of the poorest countries and it was cut off from the rest of the world. It was very technologically backward, he said. His version of the American dream then was the opening credits of the TV show "Dallas." The appeal was the opulence, the sense of dynamism.
By the time he was studying at Yale University in the 1980s, the seeds for both a globalization revolution and a technological revolution were yet to be sown. There were no satellite networks, no smart phones, no iPhones, no laptops. Hospitals were still mired in paper.
Today, many are looking to technology to improve the healthcare system and perhaps even to drive down costs.
"The fundamental point, I think, that you have to understand about healthcare is information technology, globalization are not magical solutions," Zakaria told the audience.
[See also: CIOs share meaningful use concerns at CHIME.]
This is especially so, because the fundamental structure of healthcare "makes it very difficult to achieve certain economies of scale."
"What I'm always struck by when I look at healthcare," Zakaria said, "is the fundamental accuracy, impressions of the1961 or 1962 article written by Kenneth Arrow, a Nobel Prize winning economist, who said healthcare is not going to operate like any other market."
Indeed, noted economist, New York Times columnist and author Paul Krugman also references Arrow's work.
"One of the most influential economic papers of the postwar era was Kenneth Arrow's Uncertainty and the welfare economics of health care, which demonstrated – decisively, I and many others believe – that health care can't be marketed like bread or TVs," Krugman wrote in a 2009 column.
Exactly Zakaria's point.
Healthcare "is all non-tradable work," he explained. Yet, "people look at healthcare and they ask themselves, 'Why aren't you getting more and more productivity?'"
That approach works in most industries.
"We have wrung inflation out of literally every industry," Zakaria noted. "In most cases you've seen enormous price deflation. Think about computers; think about technology."
Higher education and healthcare have been elusive when it comes to controlling spiraling costs. In fact inflation rates have been two to three times higher than the national average, he said.
"In both cases, you have the consumer not paying, very complicated government regulation that involves lots of third parties that pay and reimburse on very complicated schedules," Zakaria said. "So all the normal price mechanisms that are at work that allow supply and demand to find equilibrium do not exist. "
As Zakaria sees it, the answer does not lie in technology – at least not in technology alone, but rather in the structure of the health system itself and leaders should be prepared to unravel the structure.
"The fundamental point, I think, that you have to understand about healthcare is information technology are globalization are not magical solutions," Zakaria said. "I don't mean to be the bearer of bad news. What I mean is you have a very complicated job ahead of you, which is the structure. In addition to that you have a Democratic system, which makes it very hard to change the structure."
"The hope in America has always been that we find a technological solution that magically gets around all these problems," he concluded. "I think, more likely we're going to have to do the hard work of unraveling the system that we have in place and figuring out how you actually make some hard political decisions that force you to choose, you know, when you're 80 years old, are double hip replacements covered."