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Does the Doctor Need a Boss?

by Arnold Kling and Michael F. Cannon

No. 111

January 13, 2009

Executive Summary

First is the regime of third-party fee-for-service pay-

The traditional model of medical delivery, in

ment, which is heavily entrenched by Medicare,

which the doctor is trained, respected, and com-

Medicaid, and the regulatory and tax distortions

pensated as an independent craftsman, is

that tilt private health insurance in the same direc-

anachronistic. When a patient has multiple ail-

tion. Consumers should control the money that

ments, there is no longer a simple doctor-

purchases their health insurance, and should be

patient or doctor-patient-specialist relationship.

free to choose their insurer and health care

Instead, there are multiple specialists who have

providers.

an impact on the patient, each with a set of

Second, state licensing regulations make it dif-

interdependencies and difficult coordination

ficult for corporations to design optimal work

issues that increase exponentially with the num-

flows for health care delivery. Under institutional

ber of ailments involved.

licensing, regulators would instead evaluate how

Patients with multiple diagnoses require

well a corporation treats its patients, not the cre-

someone who can organize the efforts of multi-

dentials of the corporation's employees. Altern-

ple medical professionals. It is not unreasonable

atively, states could recognize clinician licenses

to imagine that delivering health care effectively,

issued by other states. That would let corpora-

particularly for complex patients, could require

a corporate model of organization.

tions operate in multiple states under a single set

At least two forces stand in the way of robust

of rules and put pressure on states to eliminate

competition from corporate health care providers.

unnecessarily restrictive regulations.

Arnold Kling is an adjunct scholar at the Cato Institute and the author of Crisis of Abundance: Rethinking How

We Pay for Health Care. Michael F. Cannon is director of health policy studies at the Cato Institute and coauthor of

Healthy Competition: What's Holding Back Health Care and How to Free It.

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