Report: Health gains stem from private sector innovation, not government

Photo Credit: Getty

A new Competitive Enterprise Institute report delves into evidence that populations are healthier and live longer as the result of private sector, profit-driven innovations compared to government mandates and spending. The report draws upon the work of economist Adam Smith, explaining how his theories of freedom and innovation track with real-world examples in the realm of human health gains.

"Self-interested innovation, not government efforts, have been the most potent way to improve human health over time," said Joel M. Zinberg, CEI senior fellow and author of the report. "Innovation reduces the 'price of health' over time by improving existing treatments and providing previously unavailable treatments."

Zinberg discusses available research finding that private sector discoveries, such as germ theory of disease, led to innovations in practices like hand washing and pasteurization of milk, which in turn led to increased life expectancy in the U.S. jumping from 49.3 years in 1900 to 77.5 years by 2003.

Recent examples of life-saving innovations abound, as well:

• New HIV drugs turned a uniformly fatal illness (AIDS) affecting millions into a chronic disease;
• New Hepatitis C drugs turned a chronic, often fatal illness with poor but expensive treatments into a curable disease;
• Targeted cancer medicines extended lives and cured many previously fatal malignancies; and
• New obesity medicines may ameliorate the problem of obesity that decreases our health.

"Conversely, government interventions have done little to improve innovation and health and, at times, actually decreased them," said Zinberg.

That's because most government efforts to improve health have focused on increasing health insurance coverage, as with Medicare, Medicaid, and the Affordable Care Act (ACA). Such government mandates increased the amount of medical care used and medical spending but improved health less than is commonly believed, Zinberg argues.

For example, a 20-year observational study found that insured people use more health care services but with no significant effect on health and mortality. And a randomized trial-the gold standard for scientific studies-of Medicaid coverage in the state of Oregon found that Medicaid-insured people increased use of medical care and had an improved sense of well-being but had no improvement in measurable health outcomes such as blood pressure, cholesterol levels, diabetes control, or mortality when compared to people who did not gain Medicaid coverage.

View the report, The Innovation Imperative: What Adam Smith can tell us about healthby Joel M. Zinberg, M.D., J.D.

Zinberg served as General Counsel and Senior Economist at the Council of Economic Advisers in the Executive Office of the President at the White House from 2017-2019. He practiced general and oncologic surgery in New York for nearly 30 years at the Mount Sinai Hospital and Icahn School of Medicine, where he is an Associate Clinical Professor of Surgery. He also taught at Columbia Law School, creating a course on legal issues surrounding organ transplantation and was president of the New York County Medical Society, the largest county medical society in the country.