Charles Silver, MA, JD, is an adjunct scholar at the Cato Institute, and holds the Roy W. and Eugenia C. McDonald Endowed Chair in Civil Procedure at the University of Texas School of Law, where he teaches civil litigation, health care policy, legal ethics, and insurance.
His writings on class actions and other aggregate proceedings, litigation finance, medical malpractice, and legal and medical ethics have appeared in leading peer-reviewed journals and law reviews. In 2009, the Tort Trial & Insurance Practice Section of the American Bar Association awarded him the Robert B. McKay Law Professor Award for outstanding scholarship on tort and insurance law.
He is the co-author of Overcharged: Why Americans Pay Too Much for Health Care.
HTA - Tell us about your personal/professional background?
I learned how to think when I was a grad student in political science at the Univ. of Chicago, and have kept thinking ever since. I’ve been living in Austin and teaching at UT Law since 1987, and am one of the ten most-cited members of the faculty. My areas of interest include health care policy, civil litigation, legal ethics, and insurance.
HTA - Who were your early mentors, and how did they impact your career?
At the Univ. of Chicago, I had the incredible good fortune to learn from Russell Hardin, Brian Barry, Jon Elster, and Duncan Snidal. I later studied jurisprudence with Jules Coleman at Yale Law School. Without them, I’d have amounted to nothing.
HTA - What inspired you to write the book, Overcharged?
I study points at which law and medicine intersect. After doing original research on medical malpractice for years, in 2010 I decided to learn about health care fraud, in hope of understanding its prevalence. After a year or so working on that project, I saw that fraud is just one of many negative consequences of the health care payment system. Since a book about fraud had to cover the whole payment system (because fraud is literally everywhere in the health care system), I decided to write a book that enabled readers to see that the worst pathologies of the health care system have a common source. Overcharged, which Professor David Hyman of Georgetown Law and I wrote together, is that book. I am very proud of it, both because of the ideas and insights it contains and because it is an accessible read.
HTA - Why is health care so expensive in America?
We spend too much on health care because we pay for it the wrong way. Instead of buying medical services the same way we buy cars, furniture, food, and pretty much everything else, we rely on third parties—Medicare, Medicaid, private insurers, and others—to pay for them. Comprehensive insurance coverage destroys the incentives sellers normally have in providing high quality services at low cost because, at the point of delivery, consumers are spending other people’s money, not their own. A famous Texas politician once observed that if we had food insurance, we’d eat very differently, and so would our dogs. Comprehensive health care insurance makes no more sense than comprehensive food insurance would. We should save health insurance for catastrophes—events that are unlikely to occur but that have terrible consequences when they do—and pay for everything else ourselves.
To get from where we are to where we should be, we need only let the insurance-driven cost crisis burn itself out. As health care becomes more and more expensive, health care insurance does too. As insurance becomes less affordable, more people go bare or carry high deductibles. These people have to spend their own money, so they go looking for bargains, and as they do, the retail health sector expands. We’re in the midst of a retail revolution—Walmart just opened its first comprehensive primary care clinic; it charges $40 for a doctor’s visit, $25 for a dental cleaning, and $1/minute for mental health counseling—and we need only let it continue.
We could speed the revolution along by eliminating coverage mandates, subsidies, and tax exclusions that encourage people to load up on insurance. We could also convert Medicare, Medicaid, the VA and other programs into cash-transfer programs that give people money instead of paying for or providing services. These steps would add millions of bargain-hunting consumers to the self-paying army overnight.
HTA - Other countries have universal coverage. Are their citizens paying as much as our taxpayers are now for health care?
Other countries spend less per capita on health care than we do, but this does not mean that we can reduce our costs by imitating their models. Our government is uniquely susceptible to pressure from special interests. That’s why pretty much every attempt our government has ever made to save money on health care has failed. The idea that we’ll finance universal coverage by cutting payments to doctors, hospitals, and drug makers is sheer fantasy, even lunacy.
When proponents of Medicare for All ask why we can’t have European-style health care here, I always think of Norway. When oil was discovered in the North Sea, Norway’s government put its revenues into a sovereign wealth fund that today contains more than $2 trillion dollars. By comparison, during the years when Medicare and Social Security taxes generated more revenue than the programs required, our government saved NOTHING. It spent every dollar that would be needed to pay for benefits in the future, leaving both programs grossly underfunded. Norway also has no long-term debt. Our federal government has $23 trillion in debt and is adding about $1 trillion per year to that already-crippling pile. Despite gaining revenue from oil, Norway has more electric cars per capita than any other country in the world. Meanwhile, our government is rolling back MPG requirements on vehicles with internal combustion engines.
When thinking about health care policy, we need to take our government as it is, and our government is HUGELY flawed. That’s why Medicare for All is a terrible idea. Instead of giving the government more control of health care, we should take control away from it and put it back in our own hands.
HTA - One of your solutions to rising health care costs is to make Americans pay a larger share for care. Isn’t that a hard sell, both for the public and their elected leaders, when many of them already are paying large premiums and many other legitimately can’t afford insurance?
We don’t really have to “sell” anyone on anything. The retail revolution will continue apace unless politicians try to stop it, which I don’t think they will. As long as our government doesn’t do something stupid, like enact Medicare for All or plow another $1 trillion into Medicaid, the army of self-paying consumers will keep growing and the retail health sector will keep expanding.
The government could speed things along in some ways, for example, by eliminating coverage mandates. As the retail sector grows, these changes may become more palatable. For example, why mandate free annual mammograms, as the Affordable Care Act does, when routine mammograms are available at retail for $200-$300? According to MDSave.com, the regional price in Texas for cash-paying customers is $174. That’s about the same as a family’s monthly cell phone bill, and everyone pays out of pocket for that.
As the retail revolution continues and people increasingly see medical treatments as ordinary services as goods, conditions may arise in which the changes we support are possible.
The only problem the government should help with is financial support for the poor. The hard sell will always be to convince the government to give poor people money and let them shop for themselves.
HTA - You argue that health care places too great a burden on taxpayers, via the federal budget. Realistically, what could be done immediately, potentially with bipartisan support, to significantly reduce costs?
Bipartisan support? That’s a good one.
HTA - If individuals have to pay more for care, what happens to preventive care, such as vaccinations, annual physicals and routine cancer screenings? Will more people forego preventive care and potentially end up with a preventable illness that cost staggering amounts to treat?
Before answering your question, I’d like to point out that you inadvertently endorsed the myth that annual physicals improve health. They don’t. “Careful reviews of several large studies have shown that these annual visits don’t make any difference in health outcomes,” Many types of cancer screening are useless—or worse—too. See Prasad & Newman,
Americans over-use medical treatments of all types and place far too much trust in providers whose interests are corroded by third party payment arrangements, especially by arrangements that pay them whether services work or not. An important consequence of direct payment is that it will introduce a desirable dose of skepticism, as consumers demand evidence of value, warranties, and money-back guarantees.
To me, vaccines really fall into the category of public health. The object is as much to prevent disease from spreading throughout populations as it is to protect the health of a single individuals. That said, the retail sector already has companies that conduct mass inoculations at businesses and other locations where people gather in numbers. Here’s an example: https://www.totalwellnesshealth.com/flu-shot-clinics/. If there are geographical areas or other places where vaccination rates are low, the government could pay these companies to provide them for free.
The best things people can do for their own health are free. Exercise. Eat reasonably. Sleep. Develop lasting friendships and relationships. Other determinants of health are NOT provided by the medical system, including education, housing, clean water, sanitation, and so forth. These are the areas where real, sizeable gains are to be had.
HTA - Do you believe Medicare for All plans can be paid for in a way that puts less stress on taxpayers and more on the wealthy, while paying less to doctors and hospitals?
No. In fact, the best thing to happen in the debate over Medicare for All was Liz Warren’s failed effort to fund it. Anyone who still needs convincing should read Megan McArdle’s short column in the Washington Post, where she takes Warren to task. McArdle; The math for Warren’s health-care plan adds up if you accept its ludicrous premise,
HTA - Rural hospitals are closing at alarming rates, especially in Texas, forcing people to travel many more miles for care. What can be done to save rural hospitals?
Little, perhaps nothing. The “too few people” problem is a hard nut to crack. One must also ask whether rural hospitals should be saved. When it comes to routine care, the needs of rural residents can be met by mobile clinics, telemedicine, etc. Scheduled medical procedures can be handled by travel to cities. Emergencies requiring sophisticated equipment and expertise are the real problem and I’m not sure what to do about them.
HTA - What do you think your career path would have looked like, if you were not a Professor of Law/Author/Writer?
The answer depends on where along the line my path would have diverged from the one I actually took. Coming out of college, I had an offer to join the management of a company owned by Beatrice Foods, then an enormous conglomerate. I might have risen through the ranks there. Later, I was the managing editor of a philosophy journal. I could see myself as a professional editor and sometime think I would have been better at that job than I am at this one. I have a talent for helping people express themselves more clearly. Much earlier in life, had someone pushed me harder, especially in the area of mathematics—which I was good at but too lazy to work on—I might have gone into economics or engineering.
HTA - How do you learn? What are you reading?
I learn by writing. Seriously. Over the years, I’ve become good at (1) seeing when I don’t know what I’m talking about, and (2) finding things I need to study to fill holes. When I write and am honest with myself about the limits of my understanding, I’m then forced to study until I get to the point where I feel more confident. I also seek out people who are experts in what I need to learn and talk with them. I’m especially interested in the views of practitioners, like lawyers and people who run health care businesses. When they tell me that I don’t understand how things work, I get very worried. That doesn’t happen much anymore, fortunately.
As for what I read, it really depends on the problem I’m studying. Right now, I’m working on a book on legal ethics and I’m reading works by institutional economists on the connection between law and economic growth. It is a subject about which most writers in the field of ethics know nothing, to their considerable detriment IMHO. I also read Scientific American religiously, including articles on subjects like quantum computing that I barely understand. I admire scientists greatly. For entertainment, I read home improvement magazines because I like to imagine building things. As a kid, I’d sometimes stand outside construction sites and watch what the workers were doing.