How can we fix it? 

We have seen that Quadrant IV healthcare is unsustainable, and Quadrant III healthcare is intolerable.  Is there a better quadrant in which to run our healthcare system?

Both Quadrant I and Quadrant II healthcare, in theory, have the potential of being far less destructive to individuals and to society than Quadrant III healthcare.  Unfortunately it is difficult to imagine how we can achieve either.

Quadrant I healthcare

In Quadrant I, healthcare decisions are still made by a central authority (and so it is still rationed), but the rationing employs high-quality decisions. That is, the decisions are based on good scientific and economic information appropriately and equitably applied, using processes that are open to, vetted by, and monitored by the public.

Rationing healthcare openly and transparently, while necessary for high quality rationing choices, is a daunting prospect, and it is hard to think of circumstances that would render American society willing to engage in such a thing.

But if it were somehow to happen, there would be many advantages over Quadrant III healthcare. Because the rationing would be open instead of covert, there would no longer be a reason to separate the interests of doctors from the interests of their patients, and the doctor-patient relationship could be restored. Doctors, working within a universal and well-defined set of rules, could advocate actively and aggressively for the needs of their individual patients within those rules. (More routinely than doctors can get away with today, their role might become more like that of attorneys, who aggressively work within the confines of the law to offer every advantage to their clients.) Patients would still be subject to rationing, just as they are today - but the rationing would be open for all to see, and it would be far more equitable. Everybody's access to the benefits of healthcare would be constrained by the same set of rules. The elimination of covert rationing would remove the impetus to corrupt the science of medicine and would encourage instead of stifle genuine reforms aimed at streamlining healthcare and maximizing efficiency.

Quadrant I healthcare is compatible with and actually encourages a civil, long-lasting, stable society. Implementing a successful Quadrant I healthcare system would be a challenge, likely the greatest non-wartime challenge America has ever faced; but the current alternative-Quadrant III healthcare-promises to become a disaster.

Quadrant II healthcare

In Quadrant II, medical decisions would be made where they should to be made - on the ground, by individual doctors and patients. What differentiates this from Quadrant IV (that is, the Tooth Fairy system) is that in Quadrant II patients will be paying for these decisions themselves, out of their own pockets. Oviously, the sophisticated and costly healthcare we now have is far too expensive for individuals to purchase themselves, and a self-pay healthcare system - no matter what the tax incentives - is impossible. But if we were able to institute a Quadrant II healthcare system, many benefits would accrue.

Fundamentally, because the individuals receiving the medical services would be paying for them, healthcare economics would begin to look like other, more typical economic spheres, and the quality of purchasing decisions would increase. The quality of medical decisions made in Quadrant II would rely on solid, well-designed clinical science, just as it would for decisions made under open rationing in Quadrant I. But as patients would be paying for their own care, the quality of their decisions must be more broadly defined; that is, "quality" would be less dependent on what's good for society, less reliant on randomized data for therapies whose benefits are intuitively obvious to the purchaser, and more dependent on what the patient perceives as being good. Just as a person buying a car might gain more satisfaction from buying a Lincoln Town Car than a Ford Focus, so a person buying a healthcare product might gain more satisfaction from, say, a feature-laden medical device than a bare-bones device. And not only would that more expensive purchase be perfectly okay, from an economic standpoint it might be something to encourage - just as we encourage people to upgrade when they buy their next car. (On the other hand, if it were seen as the government's responsibility to provide transportation to everybody, under the theory that in today's mobile society a car is every bit as important to wellbeing as healthcare, then we would all-except for legislators-drive Yugos.)

Whereas it becomes possible to restore the doctor-patient relationship under a Quadrant I system of open rationing, Quadrant II makes restoration of this relationship automatic. This is because in Quadrant II, doctors aren't paid by a central authority anymore-they are paid by their patients. Patients become once again their doctors' primary customers, the ones who determine their doctors' professional viability, and the ones their doctors will need to answer to above all others.

Quadrant II healthcare would revolutionize the business model for healthcare entrepreneurs. For the first time it is the patients, those whose money is being spent, who ultimately would make purchasing decisions (with the assistance and advice of their doctors, now in their employ). This means that companies for the first time would begin developing medical products that appeal directly to patients and give those patients what they need and value. Quadrant II healthcare thus would stimulate a new kind of medical innovation-it would stimulate the invention of products and services aimed at helping patients determine their own medical destiny. Medical innovation would explode, and in an entirely new direction.

So at least in theory, Quadrant II healthcare seems more desirable than Quadrant III healthcare.

Unfortunately, it is extraordinarily difficult to visualize how we Americans would ever be able to achieve either Quadrant I or Quadrant II healthcare.  We may be able, however, to achieve a synthesis of the two.

A synthesis of upper quadrant healthcare

What Quadrant I and Quadrant II healthcare have in common is that in both upper quadrants healthcare decisions are of high quality; that is, these decisions satisfy the needs of, and create value for, the respective purchasers. Because the purchasers are not identical (in Quadrant I the purchaser is society; in Quadrant II the purchaser is the individual patient), the healthcare decisions that are made in these two quadrants may not be the same. But in both quadrants those decisions will be made by the entity that is spending the money, with knowledge of the medical options, their respective costs, and the potential risks and benefits of each one.
Given that either upper quadrant would create an environment for high quality and high value healthcare decisions, each of them has a strong potential of being less destructive to society and less dangerous to individuals than the system we have today. But neither of these upper quadrant models is ideal. And it is hard to imagine how either could be feasible.

However, a synthesis of Quadrant I and Quadrant II healthcare - an "upper quadrant" healthcare system - may be possible. Such a synthesis, if designed with some care, could provide the advantages inherent to each of the upper quadrants while minimizing the disadvantages. In my book I describe such a system in detail, and in the Fixing It section of this website I offer an outline of such a system. For now I will just say that the GUTH not only explains the vagaries of today's healthcare system but it also suggests at least one achievable model for a future healthcare system that is equitable and efficient.

With at least some small hope that such a thing is possible, then, it is reasonable to begin thinking about how we might escape Quadrant III.