From Presidential Hopes to Healthcare Reform

Steve Forbes sits down for an interview with AAOS Now

As the Presidential Guest Speaker at the 2017 AAOS Annual Meeting, publisher and one-time presidential candidate Steve Forbes shared his views on a variety of topics such as tax reform and Republicans' plans to repeal and replace the Affordable Care Act. According to Mr. Forbes, health care will be the "most dynamic growth industry ever," with recent and coming trends pushing health care in a more consumer-oriented direction.


Stuart J. Fischer, MD, interviews Steve Forbes at the 2017 AAOS Annual Meeting.

Following his presentation, Mr. Forbes sat down with Stuart J. Fischer, MD, a member of the AAOS Now Editorial Board, for a more personal chat. What follows is an edited transcript of that interview.

Dr. Fischer: Mr. Forbes, thank you for joining us at the Annual Meeting. Looking back at history, we know you were here in 1996 as a presidential candidate, right here in the San Diego Convention Center. You won two primaries, but Sen. Bob Dole finished with a few more votes than you did. Do you think that more balloons and a better floor manager might have turned the tide for you?

Mr. Forbes: Well, by then in San Diego, it was a little late. You had to do the balloon stuff back in the snows of New Hampshire, Iowa, and some of the earlier states. So, we gave them a good run, and made [Sen. Dole] a better candidate, that's what I say.

Dr. Fischer: What are your "takeaways" from your presidential run?

Mr. Forbes: The regret is I didn't get more votes. Once you learn more about the country in an experience like that, . . . you learn what an extraordinary country this is. And in terms of what you might have done differently, you have to always remind yourself, if you had done something differently, your opponents might have done different things in response. It's not a static world. So you can daydream, but don't get carried away by it.

Dr. Fischer: We had Dr. Ben Carson as our presidential guest speaker at the AAOS Annual Meeting 2 years ago. When we asked him if he would consider a cabinet appointment, he basically said "No way," and now he is Secretary of Housing and Urban Development. If offered the opportunity, would you serve as a cabinet member?

Mr. Forbes: If the president asked me to do something, I would obviously give it serious consideration, but my role in recent years has been as advocate and as an agitator. I'm not seeking any office, whether elected or appointed.

Dr. Fischer: You said in your address that health care should be more consumer oriented, a sentiment you also expressed in your book "Reviving America," when you wrote, "Not even the crummiest motel would put you in a room with other guests as hospitals do with sick people."

Mr. Forbes: Yes, this goes back to the 1800s. They used to have those old boarding houses and inns where they had 10 people to a bed. Then, as people got richer, the middle class rose up—"No, we're not going to sleep with other people." Hospitals never had that same kind of revolution. What they're now discovering . . . is that when you have a private room, infections are less. In Vermont, early last year, the biggest hospital had a major expansion—all private rooms. They felt that would be a critical way of reducing infections . . . after you're admitted to the institution. So, these things are starting to happen—and as they do, you're going to see what seems like an impossibility today: more for less.

Dr. Fischer: In the past year, the economy has really had significant gains, unemployment is low—or the unemployment numbers that have been reported, anyway—have been as low as they have been in years. More Americans have some form of health insurance than ever before, housing starts are up, and fewer American servicemen and women are dying abroad than in the past few years. Why does America, then, need to be "revived?"

Mr. Forbes: Well, when you look at the unemployment numbers, you need to also look at the labor force participation rates, which are still stuck back where they were in the 1970s. In February of this year, [we were] finally starting to see a little bit of an uptick in that. A lot of those jobs that were created in recent years are part-time jobs, [but many people] want full-time jobs. The recovery, as a whole, has been very poor. Last year, the third quarter was good, [but the] fourth quarter was terrible. It came in at 1.9 percent on an annualized basis. So, this was the weakest recovery from a sharp downturn in American history. When I looked at that, I asked the basic question, "How do we get this thing moving?" We're getting good reforms on taxes, like the flat tax. Health care—making some of the changes I talked about today. The Federal Reserve—some changes there, this economy would come back very quickly. The importance of that is critical because of what you see in the rest of the world. Nobody is doing very well. There's a bit of an uptick now, [but] it's not big enough to really make an impact, say, in Europe where you look at youthful unemployment: in France, it's 25 to 30 percent, and in Spain, it is 30 to 40 percent. That is not a good situation. They've got to get moving, make structural changes, but we've got to lead the way.

Dr. Fischer: Of the three things you mentioned—reforming the healthcare system, instituting a flat tax, and clamping down on the Federal Reserve (Fed)—which of those three would you prioritize first? What do you think the Republicans should have addressed first?

Mr. Forbes: Well, I think the one that gets little attention—which means I think you can make a big change—is to get the Fed to stop playing around with the money and get the markets working again so small businesses can get on their feet and grow again. On the health care and tax side, as I mentioned today, I'd have gone with taxes first. Make it a pure, clean tax cut, and get it done. People feel it right away, which gives you political capital to tackle the immensely more complicated area of health care and get some positive things done there. That's why I think the Republicans made a mistake leading with health care.

In terms of insurance coverage . . . [Many policies] are giving people less healthcare access than they had before—not just from narrow networks, but also from these huge—call them "catastrophic"—deductibles. For a family, [a deductible might be] $12,000. It's crazy, and you're getting the worst of all worlds. You have a huge deductible, but you're not getting el cheapo insurance. If you have a high deductible, insurance should be a few dollars a month for the true catastrophes.

Dr. Fischer: Let me change the subject a little bit and ask you about the flat tax. You say that just short of 40 countries have adopted it. You note that in some places it's been helpful, and has helped stimulate economic growth. And yet, of the countries that have adopted the flat tax, only two—Russia and Saudi Arabia—are countries with greater than 20 million people. In addition, one-third of those 40 countries were coming off old Soviet-style socialism and transforming to a market economy. Many would argue that it wasn't the flat tax but rather the transition to a better economic style that is making the difference in those countries' economies.

Mr. Forbes: The flat tax doesn't cure your headache or [keep you from] losing hair, but it's a critical factor. Take where it really started: Lithuania, Latvia, and Estonia, which are three Baltic states. After they shucked off communism, they went through a wrenching period—high inflation, rising tax system. In the mid-'90s they said, "We gotta do something different." So, they . . . put in a currency board to stop the inflation, put in flat taxes, and made some other reforms, and  . . . they grew.

Look at Hong Kong. They have been doing [a variation of the flat tax] for 60 years. If you have a system where the rates are low, people spend less time trying to game the system, and more time trying to do something more productive. Much easier to collect revenue with a simple system. [In] Hong Kong, their government budget [has] one of the highest growth rates in the world, not because they piled on taxes but precisely because they had a minimalist approach. The economy prospered, even though Hong Kong has no natural resources. It is now one of the richest areas in the world, whereas 60 years ago, it was one of the poorest.

[Our tax system] brings out the worst in people: it is very complex and very corrupting. Even though I'm a conservative, as I've said in the past, I would support job retraining for Internal Revenue Service agents and tax lawyers. Maybe they could become Uber drivers or something like that.

Dr. Fischer: Thank you for joining us.

Mr. Forbes: Thank you.