AMERICAN HEALTH CARE OPTIONS
by Lawrence Wilson, MD
Ó March 2010, The Center For Development
To solve a problem, it helps to know how the problem developed. Below is a very brief outline of the history of American health care. Books such as Patient Power by John Goodman and What Has Government Done To Health Care by Terry Wasley describe it in more detail.
A VERY BRIEF HISTORY OF THE AMERICAN HEALTH CARE SYSTEM
1. The free market period - 1776 to about 1910. For her first 130 years,
America had a true free market health care system. This means anyone could offer health care services and the
public was free to choose among them.
There were few licensing laws because the American founders rejected the
‘guild’ system that existed in England that restricted healing to only one
class of men. In that system, one
group maintained control through licenses that were usually passed on from
father to son.
In America, anyone who wished to offer services did so. Many systems of care, from dietary therapies and herbs, to hydrotherapy and homeopathy, competed for business. The most effective and least costly methods tended to win out over the others. Throughout this entire time period, America ranked first in the world in health care statistics.
2. Beginning of the drug medicine cartel – 1910 or so. In the early twentieth century, the American Medical
Association or AMA, joined by the drug industry and others, lobbied every state
legislature in the nation to pass medical licensing laws. The AMA is a trade group or union that
represents one group of doctors, the allopaths or drug doctors. They strenuously objected to the fact
that in America’s free market health care system their members were unable to
make a lot of money.
The intent of their effort to pass licensing laws was to get rid of their competition so their members would earn more money and control the health care system. They succeeded well, riding a wave of increased government power and the promise of “miracle drugs”. As a result, by 1930 or so drug medicine became the only legal method of healing in the United States. Other important players in the cartel are the PMA or Pharmaceutical Manufacturers Association, the AHA or American Hospital Association, and other groups such as the ADA, or American Dental Association.
Today, the AMA-led drug medical cartel controls most aspects of American medical care via a web of anti-consumer laws, and especially by the use of licenses to control doctors, hospitals, clinics and laboratories. Meanwhile, their propaganda machine controls the public by instilling fear that without all the licenses, medical care would be more dangerous. In reality, the opposite is true. Doctors and hospitals hide behind their licenses daily. They cannot be prosecuted for idiotic, toxic and dangerous methods as long as they follow “accepted practice guidelines”.
Even under cartel control, medical care was still reasonable in cost, however. The cost of a day in the hospital in 1969 was about $20.00. An emergency room visit was about $5.00.
III. Increased cartel control
through socialized medical care – 1970 to the present. In 1967, Medicare and Medicaid were
passed. With these programs, the
federal government took over the care of the poor and the elderly. This ended most of what was left of the
free market system. Government-run
medical systems are called socialized, nationalized, single-payer
universal health care.
Note that the drug medical cartel firmly controls Medicare and Medicaid reimbursement. In other words, these programs mainly pay for drugs and surgery, and drug doctors are the main group of physicians allowed to receive reimbursement.
How these systems basically work:
Š In a free market system, each person chooses from a wide variety of medical services. One pays for them with fees negotiated between the service provider and the patient. The government’s role is only to act as a referee to see that everyone is honest.
Š A cartel-based system looks like a free market. However, choices are severely limited. Only practitioners who obtain licenses can offer services, and since the cartel controls medical education, what is taught the schools is controlled. Also, the number of service providers is limited as well, which tends to increase prices somewhat.
Š In socialized systems, such as universal health care, choices are much more limited. In these systems, used in Europe and Asia, the government confiscates the money for medical care from the people via Medicare and other taxes. Funds flow first to Washington, DC, where a large army of career bureaucrats, who don’t know you at all, decide which services will be allowed, how much they will cost, and how much of each service each person will receive.
DID THE FREE MARKET FAIL?
Of course, the answer is no. It worked too well, in fact, for the taste of the drug doctors. The free market health care system in America worked perfectly until it was destroyed by the AMA and its friends. If there is any doubt, however, study the graph of total US health care costs below. There was no cost crisis until after 1970 with the passage of Medicare and Medicaid. Today, these are the single most important fiscal problems on the American horizon. The chart below shows clearly that the cause of the cost explosion in medical care was not market failure. It was the exact opposite. It was due to destruction of the free market by government intervention, first with licensing laws in the early 20th century and even more so with the passage of Medicare and Medicaid in the late 1960s.
Source: Vital statistics of the United States
The vertical axis is in billions of dollars.
WHY DO CARTEL AND SOCIALIZED MEDICAL CARE COST SO MUCH?
Three basic reasons are: 1) improper methods of care, 2) high administrative costs, including lots of waste and fraud, and 3) corruption. Let us examine each of these in more detail:
Cost factor #1. Improper methods of care. Cartel medical care based mainly upon drugs and surgery was perhaps adequate 100 years ago. It is still excellent for surgery and trauma care. However, it is not very effective for chronic and degenerative diseases. As a result, millions of Americans are developing diabetes, cancer, heart disease, arthritis, autism, ADHD and other serious and costly conditions. The rather simple answers for many of these problems are the subject of this text. Other costs that stem directly from improper methods of care include:
Š Iatrogenic or doctor-caused problems. By their own admission, drug medicine is at least the third or fourth leading cause of death. Drug side effects, botched surgery, hospital infections and the adverse effects of vaccines add billions of dollars to our medical care costs.
Š Exorbitant legal costs. More and more people are angry at the medical system and are fighting back legally. This causes very high malpractice costs that are passed on to patients.
Š Defensive medicine. Doctors and hospitals respond to the malpractice crisis with “defensive medicine”. They perform literally millions of unnecessary tests and procedures, all to avoid lawsuits and satisfy lawyers, rather than for the wellbeing of the patients.
Cost factor #2. High administrative costs.
Š Administrative nightmares. Medicare rules are 133,000 pages. Most doctors, hospitals, laboratories, clinics and others connected with the system must hire specialists just to handle all of the rules and regulations governing these programs, if they want to be reimbursed.
Š Fraud. Medicare fraud is estimated to be at least 7.5 % of the program, and is probably double that number. The temptation for doctors, hospitals and others to abuse the system is enormous because it is hard to police the system from thousands of miles away.
Š Even more paperwork. Medicare and Medicaid administrators are responding to the fraud problem by demanding lots of extra paperwork from doctors and others. This adds billions more to the cost of these programs, both for the government and for the hospitals and doctors who must comply with the new anti-fraud measures.
Š Medical policing costs. More money is spent catching and prosecuting the cheaters.
Š Perverse incentives. Socialized programs, in particular, cause people to change their behavior, wasting much more money. When people do not pay for services directly, they tend to overuse the services. As a result, doctors and hospitals raise their fees because the demand for services increases. This is the law of supply and demand that is not taught nearly enough in high schools. Before 1967, the cost of a doctor’s visit made people think twice about using medical services. The low volume of patients made doctors think twice about raising their fees. When medical care became a “right”, meaning it was made essentially “free” (paid for by taxes), the demand for services exploded and the doctors and hospitals began charging more because they were able to do so. Today, many seniors spend their social outings at the doctors’ offices – Monday is for the eye doctor, Tuesday is for the nose doctor, and so on. Why not? – it’s free.
Cost factor #3. Corruption.
Š Centralized power and control breeds corruption. In any system with centralized control, drug companies, device makers and others only need to bribe or threaten a small number of legislators and regulators in order to control the system for their own benefit. This must be clearly understood. For example, a recent news report indicated that over half the employees at the FDA received perks of some type from the drug industry they regulate. Anyone who thinks the FDA should exist for even another week must read The History Of A Crime by Harvey Wiley, MD, the first director of the FDA. It is a sad tale of complete corruption.
Š Free markets are far more difficult to corrupt. By contrast, it is very difficult for special interests to bribe many thousands of independent practitioners in a decentralized, free market system of health care.
Š Corruption keeps the cartel in power. For example, a recent figure was that drug companies spend over $11,000.00 per doctor each year for “advertising”, gifts, vacations, retreats and more. The AMA is also one of the largest lobbying groups in the nation. The cartel also regularly funds phony research to denigrate their competition. Chapter 19 describes two such “studies” that were done to discredit hair mineral analysis.
WHAT SHOULD AMERICA DO?
The founders of America rejected the licensing or ‘guild’ system of medical care that existed in England in 1776. It is time to say no the medical guild or union system that has developed in America. Of course, that would mean breaking up the cartel and taking away the “free” care for seniors, so it is not liable to happen anytime soon. However, it is the direction to move in, rather than more government intervention that will tend to entrench the cartel even further. The rest of this chapter discusses other important issues regarding medical care.
HOW TO CARE FOR THE POOR
Private welfare. Some readers will say that we must have Medicaid to care for the poor. From the nightly news, one might think that before Medicaid and Medicare, the poor and elderly just languished in the streets. This is absolutely false. In fact, many were much better off than they are today. Before 1969, in America, they were cared for by private charities such as the Catholic and Jewish hospital systems, and many other groups whose ministry and mission was to care for the sick and dying. These groups collected money from their members and from the community, and operated a network of thousands of hospitals and clinics throughout the nation.
Public welfare. Medicaid put most of these out of business and substituted a different method of caring for the poor. Instead of a voluntary, charity-based system, the government forcibly confiscates money for the poor via taxes. Funds are sent to Washington, DC, where they pass through a massive bureaucracy that decides who will receive some tax money, how much each will receive, and for what kinds of services. All those bureaucrats must be paid, plus they all receive generous government benefits such as pensions, and health, dental, and disability insurance. The question becomes, which system is better?
Studies of the best way to care for the poor generally conclude that for the government to do the job, the cost is at least 20% more, and often 1000% more. Some argue that the extra cost is worth it. They say government welfare is fairer and more moral because there is one system for the whole nation. In contrast, private welfare will vary from city to city. However, those in favor of private welfare for the poor answer that there are many other reasons why a private system is much better, besides lower costs. These include:
Š Charity is helpful for both the donor and the recipient. It builds a spirit of love and cooperation. In contrast, taking money by force through taxes leads to anger and resentment.
Š Care that is provided by people who have dedicated their lives to charity is liable to be superior to when a distant government “mandates” the rules, the salaries and everything else about the system. Health providers are just 9-to-5 government employees.
Š Local charities are easier to police because the people running them are usually local residents. If a charity wastes money or even commits fraud, word will spread, donations will cease and the charity will go out of business. In contrast, inefficient government agencies are difficult to police and do not go out of business if they are found to be corrupt.
Š When any service is viewed as an “entitlement” or “right”, people take advantage of it and lose the incentive to take care of themselves and their health. They figure, why bother if the government will clean up their messes. With a private welfare system, there is much less entitlement mentality. Thus the poor people receive much more of an incentive to care for themselves better and stay healthy. In economic terms, government welfare tends to cause perverse incentives. This means that although we want people to care for themselves, Medicaid and all the other government programs basically gives them the opposite incentive.
IS THERE A ‘RIGHT’ TO HEALTH CARE?
The question of a right to health care needs a lot of clarification. The founders of America were extremely interested in this subject. They offered us many insights about rights. Americans enjoy three levels of rights and two basic types of rights. Each has certain benefits and drawbacks. Also, one must understand that a right must not infringe on the rights of others. Here is very basic information about rights in America:
The three levels of rights in the United States of America:
1. Natural rights. These are described in the Declaration of Independence. They come from the Creator of life and are described as “unalienable”. This means they may not be taken away by any government. For this reason, these are the best type of rights. They are stated as the rights to “life, liberty and the pursuit of happiness”. In earlier documents, the latter meant the right to own property. Since one’s body is your most intimate and valuable property, one would think this right includes the right to do what you wish with your body. A right to health care goods and services is not among the enumerated natural rights, however.
2. Constitutional rights. These are guarantees in the federal and state constitutions and their bills of rights such as the right to “a speedy trial by a jury of one’s peers”. They also include the right to speak freely, worship as one pleases, and many others. It is difficult to change constitutions, so these rights are fairly safe. There is no right to health care services here.
3. Civil rights. These are just laws passed by legislatures. They can be revoked at any time by a simple majority vote. These are the least desirable type of rights. However, even they do not include any right to health care goods and services and never have.
The two types of rights:
Š Freedoms or negative rights. These are really prohibitions against government interference with an activity or behavior. Examples of negative rights abound in our federal and state constitutions such as the freedom of speech and of worship, the right to bear arms and many others. It is critical to understand how they work. Freedom of speech, for example, means the government may not interfere with your speech. However, it does not entitle one to any goods or services such as a microphone or a podium with which to spread your message. You may own a gun, but no one is required to give you a gun. You may worship as you wish, but no one is required to provide you with a church or even a bible. A negative right to health care means the government may not prohibit you from seeking the care of your choice. Sadly, the cartel and government regulations greatly limit American’s choices today.
Š Entitlements or positive rights. These rights promise some kind of goods or services. For example, the right to a speedy trial guarantees that the government will provide a lawyer, jury, judge, bailiff, court reporter and courtroom time to any citizen who desires it. This is the type of right to health care that many people think we should have.
Let us discuss the critical differences between these two types of rights:
Š Cost. Freedoms cost the taxpayer nothing. Entitlements are often a bottomless pit of costs. That is why there are very few in our federal and state constitutions. Often entitlements cost whatever the legislatures decide to spend, and it varies from administration to administration. This is very dangerous and has bankrupted dozens of nations. In fact, Medicare and Medicaid are currently bankrupting America. When people get something for free, people tend to overuse and abuse it. It is just human nature.
Š Ease of administration. Freedoms cost little or nothing to administer. It costs little to guarantee people the right to free speech, freedom to worship as they please, or, for that matter, the freedom to choose their health care. Entitlements, on the other hand, often require large bureaucracies to administer them, with all of the problems discussed above.
Š Perverse incentives. Freedoms allow and encourage people to care for themselves and solve their own problems with a guarantee that the government will not stop them. For example, health is a very personal matter. Sound public policy would be to create as many incentives as possible that encourage people to care for themselves. Entitlements tend to cause perverse incentives. For example, a ‘positive right to health care’ gives people no incentive to care for their health because they are ‘entitled’ to government care if they become ill. This works against their health in most cases, and further raises the cost of this type of right.
IS FREE MARKET HEALTH CARE REALLY AN OPTION?
Would a free market health care system work today? Here are some comments:
Š It worked well in the past. America had a robust and successful free market health care system until it was destroyed, first by the cartel in the early twentieth century, and even more so by the passage of the socialized medicine programs in the 1960s.
Š Even now, some natural healers operate ‘below the radar’ of the cartel on a free market basis, helping thousands to achieve better health.
Š The only obstacles to a truly free market are special interests and the government. Restoring a free market system would mean dismantling the cartel or medical guild system based on licensing. It would also mean repealing hundreds or perhaps thousands of government prohibitions that stifle free enterprise in the health care arena.
The automobile repair analogy. Since few people seem to understand how free market health care would work, an analogy with present-day automobile care may be helpful. Somehow, auto care works well with minimal government regulation and without hoards of bureaucrats looking over everyone’s shoulders. Here’s how it works:
Š Many choices. Some people take their cars to fancy, expensive, triple-certified dealerships for repairs. Others choose local uncertified mechanics. Still other use shade-tree mechanics, which might be the equivalent of alternative healers. No one interferes with these choices and most people are very happy with their choices.
Š Excellent access to care at a reasonable cost. Since anyone can set up a repair shop, access
to care is excellent. Lots of competition helps keep everyone honest, and keeps prices down.
Š Caring for the poor. Most people manage to find ways to have their cars repaired. Some kind-hearted mechanics offer discounts and some make repairs at no cost. Some of the poor trade for repairs, or read books and do the work themselves. In other words, the system is extremely flexible and creative, unlike today’s medical care system that is so overburdened with silly government regulations that flexibility is sorely limited.
Š Product safety. Numerous companies have sprung up that rate products and services related to the auto care industry. Consumers Union, for example, tests vehicles and publishes their repair records. Other groups direct people to different types of repair shops, offer helpful hints for caring for your car yourself, compare costs of repair, and so on. As a result, dangerous cars, crooked mechanics, and products that don’t work are generally exposed and removed from the market rapidly. The same would be true in health care if there were more freedom of choice.
Š If an auto care rating group becomes corrupt, word may spread and they will often go out of business, unlike the current Food And Drug Administration that just keeps feeding the American people false information because it is bought and paid for by the medical cartel.
For all the billions of miles driven, this loosely organized, free market system works exceedingly well. One may say, but it is only a car and who cares much about a car. I reject this argument. An auto is the second most expensive item in most people’s lives next to their home. We depend on our cars for our safety each day. Cars today are complex pieces of machinery. The principles are identical: leave the marketplace alone and the ingenuity and needs of the people will take care of the service. The internet and other modern communications systems just make markets work better. Please consider this model when thinking of how health care could be in America and around the world.
Will the profit motive spoil any free market system? This is the common complaint heard about free market economics. I wish to address this. First, profit is needed in any system to make ends meet. Profit is the money one lives on. Second, competition in the free market controls the greed the causes excess profits. Third, the cause of greed is not the marketplace. It exists just as much in socialized systems, where it is often much worse because it is hidden and called “waste, fraud and abuse”. In other words, people can still cheat. In many ways it is easier to cheat a large bureaucracy by filling out paperwork incorrectly, than it is to cheat individual consumers. So the key is to allow many choices to keep competition going.
WHAT IS REALLY STOPPING A FREE MARKET SYSTEM?
Having observed our leaders for years, I find their talk of fairness, compassion and caring for everyone is too often a smokescreen. Many are power-hungry and want total control of health care as a way to control the people. Many of them, I think, have a deep disdain for the common people, which is you and I.
Actions speak louder than words. Our Congressmen, for example, have a much better health care system than what they are offering the American people. They also have their own retirement system that is far better than Social Security. Until the elites are willing to live by the same laws as they pass for the rest of the people, I cannot trust any of their promises. Also, I believe that individuals can make far better health care decisions than bureaucrats living thousands of miles away.