Schroeder Vs. Pramenko on Government Medicine

Dr. Michael Pramenko recently wrote an OpEd in the December 10, 2007 Grand Junction Free Press expressing support for government-mandated "universal coverage".

In response, Dr. James Schroeder wrote the following rebuttal, which appeared in the December 26, 2007 issue:

Here's your prescription

By Dr. James Schroeder
Grand Junction CO, Colorado
December 26, 2007

Dr. Michael Pramenko expressed his health care views via a series of false premises in his Dec. 10 column “Play doctor, help find a cure for health care reform.” Well I don’t just play a doctor, I am one. Allow me to give your readers a healthier perspective by analyzing some of these fallacies individually.

* “Unfortunately, [taking government out of the equation] leaves a significant number of people without health care.”

There is a significant difference between health care coverage and health care delivery. Anyone (including my brother-in-law) can declare “health care coverage for all,” but if they can’t actually deliver services, it is an empty declaration. I know my brother-in-law doesn’t have the wherewithal, and I have my doubts about the government. Taking government out of the equation therefore would merely result in people not having governmental health insurance. We have yet to see in real life a government-run health care system without delays and rationing. The real question is whether more efficient use of health care dollars is achieved by government or by private entities. The other key variable is individual behaviors. How do we motivate individuals to use their primary care physician rather than the ER? Should the government try to modulate individual behavior in our best interests, or should we be responsible for making our own decisions? Dr. Pramenko seems to think that government is better suited to make those decisions by mandating individual purchase of insurance. I disagree.

* “The free market has chosen repeatedly to ignore the problem of the uninsured.”

We do not have a free-market health care system, so this premise is false from the get-go. The main causes for the expense of private insurance are unrelated to the free market. The tax code rules that originally allowed employers to provide health insurance as a tax-free benefit created a deeply entrenched connection between employment and insurance.

This led to employers controlling payroll costs by limiting the selection of plans while the employee was basically removed from the decision-making. It also meant that employees who changed jobs had a gap in coverage.

People who are temporarily between coverage account for about one-third of the total uninsured. Current government mandates force insurance companies to include services such as acupuncture, even if the policyholder has no need or desire for such coverage. Finally, individuals who buy health insurance must do so with post-tax dollars, effectively penalizing them. SOLUTION: We should reduce, not increase, government mandates. We should allow insurers to sell plans that are responsive to the needs of individuals and offer equivalent tax breaks for the individual insurance market. In other words, remove the government and employer from the market transaction between insurance provider and consumer. Wait a minute; that sounds like a free market!

* “We all pay for this unbridled use of the emergency room.”

The fallacy here is not that we all pay. The fallacy is that inappropriate use of the emergency room is because patients cannot access physician offices. The fact of the matter is that EMTALA legislation decrees that hospitals cannot deny emergency treatment on the basis of ability to pay. This has become distorted to mean that nobody can be turned away without fear of steep fines or penalties. Most Medicaid plans do not require a copayment for emergency room use. Thus, the current system actually makes it easier for patients to use the ER (convenient hours and no appointment needed!) for primary care. SOLUTION: We need to revamp EMTALA so that true medical screening can be applied and that patients without emergency conditions can be turned away. This should be a medical decision, not a financial one. Medicaid copayments should be reinstituted to serve as a deterrent for inappropriate ER use.

* “There is agreement on universal coverage, mandates on participation and … essential levels of coverage.”

“One thing is certain: More taxes will be needed ...”

These two comments are laughable. If there is already agreement and certainty in this discussion, the debate would be over. Far from any kind of consensus on health care reform there is ongoing active debate throughout Colorado. Many doctors feel, as I do, that government over-regulation has created a mess that cannot be fixed by expanding the role of government. More taxes are not the solution, but are inevitable if we continue to stumble down the path mapped out by the 208 Commission. The government’s role should be that of referee, not participant. Mandates are the problem, not the solution.

I have dedicated my career to the provision of high-quality medical care for children and truly believe that free market solutions are more sustainable in the long-run and more likely to benefit my grandchildren and yours. This belief is based on my own first-hand experiences in the health care system and my ongoing study of the issues.

Dr. Schroeder is in private practice in Grand Junction specializing in pediatric cardiology. He is a graduate of the University of Colorado and Tulane University School of Medicine. He completed pediatric cardiology training at Denver Children’s Hospital.

Massachusetts Plan Squeezing Doctors

The December 14, 2007 Boston Globe reports that much ballyhooed Massachusetts universal health care plan is costing too much, so doctors and patients will have to pay the price. Items in bold are my emphasis:

Mass. panel approves changes to subsidized residents health plan
By Alice Dembner

Striving to hold down costs to taxpayers, a state panel yesterday approved a range of changes for next year for the rapidly growing subsidized health insurance program. The changes will probably cut payments to doctors and hospitals, reduce choices for patients, and possibly increase how much patients have to pay.

The program is the centerpiece of the state's landmark effort to insure nearly every resident, and there is widespread concern about long-term funding of the initiative because of growing healthcare costs.

The December 14, 2007 Wall Street Journal points out the natural implications:

Mass. To Cut Payments to Docs & Hospitals
Posted by Jacob Goldstein

Massachusetts’s universal health-care plan is turning out to be more expensive than predicted. Now the state is looking at cutting payments to docs and hospitals next year to make ends meet.

That fiscal reaction, which some critics of the plan warned about, sends a stark message to those of us in the other 49 states. Massachusetts has become something of a model for the national plans proposed by Hillary Clinton and John Edwards, among others.

The state requires everybody to buy health insurance. A subsidized health plan offered to the poor as part of the program has proved more popular than expected, and that’s helping to push costs 20% over what the state had budgeted. The tab could run $619 million for the current fiscal year, $147 million over budget, the Boston Globe reports.

Now the board that oversees the plans has approved cuts of 3% to 5% in reimbursements for to health-care providers caring for those in the subsidized plan. The article suggests the cuts will bring reimbursement in line with Medicaid.

The next logical step after price controls will be rationing. The Massachusetts plan is fundamentally flawed, because it does not permit individuals and insurers to seek their own best interests through voluntary contract. There's no reason for Colorado (or the rest of the country) to adopt this bad idea.

Pipes on Insurance Mandates

The December 17, 2007 edition of the Rocky Mountain News printed the following opinion piece by Sally Pipes of the Pacific Research Institute, discussing the folly of insurance mandates:

Remove barriers to affordable health insurance
Sally C. Pipes

Ever wonder why health insurance costs so much in Colorado? Well, maybe it has something to do with the fact that every insurance policy in the state must cover all kinds of services — including professional counseling — deemed unnecessary by many.

In fact, Colorado has 37 of these mandates. Should a resident want to buy a policy that doesn’t cover, say, chiropractor visits, sorry — the government has decided that everyone must have that coverage.

Recently, enthusiasm for universal health-care coverage has swept the nation, with governors in Massachusetts and California leading the way. Maine and Vermont are currently revising their own systems of expanded health-care coverage, and at least eight other states are pursuing similar reforms.

Certainly, the approximately 47 million uninsured in America is a significant problem, but the proposals under consideration do little to address the primary reason for the lack of coverage — very expensive insurance.

And why are those costs spiraling upward, seemingly without limit? One major reason is government meddling in the market for health insurance, particularly through the imposition of restrictive mandates and regulations.

The average state has 36 mandates on an individual health insurance policy. And with each mandate, the cost to the consumer goes up. These mandates often stand in the way of making health insurance more affordable in the first place.

Just as options on a new automobile add to the total cost of the car, so too do insurance mandates.

If affordability and accessibility are the problems behind the number of uninsured, then why haven’t state governments removed the mandates for those who want to buy a basic policy? It’s not just the government’s desire to micromanage — it’s interest-group politics.

Acupuncturists, for example, certainly provide an important pain-relief service to many individuals. But is it really necessary for everyone to have acupuncture coverage whether they want it or not? It would make far more sense to give individuals the freedom to purchase policies that suit their specific needs.

The current system guarantees that everyone pays the highest possible price.

We are covered for things we don’t use. Or if we do take advantage of these mandated benefits, we don’t realize the full cost of the benefit because someone else pays.

But we all indirectly absorb those costs thanks to higher premiums.

The conversation about health-care reform is long overdue, but unfortunately for most consumers, it’s headed in the wrong direction.

Without addressing the high costs of health care, efforts to achieve universal coverage by legislative fiat will fail. Just look at automobile insurance. Even though it is mandatory in all but three states, one in seven drivers on our roads remains uninsured. There’s a better way to expand health-are coverage — through greater purchasing freedom and fewer regulations.

Let’s hope Colorado learns from the heavy-handed approaches of other states and opts for a more effective approach — like ending the silly requirement that all insurance policies cover things like marriage therapy, which most people will never need.

Sally C. Pipes is president and CEO of the Pacific Research Institute. She is a resident of San Francisco.

Olson on Universal Health Care

The December 13, 2007 Rocky Mountain News printed the following LTE from David Olson critical of "universal health care":

Krugman's stance 'nonsense on stilts'
Dave Olson, Westminster
Thursday, December 13, 2007

In his column of Dec. 3, "Obama's sorry plan," The New York Times' Paul Krugman wrote in support of universal health insurance, "letting people opt out if they don't feel like buying insurance would make insurance substantially more expensive for everyone else."

First of all, I consider it immoral to force people to pay for health insurance that they do not want.

Second, it is nonsense on stilts. Adding more people into an insurance pool will simply add their cost to the total. Dividing the insurance cost among more people will not save money, when their costs have to be accounted for as well.

Third, health insurance is not health care. It doesn't even insure health care. Its only purpose is to insure that people in the medical profession get their fees paid. It should not be the responsibility of taxpayers to guarantee a doctor's standard of living.

Fourth, a better approach would be to stop using health insurance to pay for minor medical care. When it's used for things like getting a vaccination, treating a hang nail, or having a routine checkup, that drives the costs of both insurance and health care higher for everyone.

Brook and Lockitch: Free The Market

Modern Healthcare has published the following piece by Yaron Brook and Keith Lockitch of the Ayn Rand Institute. The original website requires registration, but the piece is mirrored on the ARI website:

Free the market; Government interference hampers healthcare reform

By Yaron Brook and Keith Lockitch
November 26, 2007

The Democratic presidential candidates are agitating to have the government do something about the spiraling cost of healthcare, especially the cost of health insurance, which is becoming prohibitively expensive for millions of Americans.

Insinuating that the free market has failed to produce affordable health insurance, they offer a variety of government "solutions," including proposals for universal coverage that range from systems of mixed public and private insurance plans to the outright socialism of a single-payer system.

But these proposals cannot and will not cure our ailing medical system because they misdiagnose the disease: It is not the free market that has caused the healthcare crisis, it is government interference in medicine.

The notion that America has a private, free-market medical system is a widespread misconception. More than 45% of total spending on healthcare in 2004 was government spending. Our semisocialist blend of Medicare, Medicaid and government-controlled, employer-sponsored health plans-with its onerous system of regulations and controls on medical providers-is the opposite of a free market.

Our system is built not on the premise that each individual is responsible for his own well-being and healthcare, but on the premise that healthcare is the collective responsibility of "society." Our system aims to relieve the individual of the "burden" of paying for his own healthcare by coercively imposing its costs on his neighbors. Far from being consistent with American individualism, this is the essence of collectivism.

In a system in which medical care seems free or is artificially inexpensive, with someone else paying for one's healthcare, medical costs spiral out of control because we are encouraged to demand medical services without having to consider their real price. For every dollar's worth of hospital care a patient consumes, that patient pays only about 3 cents out of pocket; the rest is paid by third-party coverage. And for the healthcare system as a whole, patients pay only about 14%.

Government-run healthcare, in particular, has fueled explosive cost increases. Prior to the inception of Medicare and Medicaid in 1965, healthcare spending was less than 6% of the gross domestic product. Today, it is 16%, one-sixth of the U.S. economy-with Medicare alone accounting for half the growth in healthcare expenditures. As spending explodes, the government cracks down by enacting coercive measures: price controls on medical services, cuts to medical benefits and a crushing burden of regulations on every aspect of the healthcare system.

These controls and regulations make it harder to offer medical services profitably, burying doctors, nurses and other providers in bureaucratic red tape and ultimately driving them out of the field. Drug companies are forced to cut back on the development of new drugs. Insurance companies are forced to restrict their policies. The shrinking supply of medical services, combined with an artificially increased demand, drives costs and insurance premiums still higher. This leads, in turn, to cries for still more government controls, which cause even more problems, and so on and so on, in a vicious cycle of destruction.

The Democratic candidates' proposals are just the latest iteration of this cycle-an attempt to solve the problems in our healthcare system by enacting the same kinds of destructive measures that caused the problems in the first place.

Although the proposals are couched in such positive-sounding euphemisms as "guarantee universal coverage," "ensure better preventive care," "modernize record-keeping," and "reduce waste and inefficiency"-there should be no doubt that what they would mean in practice is a massive expansion in government interference and further distortions of the free-market mechanisms that keep quality up and costs down.

Consider, for example, the goal of modernizing the healthcare system. It would be one thing for hospitals, doctors' offices, and insurance companies to modernize their procedures and record-keeping voluntarily, because they judged it an effective way to boost their productivity. It is a very different thing to attempt to impose "modernization" by government decree. All it can possibly mean in practice is a new flurry of regulations forcing medical providers to adopt government-approved technology, whether they have a use for it, overseen by a new government bureaucracy with all of its inevitably attendant inefficiency and waste. This would be like putting Amtrak in charge of modernizing train service.

Or consider the issue of universal coverage. A proper approach to healthcare reform would address the problem of skyrocketing insurance premiums by uprooting its fundamental cause: the shifting of responsibility for healthcare costs away from the consumers of medical services. A proper approach would remove the bizarre incentives that created our current employer-based system; lift the regulatory chains stifling the health insurance industry; and inaugurate a gradual phase-out of all government insurance programs, especially Medicare and Medicaid. Instead, the Democratic candidates propose to force businesses, insurance companies and taxpayers to simply shoulder the extra costs of herding every single American into our current collectivist system.

The solution to the healthcare crisis brought about by our hyper-regulated, collectivist medical system is not more regulation and more collectivism. We must remove government from medicine and put an end to the system that forces us to pay for other people's healthcare.

In freer industries, such as computers or shoes, there is no crisis of affordability or quality, because people don't demand free computers or shoes as a "right" to be enforced by government decree. We need to recognize that the same should apply to medicine; there is no right to healthcare-to be provided at others' expense. We must reject the proposals to expand collectivized healthcare-the Democrat proposals as well as those of the Republicans, who pay lip service to the free market but offer no fundamental changes to our current collectivized system.

What we need is a true free market in medicine, one in which the government's only role is to protect the individual rights of doctors, patients, hospitals and insurance companies to deal with one another voluntarily.

Yaron Brook is president and executive director of the Ayn Rand Institute, Irvine, Calif. Keith Lockitch is a resident fellow at the institute.

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

(Note: FIRM is non-partisan and does not endorse any particular political party or candidate.)

Moral Health Care vs. "Universal Health Care"

Lin Zinser and I have written an article on health care history and policy that will be appearing in the Winter 2007-2008 issue of The Objective Standard entitled "Moral Health Care vs. 'Universal Health Care'".

We argue that the current crisis in American health care is the result of decades of government interference and violations of individual rights in health insurance and medicine. Hence the solution to the problem is not more government controls but instead to gradually and systematically transition to a rights-respecting, fully free market in those industries.

Normally, the articles are available to subscribers only, but the editor has made the full text of the article available for free online.

National Grocery Reform

Richard Ralston of Americans for Free Choice in Medicine has written this satirical OpEd on health care reform:

National Grocery Reform
By Richard E. Ralston
November 9, 2007

One of the great scandals of our age is the fact that America spends more on food than any other nation. Many political leaders are now calling for urgent reform to bring spending on food under control. Even worse, while the result of this uncontrolled spending includes the fact that many Americans are overweight, some Americans do not have enough to eat.

Leading liberal candidates now point to what they see as the heart of the problem: corporate "greed" in the form of grocery stores and restaurants operating on a for-profit basis. They promise to replace all private grocery stores with a national system of government commissaries, which will allegedly operate far more efficiently without the administrative overhead required to make a profit. As it will take some time to organize the national network of commissaries, initially groceries will be available only at offices of the Department of Motor Vehicles and U.S. Postal Service. These offices apparently have a proven track record of operational efficiency and excellent customer service, and will be a model for the development of a government commissary system.

Liberals would achieve further efficiencies, so they claim, by prohibiting all advertising of food and food products. This wasteful expense to provide consumers with unnecessary information has proven to be just a way for food stores and manufacturers to inflate prices and fatten business profits. Consumers will find shopping to be much easier if personal preference is eliminated in favor of whatever foods government makes available.

To achieve savings by eliminating the profits of food manufacturers, the U.S. Department of Agriculture will assume ownership of all of these firms, purchase all crops from farmers (until such time as agriculture can be reorganized into government operations) and manufacture an appropriate amount of food.

In spite of the efficiencies and cost reductions that government management will achieve, there is some concern that food might not be affordable for everyone. And food is surely a “right,” as it is necessary for human survival. Therefore all groceries made available in government commissaries will be free of charge. This will be financed by an increase of 15 percent in income taxes, except for those making over $80,000 a year, whose taxes will be increased by 75 percent. Because the supply of food is not unlimited, a fixed amount of ration coupons will be distributed to insure that each consumer can obtain an equal amount of food.

All private restaurants will be closed because of the need to equalize availability of food, and limited cafeterias will be operated in the government commissaries. Liberal political candidates point to the excellent example of school lunch programs as a model, and the proven results demonstrated by several generations of well-nourished, trim and fit students.

So far, conservative leaders are at a loss after hearing these proposals. Some of the more courageous conservatives are responding with proposals for Mandatory Food Purchasing. All citizens, including those who go to bed hungry every night, will be required to purchase membership in new Food Management Organizations. Private grocery stores and restaurants would still be permitted but under strict price controls to insure that all consumers can afford their FMO memberships. To further control costs, the purchase of certain cuts of meat and imported gourmet foods could require the FMO’s advance approval.

Across the political spectrum, there is a developing consensus that the only appropriate response to the fact that some consumers cannot afford groceries is to impose a single, regimented, government-controlled food system on all citizens. Advocates point to public education as an example of how forcing all but the children of the most wealthy citizens into the gray, sterile desert of a poorly performing public education system is the only way to insure that poor children receive any education at all.

Rumor has it that the clincher for those proposing socialized grocery plans was stated recently by one of the presidential candidates: "The ideal thing about these proposals is that if we can somehow get this to work for groceries, we can apply it to health care."

Richard E. Ralston is Executive Director of Americans for Free Choice in Medicine.

Universal Health Scare

Dr. Michael Hurd has written the following opinion piece, entitled "Universal Health Scare":

Universal Health Scare
by Michael J. Hurd (December 1, 2007)

An increasingly popular argument in favor of socialized medicine goes like this: "If universal health care works for the elderly under Medicare, then why not for the rest of us?" If that's true, then the Democratic nominee for President should definitely work this one into his or her acceptance speech, starting now.

But there's a tragic flaw in that argument. Universal care-socialized medicine-for the elderly does NOT "work," even on its own terms. Many services, such as my own (psychotherapy and mental health care), are only partially covered, if at all, under Medicare. It has to be this way; otherwise the program would be slated for bankruptcy even sooner than it already is. Why do you think Medicare "supplemental insurance" is commonplace, if not essential? Because "universal coverage" guaranteed by political funding is a myth. And if you think it's a myth now, wait until the baby boomers come of age and Medicare faces certain bankruptcy. And if "universal coverage for all" passes, then the price tag for the U.S.

Treasury goes into the billions or trillions of dollars. And you thought the Iraq war was expensive.

None of these dollars-and-cents concerns address the deeper problem with socialized medicine: What it does to the doctor. Although politicians may applaud themselves for "giving" everyone health insurance for free, doctors pay the biggest price by being at the mercy of the bureaucracy and injustice created by this monolithic system. Also, once the private insurance sector (or what's left of it) is completely out of business, which will be inevitable if not outright mandatory, doctors will have no choice but to follow government dictates. As it stands now, medical reimbursement rates for doctors are spiraling downward, even as tax rates go up. The Governor of California even has the audacity to try and make doctors foot some of the bill for socialized medicine in that state.

Doctors, under universal coverage, won't enjoy the freedom to charge patients fee-for-service, and patients likewise will not enjoy the freedom of paying their doctors fee-for-service to get better quality care. This is what "universal coverage" truly means, whether it's written into the legislation or not. And the reason is simple: Socialized medicine, no matter what you call it, makes the private practice of medicine obsolete, just as it has severely undercut the practice of medicine under Medicare.

Does anyone know an elderly person who is actually happy with his or her doctors, by and large, under Medicare? Are any of you who already are elderly happy with the treatment you receive under Medicare? As doctors get increasingly frustrated, and the lines and the waiting times get longer, and the paperwork piles higher and the visits get shorter, doctors will no longer work directly for the patient. Many will see no need to strive for excellence, because under these programs they get patients whether they're good doctors or not. It's the only game in town.

"Universal Care" will drive a permanent wedge between the patient and the doctor. Imagine if the government took control over YOUR chosen profession, career or job and dictated your every move, including exactly what you could earn in that job-whether you do it well or not.

Remember that Medicare is only a slice of socialized medicine. Calls for universal coverage are the real thing. Under what's being proposed now, we 're going to get more of the same-only a LOT more of it.

The person who claims that "universal care worked for the elderly, so why not the rest of us?" had better check out the facts. The Government pays about fifty percent of all medical expenses today. It pays more every year. People are less and less happy with their doctors and the whole financial aspect of medicine. Gee, do you think maybe government is creating more problems rather than solving them?

Change of Pace

Today's post is a humor piece: "Two Medieval Physicians Debate Universal Health Care"