Free Standing ERs

Physician-blogger Scalpel has an fascinating post on free-standing ER's:

The Wave of the Future

The wave of the future is the free-standing Emergency Department.

By requiring insurance coverage or full payment at time of presentation, these facilities are able to offer reduced waiting times, concierge-style amenities, and a full array of emergency diagnostic and therapeutic services. And if they refuse to accept Medicare or Medicaid, then they are not forced to follow the restrictive rules of EMTALA.

EMTALA applies only to "participating hospitals" -- i.e., to hospitals which have entered into "provider agreements" under which they will accept payment from the Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS) under the Medicare program for services provided to beneficiaries of that program.

So these "free-market" emergency facilities can not only refuse treatment of patients who are unwilling or unable to pay, but they can also transfer patients at will without negotiating with a receiving hospital or jumping through a lot of regulatory hoops. Realistically, however, hospitals love receiving transfers from these types of facilities because they know they are getting fully-paying patients. Do you think that a hospital might accept an otherwise healthy well-insured young woman with a gallstone attack in transfer, perhaps causing the cirrhotic Medicaid patient to wait a few more hours in their own ER? I think they just might. The bottom line is a powerful incentive.

As this business model becomes more widespread, hospital-based emergency departments will be faced with an increasingly problematic payer mix, because the higher-paying patients will be siphoned off the top, leaving only the most undesirable trauma and Medicare/Medicaid populations to fill their overcrowded waiting rooms. And when emergency physicians have a broader selection of practice environments to choose from, I suspect the hospital-based ERs will soon have some difficulty filling their schedules as well, thereby compounding their problems even further.

Guess what?

Healthcare isn't a right after all.

(Via David Catron.)

Massachusetts Costs Continue to Soar

Massachusetts legislators are now stuck between a rock and a hard place with respect to the soaring costs of their "universal" health care. On one hand, they want to continue to pretend that they have solved the problem of the universal coverage. On the other hand, it's costing far more than the state can afford. So now they have to either find someone else to pay the bill (i.e., the federal government), reduce services, or stop making it "universal".

Here are some excerpts from this article in the March 26, 2008 Boston Globe:

Healthcare cost increases dominate Mass. budget debate
Controlling them said key to keeping universal coverage

When Massachusetts launched its landmark universal health insurance initiative nearly two years ago, the state put off addressing rising costs so it could expand coverage immediately. Now those costs are dominating the discussion as the state faces a recession and pivotal funding decisions that could make or break health reform.

...A larger issue will also come to a head by July 1: the need to secure a new three-year commitment from the federal government to pay for half the soaring cost of insurance subsidies. Massachusetts is seeking up to $1.5 billion, but the Bush administration has been cutting back federal payments to the states.

..."If we don't grapple seriously with the cost of healthcare, the support for reform will erode and the perception will become broader that it is unaffordable," said Jon Kingsdale, executive director of the Commonwealth Health Insurance Connector, which oversees much of the reform effort.

At root, the system cannot control costs because it explicitly rejects the market mechanisms that can do that in favor of state mandates that tell an individual how he may spend his own health care dollars and for what.

It's always easy for a state to promise "coverage". What they can't do is provide actual quality, affordable care -- only the free market can do that.

Reincarnating Failed Policies

The March 23, 2008 Colorado Daily has published the following OpEd by Linda Gorman of the Independence Institute:

Colorado Health Care Reform: Reincarnating Failed Policies

The Massachusetts plan requires everyone to buy health insurance. The reform plans from Colorado's Blue Ribbon Commission on Health Care Reform and Club 20 copy key elements of it. If everyone is insured, advocates say, safety-net providers will need far less support. Needless to say, Colorado hospitals and health plans eager to get paid have no qualms about lobbying lawmakers to make their fellow citizens pay for coverage designed by a government committee and legislators are happy to believe that less safety-net care translates into reduced state payments.

Massachusetts reformers were so sure this would be the case they eliminated the state's uncompensated care plan in 2007, replacing it with the Health Safety Net Trust Fund. According to Cambridge Health Alliance, the major result of the change was that reimbursement for providing care to the uninsured dropped from full cost coverage to only 60 to 70 percent of cost.

Stiffing providers after passing new programs with glowing promises of free health care, tax money for non-profit advocacy groups, and higher payments to providers is a health care policy tactic traditionally deployed by reformers seeking to reincarnate utopian plans from the wreckage of real world trials.

The Massachusetts plan reincarnates significant elements of TennCare. A 1994 coverage-for-all experiment featuring guaranteed issue, premium subsidies, and a choice of state selected managed care plans, TennCare lasted less than a decade.

By 2000, TennCare benefits were more generous than those of the most expensive private plans. Financial controls were so poor that thousands of enrollees were either dead or living out of state, and TennCare was a major source of prescription drugs for sale in local black markets.

To make ends meet, the state cut provider reimbursement. A 1999 audit estimated that general hospital revenues from Medicaid in 1993 were 100 percent of cost a year before TennCare started. After that, general hospital payments decreased steadily, hitting a low of 60 percent of cost in 1996 and reached 61 percent by 1997. Safety-net hospitals went from being reimbursed at 106 percent of costs in 1993, to 57 percent of costs in 1995, and 71 percent of costs in 1997. State authorized managed care providers failed, leaving physicians and hospitals with millions of dollars in unpaid bills. People in TennCare had insurance and a difficult time finding adequate care.

Judging from the Tennessee experience, the Massachusetts Commonwealth Connector Authority, the agency that administers the Massachusetts plan, is proposing reimbursement cuts right on schedule. Already over budget and looking to cut expenditures, its head proposed physician reimbursement cuts of 3 to 5 percent. In the Massachusetts legislature, State Senate President Therese Murray is proposing draconian controls, including hearings for any insurer announcing a premium price increase of more than 7 percent or any premium that is 7 percent more than the market average. She considers neither inflation nor the possibility that consumers might prefer to pay more for more expensive benefits.

So much for the Massachusetts promise that making people buy insurance leads to less uncompensated care and better reimbursement rates.

The Massachusetts plan is all the rage in the Colorado health reform circles. Reformers blame the uninsured for uncompensated care, willfully ignoring the fact that the majority of uncompensated care is generated by the government run Medicaid and Medicare programs. In Colorado, data from the Blue Ribbon Commission on Health Care Reform suggest that the uninsured pay for 45 percent of the care they receive. The Veterans Administration and Workers Compensation pay another 9 percent. The rest, about $647 million, comes from charitable sources. It amounts to 2 to 3 percent of total statewide health care spending.

As Cambridge Health Alliance and various Tennessee hospitals have seen, public program expansion that encourages people to stop paying for their own health care and health insurance may worsen provider financial stress. When providers do not get paid, they reduce the amount of care they provide.

With so many promising reforms on the horizon there is no excuse for reincarnating failed policies. Reforms that work save up to 20 percent by limiting people's ability to spend other people's money. Reforms that work encourage people to use their own money for small expenses, reserving health insurance for large ones. Reforms that work would save an estimated 10 percent annually by freeing private medicine from unnecessary government regulation. Reforms that work reduce the role of government in health care.

Battered, Not Broken

The March 24, 2008 Colorado Springs Gazette has printed a good editorial on the current health care "crisis":

Battered, not broken
Health system doesn't need more government

As was expected after Sen. John McCain locked up the Republican presidential nomination, media attention has shifted to the Democrats. Recent coverage has focused on whether Florida and Michigan would have new Democratic primaries, Sen. Barack Obama's troubles with his racist minister and the release of Sen. Hillary Clinton's White House papers. It's difficult to remember back to the days of the debates, when commentators would spend hours examining every little difference in the candidates' health care plans. Those plans might not be the lead story in the paper every day, but it's important voters don't forget they're out there.

Both Democratic candidates insist our health care system is broken and a little tinkering around the edges isn't going to bring about the necessary changes. Not surprising, each has a plan to revamp major portions of the U.S. system in an effort ensure every American has health care.

Neither candidate is proposing a National Health Service similar to what England has. That's good, because that system might make health care available to all in theory, but the reality is much different. All Britons are covered by the system, but getting in to see the doctor can mean waiting in line - for weeks. And rationing care is common, according to a Cato Institute policy analysis.

Those with serious conditions and those with diseases that are costly to treat are often shunted aside because of a lack of resources. The Cato analysis cites a London Observer report that said many colon cancer patients (almost 20 percent) who were considered treatable when diagnosed were forced to wait so long for treatment that by the time it was available, their cancer had progressed to the point it was incurable. Efficient, popular hospitals are forced by the government to institute mandatory waits of up to four months so they are not swamped with patients and run out of resources too soon. Democratic candidates aren't pushing such a plan, but activists such as Michael Moore like to trumpet the British program.

What the candidates are proposing, however, is more government intrusion and control of our health care system than what we have now.

The Cato report examined health care systems around the world that have more government involvement than ours, many of which are held up as examples of what our system could be. Cato found that in nearly all cases, after many years of government mandates and control, nations are loosening the reins and allowing more types of market-based policies to address the shortfalls of their health delivery systems.

This, of course, is lost on those in this country who wish to use government to force medical providers to care for everyone. Supporters of such action often cite World Health Organization statistics that rank the United States' health system far down the list of nations. They then use these statistics to argue for more government involvement in health care because, they say, the free market has failed to provide care for everyone. A Cato briefing paper says that's not surprising.

"To use the existing WHO rankings to justify more government involvement in health care is to engage in circular reasoning because the rankings are designed in a manner that favors greater government involvement," it said in the February paper. WHO rankings include variables outside the purview of a nation's health system, so the rankings can't be taken at face value.

When high-ranking officials in foreign governments need serious medical attention, they come to the United States. Doctors from around the world come here to have access to the best medical equipment available. That's because, in spite of the problems our system does have, it's still one of the best available. Pushing it toward more government involvement won't improve the situation. What we need is less government, not more.

I'm glad the Colorado Springs Gazette is injecting some common sense into the health care debate!

Walmart and Medicare

Brian Schwartz alerted us to an article in the Rocky Mountain news from January 9, 2008 about the fact that Medicare costs for the prescription drug program had caused a 6.7 % increase in health spending during 2006.

In fact, Medicare's spending in 2006 increased by 18.7%, driving the entire national health care spending up 6.7%, according to CMS figures. This government agency that runs Medicare and Medicaid reported that almost all other sectors of spending had a slower rate of increase than in previous years -- doctors, hospitals, clinics, home health care, private insurance, etc. So, if the government had not added the prescription drug program, medical costs would have even risen slower and might have been even with the rest of the economy.

But who would have helped the seniors to buy their drugs?

Walmart. That's who.

In Sept. 06, Walmart started its $4 prescription program -- which it now reports has allowed consumers to save over $1 billion dollars nationally (and $13 million in Colorado) in just 18 months. That's a great record - and you don't need a Medicare or Medicaid card to get those savings. In fact, you don't need an insurance card of any kind. Now that's a way to reduce health care spending. You can find out from Walmart what drugs are included in the Walmart program, and the savings per state.

Paul Hsieh, MD previously blogged on this Walmart program. But now we have something to compare it to. It's not a direct comparison because the government bought drugs the entire year, and Walmart's savings extend over 18 months beginning in Sept. 2006. But, that's another difference between the government and Walmart. Walmart can give us figures monthly or even weekly, because they have to be able to report to their stockholders and to the government. However, the US government in January 2008 was reporting on expenses in 2006. Their reports almost always take a year or more to compile. So, next year, we can see what the government spent in 2007, and meanwhile, we can see how much Walmart saves consumers week by week.

But more importantly, let's look at what this means.

Walmart reports that 30% of these prescriptions are filled for those without any insurance -- the uninsured. And these $4 prescriptions are also a huge plus for those Medicare seniors who are in the doughnut hole, which occurs when a senior has between $2,400 and $5,421.25 in drug expenses per year. In that hole, Medicare coverage disappears. So, more people can buy the drugs prescribed by their doctors and take all of the prescribed amounts -- not taking half or skipping doses because of costs. In addition, Walmart has picked up customers. And, as a result, competitors Target, Costco and Kroger have followed with their own programs as well. So, nationally, more and more prescription drug consumers benefit.

In several states, there are government restrictions on Walmart's ability to sell $4.00 prescriptions. These states include Colorado. So, without government restrictions, Colorado consumers could save more. We'll check into this and report back.

In the meantime, imagine a Free Market!

The Grass is Not Always Greener

Cato Policy Analysis No. 613 compares "universal health care systems" around the world. Here is the executive summary, as well as the full report in PDF format and HTML format:

The Grass Is Not Always Greener:
A Look at National Health Care Systems Around the World

by Michael D. Tanner
March 18, 2008

Critics of the U.S. health care system frequently point to other countries as models for reform. They point out that many countries spend far less on health care than the United States yet seem to enjoy better health outcomes. The United States should follow the lead of those countries, the critics say, and adopt a government-run, national health care system.

However, a closer look shows that nearly all health care systems worldwide are wrestling with problems of rising costs and lack of access to care. There is no single international model for national health care, of course. Countries vary dramatically in the degree of central control, regulation, and cost sharing they impose, and in the role of private insurance. Still, overall trends from national health care systems around the world suggest the following:

* Health insurance does not mean universal access to health care. In practice, many countries promise universal coverage but ration care or have long waiting lists for treatment.

* Rising health care costs are not a uniquely American phenomenon. Although other countries spend considerably less than the United States on health care, both as a percentage of GDP and per capita, costs are rising almost everywhere, leading to budget deficits, tax increases, and benefit reductions.

* In countries weighted heavily toward government control, people are most likely to face waiting lists, rationing, restrictions on physician choice, and other obstacles to care.

* Countries with more effective national health care systems are successful to the degree that they incorporate market mechanisms such as competition, cost sharing, market prices, and consumer choice, and eschew centralized government control.

Although no country with a national health care system is contemplating abandoning universal coverage, the broad and growing trend is to move away from centralized government control and to introduce more market-oriented features.

The answer then to America's health care problems lies not in heading down the road to national health care but in learning from the experiences of other countries, which demonstrate the failure of centralized command and control and the benefits of increasing consumer incentives and choice.

I haven't read the report yet, but I look forward to seeing if the author draws a link between the adverse economic consequences of "universal" health care and the violation of individual rights inherent in every such system.

Where Are the Best and Brightest Medical Students Going?

The March 19, 2008 New York Times has an interesting article on the recent popularity of fields like dermatology and cosmetic surgery amongst the top graduating medical students. Here are some excerpts:

For Top Medical Students, an Attractive Field

...As thousands of medical students await word this week on residency programs, two specialties concerned with physical appearance — dermatology and plastic surgery — are among the most competitive.

...Seniors accepted in 2007 as residents in dermatology and two other appearance-related fields — plastic surgery and otolaryngology (ear, nose and throat doctors, some of whom perform facial cosmetic surgery) — had the highest median medical-board scores and the highest percentage of members in the medical honor society among 18 specialties, the report said.

The vogue for such specialties is part of a migration of a top tier of American medical students from branches of health care that manage major diseases toward specialties that improve the life of patients — and the lives of physicians, with better pay, more autonomy and more-controllable hours.

...Dermatologists say they enjoy the variety of a specialty that encompasses serious illnesses like skin cancer and psoriasis as well as conditions like uncombable hair syndrome.

But students interested in such work also often factor in personal benefits. Internists, for example, worked an average of 50 hours a week in 2006 while dermatologists worked about 40 hours, according to an annual survey by Medical Economics magazine. Dermatology also offers more independence from the bureaucracy of managed care, because patients pay up front for cosmetic procedures not covered by health insurance.

And while an internist earns an average of $191,525, a dermatologist earns an average of $390,274, according to an annual survey conducted by the Medical Group Management Association, whose membership includes more than 21,000 managers of medical practices. Dermatologists who specialize in cosmetic treatments or in skin-cancer operations can earn much more.

These medical students are acting in their rational self-interest when they choose not to deal with the bureaucratic headaches of Medicare and Medicaid associated with primary care, and instead go into fields where patients and doctors have the freedom to voluntarily contract for goods and services according to their best rational judgment. The higher pay and increased autonomy of those fields is a direct result of them being subject to the least government interference.

Hence, in the (relatively) free markets of dermatology and cosmetic surgery, we see the typical pattern of falling costs and rising quality that we take for granted in the rest of the American economy.

If we want to attract the best medical students to fields like primary care and general surgery, then we need a free market in all of medicine. Any American who thinks that he or she might need good quality health care someday in the future (which is basically everyone) should therefore support a free market and individual rights in medicine.

More Massachusetts Problems

The March 17, 2008 Boston Globe reports that the Massachusetts "universal health care" system is having a "catastrophic" effect on the Cambridge Health Alliance, which takes care of many of the poor and uninsured in the Boston area. The state plan pays for only "60 to 70 percent" of the cost of the care delivered, and "has left [the Cambridge Health Alliance] responsible for providing free care for those without insurance while reducing the hospitals' compensation for such services." The Cambridge Health Alliance is therefore being forced to fire staff and reduce patient services in order to stay solvent.

As we've seen in Canada and the UK, governments can make plenty of paper promises of "universal health care". But they can't deliver actual care. Once again, we see the following lessons:

1) "Universal" health care inevitably leads to rationing. This particular development is just one way which it can occur.

2) The rationing especially hurts those whom "universal care" was ostensibly supposed to help. This is just an instance of the broader principle that socialism and collectivism harms everyone, even the intended beneficiaries (i.e., "the people").

Massachusetts is starting to learning the lessons of those other countries the hard way.

"I am so glad I no longer work for the NHS"

Terry Hamblin, MD is a noted medical authority who pioneered research and treatment for CLL (Chronic Lymphocytic Leukemia), cancer of the white blood cells. He recently retired from Britain's National Health Service (NHS).

In his blog, Mutations of Mortality, he writes much about CLL (and the posts are technical), but he also writes about politics, religion and movies. He also corresponds by e-mail with CLL patients. In his recent post, Travails of the NHS, he cites at least 3 cases of government interference between the doctor and patient, one where a patient died because of the interference, and one where the government bureaucrats of Britains MHRA (Medicines and Health Care Products Regulatory Agency) chastised the hospital because the hospital failed to document whether the 73 year old patient was told that she should use birth control during chemotherapy. The third patient eventually got some appropriate treatment, but only after much dialogue between his doctors and the NHS. Hamblin ends the post," I am so glad I no longer work for the NHS."

This is not the kind of medical care we want in the US.

(Thanks to Burke Chester for the link.)

More Free Market Success

The relatively free market continues to save money for consumers, this time in pharmaceutical expenses:

Wal-Mart Claims $4 Generics Have Saved Consumers $1 Billion

Wal-Mart's doing a bit of chest thumping this morning, claiming that its $4 generics program has saved consumers $1 billion — $1,032,573,012.61 as of March 10, to be precise.

The company says the $4 drugs now account for 40% of all prescriptions filled at its stores, adding that nearly 30% of the cheap prescriptions are purchased without insurance.

Wal-Mart breaks down the program by state, with the top savers being Texas ($132,628,224), Florida ($72,443,467) and North Carolina ($48,241,530).

The baseline figures the company used to calculate total savings are the average Wal-Mart price of each generic drug before the program launched. The calculations don't include the prices of branded (and much more expensive) drugs, a Wal-Mart spokeswoman told the Health Blog.

The ripple effects of the program may have driven additional consumer savings, the company pointed out. Competitors including Kroger and Target followed Wal-Mart with their own $4 generics programs.

If the partially free market we have in the US can benefit patients this much, think of how much a fully free market could benefit all of us. (Via David Catron.)

The Canadian Safety Valve is the US

John LaPlante at StateHouseCall.org recounts another story of a young man's experiences with both the Canadian and American health systems:

The Best Part of Living in Canada? Being Close to the U.S.
The safety valve for long waits for medical treatment

It's been said that Canada's single-payer systems "works" to the extent that it does because the U.S. serves as a safety valve. Since most of the population lives within a short drive, it can, if need be, get around rationing queues by crossing the border.

This morning I came across an anecdote in that same vein. It's from a sports-related blog, maintained by two guys in Toronto who love to cycle and go snowboarding.

Adam, the snowboarder, suffered a knee injury while playing basketball. On March 25, 2006, he wrote about his first trip to a medical facility. The people there were friendly and knowledgeable, but further treatment would expose him to the long queues of Canadian health care. "It’s really, really tempting," he said, "to go to Buffalo, Montreal or somewhere else to get an MRI sooner, so I can get on the road to recovery sooner. Is recouping my summer worth shelling out $500 to $1000?"

Rather than wait 55 days—the projected queue in Ontario—he must have come up with the money, since on April 22—28 days later—he had an MRI done in Buffalo, New York.

Would the doctor in Canada object on the grounds that Adam was subverting socialized medicine, that quality that (aside from "not being the United States") seems to define the country? Nope. "The [Canadian] company rep I spoke to said they had very few issues with doctors protesting, because the end result was that you were making the waiting list in Ontario shorter."

Once Adam placed the call to the U.S., he could have gotten his appointment with the New York clinic in a New York minute—they offered a screening that evening.

"To say I was impressed was an understatement," he wrote. "My overall impression: so worth the money. I'm now four months ahead of where I would be using the Ontario system."

But it took him over a month for an appointment in Canada to review the results. They weren't good: a scope on his knee, and possibly more, was called for. And "this being Ontario and all, when will I get the surgery? Six to eight months from now." [Emphasis in the original.]

The schedule must have loosened up a bit. (Maybe more Canadians decided to have their surgery in the U.S., too.) Adam decided to delay on scheduling his operation, so as to make better use of the winter. When he called in November 2006 for a date, he was told he would have a ...five month wait, which was in fact the truth.

At least three lessons come from this story: Time and money are interchangeable. A "right" to health care is a right to a queue. And if you need to see a doctor in a government-financed system, take a number.

Universal Health Care Kills

Brian Schwartz's powerful OpEd "'Universal' Health Care Kills" has appeared recently in a number of newspapers, including the Colorado Daily, Hawaii Reporter, and the Salida Mountain Mail:

"Universal" Health Care Kills

What good is having medical insurance if you cannot get medical care? Peddlers of "universal health care" — from Hillary, Obama, to Colorado congressional candidate Jared Polis — don't get this.

"Universal health care" is false advertising for politically-controlled medicine, with government as the "single-payer" monopolistic insurer. But having coverage does not guarantee getting medical care.

Since patients prepay through taxes, medical care appears "free." Hence, they have strong incentive to over-consume and providers need not compete on price. To contain costs, governments restrict your access to life-saving treatment. In countries with such "universal coverage," patients die waiting for treatment.

The Canadian Medical Association Journal reports that in one year, 71 Ontario patients died while waiting for coronary bypass surgery and over one hundred more became "medically unfit for surgery." The Canadian Broadcasting Corporation reports that "109 people had a heart attack or suffered heart failure while on the waiting list. Fifty of those patients died."

This week the Globe and Mail reported that:

Inside Sylvia de Vries lurked an enormous tumour and fluid totalling 18 kilograms. But not even that massive weight gain and a diagnosis of ovarian cancer could assure her timely treatment in Canada.

She sought treatment in the United States, as do Canadians in need of intensive care and emergency cardiac care.

"Physicians across Canada are in an advanced stage of burnout due to work conditions" which "causes them to retire early... or simply leave," a former Canadian Medical Association president told the New York Times. He "attributed much of the problem to technological shortages and the powerlessness doctors feel when patients complain about long waits for treatment."

"Access to a waiting list is not access to healthcare," wrote Canadian Chief Justice McLachlin when striking down legislation banning private insurance in 2005. Last year a New York Times headline read: "As Canada's Slow-Motion Public Health System Falters, Private Medical Care Is Surging."

And England? The BBC reports that "up to 500 heart patients die each year while they wait for potentially life-saving surgery." The Times reports that a British woman "will be denied free National Health Service treatment for breast cancer if she seeks to improve her chances by paying privately for an additional drug." A Daily Telegraph headline reads: "Sufferers pull out teeth due to lack of dentists." "Doctors are calling for NHS treatment to be withheld from patients who are too old or who lead unhealthy lives," reports another article.

Consider politically-controlled health care in America: Medicaid and Medicare. Doctors are five times more likely to refuse seeing new Medicaid patients than privately-insured patients. Increasing reimbursement rates won't help much; more than two-thirds of doctors reported being overwhelmed by Medicaid’s billing requirements, paperwork, and delays in payment.

ABC News reports that "Medicare rules bar cancer drugs for patients," including the privately-insured. As the population ages and Medicare costs continue to increase, Medicare may further restrict patients and doctors.

"Single payer" advocates cite international comparisons of life expectancy to support their cause. But life expectancy depends on factors unrelated to healthcare, such as unintentional injury and homicide. Health economist Robert Ohsfeldt found that when accounting for these two factors, life expectancy in America is comparable to that of Canada and England.

What really matters is your chance of surviving a serious illness. The American Cancer Society reported that "U.S. patients have better survival rates than European patients for most types of cancer."

So if politically-controlled medicine isn't the solution, what is?

Not a Massachusetts-style "individual mandate," which forces everyone to buy insurance. This is essentially single-payer in disguise. Insurance regulations severely limit competition, so insurance companies are effectively government contractors for politically-defined insurance.

The Boston Globe reports that to contain costs, Massachusetts authorities will "probably cut payments to doctors and hospitals" and "reduce choices for patients." Sound familiar?

Instead, we must recognize how government policies have crippled free markets.

Because the tax code deeply discounts employer-provided insurance, you're essentially stuck with your employer's non-portable plans. Hence, insurance companies can afford to be stingy and deny you care; they know that losing you as a customer requires that you change jobs. With government as "single-payer" it's even worse: to change insurance providers you must move to a different state or country.

Our current system also encourages thoughtless over-consumption and skyrocketing costs. The tax code punishes paying for medical care out-of-pocket and rewards buying insurance. So "insurance" has become prepaid medicine, and patients over-consume like business travelers dining on their company's expense account.

Further, legislation mandating minimum benefits makes insurance unaffordable for many. Consider: Colorado law compels widowed wives to pay higher premiums for prostate screening, maternity, and marital therapy. Sponsors of Colorado House Bill 08-1327 recognize this injustice. Just as businesses incorporated in other states can operate in Colorado, Coloradans should be able to buy affordable policies from insurance companies that meet less damaging regulations of another state.

So remember, the uninsured aren't the problem, but a symptom of political meddling in our most important personal choices.

Thank you, Brian!

For more on HB 08-1327 see this post by Lin Zinser.

Hsieh LTE in Christian Science Monitor

The March 7, 2008 edition of the Christian Science Monitor printed my LTE on free markets and health care:

The government hand in healthcare raises costs

Regarding the March 3 article, "Arguments mount for national healthcare": In David Francis's recent commentary on national healthcare, Shannon Brownlee blames rising healthcare costs on a failure of the free market. In my opinion, the exact opposite is true. It is government interference in the free market that has created the current crisis. Any system of national healthcare would merely worsen the current problems.

National healthcare programs violate the rights of consumers and healthcare providers to contract freely for medical services according to their best judgment. Such programs inevitably lead to rising costs and rationing, as demonstrated repeatedly in Sweden, Canada, and the United Kingdom.

In contrast, the free market consistently lowers costs and increases availability. Those sectors of medicine that are least regulated by the government (such as LASIK and cosmetic surgery) have shown the typical pattern over time of falling prices and rising quality that we take for granted in the rest of the US economy. Because the free market respects individual rights, it is the only practical and moral solution for the problem of rising healthcare costs.

Paul Hsieh, MD
Cofounder, Freedom and Individual Rights in Medicine
Sedalia, Colo.

Two Good Articles On Health Insurance

The blogosphere had two recent high-profile articles discussing the purpose of insurance and the proper role (or lack thereof) of government mandates.

The first was from "Today's Health Insurance Ain't Insurance", from Pajamas Media blogger Charlie Martin. Here's an excerpt:

...So now it's election season 2008, and the candidates are talking about the "health care crisis." It's a funny sort of crisis in one sense, because people are managing to survive to be older and healthier than they were before the crisis. But if a politician insists it's a crisis, who are we to argue? Certainly there is an issue that some people can’t afford to pay cash for day-to-day care, and old-fashioned "major medical" is hard to find.

The solution we have been offered on both sides of the aisle is something like the "Massachusetts Plan," where everyone has to have health insurance. "Has to have," here, being enforced by the government — Senator Clinton has spoken specifically of garnisheeing wages of people who don't want to participate — with some kind of public funding for people who just can't afford it.

Here's where things start to get tricky, though. Some people — young people just out of school for example — aren't making a lot of money, but then don't really want to spend a lot of money on insurance. Normally, they wouldn't have to: other than accidents and very rare diseases, a 25-year-old shouldn't normally need anything more than minor maintenance and occasional hangover cures. The idea of the mandate, though, is that if you include these low-risk people in the whole insurance pool, the premiums they pay can be added back to the pot for older people and people with serious illnesses, which makes the insurance more "affordable" — for them.

It's exactly the same situation as if we charge a 25-year-old the same amount for a year's term life insurance as we charge his 75-year-old grandfather: it may make the insurance more affordable for Granddad, but it does so by overcharging young Elmo. Add in the "mandate," so Elmo can't opt out, and we have a universal care plan that forces Elmo to pay for services he doesn't get so that Granddad can pay less for the services he gets. But it's "voluntary" — you get to pick your insurance plan to some extent — and it’s not "tax-supported" because you are just paying the insurance company directly.

Except for the cost of administering the plan itself, and the wages they take through a garnishee if I don't "volunteer."

So in this mandated universal coverage plan, the government comes and makes me give someone money so it can be distributed to other people, and I don't have any choice about participating. Where I come from, we call that a "tax."

Whatever it is, it ain't insurance.

I thought Charlie Martin's analysis of the history and nature of insurance was on-target. (Pajamas Media is a group blog that includes free speech advocate Flemming Rose of "Danish Muslim cartoons" fame as one of their contributors.)

The second is a related short piece, "Protect them from themselves?" by Atlantic writer Megan McArdle. Responding to the claim by socialized medicine supporter Ezra Klein, "...[M]andates matter because, sometimes, folks have to be protected from their worst instincts", she asks:

...I'm persistently disturbed by the notion that most of our fellow citizens are intellectual children who need to be forced to do what is good for them even at massive cost to their liberty, and ours.

In the comments section, I replied:

Megan's final sentence cuts to the heart of the issue: "Whose life is it anyways - yours or the government's?"

When this gets applied to the health care issue, the question becomes:

Should government bureaucrats decide how and for what people can spend their own health care dollars? Or do they respect the individual's right to make that decision according to his own best judgment for his own benefit?

I come down firmly on the side of the second position.

RMN Editorial on Health Care

The May 9, 2008 Rocky Mountain News has the following interesting editorial on health care reform:

The coming debate over health care

No matter who wins the Democratic presidential nomination, that candidate will have a significantly different prescription for the nation's health-care system than Sen. John McCain, the Republican nominee. Which is a good thing, since that means the country is in for a debate involving real substance.

Both parties agree that "the health system needs major repairs," reports Kevin Sack in a recent analysis of the candidates' proposals by The New York Times. As Sack noted, the Democrats are more interested in universal coverage, while the Republicans focus on cost containment.

Those may be the points of emphasis, but McCain wants expanded access, too, while Barack Obama and Hillary Clinton claim they can rein in health-care costs. One thing we've learned from state-based experiments in universal coverage: It's not cheap. In Massachusetts, taxpayer subsidies for its two-year-old program of mandated coverage will rise from $158 million in 2007 to $600 million this year and $870 million in 2009. Lawmakers are now scrambling to impose new cost controls. On the menu: lower payments to doctors, hospitals and drug companies.

Meantime, a similar plan proposed in California died in January when the independent Legislative Analyst projected the program would cost at least $4 billion more in its first five years than proponents first suggested.

By contrast, McCain's agenda would primarily expand choices for consumers. Among other things, he would allow Americans to purchase health coverage from a licensed insurer in any state; individuals could shop nationwide for an appropriate policy and compare prices. He would also allow membership organizations (like AARP) or other non-employers to sell group policies.

Most dramatically, he would end the tax deduction that employers receive for providing health insurance; instead, individuals would receive tax credits they could use to either purchase policies or invest in Health Savings Accounts. They would no longer depend on their employers for medical coverage.

Taken in combination, these proposals would give individuals more control of their health-care options..

Until the next president takes office, states would be well-advised to steer clear of comprehensive reform. But they can act on the margins. Indeed, we're encouraged to see several consumer-friendly initiatives in this year's legislature. House Bill 1061, with bipartisan sponsors, has passed both houses and would allow advanced practice nurses (who have specialized certification, such as in clinical practice or anesthesia), to provide a broader range of care - more like physicians.

Next, House Bill 1311 would establish two new, bare-bones insurance plans for any employer that does not offer its workers medical insurance. The proposal died in committee, but the lead sponsor, Rep. Spencer Swalm, R-Centennial, told us that House Speaker Andrew Romanoff has expressed interest in reviving it.

Finally, House Bill 1327, from Rep. Cory Gardner, R-Yuma, would allow Coloradans to purchase insurance from out-of-state providers if a group of states set up a market for such policies. McCain's plan does not have to be law for this bill to take effect.

HB 1327, scheduled for a committee vote on Monday, offers another example of an incremental reform at the state level that could expand choices and contain costs. We encourage more efforts along these lines.

I'm encouraged that Colorado is finally discussing some genuine free market health care reforms.

Such free market reforms are good because they respect an individual's right to spend his own health care dollar according to his judgment, for his own benefit. In contrast, false "reforms" (such as expanding Medicaid or imposing insurance mandates), merely raise costs, decrease access, and force more people to become government dependents, as has happened in Tennessee and is happening in Massachusetts. Bureaucrats then decide how and for what people's health care dollars may be spent, not the individual patients and doctors.

The debate is finally starting to shift in the right direction.

Schwartz and Shnelvar on Medicaid

The March 8, 2008 Boulder Daily Camera "virtual editorial board" has published the following comments from Brian Schwartz and Ralph Shnelvar on Medicaid in Colorado.

From Brian Schwartz:

Who's responsible?

As documented in the Cato Institute study, "Medicaid's Unseen Costs," (available on-line) Medicaid delivers sub-par medical care and unfairly competes with private insurance companies and voluntarily charities.

Medicaid also erodes personal responsibility. Many recipients avoid higher-paying jobs and saving money because such admirable behavior disqualifies them from benefits. Hence, Medicaid keeps those it "aids" helpless, on their backs, and dependent on government.

Medicaid's defenders want government in the insurance business and assert that their reforms can fix the above problems. If so, then why not let individual taxpayers decide for themselves? For every dollar expropriated from taxpayers to fund Medicaid, private charities lose a potential donation. That's unfair to private charities and condescending to taxpayers -- as if they were too callous or stupid to recognize if Medicaid were worthwhile.

A tax credit for donations to health care charities would partially level the playing field. The threat of lost revenue would motivate Medicaid administrators to be effective, and taxpayers would have more freedom to fund charities they deem most worthy.

Brian Schwartz

From Ralph Shnelvar:

Bankruptcy looms

Medicaid is/was the fastest growing component of the state budget.

If left unchecked, it will bankrupt the state of Colorado.

The idea that, somehow, the government can magically create additional medical services out of thin air is an example of the kind of Santa Clause thinking that the government wants people to believe in.

I assert without proof (because no one believes the proof or the truth) that the economy, the delivery of health services to the indigent, and the health of the budget of the government of Colorado would be far better off it the state jettisoned Medicaid and went back to private insurance.

But, of course, actually delivering better services to everyone by privatizing the system is something that those who believe in government-as-Santa-Clause will never accept.

Ralph Shnelvar

(For the record, I strongly disagree with Ralph Shnelvar's parenthetical point -- I believe that the truth is important for most people and people can be persuaded by reason.)

Kopel on Intellectually Honest Reporting

The Saturday March 8, 2008 Rocky Mountain News published an excellent column by David Kopel, discussing Denver Post writer Katy Human's claims about health care, Ari Armstrong's public challenge for her to cite her sources, her refusal to do so, and the results when she finally responded.

On February 10, 2008, in the Denver Post article "Growth spurt for kids' health plan", Katy Human wrote:

Children with health insurance, studies have shown, are less likely than uninsured kids to end up in emergency rooms, more likely to get key vaccinations, and less likely to be absent from school.

Writer and blogger Ari Armstrong then politely asked her for her citations. She initially refused, but eventually sent citations of 5 studies that supposedly supported her point.

David Kopel then analyzed the studies and reported the following for the Rocky Mountain News:

None of five studies Human cited after the fact support her article's statement about what "studies have shown" regarding the effects of insurance on emergency room use, vaccinations and school absences. Indeed four of the five studies she cited do not even address those topics. ...One study cited by Human was relevant, and it directly contradicted her article's claim.

...So Human's pronouncement in her Post article - "Children with health insurance, studies have shown, are less likely than uninsured kids to end up in emergency rooms" - turns out to be not entirely accurate. A large body of research contradicts her claim, and that research is in the very studies which Human pointed to when she was challenged to support her claims.

...In the last two years, the phrase "studies have shown" has appeared in staff-written pieces 31 times in the Rocky Mountain News, and 36 times in the Post. About half the time the phrase is used in a direct quote, or in another way which tells the reader the source of the information. For example, "According to professor Roy Hinkley, studies have shown that minnows . . . "

But the other half of the time, the dailies used "studies have shown" with no source. The unattributed locution was especially common in Post editorials, and in health and nutrition coverage in both papers.

The phrase ill-serves readers who want to learn more about a subject, but who are left in the dark about where to look. The phrase can be used to falsely declare scholarly consensus about a subject. And the phrase can be a crutch for a writer who feels "sure" about a supposed fact, but who doesn't want to take the time to verify it.

Thank you, David Kopel, for a very illuminating piece!

If I didn't know better, I might almost wonder if a reporter had a particular ideological agenda and tried to slant a news story to support a political view favoring more government control of medicine, rather than trying to write the news in an objective fashion based on the actual facts.

But that would imply that there was some sort of "liberal media bias", and we all know that couldn't be the case...

Shurts on Polis' Dangerous Plan

The Friday March 7, 2008 Rocky Mountain News printed the following LTE by Russell Shurts critical of the Polis single-payer proposal:

Polis' health-care plan a dangerous one
Russell W. Shurts, Centennial

Recently, congressional candidate Jared Polis wrote, "A free market would allow the uninsured to die on the hospital doorstep rather than provide them treatment they cannot pay for" ("Health-care plan stresses prevention," Speakout, Feb. 13).

Before you buy Polis' prescription, consider the following:

An unfree market ruled by a liberal like Polis would allow everyone and anyone to die...

* Because they were on a waiting list and lacked sufficient political pull to move themselves up the list.

* Because the government would make the decision about which possibly life-saving drug would or would not be available.

* Because there would be too few doctors left after the exodus of those unwilling to have their lives and careers programmed by bureaucrats unqualified to hand out aspirin tablets.

* Because new life-saving drugs would begin to evaporate after government denies pharmaceutical companies the profit needed to recoup the millions invested in creating the drugs.

Reality will win in the end and, Polis' assertions to the contrary, medicine will have to be paid for one way or the other. If you truly want Polis' "free" health care, be prepared to pay for it - in spades.

We've seen exactly those things happening in countries like Canada and the UK that have adopted "free" health care. Why would we ever want that for the United States?

Arizona Surgeon Speak Out Against Socialized Medicine

Ari Armstrong recently forwarded the following e-mail to me from an Arizona surgeon. I don't know anything about his organization besides what's on their website, but I thought I would pass this on as a FYI:

Medical Choice for Arizona
Freedom of Choice in Health Care Act -- A State Constitutional Initiative
March 2008

A MESSAGE TO ANYONE WHO IS, OR MAY SOMEDAY BE A MEDICAL PATIENT

Dear Friend:

My name is Jeff Singer, MD. I am a general surgeon in the greater Phoenix area, and am the Treasurer of a campaign committee called "Medical Choice for Arizona." We are circulating petitions to place on this November's ballot, "The Freedom of Choice in Health Care Act."

As I am sure you are well aware, momentum is building across the nation, by well-intentioned and not-so-well-intentioned people, for comprehensive --even radical-- reform of our health care system. Frustrated with the gridlock in Washington, many states are taking matters in to their own hands, and passing reforms aimed at achieving "universal coverage," but that ultimately will result in rationing of health care and limitations on our freedom of choice of health care options, treatments, and providers.

"The Freedom of Choice in Health Care Act" would amend the Arizona Constitution to insure that, whatever type of health care legislation ultimately emerges from our legislature, it will not be able to restrict our freedom of choice of private health care systems, plans, or options; it will not be able to prevent us from directly paying for lawful medical services; and it will not, in any way, be able to force us to participate in a plan or program if we don't want to.

What's more, our legal counsel, Clint Bolick (co-founder of the Institute for Justice, and currently Director of the Goldwater Institute's Center for Constitutional Litigation, among other things), who designed the language for our initiative, believes this might actually prevent a further FEDERAL intrusion into the healthcare system. He says that there is legal precedent for state constitutional law actually trumping federal law when the federal law trespasses into an area of police power that has been traditionally reserved to the states under the US Constitution. So passage of this amendment in AZ and other states would at least give us a fighting chance against those in DC who want to force us into a one-size-fits-all national health care plan.

Medical Choice for Arizona consists of people from across the political spectrum, all of whom want serious reform to our health care system -- all of whom want to reduce the ranks of the uninsured -- all of whom want to make sure our kids get adequate health care -- but who have differing views regarding what constitutes the best kind of reform. But there is one thing on which we all agree: WE MUST RETAIN THE RIGHT OF PEOPLE TO HAVE CONTROL OVER THEIR OWN HEALTH CARE CHOICES.

Medical Choice for Arizona is not about enacting -- or blocking -- any specific health care legislation. It is about preserving and protecting patients' choice.

WE NEED YOUR HELP TO SUCCEED!

Please visit our website at www.medicalchoiceforaz.com to learn more about "The Freedom of Choice in Health Care Act." The actual ballot language, as well as "Frequently Asked Questions," and a way to donate online can be found at the site. If you have further questions, feel free to phone us at: 623-271-9576.

But most important, please consider making a contribution to our campaign. Arizona law places NO LIMITS on the amount of money that can be contributed to non-partisan citizens initiative campaigns like ours. The donations are not tax deductible. However, Arizona law DOES ALLOW corporate contributions to be made to initiative campaigns.

Please make your check out to: "Medical Choice for Arizona," and mail it to our address at:

3655 W. Anthem Way
Suite A-109--PMB 212
Anthem, AZ 85086

Health care reform is on the front burner in all the political debates this year. No time is more important than NOW to act to protect our right to choice in health care.

Thank you for your consideration.

Sincerely,

Jeff Singer, MD
Treasurer
Our Website: www.medicalchoiceforaz.com

Canadians Keeping Sending Their Patients South

Rationing continues to worsen in Canada to the point that they can't even handle their critically ill patients. The March 1, 2008 Globe and Mail reports the following chilling facts:

More than 400 Canadians in the full throes of a heart attack or other cardiac emergency have been sent to the United States because no hospital can provide the lifesaving care they require here.

Most of the heart patients who have been sent south since 2003 typically show up in Ontario hospitals, where they are given clot-busting drugs. If those drugs fail to open their clogged arteries, the scramble to locate angioplasty in the United States begins.

"They rushed me over to Detroit, did the whole closing of the tunnel," said Eric Bialkowski, 47, of the heart attack he had on March 14, 2007, in Windsor, Ont. "It was like Disneyworld customer service."

..."We keep coming back to the same root cause," Dr. Day [Canadian Medical Association president Brian Day] said in a telephone interview from Ottawa. "The health system is not consumer-focused."

Patients first learn of the problem when they are critically ill.

So much for the myth of, "Sure, there may be some waiting for elective care in Canada, but if you have a true life-and-death emergency, then the Canadian system will be there for you..."

If America adopts such a system, where will we send our critically sick patients after we destroy the last semi-free medical system in the world?

(Via David Catron.)

No Miracle in Massachusetts

Grace-Marie Turner of the Galen Institute points out that the Massachusetts "universal" health plan may have reduced the number of uninsured citizens, but only by imposing an onerous burden on the taxpayers, due to the massive subsidies given away to the poor. Costs are still not being contained, and the stated goal of "coverage as good as members of Congress have", will cost an average family of four an astounding $23,000 per year.

Advocates of Massachusetts-style mandatory insurance like to claim that this system avoids the cost-shifting prevalent under the present system. It does no such thing -- it merely folds it into the state budget and disguises it in the form of higher taxes.

The only system that will control costs, preserve access, and improve quality is a system that allows consumers, doctors, and insurers to freely contract for medical good and services according to their own best judgment for their mutual self-interest -- namely the free market.

Gorman on Health Care Costs

The February 29, 2008 Rocky Mountain News published the following OpEd by Linda Gorman on the real source of rising health care costs:

Government, regulations drive up health costs
Linda Gorman, Independence Institute

I've got to say that the Feb. 25 editorial, "The surging tide of health-care costs," broke new ground for me in health-care policy. "The popular Medicare program... ." First time I knew that we had data letting us assess whether something that was virtually mandatory and without any substitutes, unless one is very rich, is "popular."

Then there were the factors cited by the editorial as driving health-care cost increases: "an aging population, boomer retirees, advances in drugs and medical technology." Never mind that the boomers are the aging population and so shouldn't count twice; advances in drugs generally save costs. So does a lot of new technology: MRIs are a whole lot cheaper than exploratory surgery, for example.

I guess the implication here is that to cut costs we should go back to the 1930s: put people in beds and provide lots of nurses to take pulses and temperatures without any medical devices or new drugs. Costs would go down.

The literature actually suggests a bunch of other major cost drivers — excess regulation is estimated to account for about 10 percent of U.S. national health spending each year. The spread of public insurance programs including the expansion of Medicaid/SCHIP also likely increases costs. Rising incomes are a huge factor. Wealthy people consume more health care just like they do more transportation, housing and education.

The spread of third-party payment, which has reduced consumer out-of-pocket expenses to all-time lows, is likely a big factor in the cost increase.

Finally, there's the line that "And if private Medicare plans become more popular, that too may increase costs." The embedded assumption here seems to be that private equals higher cost. This often is not the case in the real world.

Linda Gorman is director of the Health Care Center at the Independence Institute in Golden.