A Glimpse of the Future

The July 7, 2008 Wall Street Journal makes some interesting observations about the current political battle over Medicare:

As a virtual monopoly, Medicare uses a complex formula to set reimbursement rates for thousands of services. In short, it controls prices. That's why doctors are supposed to eat a pay cut, even though everyone knows this would prompt more doctors to stop seeing Medicare patients. But price fixing is the way that an open-ended entitlement like Medicare – which gobbled up $432 billion in 2007 – tries to control spending...

Yet Mr. Obama wants to... create a Medicare-like "public option" for everyone of any age. Democrats will fund this program generously, crowding out private coverage and maintaining the slow-roll toward a complete government takeover...

The fight over doctor fees is merely an appetizer for such a system, where competing interest groups would clash for their share of the spending pie. Highly politicized Medicare-like price controls on providers and services would spread to every health decision. The result would be rationing and declines in quality of care.

When single-payer advocates point to the supposed glories of the system in other countries, it's important to let them know that we already have an example of a broken government-run system in our own country.

The problems of Medicare are a glimpse of our future if we adopt any sort of Medicare-for-all solution. When the government stops patients and providers from contracting freely for goods and services to their mutual benefit in a free market, these bad results are inevitable.

Mandate Madness

David Catron has written a nice essay about mandate madness.

(I agree with his main point. My only comment is that in a fully free market, the "high risk pools" mentioned towards the end should not require any government funding at all but should be created and funded entirely by private parties and voluntary charities.)

Happy July 4th!

Thomas Jefferson was invited to attend a celebration in Washington DC on July 4, 1826, to commemorate the 50th anniversary of the signing of the Declaration of Independence. He had to decline due to reasons of health, but he did write the following in his last letter:

I should, indeed, with peculiar delight, have met and exchanged there congratulations personally with the small band, the remnant of that host of worthies, who joined with us on that day, in the bold and doubtful election we were to make for our country, between submission or the sword; and to have enjoyed with them the consolatory fact, that our fellow citizens, after half a century of experience and prosperity, continue to approve the choice we made.

May it be to the world, what I believe it will be, (to some parts sooner, to others later, but finally to all,) the signal of arousing men to burst the chains under which monkish ignorance and superstition had persuaded them to bind themselves, and to assume the blessings and security of self-government.

That form which we have substituted, restores the free right to the unbounded exercise of reason and freedom of opinion. All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately, by the grace of God. These are grounds of hope for others. For ourselves, let the annual return of this day forever refresh our recollections of these rights, and an undiminished devotion to them.

(Via Marginal Revolution, from last year. Regular health care blogging will resume next week.)

Time To Find Another Hospital?

(Via Michelle Au.)

Enslaving Doctors?

Blogging may be light for the next few days, due to my schedule.

But in the meantime, I urge readers to take a look at Brian Schwartz's post on his PatientPower blog: "Dehumanizing Doctors".

In particular, he points to the following disturbing comment on another blog:

A true "universal" system does not involve private insurance or a two tier level of service that doctors can run to when they are unhappy with the "government" tier. If universal is going to work then we all have to be in the same system and have the same commitment to its success.

This is precisely the attitude Dr. Leonard Peikoff warned about when he wrote in "Health Care Is Not A Right":

To call "medical care" a right will merely enslave the doctors and thus destroy the quality of medical care in this country, as socialized medicine has done around the world, wherever it has been tried, including Canada (I was born in Canada and I know a bit about that system first hand).

The result of "universal health care" is a system in which government forces doctors to work under the government's terms and for the government's prices even if patients and doctors would both gladly choose otherwise in a free market.

On A Lighter Note...

(From The Onion)




Study: Most Children Strongly Opposed To Children's Healthcare

Would Americans Accept European Medical Care?

In response to the recent letter to the Colorado Medical Society written by Denver nephrologist Dr. Bruce Fisch arguing that European and Canadian health care systems could not be applied to the US, the Colorado Health Insurance Insider blog asked, "Why not?"

I won't presume to speak for Dr. Fisch, but I will offer an answer of my own:

Americans are far more used to having personal control over many of their health care decisions, as opposed to the government having this degree of say. So if an average middle-class American were told by the government, "Sorry, you can't have an MRI this week for your knee injury -- the waiting time is 6 months" (as may be the case for an average Canadian), he would be far more likely to be outraged, rather than accepting that as the price to pay for "free" health care. According to the New York Times, a government system of health care "has long been considered politically sacrosanct in Canada, and even central to the national identity". This is clearly not the case in the US -- instead, the issue is one of contentious debate, and far from politically sacrosanct.

Similarly, the government system in the UK regards it as more important that citizens have equal access to health care (even if that care is bad) than that people be able to freely seek what's in their best interest although it might lead to inequalities. This is typically expressed by UK politicians as a rejection of any "two-tier" system.

Americans don't have the same degree of visceral dislike of a two-tier (or multi-tier) system as Canadians and Western Europeans. Nor should they. One marvelous advantage of the free market is that it respects and facilitates the right of an individual to purchase better goods and services from willing sellers according to his judgment and priorities. Those who want to pay extra for gold-plated health care can do so, whereas those who want to go with a minimal degree of coverage (and spend the money on other priorities) can do so as well. Or they can pick anything in between. No one is forced into a "one size fits all" system.

In summary, Dr. Fisch is right: American values such as "liberty and free thought with regard to one's health and health care are paramount". As they should be. As a result, government-run medical systems that necessarily infringe upon those liberties would stick in the craw of most Americans.

* * *

As a side point, the Colorado Health Insurance Insider blog also repeats the commonly cited figure, "47 million of our people to be without health care - without access to any sort of quality health care". There are two serious problems with that citation:

First, the "47 million" figure exaggerates the problem by a huge amount, as discussed in this short video, "Uninsured in America" as well as in numerous articles such as "The '47 Million' Uninsured Myth" in the August 29, 2007 issue of Investors Business Daily.

Second, it assumes the common error of equating health insurance with health care. The nature and significance of this error is covered in much more depth in the article co-author by Lin Zinser and myself, "Moral Health Care vs. 'Universal Health Care'".

The Myth of Administrative Cost Savings

One of the myths commonly cited by single-payer proponents is that a government-run medical system will save on administrative costs. This has already been rebutted by analysts, but this hasn't stopped people from making the same claim about American Medicare.

However, Scott Gottleib points out in the June 24, 2008 Wall Street Journal that this only works because of state-enforced cost-shifting onto physicians and other private parties:

Medicare doesn't need to hire doctors to weigh individual medical cases because it uses formulaic rules made in Washington to set broad and inflexible restrictions on medical practice. Nor does the program need to hire clinical staff to monitor compliance. It passes costs for that on to the broader health-care system by backing up its rules with the threat of costly civil and even criminal sanctions. Providers and medical product developers spend hundreds of millions of dollars on systems, personnel and paperwork to ensure compliance with Medicare's sticky morass of regulations – tasks made more expensive by the fuzziness of the program's regulations and the arbitrary way they are enforced.

As a practicing physician, I've seen first-hand the headaches our office staff have to go through in order to comply with all the arcane bureaucratic Medicare paperwork requirements. But this rarely gets mentioned in most analyses.

Via David Catron, who notes:

In reality, Medicare’s true admin costs are higher that those of the private health care industry. But Medicare can use the power of the federal government to force someone else (providers and patients) to pay them.

Unintended Consequences

Brian Schwartz at PatientPower has a nice post on unintended consequences of insurance laws such as guaranteed issue and community rating.

Who'd have thought -- government regulations of the free market leading to the exact opposite of the desired effect?

Catron on the Free Market

David Catron has some excellent suggestions for free market health care reforms.

Followup to Kennedy OpEd

After I posted Dr. Richard Parker's OpEd on Senator Kennedy and "Universal Health Care", I received the following e-mail from a physician who trained in Canada but now works in the US. I am posting this with his permission:

When I was a radiology resident at the University of Toronto, Toronto General Hospital ran short of funds. In order to ration funds the radiology department closed the MR scanner at 5 pm even for emergencies. One evening however I was paged interpret an emergent MRI. A member of parliament had developed acute back pain and we fired up the MRI scanner and performed the study. He happened to be the head of the NDP (New Democratic Party). The NDP is the socialist party and evolved from the CCF party. The CCF party was founded by Tommy Douglas, the original creator of Medicare!

Socialist leaders usually are the best fed and get the best medical care. It is easy to support socialist ideals when you are so rich that taxes and budgets are irrelevant.

Thank you for sharing this.

This sort of abuse by celebrities and those with political connections is so rampant in Canada that ordinary Canadians have a word for those who jump to the head of the government waiting lists for medical care -- "queue jumping":

Dr. Day's [president of the Canadian Medical Association] experience is one example of what he calls the "parallel public system," a system of social connections that make it easier for people in a certain class of society to get quick access to medical treatment.

He admits he himself used the system when he needed knee surgery, jumping a long queue to get the procedure done within a week by a surgeon who was also his friend.

It's not realistic, Dr. Day believes, to expect people not to use their connections to jump the queue when their own or their family's health is at stake.

More generally, it's not realistic to set up a government system that pits patients rational self-interest in getting good health care against following the rules. This is why a free market which allows patients, providers, and insurers to voluntarily contract for services according to their own best judgment to their mutual benefit is the right system -- because it aligns one's rational self interest with the rules.

The notion that "universal health care" will deliver medical treatment to all on the basis of need without any political considerations is a fantasy, and is one of the 20 myths debunked in the following article from the National Center for Policy Analysis, "20 Myths About Single-Payer Health Insurance". Similar information can be found here at, "The Myths of Single-Payer Health Care" by David Hogberg.

Government Medical Care Always Becomes Political Medical Care

Richard Ralston, executive director of Americans for Free Choice in Medicine, has written the following OpEd on government-run medical care:

Government Medical Care Always Becomes Political Medical Care

Americans did not invent democracy. What America rightly did, for the first time in history, was institutionalize the concept of limited government—based not on majority rule, but on individual rights. Sadly, this foundation is not properly recognized and is rapidly giving way to an ever-expanding government.

Government policy has already led to a devastating effect on the medical care it already controls. State regulators drive up the cost of insurance by requiring coverage in response to the political pull of individual sectors of the health care industry. Huge bureaucracies like Medicare and Medicaid serve their 130,000 pages of regulations and ignore the choices of patients and the costs of fraud.

The Food and Drug Administration serves its own institutional prerogatives and authority to ensure as its highest priority that no one in America gets well without government permission. Veterans are trapped in a system with nowhere else to go except facilities located not near veterans but near Congressmen (many now dead) who had the political influence to get them built in their districts. Tax policy has created a system in which third-party payers have destroyed transparency of pricing and the means to determine, let alone control, costs.

If "that government is best which governs the least," what does "least" mean? It means that government should be rigidly limited to those functions that only the government can perform. Otherwise government will inevitably expand until it runs everything. That is why Thomas Jefferson described "a wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouths of labor the bread it has earned."

Only the government can maintain armed forces to protect us from the threat of foreign force, and only the government can maintain the police and the courts to protect individuals from the use of force by criminals. But it does not follow that government should use force to rule every aspect of our lives. Those who say that government should seize control of all of our medical care are ultimately advocating the elimination of all restraint on government.

What should we expect if the government grabs the remains of medical care that it does not already control? More of the compassion we saw at the Annex at Walter Reed Army Hospital or at the King-Harbor Hospital lovingly managed by Los Angeles County? The promise of big government savings based on our current experience of the government's efficiency in wildly increasing spending on Medicare and Medicaid?

If the government controls everything, do we think it will be more responsive to the needs of individual patients, or to the demands and money of powerful public employee unions?

Will a government that pays for everything not inevitably control everything? Will a government that pays for your health care act like it owns your body?

We should look at the near-monopoly of public education as an example.

Government education has become a tool of indoctrination for those who would use it to promote their special agendas. In California, teachers have not hesitated to take children out of class and load them onto buses to be carried away to demonstrate their views on public policy. Curiously our children always have the same view on such issues as the teachers' unions. A government-controlled curriculum has become a politically correct curriculum.

Would a complete government monopoly in medicine create a system in which politicians care primarily about you? Or about their spoils system? Would your disease be politically correct and place you first in the line for rationed medical care? Or last? Or would newly powerful national medical unions always be first in line? As in Great Britain, would you be denied treatment for some conditions because you smoke, are too old or too fat? We had better think that through, because once the government has taken from "the mouths of labor the bread it has earned" to pay for such a system, it won't care.

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

Mandates Are Not The Answer

David Gratzer and Paul Howard explain why, "Mandates Are Not the Answer". Here are a few excerpts:

Liberal proponents think of mandates as social insurance. Many of the uninsured are younger and healthier, they note, so forcing them into insurance pools will result in lower average premiums. Some conservatives, meanwhile, argue that uninsured people use emergency rooms but often don’t pay, offloading their health costs onto the rest of us. It's not simply about coverage, in other words; it's also about personal responsibility. At a debate in Texas, Clinton made a similar argument, claiming that without mandates, "every one of us with insurance will pay the hidden tax of approximately $900 a year." Conservatives like Duke University health expert Christopher Conover, former Massachusetts governor Mitt Romney, and former Republican National Committee chairman Ken Mehlman have all made some version of this claim.

...[E]vidence shows that costs are influenced much less by mandates than by consumers’ ability to buy a broad range of competing health-insurance products. An insurance policy for a single male resident in mandate-enforced Boston, for example, costs five times more than a policy for his identical twin in mandate-free Tucson. This cost disparity is due in part to the Bay State's many insurance regulations, which limit the types of policies that consumers can buy and drive up prices. As for the responsibility argument, uncompensated care costs federal and state governments roughly $40 billion a year—in a health economy that tops more than $2 trillion annually. That's a very small percentage of the total expenditure and certainly doesn’t amount to a hidden tax of $900 per person.

...Mandates offer the illusion of fixing our health-care problems by extending insurance to all.

More fundamentally, individual insurance mandates violate basic individual rights by forcing people to spend money according to the government's priorities, rather than according to their own judgment. Once a government decides that everyone has to purchase health insurance, it necessarily must decide what constitutes an acceptable policy. Patients and insurers are then forced to abide by the government's decree, rather than negotiating for their own mutual benefit in a free market, further violating individual rights. Rather than solving the problem, mandates merely worsen the harmful government control over medicine.

Fisch Letter to Colorado Medical Society

Dr. Bruce Fisch, a nephrologist practicing in Denver, recently sent the following letter to the Colorado Medical Society (CMS) and the CMS Physicians' Congress on Health Care Reform, which I am reprinting with his permission:

Dear CMS Physicians' Congress Members,

It has come to my attention that the CMS is preparing to give an institutional endorsement to "single-payer universal coverage" as a preferred strategy for health care reform. I am writing to alert you that many CMS physicians view such health care policies as socialist, immoral, and contrary to the public good. Furthermore, using the CMS as an endorsement vehicle in this fashion conflicts with its mission as a promoter of the art and science of medicine, and threatens to alienate Colorado physicians who disagree with its position.

Incentive, achievement, excellence and ambition are the motivators that lead one to become the best possible physician. Caring and empathy, too, are critical, but Senator Kennedy, who was recently diagnosed with a malignant glioma, relied upon the former set of attributes when he selected the "most brilliant" neurosurgeon he could find to treat him. The irony is almost too painful to admit, for if we operated under a shroud of socialized medicine, Mr. Kennedy's surgeon would likely not exist, and if he did, the decision to resect the tumor would have been usurped by the government, taken away from the patient and his physician. We all know that his prognosis is dismal, but regardless, he has the means to pay for such treatment and the personal freedom to decide.

Unfortunately, American health care is both blessed and plagued by our own unsurpassed creativity and technological progress. Whereas advancements in industry, computing, finance, and agriculture lead to lower costs, medical advancement almost always leads to higher cost. But this is what Americans, like Mr. Kennedy, demand, when they get sick. The only ways to lower cost are to stifle advancement and limit access. At my core as a physician, both are abhorrent. That is one reason why some of us use "immoral" to characterize socialized medicine.

The values here in America are unique, contrasting drastically with Canada, Europe, and Asia. Liberty and free thought with regard to one's health and health care are paramount among them. One cannot accurately apply European models here in the USA.

I strongly discourage the CMS from endorsing or officially supporting any policies of "universal health care" or "mandatory insurance".

Bruce J Fisch, M.D.

Denver Nephrology

I applaud Dr. Fisch for speaking out against the current CMS position on "universal health care". I'd also like to note that in a free market, there is no necessary conflict between technological advancement and lower costs. In fact, in nearly every other sector of the relatively free American economy, we regularly see a pattern over time of lowered costs and improved quality -- just ask anyone who has bought a DVD player or computer recently. Similarly, in the sectors of medicine which are closest to a free market (i.e., least subject to government regulation) such as LASIK, we've seen a similar pattern of lower prices and improved quality over time. There's no reason that this can't be the norm for all of medicine -- if only we had a genuine free market. Furthermore, if patients wish to spend more money to achieve greater benefits to their individual lives, they should be free to do so without interference from a government bureaucrat whose primary concern is cost containment.

In response to letters from Dr. Fisch and myself, the president of the CMS (Dr. David Downs) has written:

I should note that we have explicitly avoided advocacy for particular financing strategies (including single payer) to improve access to care and to assure quality and efficiency.

And:

I would also like to reiterate that there is no intent to advocate for a single payer strategy. While there are many advocates for this, we have assiduously avoided taking a position on financing issues that require a broader discussion.

I appreciate his statement on the specific issue of "single payer". However, in the document entitled "Guiding Principles for Health System Reform" issued by the CMS Physicians' Congress for Health Care Reform, the number 1 principle listed is:

Health coverage for Coloradans should be universal, continuous, portable, and mandatory.

Hence, it appears clear that the CMS supports the principle of mandatory universal health coverage. Dr. Downs also elaborated on this as follows:

The final position reflects the consensus of congress members that, in order for coverage strategies to be most effective and to avoid the chronic cost shifting that amounts to a 'stealth tax', all citizens should have coverage for care they would otherwise be unable to afford on their own. The policy does not prescribe whether that take the form of default enrollment, individual mandate or any other specific strategy.

Unfortunately, any such strategy for universal mandatory insurance is incompatible with basic individual rights -- namely the right of individuals and insurers to contract for services for their mutual benefit in a free market. Nor does it eliminate the problem of cost-shifting or "stealth tax". Mandatory insurance merely shifts that burden onto those who are paying artificially elevated premiums in order to subsidize those receiving subsidies so they can pay artificially lowered insurance premiums, or else it shifts the costs onto the taxpayers. The "stealth tax" is not eliminated, it is merely disguised in the form of higher insurance premiums or higher taxes. The failed experiment in Massachusetts with the individual mandate merely highlights this point.

This is all the more reason that I'm glad that physicians like Dr. Fisch are speaking out against "universal health care".

Safeway Offers Cheap Drugs

The free market continues to bring benefits to consumers:

Safeway Joins Rivals In Adding $4 Generic Prescription Drugs

Safeway will begin offering $4 prescriptions on hundreds of generic drugs today at stores in the eastern United States, a spokesman said, following in the footsteps of the program popularized by Wal-Mart two years ago.

The list of $4 drugs includes the antibiotic amoxicillin, blood pressure medication atenolol and levothyroxine for thyroid disease.

...Safeway's move comes after Wal-Mart rattled the retail industry when it launched its $4 prescriptions in 2006.

Government Medical System in Japan Requires Mandatory Waistline Checks

According to the June 13, 2008 New York Times, government officials in Japan have instituted a mandatory program where all men and women between ages 40 and 74 must have their waistlines measured and recorded by the government. The purpose of this program is to reduce costs from obesity-related health conditions, because the government health system must pay the bills:

Under a national law that came into effect two months ago, companies and local governments must now measure the waistlines of Japanese people between the ages of 40 and 74 as part of their annual checkups. That represents more than 56 million waistlines, or about 44 percent of the entire population.

...To reach its goals of shrinking the overweight population by 10 percent over the next four years and 25 percent over the next seven years, the government will impose financial penalties on companies and local governments that fail to meet specific targets. The country’s Ministry of Health argues that the campaign will keep the spread of diseases like diabetes and strokes in check.

The ministry also says that curbing widening waistlines will rein in a rapidly aging society's ballooning health care costs, one of the most serious and politically delicate problems facing Japan today. Most Japanese are covered under public health care or through their work.

The government limits are very strict -- "33.5 inches for men and 35.4 inches for women" -- literally a "one-size-fits-all" standard.

One Japanese man did express his disdain for the new regulations:

...Kenzo Nagata, 73, a toy store owner, said he had ignored a letter summoning him to a so-called special checkup. His waistline was no one's business but his own, he said, though he volunteered that, at 32.7 inches, it fell safely below the limit. He planned to disregard the second notice that the city was scheduled to mail to the recalcitrant.

"I'm not going," he said. "I don't think that concerns me."

Once a government starts violating individual rights by creating a "universal" health care system, this inevitably leads to further infringements of individual rights. This is not unique to Japan.

For instance, universal health care in Great Britain has led to infringements on the right to free speech. In 2007, the British government banned television stations from playing classic 1950's-era humorous advertisements encouraging people to have an egg for breakfast, on the grounds that "the ads do not encourage healthy eating".

When a government has to pay for everyone's health care, it will naturally demand a say in whether people are leading a "sufficiently healthy" lifestyle, as defined by the government.

Colorado writer Steve Schweitzberger made a similar point in this June 30, 2007 letter to the Rocky Mountain News, referring to universal health care advocate and filmmaker Michael Moore:

If Michael Moore has a toothache, it is not my responsibility to pay for his dentistry. If it were, then I would have the right to tell him not to eat sweets. I don't want that kind of government-paid medical policy. Do you?

This is a question that all America should be asking.

Diana Hsieh LTE on RitterCare

The June 13, 2008 Rocky Mountain News printed Diana Hsieh's LTE criticizing Governor Ritter's signing into law more statist health care laws:

Parents, not society, should care for kids

Gov. Bill Ritter touted his health-care reforms as the "building blocks" of a larger plan when he signed them into law ("Ritter signs 11 'building blocks' of health agenda," June 4). That larger plan is socialized medicine.

The principle underlying these new laws is Karl Marx's dictum, "From each according to his ability, to each according to his need." Colorado taxpayers (the able) are now forced to fund expanded Medicaid benefits for children of less wealthy parents (the needy). Colorado health insurance buyers (the able) are now forced to fund a hearing aid benefit for children (the needy).

Colorado does not need more creeping socialism. Children are the sole responsibility of the parents who chose to bear them, not society as a whole. If unable to provide for them, parents should rely on voluntary charity, not forced welfare. If Ritter wants real reform, let him begin with those free-market principles.

Diana Hsieh, Sedalia

Parker on Kennedy and Universal Health Care

Dr. Richard Parker has written the following excellent OpEd on Senator Ted Kennedy and universal health care in the June 9, 2008 issue of Capitalism Magazine:

Ted Kennedy vs. Universal Healthcare: A Double Irony
by Richard Parker M.D.

Senator Ted Kennedy recently underwent an operation to remove a brain tumor at Duke University. Besides Hillary Clinton, no other politician in America has devoted as much of his political career to the enslavement of physicians. The name Ted Kennedy (and Clinton) is nearly synonymous with the anti-concept "Universal Healthcare."

It was reported that Senator Kennedy chose his surgeon for this difficult operation after very careful research and consultation with his physicians in Boston. Using his free and independent judgment, Kennedy chose Dr. Allan Friedman, a surgeon renowned for his experience and expertise in the field of neuro-oncological surgery.

No government regulations restricted the Senator in this extremely important personal choice. Facing a life threatening illness, no bureaucrat forced the Senator to chose his surgeon nor hospital from a government "approved" list--a list not generated by Kennedy's independent and free judgment, but by "public servants" who’s expertise is not Kennedy's life, but the arbitrary and byzantine politics of "pull", of favors owed and collected, of political pressure groups and the bitter reality of healthcare rationing. No, Kennedy was not forced to sacrifice his life, liberty nor property in the name of the so-called "greater public good."

The surgeon he chose, Dr. Allan Friedman, has freely devoted his life to treating patients with neurological tumors. Dr. Friedman wasn't coerced into medicine; his patient load is not presently rationed nor stipulated by bureaucrats. Dr. Friedman was still free to accept Senator Kennedy as his patient and was free to choose the best surgical approach for treating the Senator's tumor. No bureaucrat stipulated how many patients per day, week, month or year Dr. Friedman may accept and treat during the long decades he spent perfecting his life-saving skill. Dr. Friedman is still relatively free to use his expert judgment in the face of the awesome responsibility he assumes with each patient he treats.

Ironically, however, if Senator Kennedy succeeds in his ambition of forcing a government financed (and therefore government controlled) healthcare system onto the American people, all these life altering and personal freedoms will vanish with the strokes of a few pens in Washington. This is the reality of any government enforced healthcare system—both patients and physicians will face a vast increase in taxation and the loss of additional property (fines) and liberty (imprisonment) if they violate the morass of arbitrary and contradictory regulations that will descend on a healthcare industry that is already all but crippled with the slow but steady creep of government controls over the past 50 years.

In her novel Atlas Shrugged, Ayn Rand predicted one of the most pernicious aspects of so-called "Universal Healthcare"—the refusal of talented minds to be forced at the point of a gun. Dr. Hendricks, a neurosurgeon in Atlas Shrugged, describes the indignation that lead him to leave medicine:

"Do you know what it takes to perform a brain operation? Do you know the kind of skill it demands, and the years of passionate, merciless, excruciating devotion that go to acquire that skill?... I observed that in all the discussions that preceded the enslavement of medicine, men discussed everything--except the desires of the doctors... I have often wondered at the smugness with which people assert their right to enslave me, to control my work, to force my will, to violate my conscience, to stifle my mind--yet what is it that they expect to depend on, when they lie on an operating room table under my hands? Their moral code has taught them to believe that it is safe to rely on the virtue of their victims. Well, that is the virtue I have withdrawn."

Ted Kennedy will undoubtedly continue his push for the enslavement of physicians with what remains of his political career. What he will evade, of course, is that his surgeon chose to go to medical school and spend decades training for and practicing neurosurgery in what is still the freest healthcare system in the world. What Kennedy will refuse to acknowledge is that under his vision of "Universal Healthcare" he would never have had the absolute freedom to choose his surgeon, nor would his surgeon have had the absolute freedom to treat him.

The fact that "Universal Healthcare" will destroy what freedoms in American medicine still remain (and thus all the Dr. Friedman's under whose virtue the fate of Kennedy's brain now lies), will be not only evaded but explicitly denied—never mind that Kennedy chose not to go to one of the many "industrialized countries that provide 'Universal Healthcare'." Apparently, Kennedy ignored Michael Moore's claims of the excellent healthcare provided in other "industrialized" communist and socialist nations that provide "Universal Coverage", albeit this is precisely what Kennedy seeks to bring to America at the point of a gun.

While the successful outcome of Senator Kennedy's operation depended on freedom, Kennedy has devoted his political career to legislating freedom out of existence. This is an irony that America's news media will evade, much less report.

Richard Parker is a practicing physician in the Dallas-Fort Worth area. He holds and MD from Brown and MD from Yale University. He has published in the scientific literature and has written Op-eds for the Ayn Rand Institute and Capitalism Magazine.

Dorfler on Mandates

The June 11, 2008 Rocky Mountain News printed the following LTE by Russ Dorfler explaining why insurance benefit mandates are wrong:

More mandates mean more expense for all of us

It is unfortunate that all of Gov. Bill Ritter's 11 health-care bills were touted as a success ("Ritter signs 11 'building blocks' of health agenda," June 4). Most of the bills were mandates to insurers.

Consumers should be aware that when the word "mandate" appears in legislation for health care, it simply raises the premiums. Colorado has more than 45 mandates on the books required for health insurance companies. By comparison, Kansas has six mandates. Based on this fact alone, one might ask which state's insurers could offer the lowest premiums?

Most of these mandates started appearing in Colorado exclusively in the early '90s. Since then, we have seen competition among insurers dwindle in Colorado. How about some significant legislation like hospital transparency, illegals paying for the cost of their care, or reducing the number of Colorado state mandates? Another thought would be to stop government intervention and let the health products be consumer driven; let the market dictate coverages and plans, not politicians and legislators trying to secure their office.

Russ Dorfler, Littleton

Waste, Fraud, and Abuse -- For the Children

"For the children" is the mantra universally invoked to justify most expansions of government welfare programs. But for some reasons, the supporters of these programs don't talk as much about the associated waste, fraud, and abuse. Here's just one example from Colorado, as reported in the June 9, 2008 Rocky Mountain News:

Health program for kids assailed

...A report on the Children's Basic Health Plan found that 10 percent of patients were classified incorrectly - either as eligible when they weren't or as ineligible when they were entitled to services.

Hundreds of people were kept on the program after their eligibility expired - for up to two years in some cases.

...The report stunned lawmakers. "That's huge," House Minority Leader Mike May, R-Parker, said of the 10 percent error rate in qualifying participants.

If the wrong people are being enrolled, "then the whole program doesn't work," said May, who was appointed as a temporary member of the audit committee.

...The Children's Basic Health Plan is the Colorado agency that carries out the federal program called State Children's Health Insurance Program, or SCHIP.

...The auditors found 831 women who remained in the program after their eligibility should have expired. The cost associated with them is $104,000, the auditors said.

This sort of abuse is not the primary reason that state-mandated welfare is wrong and that the free market plus private charity is the only morally proper solution for the issue of children who need health care but whose parents can't afford it.

But it is another example of the problems that we've seen repeatedly in any implementation of the welfare state. It's another reason to oppose a massive expansion at the national level in the SCHIP program.

Expensive Insurance in Massachusetts

Greg Scandlen points out that due to the onerous government mandates, residents in the "universal coverage" state of Massachusetts would be better off buying their insurance in Connecticut:

The New York Times reported that 340,000 of the states residents have gained coverage, including 174,000 in Commonwealth Care (the subsidized program) and the governor "has requested $869 million for Commonwealth Care, but his aides have already conceded that will not be enough."

Let's see, that is $4,994 per person in Commonwealth Care, exclusive of any premiums paid by enrollees. I suppose any state could lower its numbers of uninsured if it is willing to spend $5,000 per enrollee. Interestingly, the most expensive policy available next door in Hartford, Connecticut for a 35-year old male costs just $2,744 a year. This is for a zero deductible, zero coinsurance HMO. Other plans cost half of that or less. Massachusetts would have been better served if it simply allowed its residents to buy coverage next door and paid all of their premium.

The high prices in MA are a direct result of the government interference in the free market.

One could achieve "universal housing" by similarly just forcing everyone to pay twice as much for rent as the market would bear and using the excess money to pay for subsidized housing for the homeless. But this sort of forced redistribution of wealth is just an indirect way of creating creating another giant welfare program.

Hannum on Colorado Health Care Activists

Single payer advocate Kristen Hannum of the group Health Care for All Colorado recently discussed a number of Colorado-based health care activists on her blog. Most of the people she discussed were her ideological allies, but she did mention Lin Zinser and myself as representatives of the opposing viewpoint. She also criticized our article, "Moral Health Care vs. 'Universal Health Care'", calling our viewpoint "mean-spirited but also extremist".

I submitted a response on the comments page of her blog post, which she did post. Here are some excerpts from what I wrote:

I recognize that we are on opposite sides of this issue, and I thank you for linking to the article written by Lin Zinser and myself. I would like to make a few comments in response.

First, neither Lin nor I are Libertarians. Nor are we conservatives (i.e., we are not supporters of the political "right"). However, we are staunch supporters of individual rights.

Second, because you have mentioned the ethical dimension, I want to highlight the fact that our opposition to "single payer" health care (or any kind of government-imposed "universal health care") is based primarily on moral grounds.

I've written a FAQ that covers this issue in more detail, which arose from a letter of mine which appeared in the New York Times a few weeks ago supporting a free market in health insurance, and the from the multiple questions and comments I've received in return.

If anyone wishes to read it, it can be found on our website at:

"FAQ on Free Market Health Insurance"

http://www.WeStandFIRM.org/blog/2008/05/faq-on-free-market-health-insurance.html

I cover the moral basis for a free market combined with voluntary charity, and the reasons that any system of "universal health care" is deeply immoral.

...Finally, on a personal note, I am sorry to read about your brother's death. During my years of practice, I have reviewed hundreds of CAT scans of patients with both diverticulitis and appendicitis. Based on what you have written, it looks like your husband's death may have been the result of a misdiagnosis and/or delayed diagnosis, rather than due to a lack of access to a physician.

If this was a misdiagnosis, then this is a separate issue unrelated to issue of "single-payer". The issue of misdiagnosis and/or delayed diagnosis is extremely important, but it will also arise in *any* medical system, regardless of the economics of the insurance system.

Respectfully,
Paul Hsieh, MD
Freedom and Individual Rights in Medicine

(In my original comment, I mistakenly referred to Paul Hannum as her husband; in fact, he was her brother.)

Charity Medical Care

We have argued on numerous occasions that the only proper and moral solution to the current health care crisis is a free market in health care and health insurance with charity care for those who cannot afford to pay for treatments.

One question that is frequently asked is how well such charity care works. Fortunately, Brian Schwartz at PatientPower has looked into this question, and he finds that it works quite well.

(And this is despite issues such as "crowd out", where government programs like Medicaid make it more difficult for private charities to function, harming patients in the process. Think of how much more effective those charities could be if there were no Medicaid.)

Schwartz LTE on Politician-Controlled Medicine

The June 4, 2008 Denver Post printed the following LTE by Brian Schwartz:

The big lie behind politician-controlled medicine

Re: "Who has your health at heart?" May 22 guest commentary.

AFL-CIO executives John Sweeney and Mike Cerbo perpetuate the big lie behind politician-controlled medicine: that the free market is not working and that costs have been spiraling out of control because of markets.

But costs have been increasing precisely because of the employer-based insurance they espouse, which is a consequence of a biased and non-free-market tax code. It favors employer-based insurance and penalizes other types of medical insurance.

We consume medical care like a business traveler dining on the company's expense account: Since someone else pays the bill (insurers), patients need not shop around, so providers don't compete on price. Why?

Tax-discounted insurance encourages us to buy more costly insurance than we probably need, hence penalizing saving for future medical expenses. Our "insurance" has become prepaid health care.

Employer-based insurance also coddles insurance companies, which have little incentive to please consumers. They know we're essentially locked to our employer and the costly insurance plans they offer. To buy a competitor's product, we must change jobs or pay a stiff tax penalty.

The AFL-CIO should be ashamed of promoting self-serving policies that both empower labor unions and result in expensive medical care and insurance.

Brian T. Schwartz, Boulder

Today's UK Horror Story

The June 2, 2008 Daily Mail tells the tragic story of another patient who was denied medical care from the British National Health Service (NHS) because she wanted to pay with her own money for chemotherapy drugs that the government wouldn't pay for.

Linda O'Boyle, a 64-year old grandmother as well as an occupational therapist for the NHS developed colon cancer, and had been receiving treatment from the government health service. But when she wanted additional medication to help prolong her life (medication which was recommended by her consulting oncologist), she was told by the ironically named "National Institute for Health and Clinical Excellence" that it was too expensive and she couldn't receive it.

She then attempted to pay for the necessary medication out of her own funds. But when she did, the NHS said that they would cut her off from access to government care (care which she had already paid for in the form of taxes all her life).

According to the article:

Mrs O'Boyle... is believed to be the first person to die after being denied free care because of 'co-payment', where a patient tops up treatment by paying privately for extra drugs.

Her husband Brian O'Boyle, who is also a manager for the NHS system noted:

"I offered to pay for it but was told I couldn't continue with the treatmentwe were receiving at the hospital -- The consultant was flabbergasted -- he was very upset."

He added: "I was always very anti private treatment. But everything she had wasn't working and it was a last resort."

Unfortunately, he had to learn about the evils of the socialized medical system they both worked for the hard way, when his own wife's life was on the line.

According to the article:

Medical experts say the ban on co-payment is one reason why Britain has one of the worst survival rates for cancer in Europe.

But the government is adamant on maintaining this cruel and immoral policy on egalitarian grounds:

Co-payment was blocked last year by Health Secretary Alan Johnson because he claimed it would create a two-tier Health Service.

...A spokesman for the Southend trust said: 'It is explained to the patient that they can either have their treatment under the NHS or privately but not both in parallel.'

This is the real evil of socialized medicine -- it punishes people for acting in their own self-interest and on the advice of their physicians. In the British system, the government would rather that people be equal than that they actually live.

(Via Michael Williams who also notes, "But at least rich people and poor people all get to die evenly! Too bad they have to die at the level of poor people, though.")

Life Imitates Ridiculous Hypothetical Example

Whenever the topic of health insurance benefit mandates come up, I often use an analogy to illustrate how they are really a form of forced subsidy for special interests groups. For instance, in an article I've submitted to The Objective Standard on Massachusetts health care policy, I wrote:

...Mandated benefits such as in vitro fertilization or chiropractor services constitute a similar rights-violation. Individuals must spend their own money on benefits required by the state, regardless of whether they actually want those benefits. These mandates are akin to homeowners in Florida having Congress pass a law requiring Arizona residents to purchase mandatory hurricane insurance. In reality, this merely forces Arizonans to subsidize the hurricane expenses incurred by Floridians--a form of forced wealth redistribution. Similarly, Massachusetts residents are forced to purchase benefits such as in vitro fertilization in order to subsidize patients and providers with political clout.

I intended to pick an extreme hypothetical example to show how ridiculous this idea would be.

I guess I shouldn't be surprised when last week's ridiculous hypothetical example turns into today's real-life serious proposal:

Wall Street Journal
Taxpayers May Face Hurricane Tab
By Elizabeth Williamson, May 31, 2008

...The proposal -- backed by giant insurers Allstate Corp. and State Farm Mutual Automobile Insurance Co., as well as Florida lawmakers -- focuses on "reinsurance," the policies bought by insurers themselves to protect against catastrophic losses. The proposal envisions a taxpayer-financed reinsurance program covering all 50 states, which would essentially backstop the giant insurers in case of disaster.

...The program could also shift costs to taxpayers in states with fewer natural-disaster risks."

...Big winners would be coastal states, particularly Florida, where more than half of the nation's hurricane risk is centered.

The WSJ article also notes that the program is also supported by politicians from both major parties, including Democratic Senators Hillary Clinton of New York, Barack Obama of Illinois, Bill Nelson of Florida, and Florida's Republican Governor Charlie Crist.

Unintended Consequences Strike Again

The June 1, 2008 New York Times had an interesting article about a Centennial, Colorado woman who wanted to purchase an individual health insurance plan from Golden Rule Insurance Company, but was turned down. She was in perfect health except for the fact that she had given birth via Caesarean section surgery (which meant that she might need to have C-section surgeries for any future childbirths.)

What was especially interesting was the fact that she wanted to purchasing from them, and they would have liked to sell the insurance to her. But Colorado state law prohibited the insurance company from offering certain terms:

Golden Rule, which sells individual policies in 30 states, said it would insure a woman who had had a Caesarean only if it could exclude paying for another one for three years. But in Colorado, such exclusions are considered discriminatory and are forbidden, so Golden Rule simply rejects women who have had the surgery, unless they have been sterilized or meet the company’s age requirements.

As a result, Golden Rule chose not to accept this patient for insurance.

This is an example of the sort of unintended consequences that arise when the government violates individual rights. In the case, this is the right of patients and insurers to negotiate in a free market to their mutual advantage. The legislators who passed this law undoubtedly thought they were protecting women who had undergone previous C-section surgeries. But in reality, the heavy hand of government regulation merely limited those patients' choices and violated their rights to contract freely with willing insurers.

If this prospective customer had been willing to except a 3-year exclusion for C-section coverage, they could have worked out a mutually acceptable arrangement. But the state law doesn't allow them to even try! And even if this particular patient might have chosen to decline that condition, there may be other Colorado women who would have gladly accepted those terms but are now forbidden from doing so by state law. We may never know how many.

Once again, government interference with the free market harms patients and insurers alike.

(Via State House Call.)

What If There Were No FDA?

Pharmaceutical writer Stella at ReasonPharm tackles the interesting question of what private alternatives would exist if there were no FDA (Food and Drug Administration).

She has some pretty good answers.

A Change of Pace

Today's post is a diversion from health care policy. I'm totally borrowing this from Crap-Based Medicine:

Do Vaccines Cause Autism?

Our crack team of scienticians have investigated. Read on for the full report.

Q: Do vaccines cause autism?

A: No. Total crap. And while we're at it, here are five more things that don't cause autism:

1. Pirates

2. iPods

3. Television

4. Gnomes

5. Jesus

Battle in New Jersey

The May 29, 2008 Wall Street Journal describes two proposals for health care reform in New Jersey coming from opposite philosophical approaches.

The first is a proposed change in the right direction:

Jay Webber, a Republican Assemblyman in Trenton, will introduce legislation to let Garden State residents buy low-cost health insurance from any registered policy in any of the 50 states.

Mr. Webber's proposal is a state version of Arizona Congressman John Shadegg's federal legislation to let individuals buy insurance across state lines, and John McCain has also endorsed the idea. But New Jersey would be a perfect test case, because its multiple mandates have made insurance too expensive for hundreds of thousands of families.

The average national cost for a family health plan is $5,799, according to America's Health Insurance Plans, but in New Jersey that same plan costs $10,398 on average. The state's politicians have driven up these costs by forcing insurers to provide gold-plated coverage – even for such voluntary medical services as in vitro fertilization.

The second is a change in the wrong direction:

Democrats in Trenton are rallying behind a plan to require that every uninsured individual in New Jersey purchase health insurance from a new state-administered program. So a state that is already so broke that its politicians are contemplating mortgaging its highways might now add a $1.7 billion health subsidy.

The Webber proposal offers lower costs and more choices for consumers, while the Democratic plan mandates public coverage and no choice, while putting a new burden on taxpayers.

As the WSJ concludes, "This is the kind of debate the country should have this election year.""

Thank You's

Thank you John Caldara for linking to our "FAQ on Free Market Health Insurance"!

And to Patient Power!

And to Health Wonk Review!

And to Healthcare Economist!

And to InsureBlog!

And to Roland Deschain!

And to Lear Jet SWAT Team!

And to Michael Williams!

And to Rand Simberg!

Religion, Corporations, and Universal Health Care

Activists are now using corporate shareholder votes to push an agenda favoring "universal" health care. According to the May 27, 2008 New York Times, these activists are attempting to get corporate boards to make explicit statements of principle supporting "universal health care" as a goal for all society (as opposed to asking that it be an employee benefit for that specific company). The activists include a mixture of religious and labor groups:

Employers frequently complain about the cost of health benefits for employees and retirees. The shareholder proposal would not require companies to provide health benefits for employees, but asks top corporate executives to view the issue in a broader context, as a question of social policy.

"We are doing what we can as shareholders," said the Rev. Michael H. Crosby, a 68-year-old Capuchin priest who has had discussions with nine companies on behalf of 20 Roman Catholic orders this year. "We come out of a religious tradition, but we are not engaged in a messianic enterprise. We are one voice among many seeking equitable access to health care for all."

Despite the fact that many have argued that these sorts of statements have no place in shareholder debates, the Securities and Exchange Commission has ruled that these resolutions must be included on the ballot.

The New Big Dig

The May 21, 2008 Wall Street Journal likens the Massachusetts health plan to the "Big Dig" -- i.e., the Boston highway construction project notorious for its inefficiency and cost overruns. Here are some excerpts:

Well, the returns are rolling in, and the critics look prescient. First, the plan isn't "universal" at all: About 350,000 more people are now insured in Massachusetts since the reform passed. Federal estimates put the prior number of uninsured at more than 657,000, so there was a reduction. But it was not secured through the market reforms that Governor Romney promised. Instead, Massachusetts also created a new state entitlement that is already trembling on the verge of bankruptcy inside of a year.

...The "new Big Dig" moniker refers to the legendary cost overruns when Boston rebuilt its traffic system. Now state legislators are pushing new schemes to offset RomneyCare's runaway expenses, including reductions in state payments to doctors and hospitals, enlarged business penalties, an increase in the state tobacco tax, and more restrictions on drug companies and insurers.

...In this respect paradoxically, we can be thankful that Massachusetts ignored the cost problems that doomed other recent liberal health insurance overhauls in California, Pennsylvania, Wisconsin and Illinois. The Bay State is showing everyone how not to reform health care.

Individual mandates violate an individual's right to contract with insurers and providers according to their mutual benefit. When the state presumes to override an individual's judgment as to what's best for his self-interest, it's no surprise that it results in bad economic outcomes and poor provision of medical services.

The Republican Health-Care Surrender

Dick Armey has a good OpEd in the May 15, 2008 Wall Street Journal explaining how the Republicans are caving in to the Democrats in asking for more government control of medicine.

In particular, he criticizes Senator Grassley's support of individual mandates:

...[T]he ranking Republican on the Senate committee with primary jurisdiction over health policy has endorsed a health-care plan with an individual mandate to purchase health insurance.

This endorsement comes in spite of clear evidence that individual mandates, besides violating an individual's right to choose, actually drive up health-care costs. In Massachusetts, which recently adopted a mandate of its own, skyrocketing cost overruns are currently projected at around $2 billion. The average price of a premium in the Bay State is nearly double what was predicted. And developing minimum benefit requirements – as mandates must do – merely creates a giant giveaway to health-care lobbyists, all while limiting the health-care choices of those covered. In practice, mandates force individuals to purchase coverage they may not need and drive up costs.

The plan Mr. Grassley advocates, S. 334 (legislation originally proposed by Oregon Democratic Sen. Ron Wyden), would create even greater chaos and upheaval in America's health-care system than Mrs. Clinton's current proposal. It would force the majority of Americans who are already covered to give up their current, employer-provided plans.

Disclaimer: FIRM is non-partisan, and does not support any specific political parties or candidates.

(Via Patient Power.)

British Physician Sees The Light

British ophthalmologist (eye specialist) Sarah Anderson used to be a big supporter of their National Health System:

...I have spent my working life in the NHS. And for all its perceived failings, I have been proud of its fundamental role in our society - to provide equality of care for all.

But when her own father got cancer, she saw a different side to the system:

...[W]hen I've read about people being refused particular drugs simply because of where they lived, I've always believed there must be another reason - even if it wasn't immediately obvious at the time.

I never for a moment thought that a life could be decided by something as arbitrary as one's address.

Yet that is what has happened to my father. And it is only now, sitting on the side of the patient, that I have seen the injustice inherent in our system and the devastation it can cause.

Basically, the NHS denying him the chemotherapy agent he needs. And if the family attempts to purchase the drug with their own money, then he will lose complete access to the government system. The full story can be found here: "How the NHS is letting my father die".

(Via Health Care BS.)

Scandlen Defends HSAs

Greg Scandlen of Consumers for Health Care Choices set the record straight on Health Savings Accounts (HSA's) in his recent May 14, 2008 testimony to the Health Subcommittee of the Ways and Means Committee of the US House of Representatives. Given that this is the very committee trying to destroy HSA's for honest Americans, his remarks are especially timely. Here's an excerpt from his testimony:

...Most of what you have been told in the testimony to date is either mistaken, based on suppositions or surveys of uninformed people, or simply irrelevant to CDHC (Consumer Driven Health Care). For example –

* You were told that lower-income people cannot afford the out-of-pocket responsibility that comes with an HSA. You were not told how those same people could afford the higher premiums that are required to avoid that cost. In fact, money that is paid to an insurance company for first-dollar coverage is money that is lost forever. Lowering the premium and using that saving to pay directly for services gives the low-income consumer a chance to save money that would otherwise be lost.

* You were told that the tax break associated with HSAs is unprecedented and a boon to the "wealthy." In fact, the tax treatment of HSAs is precisely the same tax treatment afforded to employer-sponsored health insurance. Premiums are untaxed and benefits are untaxed. It is true that the "wealthy" get a larger tax benefits than the unwealthy, but that is the case for employer-sponsored comprehensive coverage as well as for HSAs. Further, the opportunity to save, say, $2,000 a year that would otherwise go to an insurance company is of far greater benefit to the low-income worker who earns $20,000 a year than to the wealthy executive who makes $200,000, regardless of the tax treatment.

* You were told that "the sick" do not benefit from HSAs because of the higher out-of-pocket responsibility. In fact, both the healthy and the sick have less out-of-pocket exposure with an HSA, a point that was well documented in a recent Health Affairs article. In fact, HSAs limit a patient's out-of-pocket exposure, something that is not true for the Medicare program, for instance.

* You were told that most health care spending takes place above the deductible associated with an HSA, so they will not have "a significant effect on overall spending." This is probably true, but irrelevant. HSAs are having a profound effect on lower-cost routine spending and that is significant by itself. Other strategies are needed for high-cost services with or without an HSA.

* You were told that many people with a high-deductible health plan do not open up an HSA. That, too, is true but irrelevant. The HSA itself is attractive for those people who are able to get a tax benefit from passing their direct payments through the account. Other people, especially those who pay no income taxes, may find it more suitable to simply pay cash at the time of services or to keep their funds in some other, non-HSA, account. Further, there is likely to be a lag time between the point of enrollment and opening up that account. This is not a problem.

* You were told that some people who have to pay directly for care or for prescription drugs may fail to do so to save the money. That also may sometimes be true. But there is never any guarantee that people will always fill their prescriptions and take their medications regardless of the financing scheme. In fact, we know that many health conditions are caused or aggravated by patient behavior under all health insurance systems. But, to the extent that people with CDHC are more knowledgeable and more invested in their own care, their compliance will be better than it is for other benefit programs. And that is precisely what we are seeing in the market.

Given that HSA's are becoming increasingly popular (with over 6 million Americans currently enrolled, an increase of 35% from last year), it's important that lawmakers understand the tremendous benefits they offer for Americans seeking the best value for the health care dollar.

Medicaid Money Laundering

The May 19, 2008 Wall Street Journal reports on some unethical behaviour on the part of Medicaid recipients. However, the bad actors in this case are state governments. Here's the dirty little secret:

The swindle works like this: A state overpays state-run health-care providers, such as county hospitals or nursing homes, for Medicaid benefits far in excess of its typical rates. Then the federal government reimburses the state for "half" of the inflated bills. Once the state bags the extra matching funds, the hospital is required to rebate the extra money it received at the scam's outset. Cash thus makes a round trip from states to providers and back to the states – all to dupe Washington.

...The right word for this is fraud. A corporation caught in this kind of self-dealing – faking payments to extract billions, then laundering the money – would be indicted. In fact, a new industry of contingency-fee consultants has sprung up to help states find and exploit the "ambiguities" in Medicaid's regulatory wasteland. All the feds can do is notice loopholes when they get too expensive and close them, whereupon the cycle starts over.

This is not the primary reason to oppose Medicaid. But it does show the corrosive and corrupting effect that government money has in health care, especially when there are perverse incentives caused by the federal government paying matching funds for state expenditures. The only way to ultimately stop this sort of blatant fraud is to get the government out of health care.

(Via State House Call.)

Tort Reform and Texas

The May 17, 2008 Wall Street Journal reported that tort reform in Texas has brought in a huge influx of physicians, especially in "rural or underserved parts of the state". Here are a few quotes:

Over the past three years, some 7,000 M.D.s have flooded into Texas, many from Tennessee.

Why? Two words: Tort reform.

In 2003 and in 2005, Texas enacted a series of reforms to the state's civil justice system. They are stunning in their success. Texas Medical Liability Trust, one of the largest malpractice insurance companies in the state, has slashed its premiums by 35%, saving doctors some $217 million over four years. There is also a competitive malpractice insurance industry in Texas, with over 30 companies competing for business. This is driving rates down.

The result is an influx of doctors so great that recently the State Board of Medical Examiners couldn't process all the new medical-license applications quickly enough. The board faced a backlog of 3,000 applications. To handle the extra workload, the legislature rushed through an emergency appropriation last year.

Now many of the newly arriving doctors are heading to rural or underserved parts of the state. Four new anesthesiologists have headed to Beaumont, for example. Meanwhile, San Antonio has experienced a 52% growth in the number of new doctors.

If you don't penalize doctors for doing their job, then they'll actually do it!

(Via Amit Ghate.)

EMTALA Effect on Physician Consults

Physician-blogger "911DOC" illustrates the difference that the EMTALA law has had on physician-to-physician consults.

EMTALA stands for "Emergency Medical Treatment and Active Labor Act", and it is a federal law that mandates that in most circumstances hospitals treat patients that come into emergency rooms regardless of ability to pay. Additional information and specifics can be found at:

<http://www.emtala.com/faq.htm>

Rather than quoting 911DOC's piece verbatim, I encourage you to read the whole thing.

(Via KevinMD.)

Medicare For All?

Some "single-payer" advocates say that universal health care could be run along the lines of "Medicare For All". Except for the fact that if we had Medicare for everyone, then physicians would be out of business, as internist Dr. David Dale recently testified to the US Congress:

The practice of medicine is a calling and as such, my colleagues and I have endured more unfair revenue cuts than most businesses would have endured. Yet, a medical practice is also a small business, and there are limits to how much we can endure. We are now at the point where further cuts are not survivable. Just like any small business, our revenue has to exceed costs in order to survive. Despite everything that I have been able to do to cut costs, the margin of profit is now thin, and the proposed greater than 10 percent cut will put us out of business. The only option will be to downsize the practice and stop seeing all Medicare patients. I would hate this, but it will be the only option I have if Congress does not reverse the proposed cuts.

Others would-be reformers want to expand Medicaid to achieve "universal coverage". However, the April 5, 2008 New York Times reported the following from Massachusetts family practitioner Dr. Katherine Atkinson:

Dr. Atkinson, 45, said she paid herself a salary of $110,000 last year. Her insurance reimbursements often do not cover her costs, she said.

"I calculated that every time I have a Medicaid patient, it's like handing them a $20 bill when they leave," she said. "I never went into medicine to get rich, but I never expected to feel as disrespected as I feel. Where is the incentive for a practice like ours?"

These unsustainable economic distortions are predictable consequences of government interference in the free markets for health insurance and health care.

FAQ on Free Market Health Insurance

I've received multiple e-mails in response to my recent letter to the editor in the May 11, 2008 New York Times advocating a free market in health insurance. I appreciate the fact that the correspondents all took the time to read my letter, see my affiliation with Freedom and Individual Rights in Medicine (FIRM), search for the FIRM website, find my e-mail address, and then write me with their comments and questions.

The various correspondents posed a number of good questions about the nature of a free market in health insurance, as well as some more fundamental issues on individual rights and the proper role of government in health care. I've had several stimulating rounds of e-mail discussion with folks from around the country. And even though we didn't always agree on some important issues, all of the e-mails I received were polite and articulate, and I appreciated the many thoughtful remarks from all of the writers.

One correspondent recommended that I post my responses online so that other interested parties would have a place to read a more fully developed and explicit explanation of the ideas related to a free market in health insurance. I thought that was an excellent suggestion. Hence, I've paraphrased and collated an essentialized set of questions (and my subsequent responses) in the form of this brief FAQ.

===========

Q1) In a free market for health insurance, should insurers be able to exclude someone based on a pre-existing condition?

Q2) Why should whether I live or die depend on whether an insurance company finds it too costly to pay for my care? Should my fate be determined by whether a corporation finds it profitable?

Q3) How would a free market guarantee that all Americans will have necessary health coverage?

Q4) What if someone has a bad disease through no fault of his own, can't afford the treatment, and no insurance company will cover him? Who will pay for his care?

Q5) Isn't the purpose of a government to promote the common welfare of all citizens?

Q6) Your position is very harsh and Darwinian. If you were dying of cancer and could not afford treatment, would you really say to yourself, "Oh well, this is my random bad luck, no one has an obligation to treat me and so I must die"?

Q7) Isn't it my social obligation to subsidize the health care of those who can't afford it?

Q8) I agree that health care is not a "right", but isn't it moral for the US government to raise taxes to improve the overall welfare of the nation? Universal health care (ideally administered through a free-market mechanism to the greatest extent possible) would be a good use of that power.

= = = = = = = = = =

Q1) In a free market for health insurance, should insurers be able to exclude someone based on a pre-existing condition?

A1) Yes. In a free market, insurers (like any other businesses or individuals) are entitled to set whatever terms they wish for the products they wish to sell. Similarly, customers can choose to accept those terms, decline them, or negotiate with them for some other mutually agreed-upon alternative.

It's also important to note that our current system is far from a free market -- at best it's semi-free. Insurance companies are under numerous government constraints about what sorts of services they must/must not offer, who they can/cannot exclude, what sorts of prices they can charge, when they must accept customers, etc. For instance, some states require that a healthy 22-year old man must pay the same premium as a 60-year old man with multiple chronic health problems. Some states require that insurance companies that offer small group policies must accept every group that applies and must accept every member of the group regardless of lifestyle choice or health condition. Constraints such as these make it difficult for customers to purchase insurance in the first place. These constraints are the cause of our current problems and it is those constraints that I wish to see repealed. (For more details, please refer to "Moral Health Care Vs. 'Universal Health Care'" by Lin Zinser and myself.)

Q2) Why should whether I live or die depend on whether an insurance company finds it too costly to pay for my care? Should my fate be determined by whether a corporation finds it profitable?

A2) One should reverse that question. Should an insurance company be obliged to run at a loss? For example, there are many people who wish to force insurers to cover expensive treatments that are of minimal (if any) proven efficacy, such as bone marrow transplant in patients with late-stage breast cancer. If or when such laws are passed, insurance companies don't survive for long or else they pull out of local markets where such laws are in force, thus depriving all the other residents of that locality the possibility of purchasing insurance from that company. If an insurance company cannot be profitable, then they can't provide coverage for anyone.

More fundamentally, should an insurance company be obliged to pay for your care purely because you need it, regardless of the cost to them? The fact that you have a need does not create an automatic obligation on others to fulfill that need.

Q3) How would a free market guarantee that all Americans will have necessary health coverage?

A3) There's a premise in your question that I must disagree with - namely that it's the government's responsibility to guarantee health coverage for all Americans. It is not, any more than it's the proper role of the government to guarantee that every American has a job or a car. Health care is a need, but that's not the same thing as a right.

A right is a freedom of action that an individual possesses, such as the right to free speech. Rights impose no obligations on other people, other than the negative obligation to leave you alone. Rights are not automatic claims on the goods and services produced by others -- that is just state-sanctioned theft.

To further concretize the difference between a need and a right, consider an innocent child with a rare disease who will die unless he gets a bone marrow transplant from a matching donor. The only potential donor with the proper tissue match is someone who doesn't want to donate, for whatever reason (maybe he's scared of needles, maybe he's a Jehovah's Witness, maybe he's just an ornery old cuss). We'll also stipulate that the potential donor understands exactly what is at stake for the child, and that he correctly understands that donating bone marrow is a very safe procedure that would involve a few minutes of tolerable physical pain and a couple of hours of his time, but otherwise wouldn't impair his life afterwards. The fact that the child will die without that bone marrow does not mean that the child's family (or anyone else) has the right to strap that potential donor down and forcibly take a marrow sample from him against his will. The child's need does not constitute a right to that other man's bone marrow.

Q4) What if someone has a bad disease through no fault of his own, can't afford the treatment, and no insurance company will cover him? Who will pay for his care?

A4) The short answer is, "Anyone who wishes to do so."

If someone incurs an unfortunate random hardship (even though it is no fault of his own), it does not create an automatic obligation for anyone else to pay for it. Depending on the exact circumstances, I might be willing to voluntarily donate my own time/money to help him out. For example, in my capacity as a physician, I have personally waived my own professional fee more times than I can count out of voluntary charity for patients whom I've thought were worthy recipients. The same is true for nearly every other physician I know. And in general, Americans have been extraordinarily benevolent about voluntarily donating their time and money for innocent victims of natural disasters, disease, and man-made harms (such as 9-11 or the Oklahoma City bombings).

So if someone developed a bad disease that would cost him $100k, and either didn't get insurance or couldn't get insurance, then he essentially has to rely on the voluntary charity of others. His need (genuine as it may be), does not create a right to someone else's property or time.

This isn't limited to health care. The same would be true if an unfortunate homeowner didn't or couldn't purchase flood insurance, then his house was completely destroyed by a freak 100-year flood. His hardship does not constitute any sort of automatic claim on others' assets. Again, I (and many others) might be willing to be offer voluntary charity to help him out. But if no one is voluntarily willing to help him out, then he loses his house.

Furthermore, the very fact that such examples tug at the sympathies of normal decent Americans also means that those Americans will be forthcoming with voluntary charity. And I fully support giving to charities that are consistent with my values and priorities.

Q5) Isn't the purpose of a government to promote the common welfare of all citizens?

A5) No, the purpose of government is to protect individual rights - specifically to protect individuals from the predations of others who would use force to deprive men of their rights to life, liberty, and the pursuit of happiness. This includes protecting honest men from external enemies who would wage war on us as well as internal criminals who would use force to steal, murder, commit rape, etc. Hence the purpose of a government is to create and enforce conditions where men and women can freely and voluntarily exchange ideas, goods, and services to their mutual benefit according to their best rational judgment, without fear that someone else will try to forcibly rob them of those benefits. Man's essential nature requires that he uses his reasoning mind to create the values necessary for sustaining his life. Hence, protecting his right to the free use of his mind (and the right to voluntarily trade with others for the products of their thought and effort free from compulsion) is the basic function of a government.

When a government ceases to be the protector of individual rights and instead becomes one of the chief violators, then it undermines the very reason for its existence. It's akin to a government claiming that "we need to protect the freedoms of Americans from enemies abroad", and then imposing a military draft on young Americans to fight in a war (and violating those draftees' freedom and rights in the process).

Q6) Your position is very harsh and Darwinian. If you were dying of cancer and could not afford treatment, would you really say to yourself, "Oh well, this is my random bad luck, no one has an obligation to treat me and so I must die"?

A6) Yes. My life is my own responsibility. Others may choose to voluntarily help me if am in need, but they should not be legally obligated to do so (i.e., they should not be forced by the government to help me against their will or punished by the government for failing to help me.)

If I needed $100,000 for a life-saving cancer treatment but couldn't afford it, I would of course do everything legal and moral to try to live. I might borrow money from friends and family, I might ask for charitable contributions, I might sign up for clinical trials of experimental drugs, etc. But I wouldn't hack into my neighbor's bank account and steal that money from his kids' college fund. Or steal $100 each from a thousand of my neighbors. Or ask the government to take it from my neighbors by force.

Similarly, if my next-door neighbor was the only possible matching bone marrow donor to cure my rare disease but he didn't want to donate a sample to save my life, I wouldn't strap him down and take it from him by force. If I had a brain tumor that required a delicate operation in order for me to live, and the only neurosurgeon with the necessary skill was unwilling to do the procedure, I wouldn't force him to perform the surgery at gunpoint (or have the government force him).

That's not being Darwinian -- that's just being moral. Of course, I would prefer to live rather than die of a terrible disease. But I wouldn't want to live if it costs me my integrity and my self-respect. A man can't "save" his life at the price of sacrificing his morality, since morality is the very means that a man survives as a man.

Q7) Isn't it my social obligation to subsidize the health care of those who can't afford it?

A7) No, you have no positive binding obligation to help others although of course you have the voluntary choice. Nor is this limited to health care -- it's an application of a more general principle. If I saw a child drowning in the ocean, in all likelihood I would try to save him if I thought I had a reasonable chance of success. And nearly everyone I know would feel similarly. But if a different passerby chose not to make the attempt for whatever reason, then that's his choice to make and one which I have to respect. He has the right to decide whether he wishes to try or not. Conversely, the drowning child cannot demand that a random passerby must help him as a matter of right -- only out of voluntary charity. If it turned out that a passerby was a strong swimmer but refused to help because he was a total jerk, then I might hold him up to public moral censure -- maybe he'd lose his friends, his job, and the respect of his peers. But the government should not send him to jail for failing to take a positive action that could have saved the child's life (assuming that he wasn't the cause of the child's drowning in the first place).

Just as a passerby should not (and currently does not) have a legally binding positive obligation to help a drowning child even if he were capable of doing so at no cost to himself, he should not be obligated by law to pay for my cancer treatment. There's a crucially important difference between him having the negative obligations not to steal from me or not to deprive me of freedom of speech (i.e., to respect my rights), and any purported positive obligations to pay for my health care or save me from an accident. Again, my right to free speech implies only the negative obligation on his part not to violate it -- it does not require a positive action on his part. On the other hand, any alleged entitlement rights such as a "right" to health care is essentially a demand by me for some forced positive action from others.

Q8) I agree that health care is not a "right", but isn't it moral for the US government to raise taxes to improve the overall welfare of the nation? Universal health care (ideally administered through a free-market mechanism to the greatest extent possible) would be a good use of that power.

A8) If we agree that there is no "right" to health care, then by what right does a government force one citizen to pay for the care of another citizen? That's what any system of "universal care" essentially amounts to. What you consider a moral use of government power is something I consider deeply immoral. And the experience of other nations shows that any attempted system of universal care ends up destroying the free market that makes quality health care possible.

At a practical level, if I needed major medical care and couldn't afford it, I'd much rather rely on a pure free market plus voluntary charity from my fellow Americans, than a British-style system of government "universal care".

Although critics of the free market regularly claim that it would lead to "people dying in the streets", this would not actually happen unless Americans were far more impoverished and callous than they are today. The free market is our best protection from that scenario. And if Americans ever became that impoverished and callous, then no system of government-run universal care would be sustainable or even possible.

On the other hand, the nationalized health systems routinely deny care to people who have theoretical "universal coverage". Those patients do end up dying because of the allegedly "compassionate" government system.

Islam and Health Insurance

Health care debates sure are different in other countries! Here is an excerpt from the April 6, 2008 India Times:

Health Insurance illegal: Islamic body

NEW DELHI: Comparing the benefits of health insurance policy to gambling, key Islamic organisations have termed the policies as "illegal" and directed Muslims to keep away from them.

At a seminar to deliberate whether insuring health was permissible under Islamic law Shariat, the Islamic Fiqh Academy (India) decided that availing such policies was illegal.

Representatives from around 300 Madrasas, including Darul Uloom Deoband, Jamiat Islami participated in the three-day meet, where they reached a conclusion that seeking insurance cover was only another form of gambling.

Health insurance schemes have turned a noble service into a business activity, hence under Islam it is not permitted, they said...

(Via Howard Roerig.)