Rhoads: What Administrative Savings?

Jared Rhoads of the Lucidicus Project has written another OpEd, which I am reposting here with his permission. His topic is the myth of administrative savings under government-run "single payer" systems:

What Administrative Savings?
January 17, 2009 by Jared M. Rhoads

Many people seeking national healthcare reform -- particularly those on the political left -- believe that the United States should adopt a single-payer insurance system, similar to that of Canada's. Proponents say that single-payer systems achieve lower per capita healthcare expenditures because they eliminate "wasteful and unnecessary" business practices such as advertising and screening of new applicants, and that this lowers administrative costs. By empowering the government to pay all health insurance claims, they say, we could simplify paperwork, standardize billing procedures, and consolidate many other activities entailed in processing claims. In other words, if we would just leave the business of health insurance to the government, we could get the same great care we have always had, except at a much lower cost.

But do single-payer systems really achieve lower expenditures through operational efficiency, or is something else going on in this picture?

At first glance, the argument regarding administrative costs may seem plausible. After all, businesses are always trying to reduce costs by building economies of scale, so what could be more economical than having one payer for the entire nation? And statistics do show that per capital spending on healthcare is lower in many countries with single-payer systems. For example, in 2005, Americans on average spent $6,401 on healthcare, versus $3,326 for Canadians -- a difference of over three thousand dollars per person per year.

What pundits and politicians fail to disclose, however, is that the reduction in administrative costs by and large does not account for this difference. In fact, it doesn't even account for most of the difference. According to an article in the New England Journal of Medicine, administrative costs totaled an estimated $1,059 per person annually in the United States versus just $307 per person in Canada.[1] That's a difference of just $752, or about 23 percent of the difference. So where does the rest of the alleged savings come from?

In effect, Canada's relatively low per capita rate of expenditure comes not from reducing paperwork, but from using the financial grip of the government to withhold care.

Consider how the Canadian system works. Canada uses a global budget system in which government officials dictate to hospitals how much they will be allowed to spend in a given year. Looking at variables such as patient volume, supply costs, and inflation, they come up with a projection -- i.e. a wild guess -- for how much it will cost to treat all of the patients who come for care. Each hospital receives a lump-sum payment (or is put on a schedule of recurring payments), an amount of money that must last until the next round of guessing and granting.

When the money runs out, as it predictably does each time, care slows to a crawl. In order to defer or reduced costs, hospitals put patients on long waiting lists or substitute lower quality services (e.g. giving x-rays or ultrasounds in lieu of higher-resolution but more expensive MRI scans). In short, if you are a patient in Canada and need an expensive procedure, you had better hope that the facility is either early in its budget cycle and therefore still awash in money, or that it has deprived enough other patients the services that they need so there is still a ration left for you.

One of the most the perverse things about any socialized system of healthcare, including Canada's, is that the less the system does for its patients, the better its financial performance looks on paper. For instance, if a hospital withholds care from a patient long enough, the patient may give up and travel over the border to get their diagnostic test, surgery, or other procedure done elsewhere. In terms of the hospital's pocketbook (and therefore also the nation's pocketbook), this scenario goes down as an unseen and unaccounted-for personal expense, not an expenditure. Or, perhaps the patient on a six-month waiting list for hip surgery simply dies while waiting. In that scenario, there is no cost to the system at all.

Whatever the case, national expenditure figures of single-payer systems can be set as low as government officials desire, because what ultimately determines how much care patients receive is what the government is willing to fund -- not how much patients want to spend or how much their physicians recommend they spend. (And even if patients wanted to pay out of their pocket for faster or better care by their own doctor, in many cases it is illegal to do so.) Quality and access to care can always be sacrificed to create the illusion of a government-run system that is low-cost and efficient because they are much more difficult to measure and compare.

The notion of administrative efficiency as the primary source of savings is nothing but a shabby cover story to hide the rationing inherent in a single-payer system. Most people wouldn't trust (or allow) a government official to set a budget for what they spend on dry cleaning in a year, yet with a little rhetoric and some confusing statistics, they are willing to hand over control of their own healthcare. Rather than emulating our neighbors to the north and instituting a top-down, centralized system in which the government makes decisions about how much care each person should get, Americans ought to demand the freedom to pay for as many or as few services as they desire, and to keep for themselves whatever they do not spend.

_____

1 Woolhandler, Campbell, and Himmelstein. "Costs of Health Care Administration in the United States and Canada" N Engl J Med 2003;349(25):2461.

Goodman: Market Forces Work

John Goodman discusses how medical markets can actually work, citing a number of positive examples including:

Cosmetic and LASIK surgery
Laboratory testing
Pharmaceuticals
Retail health clinics
Concierge medicine
Medical tourism

The common element is that when patients control their health spending, they rationally choose to seek the greatest value for their dollar. The result is decreasing costs and increasing quality, as we expect in the free market.

For more information, see the blog post and the full paper by Devon Herrick, "Health Care Entrepreneurs: The Changing Nature of Providers".

These economic arguments work especially well when combined with the moral arguments for free market health care -- namely that patients have the right to seek health care and physicians have the right to provide it in terms that they find mutually agreeable.

Hunt: How I Got My New Hip

Allison Hunt explains what she had to do to get her new artificial hip in the Canadian medical system:



A few interesting points:

(1) Her waiting time for the initial appointment to see the orthopedic surgeon was 10 months. Then her waiting time for the surgery itself would have been another 18 months had she not taken matters into her own hands.

(2) She had no qualms about doing what she needed to do to "jump the queue". At some implicit level, most people realize that it's right to seek to improve one's health and life -- i.e., that pursuing one's self-interest is good.

(3) She also explicitly recognized that what she was doing was "cheating the system". However, she doesn't ever quite come out and say that the system was morally wrong. Instead, her final remarks sound like a form of moral rationalization for her actions. It's therefore unclear to me whether she personally thinks her actions were right and the system was wrong, or the other way around. This highlights the importance of explicit discussion of the morality (or lack thereof) of government-run health care.

(4) This sort of "queue jumping" happens all the time in Canada. Lee Kurisko, a physician who has practiced in both Canada and the US calls this the "deep dark secret" of Canadian medicine.

(Thanks to Paul Lemke for the video link.)

Daily: It's Not Wrong to Put a Price on Health

Stella Daily has written an excellent commentary responding to the recent New York Times article, "Putting A Price on Compassion".

I am reposting her piece here in its entirety, with her permission:

It's not wrong to put a price on health

In yesterday's New York Times, Pauline Chen lamented our growing comfort with the role of money in medicine. She refers to healthcare as "the gift of life," which cannot be reduced to a mere commodity that can be quantified and analyzed. And she cites the example of a man suing his estranged wife for either the return of the kidney he donated to her or $1.5 million as evidence that medicine has become too commoditized, saying that there "should have been outrage over putting a dollar value on human life." Is she right?

It's telling that Ms. Chen calls healthcare "the gift of life." Throughout the whole article, the tone is: Healthcare is getting easier to assess and quantify in monetary terms, and that's a bad thing. She would prefer "compassionate care" and "patient-centered partnerships." The implication is clear: Altruism needs to play a bigger role in medicine. Thus, healthcare is not a trade between individuals to mutual benefit, but "the gift of life."

But bringing altruism into medicine harms patients rather than helping them. If we allowed people to buy and sell organs in this country, we would see the supply of available organs increase; is it more "compassionate" to allow thousands of patients to die waiting for an organ, just to keep money out of the equation? If we go toward a freer market in medicine, rather than move in the direction of price controls and government mandates for lower payments to doctors, more bright young people will want to go to medical school; is it "compassionate" to create a shortage of doctors, or to tell someone who has spent many years in extensive postgraduate training that he doesn't deserve to make money just because people need his services?

It's true that quantifying the cost-effectiveness of healthcare has caused dissatisfaction in some ways: The insurance company decides that your doctor's time is worth a lower amount this year than last year, so he shortens the length of a visit and sends you off feeling as though you were rushed through the appointment. Your policy raises the copay for prescription drugs, so your asthma medication costs more, but delivers you no more value than it did when you were paying less. And so on and so forth.

But such examples do not prove that altruism is the solution. They only illustrate the problem with trying to pretend that healthcare has no monetary cost. When patients have to pay for their own care, they become cost-conscious: They evaluate for themselves whether it's worth it to pay more money for a doctor who has more time to spend with each patient, or whether the cost savings is worth a quick visit with less time to discuss medical issues. When a third party is introduced, the patient is insulated from the true cost of care. He starts to want the best of everything, regardless of how much it costs -- because his insurance company is covering the cost. The insurance company, on the other hand, wants to reduce costs as much as possible, even if it means that some patients are dissatisfied with their care. Thus, instead of mutual trade to mutual benefit, we get a system nobody is happy with.

Doctors, medical researchers, and pharmaceutical company executives do not work for the benefit of others. They work because of the pleasure they get from tackling the problems of human disease -- and because of the financial rewards they stand to gain. And nobody can be expected to donate an organ to a stranger out of brother-love alone. The fact that there's money in medicine is not a sad fact to be lamented -- it's the reason that we can enjoy good care.

If you liked her piece, check out her blog ReasonPharm.

More Regulation = Higher Prices

More regulation of insurance companies in Colorado is causing premiums to go up.

Here's the latest example.

(Via Brian Schwartz.)

More Trouble With Medicare "Never Events"

Dr. Kevin Pho discusses more problems and unintended consequences caused by the new Medicare "never event" rules in his January 15, 2009 OpEd in USA Today, "Medicare's Mistake". Here's an excerpt:

...Where Medicare goes wrong, however, is by extending the no-pay rules to include "reasonably preventable" complications. These currently include patient falls and hospital-acquired infections.

...When a hospitalized patient develops an infection, for instance, it can be difficult to determine whether the fault lies with the medical staff or with a predisposed condition. This is a crucial distinction because Medicare will punish the former scenario but pay in the latter.

Hospitals might be motivated to order tests, without clear medical symptoms, to show that any infection caught from within its walls was already pre-existing.

The American Medical Association shares this concern, saying that the aggressive expansion of no-pay events can "drive up costs by requiring more tests upon admission."

Furthermore, some institutions could decide not to admit or perform elective procedures on high-risk patients, particularly the elderly, out of fear of being denied payment for complications it cannot prevent.

Robert Wachter, professor of medicine at the University of California-San Francisco and an authority on hospital medicine and patient safety, cautions that the rapid expansion of the no-pay idea looks like a "cost-cutting effort clothed in the garb of patient safety" that is "nowhere near ready for prime time."

In other words, government controls to save money will end up costing more money in the long run, because doctors and hospitals will practice to suit the external incentives created by regulation rather than according to what's in the patients' genuine medical interests.

These sorts of unintended consequences will become the norm if we adopt any form of government-run universal health care.

CT Looking To Repeat MA Mistakes

The January 16, 2009 New York Times reports on Connecticut's attempt to implement "universal health care" despite the failure of a similar program in neighboring Massachusetts. This proposal has the support of the Connecticut Medical Society.

As Dr. Evan Madianos notes, they must believe that reality doesn't cross state lines.

The Value of Innovation in Health Care

Grace-Marie Turner of the Galen Institute has a new article on "The Value of Innovation in Health Care". It's well worth reading the entire piece.

One point that can never be emphasized enough is that innovation comes from the free exercise of the rational mind. The human mind requires freedom to function. That is why men need the freedom to think and the freedom to act according to their best judgment. Only force can stop the mind from functioning, which is why the initiation of force is anti-life.

When government protects individuals from the initiation of force, it protects individual rights and promotes life. In contrast, when government initiates force against honest citizens, it stifles the human mind, and thus prevents exactly the sort of life-fostering innovation that Grace-Marie Turner describes.

That is the real evil of government-run medicine. By smothering the mind, it smothers life itself.

(Disclaimer: Although Turner's piece portrays the Bush administration in a favorable light, this post should not be construed as any kind of endorsement of Bush-era policies. President Bush has been anything but a principled defender of free markets or individual rights.)

ObamaCare Could Kill You

David Catron explains why, "ObamaCare Could Kill You".

Read the whole thing. It's your life at stake.

Hsieh LTE in NCBR

From Brian Schwartz, I learned that the Northern Colorado Business Report published one of my LTEs recently as well:

Kefalas readies comprehensive health-care bill

Every country with a single-payer system saves money by rationing and waiting lists. You can save a lot of money by forcing women to wait months for their chemotherapy for their newly diagnosed breast cancer. You can save money by limiting the numbers of cardiac surgeries per year. This is commonplace in Canada. But the patients pay the ultimate price. Do we really want this in America?

Paul Hsieh, MD

Freedom and Individual Rights in Medicine (FIRM)
www.WeStandFIRM.org
Sedalia

(I'm not sure of the exact date, so I'll attribute it to 1/16/2009.)

Knope On Forbes Article

Dr. Steve Knope sent me these additional comments on the recent Forbes article on concierge medicine, "Should You Dump Your Primary Care Physician?"

I am reproducing them here with his gracious permission:

First, the title Forbes selected carries a very interesting message: "Should You Dump Your Primary Care Doctor?" It would seem that Forbes is effectively calling concierge medicine the "gold standard" by which readers should judge their own primary care doctor. If your doctor doesn't measure up -- if you don't have adequate access to and time with your doctor -- perhaps you should consider "dumping" him and paying for better care. This is a far cry from the uniformed criticism that was levied against concierge doctors in the early stages of this movement. It would appear that people are beginning to get the idea that doctors cannot provide excellent medical care without the time to do so.

Second, the comments from Joseph Heyman of the AMA are revealing in their ignorance and represent nothing more than political rhetoric:

"...[H]e says, physicians 'should provide the same quality of care to all patients regardless of the model of care in which they are practicing.'"

Really? Let's examine this statement from the chairman of the Board of Trustees of the AMA. Doctors should somehow provide the same level of care in a traditional, third-party practice (in a 7 minute visit) that a concierge doctor provides to his patients in a 30 minute visit. And just how does a physician do this, Dr. Heyman? The corollary of this statement is already recorded in the AMA position statement on concierge medicine: There is nothing intrinsically unethical about concierge medicine, they say, provided that doctors do not advertise concierge medicine as somehow better than the standard, fast-food medical model.

When is the AMA going to stop spewing this political nonsense and start telling the truth? If I didn't think spending more time with a patient was better care, I wouldn't do it. Most concierge doctors take excellent care of about 600 patients. This is plenty. Suggesting that a doctor can do the same job while taking care of 3,000 patients is nonsense. It is clearly refuted by a large body of literature, which shows that primary care doctors do not have the time to adequately address the needs of their patients, much less address their preventative care, which is now being touted by the nationalized healthcare advocates as a part of our needed "reform."

Thank you, Dr. Knope, for standing up for your right to practice in a free market on your terms, for your patients' best interests, according to your medical conscience, free from government interference.

Knope Featured on Forbes

Forbes has an article discussing concierge medicine in detail. When physicians and patients are able contract in the free market, the result is vastly improved patient care as well as physicians who love their jobs because they can practice according to their medical consciences.

Learn more at, "Should You Dump Your Primary Care Physician?"

Dr. Steve Knope is one of the featured physicians in this article.

How To Protect Yourself Against ObamaCare

Dr. Steve Knope gives some good advice on how patients can partially protect themselves from ObamaCare and the inevitable rationing. Here's an excerpt:

My advice: Maintain your private medical care if at all possible. If you are relatively healthy, look into a high-deductible health insurance plan linked to a Health Savings Account (HSA). Start putting money away in that HSA for a rainy day. Find a "concierge physician" or doctor with whom you can establish a direct financial relationship; someone who will act as your medical advocate in a system that is broken and will only get worse. You get what you pay for and medicine today is no different.

All indications are that there will be attempts to ram a national healthcare program through Congress early in the Obama administration. They will create a false sense of urgency, just as they did with the "financial bailout" of our economy. No time to study the issue; this must be done or the society will collapse! Tom Daschle has studied Hillary Clinton's failed national healthcare attempt and he does not want to make the same mistakes she made. He was just quoted in the WSJ as saying that the new Congress needs to act quickly. "We need to be on the offense. This time around, lawmakers cannot try to address every detail when it comes to legislation. Details kill." [Secretary-nominee of Health and Human Services Tom]Daschle said.

"Details kill?" "Lawmakers cannot try to address every detail?" We are just going to guarantee medical coverage for every American on the backs of the American taxpayer and we don't have time to discuss the details of how it will work or how it will be paid for? Every good lawyer I've ever retained has reminded me that the devil is in the details! It looks like we are in for a devil-of-a-new program.

Read the whole thing.

Of course the best way to protect yourself from the dangers of government-run universal health care is to stop it in the first place. So let your friends, family members, co-workers, and elected officials know that you don't want it! After all, it's your life that's at stake...

Citation in Washington Examiner

The January 11, 2009 Washington Examiner has quoted me in their editorial on the dangers of universal health care. Here is the opening:

Universal coverage? First, look at the disaster in Massachusetts
By Examiner Editorial -- 1/11/09

To much fanfare from both right and left in 2006, Massachusetts became the first state in the nation to require all residents to buy health insurance. A new state health insurance clearinghouse was created, with taxpayers subsidizing those who couldn't afford to buy coverage. Then Gov. Mitt Romney, a Republican, promised that "every uninsured citizen in Massachusetts will soon have affordable health insurance." Yet just two years later, Romney's much-heralded "solution" -- touted by many as the model for a national program -- has become an embarrassing flop.

Just a year after the universal coverage law passed, The New York Times reported, state insurers were already jacking up rates to twice the national average. According to Dr. Paul Hsieh, a physician and founding member of Freedom and Individual Rights in Medicine, 43 mandatory benefits -- including those that many people did not want or need, such as in vitro fertilization -- raised the costs of coverage for Massachusetts residents by as much as 56 percent, depending upon an individual's income status. So much for "affordable" health care...

Read the rest here.

Their OpEd quoted extensively from my article in the Fall 2008 issue of The Objective Standard, "Mandatory Health Insurance: Wrong for Massachusetts, Wrong for America".

The same issue also includes an excellent OpEd by Sally Pipes, "Obama-Daschle 'reform' will cripple American health care".

I'm deeply grateful to the Examiner for publicizing this issue and to Craig Biddle for encouraging me to write the original TOS article.

Update: The OpEd also appeared in the San Francisco Examiner.

CAHI on Mandatory Insurance

The Council for Affordable Health Insurance has just issued a short two-page paper entitled, "Should the Government Force You To Buy Health Insurance?"

It includes some useful economic data as well as some pretty damning criticisms of the Massachusetts mandatory insurance plan.

The CAHI is a little more sympathetic to the Swiss system of mandatory insurance that I would be. The Swiss system still violates individuals' right to contract, although the subsequent bad economic effects have not (yet) hit Switzerland as hard as Massachusetts.

But overall, the CAHI piece is informative and well worth reading!

Rhoads: On Preventative Medicine

Jared Rhoads, director of the Lucidus Project, has written another OpEd on the government's flawed push to promote preventative medicine. It is reposted here with his kind permission:

On preventive medicine
by Jared M. Rhoads (December 16, 2008)

With expectations for major healthcare reform on the rise, members of Congress are pushing for comprehensive measures for increasing the use and funding of preventive medicine. Senators Tom Harkin (D-Iowa) and Chris Dodd (D-Conn), for example, want to put more prevention programs in place because prevention is "smart economics in addition to good public policy."[1]

Actually, this type of prevention has nothing to do with economics, and it has no place in any proper discussion of public policy.

Practicing good prevention is a thoroughly personal responsibility. Signing up for a mammogram, having a colonoscopy, or keeping on schedule with dental exams are all part of what it means to be a rational, self-interested adult. The same is true of exercising, eating well, managing stress, and countless other measures. Sure, scientific differences of opinion exist over which of these is most important and why. But is this simple advice really so abstruse as to require government officials to instruct us how to manage our own bodies?

Whether in the domain of health, lawn care, or backgammon, the fact that such-and-such an action is "smart" is not a sufficient reason for it to be required, subsidized, paid for in full, or in any other way made the business of the government. Dodd's claim that preventive medicine is good economics and good policy makes, at best, a pseudo-logical connection. If it is proper for government to oversee and involve itself in the care of each man's health, then it is smart to economize over the long term with preventive programs today. The form of this argument holds, but where on earth did he get his premise from?

What Dodd and his colleagues fail to grasp is that government is not a plaything for do-gooders to improve society in whatever ways they believe is good -- regardless of whether such interventions make economic sense. We all know what Dodd means: an ounce of prevention is worth a pound of cure. But while that maxim is wise in the realm of personal conduct, it is irrelevant to public policy.

Why? Because the sole purpose of government is to protect individual rights. Whose rights are being violated if John Q. Smith does not get, does not want, or cannot afford, a prostate cancer screening? The answer is that nobody's rights are being violated -- not Smith's rights, not his neighbor's, and not anyone else's -- so no government-backed remedy is in order. There is, however, a violation of rights if citizens are taxed to pay for each other's services; or if certain preventive measures are made compulsory (or "highly incentivized"); or if insurance premiums are manipulated through selective tax incentives; or if further licensing requirements are introduced to mandate the teaching of preventive medicine in medical schools. Each of these is a distinct possibility given the proposals currently being discussed.

Legislators may have the power, but they do not have the right, to intervene with healthcare or any other industry. Nothing they can do can make such involvement right. Put another way, legislators do not tell us what rights we have; rights tell us what legislators can (and cannot) do.

If preventive healthcare is as economically advantageous as proponents claim, then let people form free associations with like-minded individuals and purchase -- or forgo -- healthcare services as they choose. No programs, no personal fitness czar, no "public-private partnerships", no "Universal HealthMart." Just individuals living as they see fit, and managing the natural risks and rewards of their own behavior. Now that would be smart public policy.

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[1] Adofo, A. Congressional Quarterly Healthbeat, December 10 2008

Parker on the Federal Health Board

Dr. Richard Parker explains why the proposed new "Federal Health Board" will be hazardous to your health:

The "Federal Health Board:" Another Scheme to Ration Healthcare

Tom Daschle, President-elect Obama's nominee for Secretary of Health and Human Services, has big plans for healthcare. Mr. Daschle has proposed a new "Federal Health Board," an agency that would have unprecedented powers over the healthcare industry. This new federal board would essentially determine by government fiat what doctors can and cannot do to treat their patients. This represents not only a vast increase in government regulations, but the virtual elimination of healthcare decisions at the point of service, and the specter of government bureaucrats making life and death decisions over physicians and patients.

Never mind what you and your physician think is the best course of treatment, the "Federal Health Board" in Washington will make all those decisions for you...

Read the rest here.

The moral is the practical.

Hsieh OpEd in Christian Science Monitor

I'm pleased to report that the January 7, 2009 edition of the Christian Science Monitor has published my latest OpEd on health care entitled, "Universal healthcare and the waistline police".

My theme is that adopting government-run universal healthcare will lead to a "nanny state on steroids" deeply antithetical to core American principles of individual freedom and responsibility.

Here is the opening:

Universal healthcare and the waistline police

Imagine a country where the government regularly checks the waistlines of citizens over age 40. Anyone deemed too fat would be required to undergo diet counseling. Those who fail to lose sufficient weight could face further "reeducation" and their communities subject to stiff fines.

Is this some nightmarish dystopia?

No, this is contemporary Japan.

The Japanese government argues that it must regulate citizens' lifestyles because it is paying their health costs. This highlights one of the greatly underappreciated dangers of "universal healthcare." Any government that attempts to guarantee healthcare must also control its costs. The inevitable next step will be to seek to control citizens' health and their behavior. Hence, Americans should beware that if we adopt universal healthcare, we also risk creating a "nanny state on steroids" antithetical to core American principles...

Read the rest here.

(I would also like to extend my deepest thanks to Diana Hsieh, Ari Armstrong, and Brian Schwartz for their many helpful suggestions when proofreading earlier drafts of this piece.)

Maryland Moves Against Concierge Medicine

The December 20, 2008 Baltimore Sun reports on a proposal by the Maryland insurance commissioner to regulate concierge physicians as a form of insurance.

Fortunately, Greg Scandlen has been raising a stink about this. And so has Marc Kilmer.

And the January 2, 2009 Baltimore Sun also printed my LTE opposing this unjust intrusion of government against the rights of patients and physicians to contract for their mutual benefit.

But as Dr. Steve Knope explains, the Maryland physicians gave up the fight too quickly.

If Maryland patients want to preserve this option for themselves, they need to speak up now.

Thomas on Charity and Rights

Retired surgeon Dr. David Thomas has posted some thoughts on charity, medical care, and rights on his blog. The following is an excerpt from his post, "Can There Be A Right to Medical Care?":

...When I was in medical school, there was no insurance. People got care. Doctors charged and received payment with a direct doctor-patient relationship that was mutually sustainable and satisfactory, medically and financially. Poor people received care through the dedication and compassion of the doctor and community.

I was taught, "Save the widow the farm." That is, when Farmer Joe comes in with a lung cancer, one might encourage him to undergo extensive, expensive surgery that would require that the farm be mortgaged. However, the results were dismal. After Joe’s death, the widow frequently was unable to pay the mortgage and lost the farm.

Instead, one could explain the situation with compassion and frankness and Farmer Joe and his wife, using the same frugality and value system by which they had otherwise lived, would accept the reality of the situation, a reality that bespoke a meager chance of benefit that was not appropriately affordable. Joe's plight would be alleviated by all palliative means medicine had to offer. This rational, realistic decision was the norm. Indulgence in futile care to the point of threatening the whole system was not a problem.

Some patients would be wealthy, and with a full understanding, decide to take the slim chance of cure, paying for their treatment out of pocket, getting the "best money could buy." Frequently, they would leave money in their will to help the hospital meet the expenses of the care given to the poor.

Patients who received charity care knew that the doctor was doing it without pay, out of compassion. That had an added healing effect on the illness and the patient had the ennobling experience of gratitude. The physician sensed fulfillment of the underlying reasons that called him to an honorable, healing profession, a reward greater than money. Thus, the patient and the physician derived a mutual benefit.

The intrusion of government as the provider for the poor came at a great price. The politician arrogated the role of being the source of care. He gave the poor a warrant for medical care through Medicaid and instilled an attitude in the patient of having a right to it. This deprived the patient of any sense of being a recipient of personal compassion and the physician of feeling appreciated. The patient was told that the medical bill had been paid by the government. The physician actually received a pittance on the bill. So the mutual benefit of patient gratitude and physician fulfillment was replaced by the patient feeling entitlement and the physician feeling exploited.

Dr. Thomas has written much more, and I may post additional excerpts in the future. Here's the link to the whole piece.

Happy New Year!

Because of the holiday, there will be no posting until January 5, 2009. Happy New Year!

Pipes on ObamaCare

The December 30, 2008 Wall Street Journal published the following OpEd by Sally Pipes on President-elect Obama's health care proposals. Here is an excerpt:

...Now Mr. Daschle proposes nothing less than a giant HMO with a federal bureaucracy setting the benefit plan.

Mr. Daschle's model is Massachusetts. But Massachusetts's plan is an unfolding disaster and demonstrates how Mr. Daschle's private/public model is merely a stalking horse for government-dominated health care.

The headline claim is that the program has signed up 442,000 more people for health insurance. The reality is that 80,000 of these were simply put on Medicaid and 176,000 more on the taxpayer-subsidized plans. Costs have exploded, requiring additional tax hikes and the entire system is only possible due to sizable transfers from the federal government. The plans are so unaffordable that in 2007, 62,000 people were exempted from the individual mandate. So much for universal coverage.

The only way the Massachusetts plan will survive is with continued and increasing federal subsidies -- that is, tax revenue from the residents of other states. The only way Mr. Daschle's proposed plan would survive is with massive deficit spending -- that is, with taxpayer money from future Americans, many of whom are not yet born.

Once the national version of the Massachusetts plan collapses, this will pave the way for the even worse "single payer" system so beloved by the socialists. Hence, it's important to oppose the seemingly less-dangerous Massachusetts-for-all plan now, before it becomes the law of the land.

The False Promise of EMRs

There have been several good discussions lately debunking President-elect Obama's claim that electronic medical records (EMRs) will achieve huge health care cost savings.

Dr. Steve Knope explains, "Why This Concierge Practice Prefers Paper Records".

Lee Gomes writes, "Why Tech Can't Cure Medical Inflation".

Dr. Kevin Pho discusses, "Why doctors still balk at electronic medical records".

Newsweek dissects, "Obama's Inflated Health Savings".

As these articles note, the fundamental problem with our health care system is not one of information technology. In fact, a government-mandated adoption of EMR could hamper good clinical practice. Rather, the fundamental problem is the perverse economics caused by decades of government policies. Hence, instead of a bogus technical "fix", we need fundamental free market health care reforms.

Schwartz OpEd: "Liberty is Best Prescription for Health Care"

The December 26, 2008 Rocky Mountain News has published Brian Schwartz's most recent OpEd on liberty and health care:

Liberty is best prescription for health care

At the recent Colorado Health Care Summit, Barack Obama's Cabinet pick Tom Daschle said his boss’s "commitment to changing the health-care system remains strong and focused." But in the wrong direction.

Obama has stated that "capitalism is great for consumers" when they have "many alternatives," when customers, "not government bureaucrats ... are the judges of what best serves their needs." Obama's health insurance proposals fail these standards and would fail patients.

Obama would further empower government bureaucrats to judge what insurance is best for you. By increasing private premium costs, new controls would drive patients to Obama’s proposed "new public plan."

This would make way for what Obama would want if he could "start from scratch": A "single-payer" government monopoly on health insurance.

This is the opposite of the "many alternatives" that Obama says are "great for consumers."

Before Medicare, retirees bought voluntary insurance in increasing numbers. Medicare killed this trend and soon monopolized the market. Obama's proposal to expand eligibility for Medicaid and the State Children's Health Insurance Program would coercively increase government's dominance in low-income and children's insurance markets.

Politicians capture these markets by making private premiums more expensive with burdensome regulations, and then offering tax-funded government-run insurance to many who cannot afford these premiums.

Obama's insurance controls would continue this strategy.

Obama would subject all insurance to new national mandates, letting government bureaucrats decide what insurance is good for you. The result? Look at Massachusetts, where the average family plan costs almost $17,000, compared to $5,400 in Colorado and $3,000 in Wisconsin, according to America's Health Insurance Plans. The Boston Globe reports that "mandates are helping to drive up costs, making coverage unaffordable." Residents with policies that don't meet "minimum standards set by state regulators could face a hefty tax penalty."

One mandate would force insurers to sell policies to all applicants, while another would forbid charging different premiums based on the customer's health. These controls have dire consequences: "a rise in insurance premiums, a reduction of individual insurance enrollment, and an exodus of health insurers" from the market, concluded The Milliman actuarial firm.

Having driven out competition, politicians would use tax dollars to expand Medicaid and SCHIP for the poor. For every 10 children enrolled in SCHIP, six dropped private insurance to do so, reports the National Bureau of Economic Research. Like Medicaid, SCHIP is a "low-wage trap" that punishes parents for increasing their income -- which makes them ineligible for government insurance.

Insurance for retirees, the poor, and kids -- government insurance has squashed competitors in these markets. Why has Obama proposed a new tax-funded "public plan"? "So people can opt out of private insurance," says New York Times columnist Paul Krugman -- and hence monopolize all health insurance. And the insured will opt out. Insurance companies cannot compete with government-run insurance, which can keep premiums low by forcing taxpayers to subsidize them.

Obama says his plan "strengthens employer-based coverage." But government's favoring this has been disastrous. The tax exemption for employer-provided insurance has turned insurance into prepaid health care, so people consume medical care like business travelers on the company expense account.

It also coddles insurance companies, who know that for you to buy a competitor's product you must either change jobs or pay a stiff tax penalty plus the full premium. As Obama's own economic adviser Jason Furman says, this tax exemption "reduces competition and choice for enrollees that could otherwise lead to better-designed insurance plans."

Government-favored employer-based insurance is bad enough. The single-payer insurance monopoly endorsed by Obama and others is worse. If you don't like single-payer, you cannot escape by changing jobs. You must leave the country.

President-elect Obama should remember that "customers—not government bureaucrats ... are the judges of what best serves their needs." He should eliminate damaging laws that lead to a government insurance monopoly. This would advance real change that is truly "great for consumers": economic liberty.

Brian Schwartz of Boulder blogs at the Independence Institute's PatientPowerNow.org.

Hsieh OpEd: "Polis vs Polis on Cars and Health Care"

The December 28, 2008 Boulder Daily Camera has published my latest OpEd on health care. Interestingly, the first online comment in response was from Congressman-elect Jared Polis himself.

Here's the OpEd:

Polis vs. Polis on cars and health care

By Dr. Paul Hsieh
Sunday, December 28, 2008

Boulder's Congressman-elect Jared Polis recently took a bold stand against a federal bailout of the automobile industry, correctly arguing that that the car manufacturers' problems should be handled by the private sector, not the government. Coloradans should urge him to apply the same principles to the issue of health care reform.

In the Dec. 10 Wall Street Journal, Polis wrote: "Our United States Congress... now finds itself poring over 'business plans' submitted this week by Ford, GM and Chrysler. People who have never before in their lives seen -- no less implemented -- a business plan are now trying to decide if these companies will succeed by means of a 'capital infusion' with... [taxpayer] money. Something is wrong with this picture."

Polis is absolutely correct on this point. As a successful businessman himself, he knows that government cannot and should not be manufacturing cars.

His argument applies even more strongly to the issue of health care. Although he campaigned on a platform of government-run "single payer" health care, he should recognize that government cannot and should not be running health care.

Similar socialized medical systems in other countries are consistent failures, leading only to harsh rationing and long waiting lists. In Canada's "single payer" system, a woman who feels a lump in her breast might wait months for the surgery and chemotherapy she needs. In contrast, a Boulder woman could get the care she needed in a few days.

Furthermore, whenever government attempts to guarantee "universal health care," it must also control it. Government then decide who gets what health care and when, not doctors and patients. In single payer systems, far from being a "right," health care becomes just another privilege dispensed at the discretion of government bureaucrats.

A 20-year old Canadian snowboarder who hurts his knee on the slopes might wait almost a year for an MRI scan, if the government does not consider it an "emergency." Yet such a delay in proper diagnosis and treatment could result in a permanent crippling arthritis by age 30. A Colorado snowboarder with the same injury could receive the necessary scan and surgery in a few weeks, avoiding such a life-long disability.

Finally, single payer health care necessarily interposes the government into the doctor-patient relationship in the name of cost control. According to the Telegraph, Great Britain's National Health Service paid bonuses to primary care physicians who reduced the numbers of referrals to hospital specialists -- thus forcing those doctors to choose between their oaths to their patients or the government which pays their salaries.

This corrosive effect on the doctor-patient relationship is one of the worst evils of single payer health care. The evil is not that it allows a few doctors to act badly, but rather that it takes good doctors and encourages them to become bad physicians willing to betray their patients' best medical interests.

The fundamental flaw behind single payer systems (or any other form of "universal health care") is the assumption that health care is a "right" that must be guaranteed by the government. Health care is a need, not a right. Rights are freedoms of action (such as the right to free speech), not automatic claims on goods or services that must be produced by another. There's no such thing as a "right" to a car -- or a tonsillectomy.

Individuals are legitimately entitled to health care that they purchase with their own money, are promised by prior contractual agreements, or are given to them via voluntary charity.

Any attempts to guarantee an alleged "right" to health care must necessarily violate the genuine rights of others -- such as the physicians who are forced deliver health care on the government's terms (rather than their own) and the taxpayers who are forced to pay for others' health care against their will.

Socialism doesn't work for car manufacturing, and won't work for health care. Congressman-elect Polis correctly understands that the government should not be running the auto industry. If Coloradans value their lives and their health, they should urge him to apply that same understanding to health care and to support free market reforms, instead of a "single payer" system. After all, it is their own future health care at stake.

Dr. Paul Hsieh of Sedalia is co-founder, Freedom and Individual Rights in Medicine

Merry Christmas!

Due to the holiday, there will be no more posts for the rest of the week. Regular blogging will resume Monday, December 29. Merry Christmas!

Truth or Consequences -- the Beth Ashmore Chronicle

Physician Jonathan Cargan alerted me to this video on the horrors of single-payer health care in Great Britain entitled, "Truth or Consequences -- the Beth Ashmore Chronicle".



According to the producers, the National Association of Health Underwriters:

Our new single payer video "Truth or Consequences—the Beth Ashmore Chronicle" demonstrates through the personal experiences of Beth Ashmore and her mother why the purported advantages of a single-payer health care system are really myths. The Beth Ashmore Chronicle offers real world evidence of the inadequacies of the single payer concept versus the quality and expediency of our current private market health care system.

Just one additional comment in response to a line in the video: There is a solution to the current health care problems in the US -- the free market.

Rhoads: Message to PhRMA

Jared Rhoads, director of the Lucidus Project, has written the following message to the pharmaceutical industry group PhRMA (Pharmaceutical Research and Manufacturers of America). It is reposted here with his kind permission:

Message to PhRMA
by Jared M. Rhoads (November 30, 2008)

According to a recent article in the Washington Times, the nation's largest and most influential lobbying group for the pharmaceutical industry is preparing to launch a multi-million dollar public relations campaign to trumpet the benefits of the free market in healthcare. The intent of the campaign, confirmed by the Pharmaceutical Research and Manufacturers of America (PhRMA) group, is to preempt an expected push by the Obama administration for price controls on prescription drugs.[1]

The group's concern over the political desire for new controls is certainly justified. During the presidential campaign, Obama promised to "take on the drug and insurance companies and hold them accountable for the prices they charge and the harm they cause."[2] He also promised to "tell the pharmaceutical companies thanks, but no thanks, for the overpriced drugs." Central to these price reforms is a plan to allow the federal government to "negotiate" (i.e. dictate) for Medicare to pay lower prices for prescription drugs for its enrollees. Such a move would have major implications. After all, Medicare is not just any payer; it is the largest single payer of healthcare services in the United States. According to some estimates, the hit on revenues for pharmaceutical companies would be between $10 billion and $30 billion. That is about equivalent to wiping out the entire annual revenue of Merck, the third largest drugmaker in the U.S.

But does PhRMA really have the fortitude to run an effective ad campaign in support of free markets? In the past, the group has taken some pro-market stances on issues involving intellectual property rights, regulatory barriers, and e-pedigree requirements. But the group has also been a vocal supporter of government-supported research, post-market surveillance requirements, SCHIP expansion, and worst of all, the 2006 Medicare Prescription Drug Benefit -- the largest new entitlement program since the inception of Medicare in the 1960s. And if recent comments by PhRMA representatives are any indicator, then the group views the fight against price controls as more akin to "moving the pieces on the chess board" (i.e. manipulating members of Congress) than an opportunity to make a strong, philosophical case for free-market reforms.[3]

Setting aside some doubts, let us assume that PhRMA is in fact serious about defending the free market. How should it go about doing this? Here are three pieces of advice:

1) Don't allow opponents to claim that the market has failed. Seemingly every discourse on healthcare begins with a harangue about how Americans spend more on healthcare and allegedly get less, and how the U.S. is the only industrialized nation that does not provides universal healthcare to its citizens. As a result, many people are led to believe that the cause of our problems is too much privatization and not enough government. The reality is precisely the opposite: it is the policies, controls, and interventions of government that raise costs, divert investment capital, and thwart innovation. PhRMA's campaign needs to remind (or educate) the public that the pharmaceutical industry today is not a free market but a thoroughly hampered one, and that the only "change we can believe in" is change in the direction of a free market. The problem is not that markets have failed; markets haven't even been given a chance.

2) Name your principles. Proponents of price controls on prescription drugs can offer no rational objection to the argument that individuals have the right to produce and offer their products on whatever terms they wish. This is a fundamental point, and -- to paraphrase a famous fictional architect -- it has to be said. Unfortunately, in today's climate of pragmatism, principles do not get the respect they deserve. A principled, rights-based argument alone will not silence those who are pushing for price controls, so PhRMA should tout the practical and economic case for free markets as clearly as possible. But please, PhRMA: anchor your message in the principle of rights, and refer to it at every opportunity. Whether you know it or not, this is what will sustain your fight over the long run (if there is to be a long run).

3) Demonstrate some integrity. Don't ask for laissez-faire treatment one minute, and then demand increased subsidies, research grants, or bailouts the next. To be sure, a mixed economy is a funny thing; it is a system of contradictions. And in the midst of oppressive regulations, taxes, and fees, no organization reasonably can be blamed for exerting their influence in Washington as a matter of self-defense. But to the fullest extent possible, PhRMA should be willing to explore ideas that trade today's goodies for increased freedom. With an incoming administration that will be looking for ways to control spending in the current economic crisis, 2009 will be a favorable time for new ideas. For instance, the pharmaceutical industry could offer to negotiate a 50 percent reduction in its share of NIH extramural research grants in exchange for a 50 percent reduction in the time or paperwork required for drug approvals. Or the same, in exchange for the lifting of liability on developmental drugs. Or for the removal of restrictions on advertising. Yes, it is a shame that your industry must "buy back" its own freedom -- but that is one of the consequences of having failed to defend it properly in the first place. As for the forgone grant money, you won't miss it. Not when you realize the wealth of innovations and discoveries that your minds are capable of producing when left free to think.

As PhRMA begins to launch its campaign for the defense of free markets, advocates of laissez-faire will be watching -- and hoping -- for a confident and principled approach. If executed properly, it could be effective in stemming the tide of new price controls. If botched, it will be worse than offering no defense at all.

_____

[1] Lengell, S. "Drugmaker ads to target Obama idea," Washington Times, November 14, 2008

[2] "Remarks in Newport News, Virginia" Barack Obama, October 4 2008. (This sentiment, by the way, was to a large extent shared by Obama's Republican opponent John McCain.)

[3] Lengell, November 14 2008

Ralston and Hsieh LTEs in Wall Street Journal

The December 22, 2008 has printed two contiguous LTEs critical of Obama's health care plans. One is by Richard Ralston, director of Americans for Free Choice in Medicine and the second is by myself. Both were in response to their December 9, 2008 article, "The Obama Health-Care Express".

Here are the two LTEs:

Three Big Problems With Obama's Health-Care Plan

You are probably correct that a major new national health-care program will be rushed through the next Congress without substantial debate through some mechanism such as budget reconciliation. That is because many of its elements would not survive close examination. The fatuous claim of Sen. Max Baucus that placing the nation's medical care under the rule of an "independent" council of presidentially appointed experts would not constitute government management of care is only the most conspicuous example. Others include the claim that computerizing those remaining medical records still on paper would reduce insurance costs by $2,500 a year per family.

But the main reason for the big rush is that nobody has a clue how the government will pay for it -- anymore than they know how the current unfunded liability of Medicare and Medicaid can be honored.

The last thing that proponents want is for anyone to ask where the money will come from, except perhaps questions about such details as the individual rights of patients and physicians to make their own medical decisions without the approval of presidentially appointed experts.

Richard E. Ralston
Executive Director
Americans for Free Choice in Medicine
Newport Beach, Calif.


Businesses expecting to save money under President-elect Barack Obama's universal health-care plan are going to be in for a rude awakening. President-elect Obama's plan includes an employer mandate in which businesses must either pay their employee health insurance or else pay into a government fund to cover the uninsured.

A similar mandate has already been in place in Massachusetts for two years. As health costs there have skyrocketed, the state government has asked for more and more "contributions" from businesses. During this financial crisis, the last thing America needs is yet more economic burdens on the businessmen who create jobs and prosperity.

The fundamental problem with Mr. Obama's plan is the premise that health care is a "right" that must be guaranteed by the government. Health care is a need, not a right. Rights are freedoms of action, not automatic claims on goods and services that must be produced by another. Attempting to guarantee an alleged "right" to health care must necessarily violate actual individual rights and will destroy the American economy in the process.

Paul Hsieh, M.D.
Sedalia, Colo.

Alliance of Health Care Sharing Ministries

As an alternative to the current system of employer-based insurance, the Alliance of Health Care Sharing Ministries provides voluntary mutual aid to members to help cover their medical expenses.

Their system works as follows:

A health care sharing ministry (HCSM) provides a health care cost sharing arrangement among persons of similar and sincerely held beliefs. HCSMs are not-for-profit religious organization acting as a clearinghouse for those who have medical expenses and those who desire to share the burden of those medical expenses. These organizations are known as health care sharing ministries (HCSM).

* HCSMs receive no funding or grants from government sources.
* HCSMs are not insurance companies. HCSM do not assume any risk or guarantee the payment of any medical bill. Ten states have explicitly recognized this and specifically exempt HCSMs from their insurance codes.
* HCSMs serve more than 100,000 members, with members in all fifty states.
* HCSMs' members share more than $60 million per year for one another’s health care costs.
* HCSMs strive to be accessible to members regardless of their income, because traditionally shares are a fraction of the cost of insurance rates.

This is exactly the sort of private, voluntary charity that Dr. Leonard Peikoff speaks of in his essay, "Health Care Is Not A Right":

Some people can't afford medical care in the U.S. But they are necessarily a small minority in a free or even semi-free country. If they were the majority, the country would be an utter bankrupt and could not even think of a national medical program. As to this small minority, in a free country they have to rely solely on private, voluntary charity. Yes, charity, the kindness of the doctors or of the better off -- charity, not right, i.e. not their right to the lives or work of others. And such charity, I may say, was always forthcoming in the past in America. The advocates of Medicaid and Medicare under LBJ did not claim that the poor or old in the '60's got bad care; they claimed that it was an affront for anyone to have to depend on charity.

I fully support the right of organizations such as AHCSM to engage in such charitable mutual aid, free from the onerous restrictions that the government places on insurance companies. And although the AHCSM bases its policies on Christian Biblical principles, in a free society any group of people (religious or non-religious) could band together to create a similar system of voluntary mutual aid.

I therefore commend the AHCSM for showing that it is possible to create a real-life positive alternative to traditional insurance that many Americans would gladly support and benefit from.

The AHCSM has also correctly taken a strong position against government-mandated health insurance. In one of their policy briefings (not on their website, but sent to me as a PDF), they wrote:

CONCERNS: Mandating health insurance will infringe on the religious and economic liberties of members of health care sharing ministries and ultimately destroy these unique ministries.

• Mandatory Insurance Will Cripple An Innovative Approach to Meeting Health Care Expenses. HCSMs are the result of a cooperative effort of individuals and employers organized around a religious principle of "bearing one another's burdens" in a time of need. Requiring these sustaining communities to use their scarce resources to purchase health insurance or pay taxes and penalties for failing to do so will drain the financial lifeblood from these vibrant ministries.

• Mandatory Insurance Infringes on Religious Liberty. Members of HSCMs are presently in charge of the decisions regarding their own health care and able to refrain from supporting practices contrary to their moral convictions. Mandatory insurance, on the other hand, would legally require the purchase of insurance policies that force citizens to give financial support to treatments that violate their convictions.

• This Innovative Solution to Rising Health Care Costs Works. HCSM members help with medical burdens by sending a monthly share that is significantly lower than individual or employer insurance rates. HCSMs also provide the spiritual and emotional support of a community of believers that helps to heal the whole person rather than just the illness.

THE SOLUTION: Do not mandate the purchase of health insurance. Instead, give increased liberty to all consumers and allow them to control their health care dollars. In HCSMs this approach has resulted in greater individual control of health care spending and improved quality of care...

All Americans should support and defend the right of the HCSMs to engage in this sort of charity. One of the evils of mandatory insurance is that it would violate the rights of individuals to create and engage in these sorts of innovative mutual aid activities. This is yet another reason to oppose mandatory health insurance.

Poem: 'Twas the Night After Single Payer

In the spirit of Christmas, long-time FIRM supporter Gina Liggett has composed the following poem, "'Twas the Night After Single Payer":

'Twas the Night After Single Payer
By Gina Liggett, RN, MPH

'Twas the night after Single Payer, when all through the land
Not a creature had health care that could be called grand;

The ERs were stuffed with those seeking care,
In hopes Dr. Daschle soon would be there;

The patients were all nestled sick in their beds,
Hallucinating that sugar-plums danced in their heads;

And doctors at their post, and nurses at their station,
Had just hunkered down for a long Administration,

When on the Rose Garden lawn there arose such a clatter,
I turned on CNN to see what was the matter.

Away to the screen it flew like a flash,
Camera shutters were clicking, Dr. Daschle with his sash.

TV lights shined in faces hailing the plan
Gave the lustre of "quality" for each woman and man,

When, what to my wondering eyes be endured,
But a huge new department, and forty-eight million more insured,

With a powerful new driver, two roles to fulfill,
I knew in a moment it would be government overkill.

Regulations not treatments his ideas they came,
New restrictions, new rules, and he called them by name;

"Now, Daschle! now, Dollar! now, Payer and Taxin'!
On, Common! on Cure-all! on, Daunting and Blighted!

To the top of the White House! it will hit the wall!
Now cash away! cash away! cash away all!"

As dry heaves that before an intestinal flare,
With patients on the wait list, what do they care?

So up in the bureaucracy the coursers they flew,
Through the cabinets of paperwork, and Dr. Daschle too.

And then, in a news conference, I heard more restrictions
The limits and taxing and fewer prescriptions.

As I called 911, one day writhing in pain,
The response that I got could only be called insane.

He was dressed in his scrubs, and checked my citizen's ID,
And the equipment malfunctioned, but the diagnosis was free;

A bundle of supplies, the treatment room disordered,
But they lacked what was needed, what the Dr. had ordered.

His eyes--how they glazed! dark circles how weary!
His cheeks were so sallow, his job was so dreary!

Another patient in line dehydrated like wheat,
Uncontrolled diabetes, his blood sugar too sweet;

The stump of a leg infected for weeks,
It was surgical care that this patient seeks;

He had Universal Insurance and a sad-looking face,
Because it only covered some gauze and an Ace.

He was pale and sweaty, a sickly young man,
And I cried when I saw him, in spite of his free-coverage plan.

A wink of the bureaucrat and a nod of her head,
Said, with Single Payer I had nothing to dread;

She spoke no more words, but took her first break,
Civil servants remember their rules are at stake.

And the Doctor came back, his fingers rubbing his eyes,
And he gave me a med and some vague replies;

He sprang to his computer, the new high-tech efficiency
Sent my records to D.C. for some clerk to see.

But I heard him exclaim, ere he walked out of sight,

"Single Payer for all has become a nightmarish fright!"

(Via NoodleFood.)

Polis Vs. Polis

Democratic Congressman-elect Jared Polis of Boulder, Colorado, recently wrote a fairly good OpEd for the December 10, 2008 Wall Street Journal in which he warned that Congress should not bail out the auto industry, but instead let the private sector take care of the problem:

Our United States Congress... now finds itself poring over "business plans" submitted this week by Ford, GM and Chrysler. People who have never before in their lives seen -- no less implemented -- a business plan are now trying to decide if these companies will succeed by means of a "capital infusion" with... [taxpayer] money. Something is wrong with this picture.

Instead, if the private sector takes on this issue, then:

At the very least, my constituents in Colorado won't find themselves as limited partners in a private equity fund run by Congress making speculative investments in flagging automobile manufacturers and who knows what else with their taxpayer money.

Polis concludes:

Reading business plans and making investments is the job of equity funds and turnaround specialists, not members of Congress.

Polis is quite right on that point. The function of government is not to run businesses but to protect individual rights.

Yet he fails to apply his own argument to health care. Polis is a proponent of government-run "single payer" health care, and he would use Medicare as the model:

Medicare, a universal access, single-payer, government-administered, publicly financed and efficient program, has high patient satisfaction and only 3% administrative expenses – less than any private insurance plan. While there are many improvements we need to focus on within Medicare, it serves as a model of a single-payer healthcare system.

Yet this is the same Medicare system that is faced with perennial funding crises, which achieves these artificially low administrative costs by foisting them on private physicians' office staff, and which pays so little that many doctors are thinking of dropping Medicare patients.

If we expanded this system to cover all Americans (not just the elderly), those problems would merely multiply.

Polis is right -- the US government is not capable of running the auto industry. If it attempted to do so, it would merely destroy those companies.

His argument applies just as well to health care. Health care is not a right, and any attempt to guarantee it with a single-payer system (or any other form of "universal coverage") would destroy American health care.

Polis-on-automakers is right. Polis-on-health-care is wrong.

Coloradans should urge Polis to apply his correct understanding on the issue of the auto bailout to the health care issue.

New Insurance Option

Amidst the gloomy news of some insurance industry lobbyists supporting yet more government controls of health insurance, there are occasional bits of good news.

One is the concept of being able to purchase an option now to be able to buy future insurance in the event of a future illness, offered by United Health Care in some states.

This sort of innovative insurance product is precisely the sort of creative offering one would expect in a free market. There is a need (consumers' concerns about being able to be insured in the future) and a potential for profitable service (an option that insurers can sell), making it possible for a mutually beneficial exchange.

If current government restrictions on insurers (such as guaranteed issue, community rating, and guaranteed renewability) were lifted, insurers and patients would be free to negotiate even more financial and contractual innovations such as this one -- to the tremendous benefit of us all.

Americans already know the benefits of our current semi-free market in other sectors of the economy, with massive innovations in computers, cell phones, food, clothing, and other consumer goods. This can and should be the norm for health insurance as well.

Knope Translates Insurance Double-Speak

Dr. Steven Knope translates the words behind the insurance industries new-found enthusiasm for mandated universal coverage:

Here is how the insurance industry stated they would make their plan work: "The group called on Congress to establish a public-private advisory group to recommend action in three areas: reducing wasteful spending, changing how doctors and hospitals are paid, and reducing administrative costs."

Let me translate this insurance double speak for you.

"Reducing wasteful spending" translates into rationing medical care to patients for profit.

"Changing how doctors and hospitals are paid" translates into paying them less. Clearly, if doctors and hospitals were paid more or even paid at current rates, spending could not be reduced. This fee reduction will result in doctors seeing even more patients than they see now, spending less time with each and further rationing healthcare.

Finally, "reducing administrative costs" translates into allowing the insurance companies to become the administrators for the program. What this means is that much of the new healthcare dollar will flow through insurance company pipelines, which will be designed with leaks in strategic places.

Instead of trying to use the power of the government to force consumers to purchase insurance on their terms, they should be advocating a free market that allows patients to purchase insurance (or not) based on their own assessment of their needs. For some patients, that might involve paying routine costs out of pocket (or with a Health Savings Account), then using catastrophic-only insurance for expensive events. Other patients may wish more of a pre-paid model, with richer benefits but higher premiums. Others might wish to retain a concierge physician and pay directly for all medical services with no insurance whatsoever.

But patients should have the freedom to choose in a free market. The insurance companies' proposed unholy alliance with the government is a direct infringement of this basic right, and will inevitably lead to an even worse "single payer" system.

No Posting

There will be no blogging for a few days. My wife and I had to put our dog Kate to sleep this morning. She had been suffering from an abdominal tumor which finally spread to her spinal cord.

We had her for almost 9 years (adopted from a shelter as a full-grown adult). She was a sweet, cheerful, faithful, loyal, and protective girl who gave us many years of happiness.

Rest in peace, Kate.



For more pictures, see here.

Hsieh LTE in Boston Globe

The December 8, 2008 Boston Globe has published my LTE opposing mandatory insurance in response to their December 3, 2008 article, "Lobbies Backing Health Care Reform".

My LTE reads as follows:

Steer clear of making purchase mandatory

The insurance industry proposal to force all Americans to purchase health insurance would be as wrong as Detroit automakers asking Congress to force all Americans to purchase a new GM or Ford car every year. Americans have the right to purchase (or not purchase) insurance in a free market, based on a rational assessment of their needs. When health insurance is mandatory, the state must necessarily define what constitutes "acceptable" insurance, meaning that individuals must purchase insurance on terms set by lobbyists and bureaucrats.

Instead of mandatory health insurance, America needs free-market reforms, such as allowing patients to purchase insurance across state lines and to use health savings accounts for routine expenses, and allowing insurers to sell inexpensive, catastrophic-only policies to cover rare but expensive events. Such reforms could reduce costs and make insurance available to millions who cannot currently afford it.

Dr. Paul Hsieh
Sedalia, Colo.
The writer is cofounder of Freedom and Individual Rights in Medicine.

Hsieh LTE in Los Angeles Times

The December 4, 2008 Los Angeles Times printed my LTE submitted in response to their December 1, 2008 article, "Consensus emerging on universal healthcare".

My LTE is the 3rd one in the section "Health Care Debate":

The government should not be guaranteeing "universal healthcare." Healthcare is a need, not a right. Rights are freedoms of action, not automatic claims on goods and services that must be produced by another. There's no such thing as a "right" to a car or an appendectomy. Whenever the government attempts to guarantee a service such as healthcare, it must control it, leading to Canadian-style rationing and waiting lists.

Instead of universal healthcare, we need free-market reforms, such as allowing patients to purchase insurance across state lines and use health savings accounts for routine expenses, and allowing insurers to sell inexpensive, catastrophic-only policies to cover rare but expensive events. Such reforms could reduce costs and make insurance available to millions who cannot currently afford it.

Paul Hsieh, MD
Sedalia, Colo.

(They also printed two letters from local residents supporting single-payer health care.)

Shared Medical Appointments in Massachusetts

Waiting times for medical care in Massachusetts have gotten so long as a result of their "universal coverage" system, that some patients are accepting "group medical appointments", giving up privacy and one-on-one time with their physician in exchange for getting a timely appointment.

The story includes a video of such a group appointment.

As one commenter stated:

In the group setting, the patients are not allowed to remove clothing for proper physical examination due to the lack of privacy. In the video, Dr. Lindsey is shown auscultating and percussing through the patients' clothing.

As a medical student, I would flunk, that's right, flunk my standardized patient examinations if I even thought of auscultating or percussing through clothing. It is obvious that the lack of privacy even in the cardiology setting restricts the doctor from doing a proper physical examination.

If Senator Baucus has his way with his planned expansion of the Massachusetts plan to the national level, we'll soon see this in all 50 states.

(Via AAPS News.)

Amerling on Arizona

The December 1, 2008 Wall Street Journal printed the following LTE by Dr. Richard Amerling, commenting on the defeat of Arizona's ballot initiative which would have guaranteed that patients could pay for private health care (2nd letter on the page):

The apparent defeat of Proposition 101 in Arizona strongly suggests the ultimate goal of the single-payer wonks is to delegitimize, or frankly outlaw, private medical contracting. Based on experiences in Canada and the U.K., the only way a government-run health-care system can survive (finances notwithstanding) is with a private pay option to handle the excess demand such systems always create.

If private medicine is outlawed in the U.S., doctors will no longer work for patients, and a basic freedom will be lost. I hope my colleagues, many of whom naively endorse the single-payer concept, are paying attention.

Richard Amerling, M.D.
Director
Outpatient Dialysis
Beth Israel Medical Center
New York

I also hope that more doctors listen to Dr. Amerling.

Ralston on the FDA

Richard Ralston, executive director of Americans for Free Choice in Medicine, has written an OpEd sharply critical of the Food and Drug Administration (FDA):

Freedom from the FDA
By Richard E. Ralston
November 28, 2008

It took the Food and Drug Administration more than a century to grow into a massive, expensive, wasteful, inflexible, ineffective, distant and indifferent bureaucracy. It now violates a founding principle of the practice of medicine: "First, do no harm."

The FDA does a lot of harm, every day. Why do we allow that?

The FDA has kept some unsafe or ineffective drugs off the market (although a consortium of independent research organizations could have done the same thing). But at what cost? We can summarize in ten ways how the FDA threatens or does real harm to our health:

1. The FDA adds billions to the development cost and price of new drugs.

2. The FDA delays the availability of new drugs for years.

3. The FDA prohibits the use of new drugs that treat conditions for which other drugs are available, regardless of how much better they might work for some patients.

4. The FDA withholds new drugs—even those that passed initial safety tests—from terminally ill patients, in the name of preserving safety. When one of these patients wins access to the drugs by going to court, the FDA, apparently in a relentless effort to protect the health of the dead, appeals the ruling until the patient dies, at which time the appeal is of course dismissed.

5. The FDA and Congress allow the drug approval process to be politicized to protect the interests of firms with political pull or to serve the anti-corporate political agenda of those who would rather see Americans die than allow any investors or businesses to make money developing new medications.

6. The FDA suppresses off-label use of drugs with proven ability to treat other conditions and restricts the circulation of information about such successful off-label use of drugs that have already been approved as safe.

7. The FDA actively seeks to extend the authority it so ineptly applies to drugs—and for which it asserts to have insufficient staff—to controlling all vitamins and food supplements. Whenever the reach of the FDA exceeds its grasp, it always tries to extend its reach.

8. The FDA constitutes a roadblock to new developments in anti-aging drugs by refusing to consider any science that would extend healthy lifespans—because "aging is not a disease."

9. The FDA states that it lacks the resources to ensure human drug safety but requests more resources to review veterinary medicine.

10. The FDA now publishes lists of drugs it approved but the safety of which it questions—leaving physicians in the lurch and creating a potential jackpot for litigation.

The FDA adds billions of dollars to the cost of developing new drugs and delays their use for years. Yet it is so obsessed with predicting exactly how each drug will perform for any patient—with any condition, in any dosage, for any length of time and in any combination with any other drug or combination of drugs in any dosage—that it often loses sight of safety. So a few years ago the FDA proposed the creation of a new "Drug Safety Board" to provide for drug safety. One would have thought that was the purpose of the whole agency.

That hypocrisy is consistent with the history of the agency. Every failure to fulfill its purpose is met with a review or a study by another government-related organization hired by the FDA to make recommendations. The recommendations are always the same: more staff, more budget, more authority, more buildings, more office furniture and more regulations.

If we want the tremendous progress in the development of medications in recent years to continue, we must act to eliminate the awesome ability of the FDA to destroy that progress. The first steps in reform should be to direct the FDA to focus entirely on safety and allow physicians and their patients to determine efficacy. Research must be encouraged, not restricted, and information on that research must be open to all.

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

The Obama Health Plan Emerges

The November 20, 2008 Wall Street Journal has more analysis of the Obama health plan, including why it will lead to a government takeover of medicine. Here are a few excerpts:

The Obama Health Plan Emerges

...First, Democrats want the government to create a national insurance exchange, or marketplace, in which all comers could buy into a range of heavily regulated private policies at group rates. These private plans would then "compete" with a new public insurance option, i.e., a program managed by the government and modeled after Medicare. Lower-income earners would get subsidies to make coverage "affordable." Businesses that didn't cover their employees would pay a tax on some portion of their payroll.

... Even if Congress doubled all individual and corporate tax rates, it still wouldn't raise enough revenue to pay for Medicare and Medicaid.

The Obama-Baucus solution to this slow-motion catastrophe is to add tens of millions more people to the federal balance sheet. Because the public option will enjoy taxpayer sponsorship, it will offer generous packages to consumers that no private company could ever afford or justify. And because federal officials will run not only the new plan but also the "market" in which it "competes" with private programs -- like playing both umpire and one of the teams on the field -- they will crowd out private alternatives and gradually assume a health-care monopoly.

Many proponents of plans similar to Mr. Baucus's openly cite this as one of their goals. Eventually, the public option will import Medicare's price controls into the private sector as it tries to manage the inevitable cost overruns. When that doesn't work, Congress will deal with the problem by capping overall spending and rationing care through politics (instead of prices) -- like Canada does today.

Whether the advocates of the Democratic plan(s) open admit it or not, this is the natural logic of their ideas.

Concierge physician Dr. Steve Knope predicts the following:

...I also believe that there are enough people, limousine liberals included, who would never tolerate a Canadian system in which they would have to wait to see an overworked, governmental employee who calls himself a doctor. Even they will pay for real doctors. So I think we are destined to have an English system, in which people with means pay for good care and the rest get a diluted form of Medicare medicine. The only way that excellence will be preserved will be inside the private arena, which is why I believe our movement will grow.

(From private correspondence, quoted with his permission.)

I hope he's right. If Arizona's "Freedom of Choice in Health Care Act" (which would have guaranteed that, "No law shall interfere with a person's right to pay directly for lawful medical services") had passed, then concierge medicine would remain a viable option.

But if the federal government decides to outlaw this practice (on some supposed grounds of "equal access" or "fairness"), then we'll all suffer. Whether this happens is up to us.

Hsieh OpEd: "Asking For Trouble In Health Care"

The November 22, 2008 edition of the Colorado Springs Gazette has published my OpEd on the bailout crisis and lessons for those advocating "universal health care":

Asking For Trouble in Health Care

Paul Hsieh, M.D., Guest Columnist

In the 1990s, politicians wanted to make home ownership as universal as possible. They used laws such as the Community Reinvestment Act to force banks to make unsustainable loans to millions of people. They also expanded quasi-government agencies such as Fannie Mae and Freddie Mac to guarantee these loans.

This scheme could last only a few years. In 2008, the housing bubble finally burst and economic reality caught up with the politicians. American taxpayers were stuck with the tab for these "toxic" mortgages. The result was the Wall Street Bailout of 2008 and the worst economic crisis since the Great Depression.

In 2008, politicians want to guarantee "universal health care" with new laws and new government programs. President-elect Barack Obama wants to require health insurers to sell policies whether or not those policies are economically sustainable (for instance by requiring them to issue policies regardless of pre-existing conditions). He has also proposed creating a massive new "National Health Insurance Exchange" to help ensure "universal coverage."

But no politician can evade the laws of economic reality. Massachusetts' program of "universal coverage" requires hundreds of millions of dollars of federal money a year to stay afloat, paid for by the taxpayers of the other 49 states. If the U.S .attempted this at a national level, there would be no one to bail us out.

When Obama's proposed national system inevitably collapses under the weight of market inefficiency and bureaucratic overhead, this will merely pave the way to fully socialized single-payer health care. Health care spending now comprises one-sixth of the U.S. economy. Forcing taxpayers to pay for everyone's medical expenses would make the $700 billion Wall Street bailout look like pocket change in comparison.

Even worse, under nationalized health care the government will eventually have to ration medical services to control costs. This is already commonplace in other countries. A Canadian woman who feels a lump in her breast oftens wait months before she receives the surgery and chemotherapy she needs. In contrast, an American woman can get the treatment she needs within days.

According to The Telegraph, Great Britain's National Health Service paid bonuses to primary care physicians who reduced the numbers of referrals to hospital specialists - thus forcing those doctors to choose between their oaths to their patients or the government which pays their salaries. Whenever government attempts to guarantee a "right" to health care, it must also control it. Bureaucrats then decide who gets what health care and when, not doctors and patients.

The fundamental problem with "universal health care" is the mistaken premise that health care is a "right." Rights are freedoms of actions (such as the right to free speech), not automatic claims on goods and services that must be produced by others.

Individuals are legitimately entitled to health care that they purchase with their own money, are promised by prior contractual agreements, or are given to them via voluntary charity.

Attempting to guarantee an alleged "right" to health care must necessarily violate someone's actual rights - the rights of those compelled to pay for it. The ultimate victims will again be the taxpayers, just as they were the ultimate victims of the Wall Street bailout.

Instead of universal health care, we need free market reforms that reduce costs, reward individual responsibility, and respect individual rights. Some examples include eliminating mandatory insurance benefits, repealing laws that forbid purchasing health insurance across state lines, and allowing individuals to use Health Savings Accounts for routine expenses and to purchase low cost, catastrophic-only insurance for major expenses. Such reforms could lower costs up to 50 percent, making health insurance available to millions who cannot currently afford it.

We can't go back in time and avoid the Wall Street Bailout of 2008. But we can still make the right decision with respect to health care. We must reject calls for "universal health care" or else we'll be faced with a massive "Health Care Bailout of 2018." The events of the past few months have taught us some important lessons about economic reality. The only question is whether we're willing to learn from them.

Hsieh, of Sedalia, is the co-founder of Freedom and Individual Rights in Medicine.