Schwartz on MassHealth

Brian Schwartz points out that the government-run MassHealth program in Massachusetts denies payment for treatments far more than the commercial insurance companies.

Those who think that a government-run "single payer" system will provide more care than the semi-free market system we have now will be in for a rude awakening.

More Mythbusting From The AAPS

The AAPS debunks yet more commonly-held myths.

This time they tackle, "Myth 3. Americans are going bankrupt, and American companies are noncompetitive, because we don't have 'universal health care.'"

Save Justin's Health Insurance

The Independence Institute points out more problems with Massachusetts-style mandates to provide "universal coverage" in this video, "Save Justin's Health Insurance":



(Via Free Colorado.)

Canadian Cost Controls

As health costs continue to rise, Canadian government authorities impose yet further controls which amount to rationing.

William Watson describes the latest insanity in the June 24, 2009 Financial Post:

...To keep expenses down, Quebec's Ministry of Health imposes surtaxes on physicians who make more than about $200,000 a year -- gross of expenses. What with swine flu and all, it's been a busy year for pediatricians. Some of those running the Tiny Tots Clinic apparently have already bumped up against their maximum income. As a result, they're now going to be paid at 25¢ on the dollar for all the services they provide between now and the end of the year.

Think of it as a kind of Tax Freedom Day in reverse. Tax Freedom Day is when you've earned enough in the year to pay all your taxes and can then start working for yourself. But if you're a Quebec doctor, it works the other way around: As early as June, depending how hard you worked the first part of the year, you may start working almost entirely for the government.

Trouble is, 25¢ on the dollar doesn't pay the clinic's overhead. So the clinic has been restricting its hours while the doctors petition the Minister of Health for permission to be re-classified so they can keep working with full remuneration for the services they’re providing.

What a bizarre country we live in. A doctor wants to treat a child. That child's parent wants the child treated. But if the doctor is to be paid for providing treatment, they have to await permission from the Minister of Health.

Read the whole thing.

If the government pays for health care, it will demand a say in how the money is spent. These sorts of problems are the inevitable result...

(Via RM.)

Wal-Mart and the Employer Mandate

The advocates of "universal health care" got a big boost recently when Wal-Mart went on record as supporting an employer mandate requiring companies to provide health insurance for their workers.

But Michael Cannon explains why they did this. Basically, it's to use the power of the government to hurt their smaller competitors:

...[I]t all became clear when the lobbyist explained the reason for Wal-Mart's position: "Target's health-benefits costs are lower."

I have no idea what Target's or Wal-Mart's health-benefits costs are. Let's say that Target spends $5,000 per worker on health benefits and Wal-Mart spends $10,000. An employer mandate that requires both retail giants to spend $9,000 per worker would have no effect on Wal-Mart. But it would cripple one of Wal-Mart's chief competitors.

This is just another example of the sort of unholy alliance that some big businesses and government regulators make in order to put a squeeze on smaller competitors.

This is very similar to the explanation that Tim Carney at the DC Examiner offered for Mattel's support behind onerous new regulations on lead content in toys:

Washington toy story shows why regulation helps the big guys

... [M]anufacturers who mass produce toys or children's furniture will face some added costs from the bill, but these are costs they can bear—especially because the costs will be industry wide thus passed onto consumers.

Indeed, many of the bigger manufacturers have already implemented testing procedures to comply with the federal requirements. Their smaller competitors, however, will suffer under the burden.

A stay-at-home mom who sews children's dolls on the side or a small woodworker who sells a few child-sized chairs each year will find these regulations much more burdensome if not impossible.

The big businesses offer their support for regulations in exchange for having some say ("a seat at the table") in crafting their specific provisions. The politicians get to claim that they have a "consensus" from all the "stakeholders".

In other words, the businesses provide political cover for the politicians in exchange for the politicians providing economic protection for the businesses.

Only this time, the victims won't just be customers purchasing children's toys. Instead, it will be every American who needs health care -- which is pretty much all of us...

(Via David Catron and Brian Schwartz.)

More on the Administrative Savings Myth

The AAPS debunks the widely-repeated myth that, "A public plan could save enough on administrative costs to provide coverage to all".

Some excerpts:

...The basis for the assertion is the claim that Medicare spends only 2% to 3% of its outlays on administration, compared with private plans’ alleged costs of 20% to 25%.

In fact, data from the Congressional Budget Office (CBO) shows that insurance companies spend at least 50% less on administration that government does on its health programs. (The Congressional Budget Office Reports: Comparing health care admin cost: who's less costly?)

Furthermore, there are various accounting differences that one must remember when comparing relative administrative costs of Medicare vs. private insurance plans that make Medicare seem artificially cheaper than it really is:

* Private insurance plans must pay government taxes and assessments up to 5% of premiums. When these are factored out, the real net cost of private administration is less than 10%.
* CMS excludes the cost of its own employees who enroll recipients, perform outreach and education, handle customer service, and do auditing and other functions. Private plans include these in overhead.
* Private plans have on average a higher number of claims to process for a given amount of expenditure.
* Insurance companies have to collect premiums. The IRS does that for Medicare.
* Private companies do underwriting; their premiums have to cover their costs. Medicare deficits have to be covered by taxpayers.
* The cost of servicing the public debt is not included in Medicare costs—and Part B is 75% subsidized by general revenues, not beneficiary premiums.

Journalists and politicians need to be aware of these hidden costs, rather then repeating myths promoted by those with a specific policy agenda.

Harsanyi on Lying With Statistics

The June 26, 2009 Denver Post carried this column by David Harsanyi on the statistical falsehoods being used to allegedly justify "universal health care". Here is an excerpt:

How to lie with statistics — again

Did you know that around 300 million Americans went without food, water and shelter at some point last year?

I am a survivor.

...One of the most persistent examples of modern-day statisticulation is the sufficiently true claim that 46 million (it becomes 50 million when senators really get keyed up) Americans are without health insurance.

...It is true that the 46 million figure is based on unreliable Census Bureau data. But even the less unreliable Congressional Budget Office puts the number at around 31 million. And even that number, former CBO Director Douglas Holtz-Eakin claims, is an "incomplete and potentially misleading picture of the uninsured population."

For one reason, the uninsured figure counts every American (and illegal immigrant) who has been uninsured for any time frame during a year, even if they happen to be between jobs or changing insurance plans or on family visit to Guatemala.

...Then, another portion of uninsured Americans already qualify for an existing government health insurance program — and government already controls 46 percent of spending on health care — for which they have not signed up.

The CBO estimates that as many as 15 percent of the chronically uninsured are already eligible for help. The Urban Institute (hardly advocates of free-market fundamentalism) found that 25 percent of the uninsured qualify for some program.

...Turns out that 8.4 million uninsured Americans are making $50,000 to $74,999 and 9.1 million more are making more than $75,000. Health insurance is just incompatible with their lifestyles, I guess.

There are obviously inconveniences — children and mortgages, for instance — that can quickly make $50,000 seem like a pittance. Then again, 27 percent of all adults in their 20s (many, I presume, without offspring) choose not to have health insurance. Many of them surely have the means to purchase insurance, but after meticulously considering the tradeoffs (imbibing or insuring?) say no thanks.

Read the whole thing.

Harsanyi correctly notes that this is not a primary argument to oppose nationalized health care. But it's still important to debunk bad statistics, especially when they are so frequently used to justify bad policy proposals.

The Forbidding Arithmetic of Healthcare Reform

Even Massachusetts governor Deval Patrick say that perhaps the US should not adopt the Massachusetts plan on a national level, according to this June 29, 2009 article in the Boston Globe, "The forbidding arithmetic of healthcare reform".

The arguments they make are primary economic (albeit important ones). For additional perspective, please see my TOS article on the topic, "Mandatory Health Insurance: Wrong For Massachusetts, Wrong For America".

Congress Exempts Itself From Insurance Controls

In the June 19, 2009 Wall Street Journal Betsy McCaughey notes that Congress will exempt itself from new insurance controls that it wishes to impose on the rest of us.

Here is an excerpt:

Dissecting the Kennedy Health Bill

Last September Sen. Barack Obama promised that under his health-care proposal "you'll be able to get the same kind of coverage that members of Congress give themselves." On Monday, President Obama repeated that promise in a speech to the American Medical Association. It's not true.

The president is barnstorming the nation, urging swift approval of legislation that is taking shape in Congress. This legislation -- the Affordable Health Choices Act that's being drafted by Sen. Edward Kennedy's staff and the Health, Education, Labor and Pensions Committee -- will push Americans into stingy insurance plans with tight, HMO-style controls. It specifically exempts members of Congress (along with federal employees; the exemptions are in section 3116).

Members of Congress "enjoy the widest selection of health plans in the country," according to the U.S. Office of Personnel Management. They "can choose from among consumer-driven and high deductible plans that offer catastrophic risk protection with higher deductibles, health saving/reimbursable accounts and lower premiums, or fee-for-service (FFS) plans, and their preferred provider organizations (PPO), or health maintenance organizations (HMO)." These choices would be nice for all of us, but they're not in the offing. Instead, if you don't enroll in a "qualified" health plan and submit proof of enrollment to the federal government, you'll be tracked down and fined (sections 3101 and 6055)...

Read the whole thing.

Under the Kennedy plan, you may not decide for yourself what sort of insurance best suits your needs. Instead, the government would determine what counts as "qualified".

This is a clear violation of the rights of patients and insurers to contract freely for their mutual benefit.

Schroeder on the Dartmouth Atlas

Pediatric cardiologist Jim Schroeder has been active responding to state and national level attention being paid to health care in Grand Junction, CO.

In particular, he has responded to some recent articles and opinion pieces in the Grand Junction news:

"Obama invited to tour valley health insurer" (June 11, 2009)

"Grand Junction shows how a responsible health system can operate" (June 18, 2009)

"GJ's acclaimed health care system may not be easy to replicate" (June 21, 2009)

Here is Dr. Schroeder's analysis, reproduced in full (with his permission):

Grand Junction in the Spotlight

It has been an unusually cold spring in Grand Junction, but hold onto your hats folks (not to mention your wallets) because it is about to snow in July.

Lil Ol' Grand Junction has popped up on the national scene in the current healthcare discussion. As a result, President Obama has been invited to visit Grand Junction as a shining example of how health care delivery should be done on a national scale and breathless local TV news reporters and members of the medical community are gushing. But in the excitement of being noticed by Washington some inconvenient facts are being ignored and other facts are being manipulated. Before we get too blinded by the spotlight of national attention that is about to hit, perhaps we should take a deep breath and regain a little perspective.

Why did Grand Junction's name pop to the surface? Here is the sequence of events. First, a large multi-year academic study was done at Dartmouth University (one of the lesser Ivy League schools) designed to look at regional variations in Medicare spending on health care. These results came out in April 2008. More recently Dr. Atul Gawande, an Ivy League surgeon, wrote an opinion piece or essay in the June 1 issue of The New Yorker magazine purportedly investigating why McAllen, TX has one of the nation’s highest levels of Medicare spending. Grand Junction’s name popped up in that article (alongside the Mayo Clinics) as one of the lowest spending regions. Next, this information came to the attention of one Barack Obama (an Ivy League graduate) who apparently is now using the Dartmouth study as a fulcrum to try to leverage advancement of the Democrat party’s health care proposal. Let me elaborate:

1. The Dartmouth Atlas: This study contains some intriguing data but is also being misrepresented in some ways. To briefly recap, the Dartmouth Atlas collected and analyzed data concerning the amount of Medicare dollars expended during the last two years of an individual’s life. They did this by the simple expedient of starting at the time of each person’s death and looking backward at Medicare records over a two year period. Patient expenditures were assigned to the primary hospital used during that two-year look back period and also to the city of residence at the time of death. Patients who were enrolled in a managed care plan were not included in the analysis. The data showed a wide range of variation between individual hospitals, cities and regions in the amount of dollars spent by Medicare in the last two years of a person’s life. For example, for inpatient hospital costs the values ranged from $13,706 (Dubuque, IA) to $51,917 (Manhattan) per deceased person. Grand Junction came in at $14,739 and was the lowest among 7 regions in Colorado while McAllen, TX came in at $33,729. What the data did not provide was an answer for why these differences exist. The data also did not show whether these differences in spending had anything whatsoever to do with the quality of the health care provided or any outcome other than death. The data did not indicate one way or the other whether the only outcome included in the study (death) happened earlier or later in hospitals that spent a lot or spent a little. All the data showed is that some hospitals spent more Medicare money than others. As such, this study should serve as a starting point for further research, not as a measure of how to model health care delivery for the nation as a whole.

Here's where you need to hang on to your wallet, because what is about to happen is that the Dartmouth Atlas will be touted as showing that some regions (Grand Junction will be held out as the shining example) are "more efficient" at delivering healthcare while saving money! This in turn will serve as the anvil upon which health care spending throughout the country will be hammered into line by a federally controlled healthcare system. In fact, the Dartmouth study reveals absolutely nothing about efficiency. Before that discussion can even begin, there must be some agreement on what constitutes 'efficiency'. That will require looking at end points other than death, and will include individual interpretations of value, quality and lifestyle. But those things are much more difficult to measure, so we are about to be treated to an example of using the wrong data to support the wrong argument for the wrong purposes.

2. Grand Junction: There are some aspects of Grand Junction that are unique in respect to this discussion. Grand Junction is relatively isolated geographically, with substantial mountain ranges separating it from the two closest metropolitan areas (Denver and Salt Lake City). The economy of Grand Junction primarily consists of agriculture and energy exploration and production. There is not a large union presence or much heavy industry. Small businesses abound. There is one large hospital (St. Mary's Hospital) and one small niche hospital (Community Hospital). St. Mary's has a fairly wide range of services while Community Hospital is more limited (e.g. no obstetric or newborn services, etc). There is one large regional insurance company, Rocky Mountain HMO. Grand Junction has a disproportionately high number of family practice physicians compared to larger metropolitan areas and a smaller number of specialists and even fewer subspecialists.

These are some of the reasons the current local framework works for Grand Junction:

-geographical isolation (G.J. is an inland island)
-fairly homogenous patient population
-homogenous range of physicians (FP predominating)
-good range of basic services, but limited range of specialty services
-sicker (i.e. more expensive) patients often are sent to Denver or Salt Lake City
-limited range of industry (i.e. the large corporate purchasers of health insurance)
-lack of a strong labor union presence (i.e. strong voice in benefits/coverage of plans)
-lack of competition for hospital services
-lack of competition for specialty/subspecialty services
-dominant local health insurance provider (HMO)

Those same reasons are exactly why the Grand Junction model will not serve well as a useful model for national health care. But that won’t stop some from trying to jam the ugly stepsister’s foot into Cinderella’s slipper (gratuitous fairy tale reference).


3. The Cost Conundrum -- What a Texas town can teach us about health care

By Dr. Atul Gawande
Here is an excerpt from Dr. Gawande's article:

The Mayo Clinic is not an aberration. One of the lowest-cost markets in the country is Grand Junction, Colorado, a community of a hundred and twenty thousand that nonetheless has achieved some of Medicare's highest quality-of-care scores.

Michael Pramenko is a family physician and a local medical leader there. Unlike doctors at the Mayo Clinic, he told me, those in Grand Junction get piecework fees from insurers. But years ago the doctors agreed among themselves to a system that paid them a similar fee whether they saw Medicare, Medicaid, or private-insurance patients, so that there would be little incentive to cherry-pick patients. They also agreed, at the behest of the main health plan in town, an H.M.O., to meet regularly on small peer-review committees to go over their patient charts together. They focussed on rooting out problems like poor prevention practices, unnecessary back operations, and unusual hospital-complication rates. Problems went down. Quality went up. Then, in 2004, the doctors' group and the local H.M.O. jointly created a regional information network—a community-wide electronic-record system that shared office notes, test results, and hospital data for patients across the area. Again, problems went down. Quality went up. And costs ended up lower than just about anywhere else in the United States.

Grand Junction's medical community was not following anyone else's recipe. But, like Mayo, it created what Elliott Fisher, of Dartmouth, calls an accountable-care organization. The leading doctors and the hospital system adopted measures to blunt harmful financial incentives, and they took collective responsibility for improving the sum total of patient care.

Keep in mind when reading this excerpt:

-"Grand Junction... has achieved some of Medicare's highest quality-of-care scores"

The Dartmouth data does not assess "quality of care". If he is referring to some other measures of quality he does not specify the source.

-"Problems went down. Quality went up."

There is no citation or data to support this comment other than an interview with Dr. Pramenko.

-"Then, in 2004, the doctors' group and the local H.M.O. jointly created a regional information network—a community-wide electronic-record system that shared office notes, test results, and hospital data for patients across the area. Again, problems went down. Quality went up. And costs ended up lower than just about anywhere else in the United States."

Once again, there are no data linking the creation of the regional information network with lowering of costs, decreased problems or increased quality. In fact, the Dartmouth data was collected from the beginning of 2001 to the end of 2005. The majority of the Dartmouth data therefore preceded the existence of the network (founded in 2004). In addition, since managed care Medicare patients were not included in the Dartmouth analysis, attributing any supposed savings to the HMO is dubious at best.

Dr. Gawande goes on to conclude that the reason for high expenditures in McAllen, TX is overutilization of medical services. Unfortunately, there is no definition of what constitutes "over-" or "under- utilization other than the cited dollar expenditures. Carried to its ridiculous extreme that would mean spending zero dollars would equal the "most efficient" strategy.

4. Having personally practiced medicine both in South Texas (San Antonio, just a couple hundred miles north of McAllen) and in Grand Junction, I can offer some perspective on the discrepancies between the two regions.

I can tell you from first-hand experience that there are huge differences in the collective mindsets of the medical community of South Texas when compared to the medical community of Western Colorado. Whether the differences reflect inherent cultural differences of either the general population or the doctors, historical evolution of medical services in the respective areas, demographic pressures, or some other factors I cannot say. I would not, however, be going too far out on a limb to say that corruption is rampant in South Texas. The mindset I saw when I lived there was one of "bill as much as you can get away with and then bill some more". Medicaid fraud was an everyday occurrence if not a way of life and diagnostic testing was used indiscriminately as a revenue source.

The mindset in Grand Junction has more typically been one of primary care, prevention and less utilization of diagnostic testing and subspecialty services. While it is safe to say that McAllen "overutilizes" it could be equally valid to say that Grand Junction "underutilizes".

5. It is reasonable and probably important to wonder why there are local and regional variations in health care spending. For now however, the available data raise interesting points of speculation rather than providing any answers. One could even make the case that regional variation in spending is not inherently a bad thing. We seem to be continuing to experiment on various ways of delivering health care. What works for Grand Junction will probably not work for Los Angeles or McAllen, TX.

Almost certainly a "one size fits all" nationalized approach will be untenable. Dr. Gawande acknowledges this to an extent when he calls for rewarding doctors and hospitals that unite into "accountable-care organizations, in which doctors collaborate to increase prevention and the quality of care, while discouraging overtreatment, undertreatment, and sheer profiteering."

Health care is, like any other commodity, finite in its supply. When you get right down to it, the entire health care debate can be conceived of as wrestling with the question of how to distribute a finite number of dollars for the purchase of health care services for a diverse population of 300 million. The only way to do that is by allocating expenditures or resources, or in other words, the dreaded "R"-word... rationing. Like it or not, rationing is at the core of every single healthcare reform proposal under consideration. Every entity that has a hand in the pie is trying with all their might to hang onto their piece and maybe get a little bit of someone else’s while those who seek to control the system are trying to fairly divide the pie.

Free market advocates believe that individuals making decisions in their own rational self interest, using the fruits of their own labor will collectively make wise decisions that will result in an inherent balance or "fairness" of the system. Those who value a given product or service more will choose rationally to spend more of their own money to purchase that product or service. Those who don't value a given product or service can choose to buy a boat or ATV instead. On the other hand, advocates of nationalized healthcare (including the current Congress and Administration) believe that a centralized government agency or oversight committee can efficiently collect individual wealth from a segment of society, pool that money for the purchase of health care goods and services for "all" and micromanage the delivery of these multitudinous goods and services and allocate resources effectively and fairly from Washington, D.C.

The questions you should be asking are these: Who will be making the rationing decisions and will those decisions be in your best interest? How is quality defined and how is it measured? What outcomes are measured and how accurately can they be measured? Does the raw data actually support the claims that are being made? Who gets to decide how much money gets spent on your health care during the last two years of your life, or the last five years of your life or any other arbitrary length of time?

We can only hope that what is good about the local medical system does not get swallowed up by a voracious federal juggernaut or glossed over in a meaningless sound bite. Is Grand Junction really a shining example of how to run health care or are we just giddy that a national celebrity might come to visit? Is that bright light the spotlight of a grateful nation or the headlight of an onrushing federal healthcare train barreling down the tracks directly at us? Listen carefully and critically to what is said. Take time to educate yourself. Speak up among your family, friends, community leaders and legislative representatives and let them know where you stand. And finally, wear your mittens and a sweater, Grand Junction, for the snow job is about to begin.


James K. Schroeder, MD

Dr. Schroeder is a practicing Pediatric Cardiologist currently living and working in Grand Junction. He has previously practiced medicine in the military for 13 years and in San Antonio, TX for 8 years. He attended high school in the Palisade High School right here in the Grand Valley. He attended college at West Point and the University of Colorado and medical school at Tulane University in New Orleans. Dr. Schroeder cares deeply about the future of his profession and the future his grandchildren will inhabit.

Dr. Schroeder makes many excellent points.

My only additional comment is to note that when producers and consumers are allowed to exchange goods and services in a free market (which the current system is not), the result is not rationing. Instead, it's an allocation based on people acting according to their own values and priorities in a just fashion.

Someone who purchases health care from a willing provider has earned it.

If someone needs medical care but can't pay for it, then he should ask for voluntary charity from others. But he should not demand it as some sort of "right" owed to him by a provider -- that would be asking for the unearned.

In contrast, rationing is a system in which the government allocates some good service according to its assessment, independent of the wishes of those who produce it. This violates the rights of the producers and the other consumers who may wish to trade with the producer on other voluntary terms.

This is the gross injustice of rationing, and we've seen the end result in other countries such as Canada and Great Britain, where the government decides who gets what sorts of access to advanced technology, and when.

Let's hope we never see that in the US.

Armstrong: Reject Political Control Of Health Care

The June 24, 2009 Grand Junction Free Press has published this OpEd by Linn and Ari Armstrong entitled, "Reject political control of health care".

Here is the piece in full:

Reject political control of health care
By Linn and Ari Armstrong

Medical decisions can be made by voluntary agreements among patients, doctors, and insurers. Or they can be made by politicians and their appointed bureaucrats. President Obama hopes for more of the latter.

While details remain sketchy, the centerpiece of Obama's plan is a "public" option, meaning that taxpayers would subsidize more health care, probably amounting to well over a trillion dollars over the coming decade.

Calling these forced wealth transfers "public" is misleading. Generally hospitals, doctors' offices, and insurance plans are already open to the public. Any member of the public is welcome to ask for these services and pay for them. But in Obamaland "public" means something different. It means that some members of the public can force other members of the public to help pay for their health care.

Recently, Obama said that his "public" plan would "ensure coverage for people where the free market system fails." He said, "We've got to admit that the free market has not worked perfectly when it comes to health care."

The reason that the "free market has not worked perfectly" is that there is no free market in health care, nor has there been one for many decades, Obama's magnificent lie notwithstanding. The problems with American medicine arise from decades of political interference in medicine -- so of course Obama wants to expand such interference.

Between Medicare, Medicaid, and other tax-funded programs, government spends nearly half of all health care dollars. In addition to driving up federal spending and threatening financial catastrophe in coming years, such programs increase health costs for everyone else by loading down doctors with paperwork and red tape, underpaying doctors, and artificially increasing the services demanded.

The federal government has entrenched employer-paid insurance through tax policy. Lose your job, lose your insurance. This especially screws people who develop medical conditions and then lose their jobs. Because of the tax incentives, such insurance also encourages people to run everything through insurance, which again drives up prices by increasing paperwork and decreasing the incentive to monitor costs. It would be like buying auto insurance that covers oil changes and tire rotations.

Among the many other political controls of medicine, both state and federal governments impose all kinds of insurance mandates, driving up insurance premiums and pricing many out of the market.

So, now that federal politicians have completely screwed up the private insurance market, they want to provide tax-funded insurance. How generous.

But Team Obama is clever. In further destroying the free market in medicine, Obama nevertheless adopts the rhetoric of capitalism. He said, "If the private insurance companies have to compete with a public option, it will keep them honest and it will help keep their prices down."

In the context of a free market, open competition indeed encourages companies to remain innovative and cost-conscious. But we are not talking about a free market here. We are talking about the federal government essentially knee-capping private insurance companies and then forcing people to pay protection money to finance the political plan. It is the "competition" of gangsters.

Obama dismisses as irrational "fear, that somehow once you have a public plan that government will take over the entire health care system."

Really? The logic behind the plan is to punish private insurance providers and tax-subsidize the "competition." Such a plan is just a back-door approach to eventually establishing "single-payer," meaning the federal government assumes responsibility for most medical payments. And he who pays the piper calls the tune. What the federal government finances, the federal government controls.

If you think we're stretching, watch the YouTube video, “The Public Plan Deception -- It's Not About Choice.” In the past Obama professed support for single-payer. Earlier this year Democratic Congresswoman Jan Schakowsky said she agrees that “the public option will put the private insurance industry out of business and lead to single-payer.”

We agree that insurance companies play too great a role in our health decisions and fail to offer the best kinds of insurance. Again, this is strictly a result of federal interference in insurance, and the solution is to get politicians out of the insurance industry, not let them take it over completely.

Obama has also been clever in tying the political takeover of health financing to tort reform. Obama told doctors that, if they get on board, he will do something about "excessive defensive medicine," referring to the insane and unjust law suits often brought against doctors that raise costs for the rest of us.

But if the legal system needs reform -- and we agree it does -- that should be done for its own sake, not used as a club to force doctors into compliance.

Political interference in medicine caused the problems. You're crazy if you think more of the same will solve those problems. And you're putting the health, finances, and liberty of the rest of us at grave risk.

-----------------------------------

Linn Armstrong is a local political activist and firearms instructor with the Grand Valley Training Club. His son, Ari, edits FreeColorado.com from the Denver area.

The piece is also mirrored on Ari Armstrong's FreeColorado.com website.

Thank you, Linn and Ari, for that clear and principled statement!

Will on the Public Option

George Will explains why the "public option" is more accurately called, "The Stealth Single-Payer Agenda".

Among the many good points he raises, here are two:

Arguments for the public option are too feeble to seem ingenuous. The president says competition from a government plan is necessary to keep private insurers "honest." Presumably, being "honest" means not colluding to set prices, and evidently he thinks that, absent competition from government, there will not be a competitive market for insurance. This ignores two facts:

There are 1,300 competing providers of health insurance. And Roll Call's Morton Kondracke notes that the 2003 Medicare prescription drug entitlement, relying on competition among private insurers, enjoys 87 percent approval partly because competition has made premiums less expensive than had been projected. The program's estimated cost from 2007 to 2016 has been reduced 43 percent.

Some advocates of a public option say health coverage is so complex that consumers will be befuddled by choices. But consumers of many complicated products, from auto insurance to computers, have navigated the competition among providers, who have increased quality while lowering prices.

Read the rest here or at this mirror.

The Unfree Market in Health Care

In response to President Obama's claim that the free market has failed us in health care, Brian Schwartz reminds us why the current problems in health care should not be blamed on the free market but rather on government interference in the free market.

Here's an excerpt from his post:

Does Barack Obama seriously think that there's a free market in medical care or insurance in Unites States? Is he ignorant? Is he trying to trick us?

Sure, there is a market, that is, people exchange goods and services. But it is by no means free from political mandates, controls, and prohibitions. That is what a “free market” is supposed to be free from, where people interact on a voluntary basis. Government’s taxing citizens to pay for other people's medical care, prohibitions and mandates on how insurance companies, hospitals, physicians, drug companies, etc. can interact with customers are all intrusions the market that make it less free.

As Ronald Bailey points out, "about 47 percent of all health care expenses today are paid for by federal, state, and local governments, e.g., Medicare, Medicaid, and State Children's Health Insurance Program (SCHIP)." Both Medicaid and Medicare drive up insurance premiums, not to mention the taxes you pay for them.

And then there's regulation...

Read the whole thing.

George Mason University economics professor Peter Boettke makes a similar point in this article:

If you bound the arms and legs of gold-medal swimmer Michael Phelps, weighed him down with chains, threw him in a pool and he sank, you wouldn't call it a 'failure of swimming.'

So, when markets have been weighted down by inept and excessive regulation, why call this a 'failure of capitalism'?

Although Boettke was referring to the financial crisis, his analysis applies equally well to health care policy.

Or as Ayn Rand stated in 1975:

One of the methods used by statists to destroy capitalism consists in establishing controls that tie a given industry hand and foot, making it unable to solve its problems, then declaring that freedom has failed and stronger controls are necessary.

Before we can fix the problems in American health care, we must correctly identify the source of those problems. Thank you, Brian, for doing exactly that.

Market-Based Reforms at Safeway

The June 19, 2009 Wall Street Journal has a good article discussing how Safeway CEO Steve Burd has reduced health care costs and improved quality of care for his employees through market based reforms.

Here are a few excerpts:

...As recently as 2004, Safeway was suffocating under health-care costs growing at 10% a year.

...Today, Safeway has accomplished what Washington claims is the goal: The company's per-capita health-care expenses have remained flat, compared to the near 40% increase experienced by the rest of corporate America over the past four years. This has not been done by cutting care or shifting costs to employees. Nearly 80% of the 30,000 nonunion Safeway workers who take part in the program rate it good, very good, or excellent.

Magic? Not even. Mr. Burd explains that the "cure for today's ills is simply removing the obstacles to a free health-care market."

Read the whole thing.

Employers, employees, and providers all win when the free market is allowed to operate. Safeway employees have experienced these benefits first-hand. Let's hope that our legislators are willing to learn from their experience.

Harrington on the Public Plan

The June 15, 2009 Wall Street Journal carried the following OpEd by Scott Harrington, warning that "The 'Public Plan' Would Be the Only Plan".

Catron's Warning

One of my favorite health care writers, David Catron, warns "How Obamacare Will Change Your Life".

Catron's own blog is here.

Five More Reasons To Oppose ObamaCare

T.L. James of the People's Press Collective lists "Five More Reasons to Oppose Obama's 'Single-Payer' Collectivized Healthcare". Here are his main points:

1. The Incompetence of Large Organizations
2. More Government = More Options for Corruption
3. Power Granted to the Government Will Inevitably Be Abuse
4. Healthcare Will Be Distorted by Vote-Farming Politicians
5. Healthcare in Government Hands Means Unstoppable Nannying

Read the whole thing.

Informative Links

As health care takes center stage in the political debate, some good articles have been published recently analyzing different facets of the issue. Here are a few informative links:

"How Not to Reform Health Care" by Michael Tanner
(Massaschusetts is a model of failure that we should not emulate at the national level.)

"Canada's ObamaCare Precedent" by David Gratzer
(Canada is a model of failure that we should not emulate in the US.)

"4 reasons why Obama's health plan is no bargain" by Shawn Tully
(Why Obama's plan will fail if implemented.

Another Doctor "Goes Galt"

Psychiatrist-blogger "Dr. Sanity" explain why she's stopped fighting against socialized medicine. Here are some excerpts from her June 13, 2009 blog post:

THIS TIME, I DON'T CARE ANYMORE...LET THE ZOMBIES TAKE OVER MEDICINE

...My entire professional life as a physician and psychiatrist I have been exceptionally vocal about the prospect of government medicine here in the US. I have given impassioned speeches (when I was younger); written essays in medical journals and elsewhere; and talked until I am blue in the face to anyone and everyone about the horrors of socialized medicine and government interference in the health care system of this country. Once it would have seemed impossible that I would ever want to quit medicine; to stop practicing psychiatry.

I have watched with dismay as every year we have inched closer and closer to the Democrats and the left's goals; goals which I firmly believe will completely destroy American medicine. I have watched up close and personal the utter soul-destroying consequences to both patients and doctors alike, of the pervasive cultural collectivist and looter thinking in my specialty. Every time this madness is killed, it just doesn't stay dead. Like some kind of putrefying zombie, the left just keeps resurrecting it. Logic doesn't matter. Facts don't matter.

Let's face it. To the zombies of the left, reality doesn't matter. With President Postmodern in office, aided and abetted by zombie hordes in Congress; why should I pretend anymore that it does?

This time around, I JUST DON'T CARE ANYMORE. If that's what people want, so be it.

I'm done. If Congress passes Obama's destructive zombie health plan in any form, I quit.

I will simply not practice medicine anymore. I will take my psychiatry books and my years of experience and do something else. I used to wait tables when I was in college. It's an honest living and Obama isn't interested for the time being in nationalizing restaurants--yet.

Let me be clear. I don't believe that people have a "right" to health care; because, what advocating such a "right" basically means is that you believe you have a "right" to my mind; you have a "right" to my professional competence; i.e., you have a "right" to enslave me.

Read the whole thing.

This doctor understands the central moral issue -- namely, that "guaranteed" health care enslaves the physician.

If Obama's health care plan passes, we'll see more doctors taking her approach and quitting the field.

And yet another "prophecy" from Ayn Rand's book Atlas Shrugged will have become true. In the words of the character Dr. Hendricks:

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? That was what I would not place at the disposal of men whose sole qualification to rule me was their capacity to spout the fraudulent generalities that got them elected to the privilege of enforcing their wishes at the point of a gun. I would not let them dictate the purpose for which my years of study had been spent, or the conditions of my work, or my choice of patients, or the amount of my reward. I observed that in all the discussions that preceded the enslavement of medicine, men discussed everything -- except the desires of the doctors. Men considered only the "welfare" of the patients, with no thought for those who were to provide it. That a doctor should have any right, desire or choice in the matter, was regarded as irrelevant selfishness; his is not to choose, they said, only "to serve."

...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 table under my hands?

Stossel on Competition

John Stossel explains why competition and free market reforms will save American health care.

Hennessey on KennedyCare

Keith Hennessey lays out the big problems with the proposed Kennedy health care "reform" plan.

And here's his updated analysis of the House of Representatives version.

Mankiw Asks the Big Question

In all the discussion about the so-called "public plan" supported by President Obama, Greg Mankiw notes that very few people are asking the big question:

...Would the public plan have access to taxpayer funds unavailable to private plans?

If the answer is yes, then the public plan would not offer honest competition to private plans. The taxpayer subsidies would tilt the playing field in favor of the public plan. In this case, the whole idea of a public option seems to be a disingenuous route toward a single-payer system, which many on the left favor but recognize is a political nonstarter.

If the answer is no, then the public plan would need to stand on its own financially and, in essence, would be a private nonprofit plan. But then what's the point? If advocates of a public plan want to start a nonprofit company offering health insurance on better terms than existing insurance companies, nothing is stopping them from doing so right now. There is free entry into the market for health insurance. If a public plan without taxpayer support would succeed, so would a nonprofit insurance company...

Mankiw is quite correct.

As we already know, there are many who view the "public plan" as just a stealth mechanism to get to a single-payer system which most Americans would reject.

This is why the "public plan" must be opposed.

Galen Video Contest Winners

The Galen Institute has announced the winners of their video contest to highlight the dangers of socialized medicine.

First place, "Universal Car Care":



Second place, "First, Do No Harm":



Third place, "Free Market Boyz":

Pipes on Canada

Sally Pipes has two-part editorial in the Washington Examiner on the problems with Canadian health care (and the problems Americans will soon face if we adopt our own "universal health care" system). I highly recommend reading both parts:

"Canadians seeking health care have a 'wait problem'" (June 3, 2009).

"Canadian patients face long waits for low-tech healthcare" (June 5, 2009)

Killing Medical Innovation

In the June 1, 2009 Wall Street Journal, Tevi Troy warns that the push towards government-run "universal health care" will strangle the sorts of medical innovation that we currently take for granted.

Here are a few excerpts:

The End of Medical Miracles?

...Scientific discoveries are neither inevitable nor predictable. What is more, they are affected, especially in our time, by forces outside the laboratory—in particular, the actions of politicians and government bureaucracies.

...The conduct of the businesses that had been responsible for almost every medical innovation from which Americans and the world had benefited for decades became intensely controversial in the 1990s. An odd inversion came into play. Since the work they did was life-saving or life-enhancing, it was not deemed by a certain liberal mindset to be of special value, worth the expense. Rather, medical treatment came to be considered a human right to which universal access was required without regard to cost. Because people needed these goods so much, it was unscrupulous or greedy to involve the profit principle in them. What mattered most was equity. Consumers of health care should not have to be subject to market forces.

...Attempts to universalize our system and pay for it with cost controls that could stifle innovation contradict their own goal, which is, presumably, better health. It also embraces the notion that you can get something for nothing—namely, that you can get innovative new discoveries and better health outcomes somehow without paying for these discoveries to come into being.

We forget the power of the single-celled organism. For most of man's existence on earth, the power of a single-celled animal to snuff out life was an accepted—and tragic—way of the world. Human beings could be wiped out in vast communicable plagues or simple through ingesting food or water. In the last century, the advent of the antibiotic has changed all that. For millennia, the only cure for an infection in humans was hope. Today, antibiotic use is so common that public health officials struggle to get people not to overuse antibiotics and thereby diminish their effectiveness.

There a reason that the US is the center of medical innovation in the world (see note #10), rather than the socialized medical systems of Canada and Europe. Hence, patients in those countries rely on advances developed in the US for new life-saving drugs and technology.

If the US moves towards a European-style health system, then there will be no other country to provide Americans with the current level of innovation that we now enjoy. Is that what we want?

Trojan Horse

The June 1, 2009 Washington Times has an OpEd by Michael Leavitt and Jeffrey Anderson discussing why the proposed "public plan" is a Trojan horse for a complete government takeover of medicine.

Their analysis of the problems of Medicare and the even-worse problems with a "public plan" are correct.

I do disagree with their statement that, "Every American should have access to affordable health insurance. Government must take strong action to make that possible."

The only action that the government needs to take is to get out of the way and allow the free market to work. If the government sticks to its legitimate function of protecting against the initiation of force and/or fraud, then we'll see massive improvements in health care and health insurance as willing entrepreneurs and businessmen spring up to offer services to patients.

We've seen the relatively-free market provide Americans with abundant affordable food, clothing, and housing. It's time we let it work for health care as well.

Rhoads: Force Is Not Competition

Jared Rhoads, director of the Lucidicus Project, has written another excellent OpEd, this time on force and pseudo-competition, as it applies to the proposed "public plan".

Here is his piece in its entirety, reposted with his permission:

Force is not competition
By Jared M. Rhoads
May 12, 2009

A letter to the editor in yesterday's edition of the New York Times calls for health insurance companies to be forced to compete with a public health plan administered by the government. "And if they fail," the writer goes on, "they should get out of the health insurance business."[1]

Compete? What a strange concept to apply to a scenario in which one party deals by voluntary trade, and the other deals by force.

Private insurers compete with each other to provide the best product they can on the market. Their costs are based on the payments that they can negotiate with providers, voluntarily. Their revenue is based on the number of customers they can attract, voluntarily. These companies are contractually obligated to provide that is clearly stated in the policies they underwrite. Many of these companies are quite large. Dealing with them can sometimes feel impersonal. But no matter how big they are, they cannot "wield power" capriciously, break contracts arbitrarily, or force you to subsidize your neighbor's premium. Consumers have recourse if they do.

The government, on the other hand, has no other way but to deal by force.[2] It gets price advantages by strong-arming providers (and will almost certainly be dictating care options before Obama's term is over). It gets operational advantages by hamstringing the private industry with regulations. And whatever revenue the government cannot raise from premiums, it can confiscate through taxation and inflation. That's not a business model. That's organized crime.

Many advocates of the public option proudly acknowledge that their plan amounts to one massive Medicare-for-all program that would likely have the effect of wiping out the insurance industry altogether. Yes, that is the same bureaucratic Medicare that is racked with unprecedented levels of fraud and abuse and which now faces insolvency as soon as 2016 or 2019.[3] The purpose of the public option is political, and if it is allowed to be implemented, the results will be ugly.

_____

1 Blaine, M. "Re Schumer Points to a Middle Ground on Government-Run Health Insurance" New York Times, Letter to the Editor, May 12 2009

2 The delegation of force to the government is appropriate only for the purpose of protecting individual rights. This is true for the military, police, and court system.

3 Will, G. "Dr. Leavitt's Scary Diagnosis" Washington Post, January 1 2009

More broadly, this is another example of the statists conflating economic power with political power.

But rather than the usual claim that allegedly evil private companies' use of economic power in the marketplace is equivalent to using force against helpless consumers, they're reversing the claim to promote the idea that the government's use of genuine force is just another benign form of economic power in the form of "competition". This is just an old fallacy in a new guise.

Thank you, Jared, for highlighting this issue!

How US Health Care Stacks Up

Because so many advocates of "universal health care" point towards other countries as models for our own, it's important to see exactly how the US compares with those other countries.

Investors Business Daily has a nice chart summarizing some key statistics, including survival rates for various cancers, waiting periods for treatments, and the supply of medical scanners:



Here's the related article.

As John LaPlante notes:

We certainly don't have a perfect approach to health care in this country. But we're doing some things right... We should build on what we've got right--a modicum of freedom from government control--not remove it.

Ups and Downs in Massachusetts

The May 28, 2009 New York Times reports on continued problems in the Massaschusetts system of "universal" health care.

As we've noted before, patients now have "coverage", but do not have access to actual care. The article notes:

Massachusetts, Model for Universal Health Care, Sees Ups and Downs in Policy

...The difficulties in receiving care were severest among low-income residents, who have gained the most from expanded access under the state's law, passed in 2006. It requires most residents to have health insurance and provides state-subsidized plans for the poor. Massachusetts now has the country’s lowest percentage of the uninsured -- 2.6 percent, compared with a national average of 15 percent.

But the study, which was scheduled for publication Thursday in the journal Health Affairs, found that increased demand for care from the newly insured was confronting an insufficient supply of willing physicians. One in five adults said they had been told in the last 12 months that a doctor or clinic was not accepting new patients or would not see patients with their type of insurance. The rejection rates for low-income adults and those with public insurance were double the rates for higher-income residents and those with private coverage.

The government could attempt to "solve" this problem by next forcing doctors to take patients who have the public plan. Or outlaw private plans altogether. Doctors will then no longer be independent providers of medical services, but serfs of the state. This is the path towards socialized medicine.

Or the government can abandon its attempt to guarantee universal health care and instead implement free market reforms.

The next few months will tell us which way this country will head.

Video: Universal Car Care

The Galen Institute has sponsored a contest for the best short video (less than 90 seconds) on the dangers of "universal health care".

You can see their entries here.

Brian Schwartz especially liked this one, "Universal Car Care":

Physician Shortages

David Catron explains the link between universal health care and physician shortages.

Luntz's Talking Points

I've had a busy Memorial Day weekend on call at the hospital, so I don't have a blog post for today.

But take a look at Brian Schwartz's post on Frank Luntz's health care talking points.

Many of the points that Luntz raises are good ones.

But as the debate over universal health care descend into a nitty-gritty battle of power politics, it is critical that advocates of free market health care reform find ways to communicate their message in terms that resonate with average Americans without resorting to emotionalism or pragmatism. Our victory or defeat may will depend on whether we can articulate our ideas in a way that is both principled and persuasive.

How Washington Will Ration Health Care

The May 19, 2009 Wall Street Journal explains "How Washington Will Ration Health Care":

Try to follow this logic: Last week the Medicare trustees reported that the program has an "unfunded liability" of nearly $38 trillion -- which is the amount of benefits promised but not covered by taxes over the next 75 years. So Democrats have decided that the way to close this gap is to create a new "universal" health insurance entitlement for the middle class.

Such thinking may be a non sequitur, but it will have drastic effects on the health care of all Americans -- and as it happens, this future is playing out in miniature in Medicare right now. Desperate to prevent medical costs from engulfing the federal budget, the program's central planners decided last week to deny payment for a new version of one of life's most unpleasant routine procedures, the colonoscopy. This is a preview of how health care will be rationed when Democrats get their way...

Unless Americans speak out against "universal" health care, this will be our future...

Bernstein On Innovation

David Bernstein raises a good point on medical innovation that more politicians should be thinking about:

I don't have the expertise to discuss the various health care reform proposals that are being bandied about, but I do know that it's important to ensure that whatever is implemented doesn't interfere with innovation.

Consider my own immediate family. I was born a month premature, a bit over three pounds, in my parents' bedroom after an extremely short (like 5 minutes) labor. I was rushed to the hospital, where I stayed for over a month in a "warmer". A decade or two earlier, I would have been a goner. Two and a half decades later, my cousin's son survived being born three months premature and weighing less than two pounds...

[Multiple other examples]

...Oh, and you can add my wife, who not too long ago would have died due to complications in one of her pregnancies. Indeed, before the invention of ultrasounds, the doctors wouldn't have even known about the problem until it was way too late.

Given all this, it's not surprising that I get a bit antsy when I hear some politicians talk as if health care is a fixed good, and the only question is how to distribute it properly.

Fortunately, we already know what system has led to innovation and advancement in the rest of the American economy. It was the free market.

Perhaps we should let it work in health care as well.

Massachusetts Cost Containment

Due to continued rising health care costs in Massachusetts under their "universal" plan, the May 7, 2009 Boston Globe reports that the government plans "another bold healthcare experiment":

State seeks to revamp way doctors, hospitals are paid

...Commission [Special Commission on the Health Care Payment System] members said they will urge Governor Deval Patrick and the Legislature to replace the current system, in which insurers typically pay doctors and hospitals a negotiated fee for each individual procedure or visit, with a set payment for each patient that covers all that person's care for an entire year.

Massachusetts would be the first state to broadly adopt such a system, which would essentially put doctors and hospitals on a budget in an effort to restrain health spending.

A single, yearly fee is intended to discourage doctors and hospitals from providing unneeded tests and treatments, so patients could find it harder to get procedures of questionable benefit. And because doctors and hospitals would have to work together more closely to manage the budget, the hope is they will better coordinate care for patients, which could improve quality.

But Scott Keays correctly noted that this is nothing new in this May 10, 2009 LTE to the Boston Globe:

Patients' care would be compromised

Adopting a system to pay doctors and hospitals a single, yearly fee for each patient is neither bold nor experimental. It's just another variation of capitation: a system that would lead to the government rationing and ultimately compromising patient care.

Before making another costly healthcare mistake, Beacon Hill lawmakers should ask themselves how they would react if their doctor said, "We've already spent your annual healthcare allowance, and anything else we could do to treat your condition would put us deeper in the red." My guess is that it would only take one really sick lawmaker (or governor) to realize the error of their ways.

Scott Keays
Allston

Keays is completely correct. This sort of capitation creates a financial incentive for hospitals and physicians to provide the minimum care necessary. So if you come to your doctor with abdominal pain and he has a choice between a more expensive surgery which will cure your condition or less expensive medications that will be less effective, he may choose to delay surgery for as long as possible to avoid losing money on your case.

Can patients trust medical advice in such circumstances, knowing that their doctors are rewarded financially for undertreatment and penalized for recommending more expensive treatments?

Patients hated this sort of indirect rationing during the heydey of HMOs. They won't like it any better when the government does it.

More Waiting in Massachusetts

The cracks continue to widen in the Massachusetts "universal" health care plan. The May 15, 2009 Boston Globe reports that patients are waiting even longer for access to specialists:

Waits to see Hub doctors grow longer

Despite Boston's abundance of top-notch medical specialists, the waits to see dermatologists, obstetrician-gynecologists, and orthopedic surgeons for routine care have grown longer - to as much as a year for the busiest doctors.

A study of five specialties shows that the wait for a nonurgent appointment in the Boston area has increased in the past five years, and now averages 50 days - more than three weeks longer than in any other city studied.

Read the whole thing.

Too many politicians conflate "coverage" with actual medical care. Under "universal" systems, governments can promise plenty of theoretical "coverage", but not actual medical care.

Massachusetts patients know the difference between "coverage" and medical care. So do patients in Hawaii.

Will the rest of the country have to learn this lesson the hard way?

How ObamaCare Will Affect Your Doctor

The May 12, 2009 Wall Street Journal warns that the current push towards government-run health care will squeeze patients and physicians alike, with massive unintended consequences. Here are a few excerpts:

How ObamaCare Will Affect Your Doctor

...Physician income declines will be accompanied by regulations that will make practicing medicine more costly, creating a double whammy of lower revenue and higher practice costs, especially for primary-care doctors who generally operate busy practices and work on thinner margins. For example, doctors will face expenses to deploy pricey electronic prescribing tools and computerized health records that are mandated under the Obama plan. For most doctors these capital costs won't be fully covered by the subsidies provided by the plan.

...Right or wrong, more doctors will close their practices to new patients, especially patients carrying lower paying insurance such as Medicaid. Some doctors will opt out of the system entirely, going "cash only." If too many doctors take this route the government could step in -- as in Canada, for example -- to effectively outlaw private-only medical practice.

Read the whole thing.

The end result will be a total government takeover of medicine.

If you want the US health care system to look like the Department of Motor Vehicles, you won't have to wait long.

Medicare is Unsustainable

John Goodman runs some numbers and shows that Medicare is unsustainable.

There are two important consequences.

1) If we move towards any form of government-run universal health care (such as the proposed "Medicare for all"), the problem will become quickly worse.

2) The government will eventually have to cut health care spending. In other countries, this has taken the form of draconian rationing (e.g., "no dialysis if you're over a certain age"). Basically, the government determines what their citizens' lives are worth.

That's why we need to adopt free market health care reforms as quickly as possible, where the usual market mechanisms can lower costs while preserving quality. We don't have much time to act. All we need is the political will.

Simpson on Licensing

During an online discussion on whether physicians should be forced to work during pandemics as a condition of retaining their medical license, the discussion turned towards the appropriateness of medical licensing in general.

Steve Simpson of the Institute of Justice had the following excellent comments to make in response to some questions. With his permission, I'm reposting his remarks here.

With respect to the question that doctors know up front that they agree to certain terms before they accept a license, hence they've voluntarily contracted to any associated obligations:

First, doctors do not consent to medical licensing in the sense in which that consent could legitimately be said to impose further obligations on them, the way one consents to the obligations in a contract.

Doctors do not get to decide to practice with a license or without a license. They are compelled to practice with a license whether they want to or not. So it is wrong to claim that they somehow consent to whatever obligations come with licensing. The state offers them the "choice" of practicing with a license or not practicing at all. That is not a choice the state has to authority to impose upon doctors, any more than it has the moral authority to offer citizens the "choice" of being enslaved citizens or not being citizens at all. I could say much more about this, but I'll leave it at that.

With respect to the concern that private medical licensing groups would have a conflict of interest between setting high standards vs. retaining their members (and hence government would be better at protecting the public from shady practitioners):

Second, your view that private medical licensing would constitute an inherent conflict of interest because it would be doctors essentially engaging in self-regulation is wrong on many fronts. The fallacy at the root of your view is that individuals are capable of objectively governing the lives of others but not capable of governing their own lives because of their own self interest in the latter situation but not the former. There is much to say to this, and reading Atlas Shrugged would be a good place to start in learning why that view is the exact opposite of the truth, but let me say just a couple things.

You say that there is no guarantee that private medical boards will set high standards or improve them as necessary. But there is, and it's the best guarantee that has ever existed--rational self interest. Doctors are neither insane, nor irrational (indeed, if they were, I submit they would not be doctors now would they). Nor are their patients. Doctors have no desire to harm or injure their patients, for, among other reasons, if they do they will not remain doctors for very long, they will have no patients, they will get sued, etc.

Moreover, there is no guarantee that state regulatory boards will set high standards either. Indeed, state regulatory boards have no incentive whatsoever to keep current with the latest developments in medicine and to ensure that their standards are high. What is the cost to them if they do not do so? They are committees, and thus each individual can always shuffle off the responsiblity for their failures to someone else, and even if they are found to have failed to set high enough standards, they suffer no consequences whatsoever. Their income and careers are not on the line, they will never be fined or sanctioned for their failures, and rarely, if ever, are any regulatory boards ever held accountable for their failures.

But there's another mistake in your thinking about this that many people make, which is to consider any regulatory boards to be separate from the professions they regulate. This is flawed as a matter of both history and common sense. Historically, occupational licensing has typically been championed by the very professionals who are to be licensed. They do this both to "professionalize" their industries--because it is much better to be "state licensed" than simply to be qualified--and to make it much harder for others to compete with them.

As a result, all occupational licensing agencies or boards that exist today are composed of the very professionals that they regulate. This makes perfectly good sense when you consider that no one else is qualified to regulate them. Who is going to decide what the proper standards for doctors are but doctors? Likewise lawyers, plumbers, carpenters, engineers, architects, stenographers, morticians and funeral directors, barbers and cosmetologists, florists, etc. Do you know what standards even a licensed florist or interior decorator must meet to be qualified? I don't. So who, but other florists and interior designers are going to regulate the florists and interior designers?

The term for what I am talking about is "regulatory capture," which simply means that the idea that regulatory boards and agencies of any type are somehow "separate" from the industries they regulate and thus "objective" is utter, unbridled nonsense. It is a pipe dream. It is the sort of thing that we all believed in fourth grade when we thought that committees should run the whole wide world because that would be "fair." My point is not simply that regulatory capture is likely to happen.

My point is that occupational and industrial or economic regulation is virtually impossible without regulatory capture, and, indeed, the regulators actively want the participation of the industries they regulate because otherwise they would not know what the hell they were doing. So your view that regulatory boards are somehow more "objective" and less "conflicted" than private boards is just not true factually and by the very logic of what such regulation aims to do.

And with respect to occupational licensing in general:

I could go on about occupational licensing all day. At IJ, we've done quite a lot of work on the subject, so if anyone is interested in more concrete examples of how licensing evolves in a given profession, check out our website, particularly the economic liberty cases and some of our research publications (www.ij.org). Or just shoot me an email (or ask a question here) and I'll do my best to answer it or direct you to more information.

The idea that licensed workers voluntarily consent to the obligations imposed on them by states is really unjust in more ways than I mentioned. As a lawyer, I see this all the time.

The states in which I'm licensed are constantly imposing new requirements, like mandatory pro bono, additional "continuing legal education" and the like to which I never consented and that are burdensome, costly, almost always a complete waste of time, and useless from the standpoint of improving my qualifications. In fact, what does motivate me to do a good job is precisely the opposite of all of these (and more) unchosen obligations.

I am motivated by the chosen obligations I freely decided to accept when I became a lawyer. My own desire to produce excellent work, to give my client the best work I can, to win my cases or at least to outlitigate the other side at every step, and to constantly produce a better brief or better argument or better analysis than I did the last time out.

But even if those things didn't motivate me, I and every other regulated professional would be motivated by the desire not to be embarrassed or to develop a bad reputation (and I have both colleagues, clients, and judges to worry about) or the other things I mentioned in my last post. In fact, I have never in my 15 year career met anyone who was ever motivated to produce good work by the states in which they were licensed. I could produce consistently incompetent and crappy work for years before any of the three states in which I'm licensed would take notice. My colleagues, my employer, my clients, and all the judges I appear before would take notice long before the state bars.

So my point is that the notion that we voluntarily assume the obligations of our state licenses is both a classic moral inversion--because it is in fact the voluntary obligations that motivate professionals and regulated occupations to produce high quality work--and it is illogical in that it contradicts the supposed purpose of licensing, which is to impose obligations on regulated occupations that they did not choose, because, allegedly, they can't voluntarily regulate themselves. See the contradiction? On the one hand, the obligations of licensing are "voluntary." On the other, licensed occupations can't be self-regulated because "voluntary" regulation would not work. Heads they win, tails we lose.

Thank you, Steve, for this great impromptu analysis!

Here's the full discussion thread, which includes links to additional articles on licensing by Alex Epstein ("End Government Licensing") and Shirley Svorny ("Medical Licensing: An Obstacle to Affordable, Quality Care").

Spaceship Trauma

Yes, there is an ICD-9 code for getting injured onboard a spaceship.

(Via KevinMD.)

Steve Forbes on Health Care

Steve Forbes discusses why we shouldn't look to other countries for health care reform.

Much of what he cites can be found in the NCPA paper, "Health Care Reform: Do Other Countries Have the Answers?" by John C. Goodman, Linda Gorman, Devon Herrick, and Robert M. Sade.

Dalmia Debunks Obama

Shikha Dalmia debunks President Obama's claim that government-run health care will save our economy in this May 5, 2009 piece from Forbes. Here is an excerpt:

Obama's Health Care Reform Tactics

True to the advice of his chief of staff to never let a good crisis go to waste, President Barack Obama is using the current economic crisis to sell a top item on the liberal wish-list: universal health care. "You can't fix the economy," he has repeatedly said, "without fixing health care."

But the president needs to take a chill pill before committing America to a huge new entitlement: One is hard pressed to find any evidence from abroad showing that universal coverage has grown the major industrialized economies more than ours in the past--or shielded them more than us from the global slump now.

...But whatever else universal coverage might bring, there is no evidence that it will bring economic nirvana. If anything, contrary to what the president suggests, the correlation runs the other way for countries with universal coverage such as Canada, England, France, Germany and Japan. On nearly every economic front, their performance has been worse than America's--even, surprisingly, in controlling health care costs.

...All in all, there is no major industrialized economy with universal coverage that has performed as well--let alone better--than the United States in the last decade

(Read the whole thing.)

Admin Note: Light Posting

Due to external obligations, posting will be light next week.

Quote of the Day from Mark Steyn

Canadian writer Mark Steyn has the quote of the day on President Obama's plans for government-run medicine:

Socialized health care in particular changes the nature of the relationship between citizen and state into something closer to junkie and pusher.

And as David Catron notes:

...[O]nce all Americans find themselves dependent on Big Brother for health care, they will do anything to keep the supply flowing. No matter how badly it works, the voters will resist any change.

...That's why the Democrats and our new President want to foist government-run health care on you. They want the kind of power over you that a crack dealer has over a crackhead.

Bill Whittle nails the essential issue here:

"Free" health-care costs us something precious, and no less precious for being invisible. Because there's a word for someone who has their food, housing and care provided for them... for people who owe their existence to someone else.

And that word is "slaves."

Hsieh OpEd at PJM: "Health Care Reform vs. Universal Health Care"

PajamasMedia.com has just published my latest health care OpEd, "Health Care Reform vs. Universal Health Care".

Here is the opening:

Health Care Reform vs. Universal Health Care

President Obama and Congress have now shifted their attention towards health care reform. This subject is critically important to anyone who might need medical care someday — namely, all Americans. Unfortunately, too many pundits and politicians erroneously equate "health care reform" with government-run "universal health care." Before we rush headlong into any such program, here are three basic facts that Americans should know about universal health care...

The three basic facts I discuss include:

1) Government-run "universal health care" leads to rationing
2) Health care is not a "right"
3) Free-market health care reform can and does work

Read the whole thing here.

McCaughey: Controlling Doctors' Decisions

Former New York lieutenant governor Betsy McCaughey gives us an update on comparative effectiveness mandates and how the will compromise your doctor's ability to practice good medicine.

Here are a few excerpts:

Controlling Doctors' Decisions

...Legislators slipped the framework for top-down government controls into the stimulus package passed in February. One provision called for computer technology that will "guide" doctors' decisions about what care is "cost-effective." Beginning in 2014, Medicare and other federal programs will impose financial penalties on doctors and hospitals who are not "meaningful users" of this system. Private insurers historically have followed Medicare's lead.

...Government controls on health expenditures will reduce the availability of medical technology, such as MRIs, and cause waits for treatment. [Harvard Medical School professor David] Blumenthal says it's "debatable" whether the timely care Americans currently receive is worth the added price.

Ask a cancer patient about waiting, and you'll get a different answer. Delays lower your chance of survival. For example, women in the U.S are more likely to have regular mammograms than are women elsewhere, according to data from the Commonwealth Fund. Their breast cancer is detected sooner. They are also treated faster and have higher survival rates than women in any other developed country, according to the CONCORD study published in 2008 in Lancet Oncology. These statistics include all American women, not just those with insurance.

Read the whole thing.

Advocates of government-run "universal health care" typically criticize insurance companies for denying care in order to save money.

The harm that private insurers can do will pale in comparison to what the government can do when it becomes the the sole monopoly insurer.

Let's hope we don't have to find out.

Four Myths About Universal Coverage

University of Illinois law professor David Hyman has posted a paper entitled, "Employment-Based Health Insurance and Universal Coverage: Four Things People Know That Aren't So".

He covers four commonly-held myths about insurance and universal coverage, including:

* Employers pay for EBC (employment-based coverage)
* There are 45.7 million uninsured Americans
* Universal coverage means everyone will have access to high quality care
* Universal coverage will solve the cost problems of American health care

We do need significant reforms. But his paper explains why government-run "universal health care" will take us in the opposite direction.

And given the fact that the current employment-based system has its roots in bad tax policies, we should eliminate the laws the link employement to insurance, not strengthen them. This would be genuine reform in the right direction.

(For more information on this latter point, see "Healthcare shouldn't be linked to employment" by Jeff Jacoby in the October 19, 2008 Boston Globe.)

Health Care Reform that Will Kill the U.S. Economy

U.S. Senator Tom Coburn (R-OK, and a practicing physician) and Regina E. Herzlinger (Harvard Business School Professor) have written the following OpEd on the perils of Congressional proposals to impose a Massachusetts-style health care system on the entire US. Here are a few excerpts:

Health Care Reform that Will Kill the U.S. Economy

...Massachusetts, which operates a U.S. analogue to a national government-run health-insurance market, is, in fact, a case study illustrating why health insurance run by Washington would collapse on itself. By March 2009, the state's uninsured rate fell to 2.8 percent from about 6 percent. The market, stocked with private-sector insurance policies, had insured 169,000 people in two new programs, one of which directly subsidizes uninsured individuals.

Good news, right? Wrong.

Their piece then describes the rising costs and long waits.

The next step:

By 2009, Massachusetts enacted almost $800 million in new taxes to fund, among other things, the third year of health care reform. Now, the state government, desperate for revenue, is considering setting the prices of health insurance and essentially taking control over all health-care costs, other than Medicare and out-of-pocket spending. If this sounds like a march into a single-payer Soviet-style system, that's because it is.

And the end result:

...In the end, the Democrats' health care reform will require drastic rationing of health care for the sick to control its costs. Consider Canadian patients, who may wait a year or longer to get radiation therapy. Or ask one of the nearly 1.8 million Britons who are waiting to get into a hospital or have an outpatient procedure. Or talk to the German breast cancer patients who are 52 percent more likely to die from the disease than Americans.

We have been warned.

Killing Private Health Insurance

US Rep. Jan Schakowsky (D-IL) has openly stated that the goal of "health care reform" is to kill off the private health insurance sector and replace it with a "single payer" system:



As the sympathetic leftist website People's Weekly World reports:

Rep. Jan Schakowsky (D-Ill.) and co-sponsor of HR-676 answered criticisms from single-payer advocates. She said the public option is not a compromise, but a strategic step toward the single-payer system and the elimination of the private insurance industry.

The private sector is united in opposing any legislation that would expand publicly funded health care over and against the virtual monopoly of insurance companies.

The public option is simply the opening salvo against the private sector, Schakowsky and other speakers said.

(Via Verum Serum and Hot Air.)