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Tuesday, November 26, 2002
The Dangers of Socialized Medicine
Jacob G Hornberger, editor of the treatise, The Dangers of Socialized Medicine, contends that the debate over national health care is a debate over the future of the United States. During the eighteenth and nineteenth centuries, the American people guarded the principles of private property, free markets and limited government, which brought them unprecedented prosperity. Throughout history, only the royalty and aristocracy had wealth, now enjoyed by our huge middle class. “Unlike their ancestors, twentieth century Americans have permitted the state to take control over their income, their educational activities, their charitable acts, and their economic endeavors . . . now comes the culmination of this devotion to omnipotent government–the idea that the state should take control of people’s health care . . . benignly called national health insurance, but it is actually nothing less than socialized medicine.”
Richard M Ebeling, Vice President of Academic Affairs at the Future of Freedom Foundation, writes in the introduction to the same treatise . . . “Government’s entry into the health care market has dramatically expanded the volume, intensity, and price of health care. By first bidding up the price of health care with a payment system that encouraged excessive utilization and spending, and then imposing cost-containment measures that led to cost-shifting, government has inadvertently increased the cost of health care to other buyers and changed the way that health care is delivered. In so doing, government has contributed to a process that has priced health care and health insurance out of the reach of millions of Americans. Yet, the advocates of national socialist health care insist that the rising costs and less-than-satisfactory care is the fault of the private sector, when in fact it has been the state’s intrusion into the private health-care market that is behind practically all of these undesired effects. Having distorted and disrupted the health-care market with one set of state interventions, the government is now proposing to fix its own mistakes with comprehensive state intervention and regulation over the entire medical industry. No clearer road to disaster can be proposed.”
Medical Catastrophe for America
The twelve authors of the essays in this volume share a common belief that the implementation of any form of national socialist health care in the United States would create a medical catastrophe for the American people. In their contributions, which we will visit in subsequent issues of the MedicalTuesday e-letters, they demonstrate both the undesirable consequences that would follow such a system and why the only hope for a sound and efficient health care system in America lies in the radical repeal and denationalization of all existing state interventions in the health-care industry.
In this section, we give examples of patients utilizing at least twice the necessary health care costs and frequently 10 to100 times what is reasonable. Recently, a 25-year-old male complained of pain in his right chest after wrestling with his young son. The pain was localized to a rib, which along with the muscle, was tender. His breath sounds were good in both lungs. However, in view of a history of pneumothorax, I did a chest x-ray to make sure that a fractured rib, pneumothorax, or bleeding–the significant complications of a fractured rib–were not present; indeed, nothing showed on x-ray. Thus it became a pain management problem and he was advised to take 10 grains of Tylenol every 3-4 hours as needed. Should the pain increase in severity, a prescription for 20 codeine compound tablets was also given. The following Saturday, three days later, his wife called and stated she was taking him to an “urgent care” center for further evaluation since he was in excruciating pain and his “obviously fractured rib was sticking out.” I pointed out that three days earlier this was not the case. Nevertheless, she took him to an urgent care center. Four days later he wanted to return to the center for follow-up evaluation. Instead, we saw him in our office that day. The report from the urgent care center was quite negative; the only findings were the same as ours: namely a tender rib. Their recommendation was to “be careful.” They prescribed 30 codeine pills for pain if it became severe. He had not taken any pain medications and had not filled either codeine prescription, despite three medical visits. His reason, “I don’t like to take medications!”
Utilizing three appointments with identical findings when one would have been appropriate for high level optimal health care is already a 300 percent increase in health care expenditures. The news media reports daily about needed reduction in health care costs. Since that is not occurring, Congress is reducing reimbursements by 5 percent to 10 percent to the providers, including physicians. The gluttonous behavior of patient utilizers, which is rarely considered, is an area where health care costs can be cut rather significantly. However, costs can only be cut at the utilization end by the patient. Furthermore, the patient will only monitor costs and utilization if he becomes financially liable. In the aforementioned case, the patient admitted that if he had to pay 30 percent of the estimated costs, he would not have made the second and third visits. Although he had not followed the recommendations of any of the three evaluations, he now stated that he would have taken the recommended Tylenol, and if not relieved of pain, he would have had the codeine prescription filled. Obviously a $10 copay was inconsequential in affecting medical gluttony. But a 30 percent co-payment would have caused a 67 percent reduction in cost rather than a 300 percent increase, far greater than any Congress, Legislature, Parliament or Bundestag could have accomplished. The answer to health care cost reduction is obvious–get the bureaucracy out of health care.
Price Gouging or Looting the Public Trough
In the October 29, 2002, MedicalTuesday E-letter, we mentioned a private hospital that increased the charges for oxygen to about 15 times (1500 percent) the cost. The hospital administrator did not see this as price gouging; nor did he see it as unethical. In the last issue, November 12, 2002, we mentioned the investigation of excessive Medicare costs at the Redding Medical Center, along with a Cardiologist and Cardiac Surgeon on the staff of this Tenet Hospital. The medical board’s attempt to obtain a court injunction to remove the medical licenses of the physicians was unsuccessful. According to current headlines, the drug prices at this hospital are 1000 percent over cost which is about twice the average. However, further investigation found many hospitals have been charging up to 15 times cost (1500 percent).
So What Else is New?
When I was a medical director of respiratory care, I noted that the hospital was changing from drug stock bottles to unit dose. Drugs were individually wrapped and administered by the nurse. The initial charge was 25 cents per pill which some people felt was an outrage inasmuch as most pills in those days cost pennies. Antibiotics were ten cents. After the furor subsided, the charges, just as the oxygen cost, increased and became progressively higher: first by 5 cent increments, later by 25 cent increments, up to $4.50. Even though the cost was still 25 cents on average, the administrator informed me that some pills were approaching $1.00, and the cost of administration by the nurses was barely covered by the $4.50 charge. This was 18 times (1800 percent) the average cost. The spokesman for Redding Medical Center readily admitted that they charge up to 15 times (1500 percent) what they pay for drugs. However, Medicare and other insurance companies never pay the full amount; therefore, they had to keep the charges up so non-Medicare patients would pick up the slack. This cost shifting to other payers illustrates that charges do not reflect costs, value, or competitive pricing. Therein lies a major problem in health care today. Returning to the Medical MarketPlace will be a painful process, but necessary to rein in health care costs. With moneys collected through taxation by the government to pay the bill, I have observed this sort of abuse for 30 years. The news media treats it as a recent phenomenon suggesting that even more bureaucracy is necessary for control. In a free market economy, these distortions could not have survived for more than a few months. Patients would seek out the most cost efficient hospital available.
National HealthCare Systems in the English-speaking
World (No 7)
In his recent update of the “Twenty Myths about National Health Insurance,” John C Goodman, PhD, president of the National Center for Policy Analysis (www.ncpa.org), states that the failures of national health insurance are one of the great secrets of modern social science. Not only do ordinary citizens lack an understanding of the defects of national health insurance, all too often they have an idealized view of socialized medicine. For that reason, Goodman and his associates have chosen to present their information in the form of rebuttal to commonly held myths.
Myth Seven: Countries with Single-payer Health
Insurance Systems Have Been More Successful than the United States in
The United States spends more on health care than any other country in the world, both in dollars per person and as a percent of gross domestic product (GDP). Does this mean that the US, with a predominantly private system, is less able to control health care spending than developed countries with national health insurance? Goodman does not think so. Health economist Joseph Newhouse found that 90 percent of the variation in health care spending among developed countries is based on income alone. As people have more income, they spend more on health care, whether their spending takes place through the Medical MarketPlace, the political system or quasi-public institutions. In countries with a national single-payer health system, the government can, in principle, limit health care dollars and force hospitals and doctors to ration services. In all political systems, just as in the US, there is unrelenting pressure to spend more on health care.
Organization for Economic Cooperation and
Most international statistics on health care spending are produced by the Organization for Economic Cooperation and Development (OECD). However, Goodman contends that these statistics are not always reliable because the various countries use widely different methods of reporting costs. For instance, Germany includes nursing home care as part of the total health expenditures; Britain does not. Some countries report hospital beds by counting bed frames, whether or not in use; while others count a bed only if it is staffed and operational. The US has a lower inpatient rate (12) below the OECD average (16), because the US figures do not count outpatient procedures, whereas OECD statistics include them. In the 1990s, health care spending in 12 of 15 OECD countries grew at the same rate or higher than the US, while expenditures on hospitalization and physician services actually decreased in the US–well below the OECD mean. Goodman contends that this is surprising since the US has less rationing of care and greater access to medical technology, with a wider range of health problems; AIDS is 10 times more prevalent in the US than in Canada and obesity is a greater problem in the US than in other developed countries. The US has more health care costs related to war injuries and teenage pregnancies, with a high premature baby rate and twice as high a pregnancy rate.
The US vs Canada
Canada achieved the impressive feat of limiting the real rate of health care growth to about half that of the US by cutting funding for services; however, it did so in ways that caused people to suffer. There were draconian cuts in facilities and services. The Canadian federal government reduced block grants to provinces for health care in 1986, 1989, and froze expenditures in 1990 for five years. They then made further cuts through the last half of the 1990s. The provincial governments reduced funds to hospitals which severely limited purchase of new technology and removed some services from coverage. Many smaller hospitals were closed–50 in Saskatchewan–and the number of beds nationwide was reduced from 6.6 per thousand in 1987 to 4.1 per thousand in 1995.
Goodman concludes that, unfortunately, these reductions in the availability of medical services had more to do with budgetary shortfalls than lack of medical needs, meaning that patients often must do without needed care. As we will see in the next issue, satisfaction with the Canadian health care system has fallen throughout the 1990s, and the waiting lists have increased.
Oregon Voters Refused to Be Human Guinea Pigs
Oregon rejected the Canadian-style socialized medicine initiative by a 4 to 1 margin earlier this month. They decided that there were already enough human guinea pigs around the world who confirm that government medicine does not work, and that only privatization is saving their system from disaster. However, elements in California were not dissuaded from immediately pressing for a single-payer initiative in 2004. We have a governor who entered office four years ago with tens of billions of dollars surplus and won reelection despite ending his first term with a $30 billion deficit. He is cutting health care budgets for the poor. If we can’t afford to give the poor Medicaid people decent care, aren’t we taking leave of our senses to even suggest we can afford to give care to everybody else?
Bill Virgin, a business columnist with the Seattle Post-Intelligencer was impressed by the defeat of Single Payer in Oregon. He says “defeat” isn't the right word. “The result requires more action-oriented verbs such as shredded, pummeled, clobbered.”
MedicalTuesday Recommends the Following Efforts in
The Greg Scandlen Health Policy Comments as an important source of market-based medicine. You may log onto NCPA (www.ncpa.org) and register to received Greg’s weekly report, or the weekly Health Policy Digest or the full NCPA daily report. The Mercatus Center at George Mason University is a strong advocate for accountability in government. You may register your email address or read their government accountability reports at www.mercatus.org. Martin Masse, director of the Montreal Economic Institute, is the publisher of the webzine: Le Québécois Libre. His enlightening articles can be found at www.quebecoislibre.org/apmasse.htm. You can also brush up on your French at the same time with some of the bilingual articles. We also recommend the market-based reports of Lew Rockwell, president of the Ludwig von Mises Institute. Please log on at www.mises.org to obtain the foundation’s reports or log onto Lew’s premier free market site at www.lewrockwell.com.
MedicalTuesday Recognizes the Following Efforts in Restoring the Private Doctor & Patient Interface: PATMOS EmergiClinic - www.emergiclinic.com, where Dr Robert Berry, MD, an emergency physician and internist, provides prompt care for many of the injuries and illnesses treated in Emergency Rooms at a fraction of their cost, as well as an internal medicine practice; Dennis Gabos, MD, President of the Society for the Education of Physicians and Patients (SEPP), www.sepp.net, for his efforts in Protecting, Preserving, and Promoting, the Rights, Freedoms, and Responsibilities of Patients and Health Care Professionals, with a special page for our colleagues in nursing; SimpleCare for their success in restoring private practice, www.simplecare.com; HealIndiana as a supporter of market-based medicine, www.HealIndiana.org; and the AAPS for representing physicians in their struggles against bureaucratic medicine, www.AAPSOnline.org.
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Del Meyer, MD, CEO & Founder