Monday, March 23, 2015

Why I Opened a Direct Primary Care Clinic

Towards the end of a busy Neosho Business Expo this weekend a potential patient asked me why I had opened my Direct Primary Care clinic. Usually I would answer this question with enthusiam, but my tired mind sputtered. My answer was pathetic.

I hope do better here. This is why I opened my Direct Primary Care Clinic, Free Market Physician.

1. Health care is too expensive. As a physician and as a patient I have experienced the inside and outside of the health care structure. I know how much care should cost and how much it does cost. Health care is simply too expensive. What patients pay are not a true reflection of the cost of their care. As a Direct Primary Care doctor, I have the chance to change that. I have removed the insurance middle men from the health care equation. I keep my overhead low. I strive to fulfill the clinic's mission to make health care personally affordable to my patients.

2. Patients are getting pretty crummy care. There are plenty of reasons to complain as a patient in most clinics. We get insufficient time with our doctors. Our doctors don't listen to us. They can be short-tempered. They don't answer questions. We can't get in to the clinic when we are actually sick. Our visits are always late. We can never reach our doctors (or even the nurses) by phone.

In the insurance system I was going to be that doctor. I would enter the system as an idealistic, people-loving medical school graduate and surely be beat up and worn down to an short-tempered, hen-pecked, chronically late doctor. But here it is different. I have time with my patients. We talk. I know them. I am on time for our visits. My patients can reach my cell phone. I can give truly good care.

3. American health care has to change. Things were bad before the Affordable Care Act (Obamacare) and worse after. The Act did not reform health care- it reinforced and mandated all the worst aspects of the system. I didn't want to participate as a physician and I certainly don't want to participate as a patient. I have opened a Direct Primary Care clinic to be part of true health care reform. I have left behind dealing with health insurance and oppressive federal mandates. I work directly for my patients. I believe this is the change that America needs and along with thousands of other physicians I am taking action now.

Whether you are a patient or a physician, please join the Direct Primary Care movement to enact true health care reform.

Rusty Scalpel

Tuesday, March 11, 2014

Free Market Physician is now a direct primary care clinic!

After years of researching and writing about alternative approaches to health care, I am excited to personally take a crack at it. In July I will be opening a direct primary care clinic in Neosho, Missouri. It will be called Free Market Physician. I am grateful to many colleagues and professionals that have assisted me in getting started and paved the path for insurance-free clinics. I hope to see them multiply in response to our current health care trends. Feel free to check out my website.

Tuesday, February 1, 2011

Senate to Vote on Repeal of Health Care Reform Bill

The Senate will be voting on a bill containing an amendment that would repeal the health care reform bill as early as tonight. Four democratic senators are considered key in this vote: Senator Claire McCaskill of Missouri, Ben Nelson of Nebraska, Joe Manchin of West Virginia, and Jon Tester of Montana. Any readers in these states are encouraged to contact their senators and encourage them to vote for the repeal.

This vote comes shortly after a second federal district judge ruled the health care reform bill unconstitutional and outside of the powers of Congress due to the individual insurance mandate. Essentially the rulings reinforce Congress' constitutional bounds. Congress cannot pass a law forcing American citizens to buy health insurance. Not only is this concept crucial in the health care reform debate, but it is essential in preventing further abuse of powers by Congress. If Congress can force Americans to spend their money on private insurance plans, what other businesses and organizations could a corrupt Congress force Americans to patronize?

Rusty Scalpel

Tuesday, December 14, 2010

U.S. District Judge Rules Against Health Insurance Mandate

After all the spin and misdirection of the health care reform debate, the legal process is going to renew debate on the critical, constitutional American issues. Most importantly, can the federal government force its citizens to buy health insurance? Can the federal government force Americans' involvement in any private market? A lot of complex, convoluted arguments about the the good the legislation will achieve have been used, but they all require the lynchpin of forced involvement. None of this intricate social experiment is going to work without mandated participation.

But judges are already calling a foul. Yesterday a Virginia U.S. District Judge ruled the mandate requiring Americans to maintain health insurance unconstitutional.  As U.S. District Judge Henry Hudson stated in his 42 page opinion, “At its core, this dispute is not simply about regulating the business of insurance -- or crafting a scheme of universal health insurance coverage -- it’s about an individual’s right to choose to participate."

 As stated in a Bloomberg piece on the ruling: Hudson said the “unchecked expansion” of congressional power represented by the insurance requirement “would invite unbridled exercise of federal police powers.” No Supreme Court decision has authorized Congress to “compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market,” he wrote.

Judge Hudson's ruling will certainly be appealed and the insurance mandate may soon visit the Supreme Court. With the current composition of the Court, is is likely that the court will agree with Judge Hudson's opinion. What will happen to the legislation if the mandate is removed? 

As stated above, the insurance mandate is really the lynchpin in the reform bill. Without it, the reform bill just doesn't work. The legislation forces the insurance industry to open its doors to all comers without regard to pre-existing conditions. It sets price controls on the how much the industry can charge for its policies and also removes the industry's ability to limit their payout on each patient. The bill will bankrupt the industry, especially if the insurance mandate is not present.

The insurance mandate was implemented to moderate this strangle hold on the insurance industry. With the insurance mandate, the government forced some 40  million Americans into the insurance industry. The majority of these new clients were young and healthy, rarely utitlized health care, and did not have need for comprehensive insurance plans. Congress sold these Americans to the insurance industry to balance the huge financial losses the reform legislation would inflict on the industry.

Without these Americans being forced to participate, the whole house of cards will tumble. Health insurance companies, already doomed to eventual bankruptcy by the legislation, will immediately begin to fall. Health care reform will be shredded with a new set of legislators left to put together the pieces.

Legislators will be forced to revisit health care reform. They will decide if America should continue down this path of socialization, with a blatant takeover of the insurance industry. Or they can recognize the inherent, God-given rights of American people and the constitutional checks on American government. If so, perhaps true reform can take place with the restoration of freedom and resulting access and affordability in the medical market.

Rusty Scalpel

Monday, November 22, 2010

Both Oranges and Health Care Can Be Substituted

(And Why This Is Important)

Imagine that a bored billionaire made it a pet project to research all of the health benefits of eating oranges. The billionaire would hire the best scientists and use cutting edge technology for his research. Imagine the findings that might be produced. The billionaire's new Orange Journal would be brimming with excellent research showing the benefits of eating oranges.

Oranges' antioxidants would be categorized and individually studied. Research might show that eating oranges extends lifespan. The benefits of potassium and Vitamin C would be further studied. Oranges might be shown to have antimicrobial properties. Other findings would show that eating oranges reduces the risk of heart attacks. Research might even show that people that eat oranges have lower incidence of certain cancers. 

With all the research and publicity on oranges, they would become a major craze. Experts would make statements about how many oranges should be eaten daily. People would be seen carrying oranges around the office. All America would be saving lives, one orange at a time.

And yet, despite all the craze, oranges would still be substitutable. This would become especially apparent once orange prices skyrocketed because of the massive orange consumption. In a pinch most of us would still survive with an apple or banana in our lunches. The vitamin C and potassium could be obtained from other food sources. The reduced cancer risk could equally be attained by smoking cessation. Despite all the excitement and research showing the benefits of oranges, most people could get by using substitutes for oranges.

American health care is a lot like oranges. Trillions of dollars of research has been poured into the development of health care services. Pharmaceuticals have been extensively studied and have proven benefits. Health care providers work hard to prove that every intervention is backed by solid research. America has swallowed the pitch that our health care is invaluable. Some even go so far to state that health care is a right, apparently inalienable and inseparable from the human experience. 

But is it? Is our current version of health care irreplaceable? Is there any substitute for American health care?

In the case of our oranges, we saw that despite proven benefits of eating oranges, they could be substituted. The same is the case with our current health care system. A substitute can be recognized or developed for every benefit that medical technology currently offers. These substitutes can be found in dietary and nutritional sciences, in behavioral changes, in further pharmaceutical discovery, or in religious exercise or divine intervention.

For example, what is a viable substitute for diabetes treatment? The answer is diet and exercise. What is a viable substitute for antibiotic treatment for childhood ear infections? Research now shows that no treatment is generally just as effective and is thus a viable substitute. What about a substitute for antidepressant medication? Counseling and therapy are proven viable substitutes. What about chemotherapy for cancer? In many cases there may be no currently recognized substitute, but it is certain that  substitute therapies will be discovered. 

It is an absolute fact that substitutes can be recognized or developed for every medical intervention now currently utilized in the American health care system.

American health care is a commodity. It is an extremely valuable commodity, but still one that can be substituted by other commodities. Unlike the right to freely worship God, the right to free speech, and the right to bear arms, health care can be substituted. It is subject to the laws of economics, as are all other commodities. 

If American health care is "universalized" and made absolutely accessible to the public, it will be consumed out of proportion to its existing supply and prices will skyrocket. Health care will be utilized for silly, trivial purposes and thus become unavailable for serious problems. Instead of attempting to mandate and universalize health care, doesn't it make sense to allow for and encourage substitution? Wouldn't it be better that Americans find viable substitutions for the existing system? 

Rusty Scalpel

Saturday, February 27, 2010

The Tax Club

Imagine you are a member of a very well-known and distinguished club. At one meeting you sit around the polished table in the club headquarters to discuss the matter of the annual budget. This year the club has taken on a number of expensive projects and is going to run up short on its budget. It is suggested that the deficit should be made up by increasing membership fees.

At this suggestion everyone looks a little uncomfortable. Times are hard. Increasing membership fees would be difficult for everyone. Someone else suggests cutting down on club projects so that their cost will not exceed current membership fees. There is silence at this suggestion, too. The club members are very proud of the projects and service the club performs for the community. It would be hard to drop these.

You are shocked at the next suggestion that is made. Looking at the other club members, one of members points a finger straight at you and says- “Let’s just increase his membership fees to cover the deficit.” He continues talking without looking you in the face. “We all know that he makes plenty. Why not raise his membership fees since he can afford it.”

You breathlessly attempt to sputter a response, but are cut off.

Greedy, they call you. Don’t you want the club to continue in its noble pursuits? If you are unwilling to pay your dues, perhaps you will no longer be permitted to be a member.

The solution is perfect. The club will be able to continue its work. The hard-working members who cannot afford higher membership fees will not have to pay them. The vote passes by a huge majority. Your fellow members look away from you and raise their hands in favor of the new membership fee formula.

This is the story of our federal budget and its proposed tax scheme. Already we operate under a graduated tax scale. Instead of every person paying a set percentage of their income, the government requires a higher percentage of income the more a person earns. Under the current system, the person making $30,000 a year pays 13.6% of their income as federal taxes while the person earning $300,000 a year pays 28% of their income as federal tax. But like the club members looking for additional funding, the President and members of the House and Senate are unwilling to cut programs and are looking for additional federal revenue. Although high earners already pay more than “their share,” they are seen as ideal targets and helpless against a majority vote.

The vote to raise taxes against high earners is referred to these days as “rolling back tax cuts on the wealthy.” In this way politicians infer that they are simply removing an unfair advantage that the wealthy have been enjoying. If the President is to be taken literally and is planning to restore the tax to pre-President Bush levels, he would be raising the income tax on our $300,000 earner from 28% to 32%. But how much he will actually raise them remains to be seen. He has pledged that he will not raise taxes on those earning under $250,000 a year, just on 5% of Americans making over $250,000 a year.

The solution seems perfect. But here is why an additional tax on the wealthy (and why graduated tax plans in general) hurts and will continue to hurt America.

1) It divides Americans against each other. We talk about class warfare- the rich vs. the poor. But consider what can be more divisive to America than elections where Americans vote about whose taxes they are going to increase. It allows a majority of the American electorate to confiscate the property of their fellow Americans. It causes Americans to examine each other with greed. They begin to vote against their wealthy neighbor, not because he has not contributed his share, but because they see that he continues to have resources that can be taken away. This is not liberty and justice for all. It corrupts politics and makes every man an enemy to his neighbor.

2) It discourages production. Consider the $250,000 ceiling that President Obama proposes putting on earnings. He is literally legislating a law of diminishing returns. Just imagine how many people will deliberately work and produce less in order to avoid higher taxes. Imagine the impact in health care, where many doctors are making around $250,000. Will doctors continue to see patients at the end of the year when they are already at their maximum earnings and any more patient visits will bump them into a higher tax bracket? We might consider such an action petty. But is there anything petty about quitting when you realize that each additional drop of sweat loses you thousands of dollars?

3) It assumes “enough” for each person. By setting $250,000 as the tax-at-will income, President Obama is attempting to establish by law how much income is “enough” to earn. Anyone making more than $250,000 is fair game because their income is now considered luxurious. But this “enough” is not the same for every person or circumstance. A $250,000 income might be luxurious for one family, whereas for another it might be a shoestring budget. What happens when medical catastrophes, educational expenses, business failures, or other circumstances make this level of income insufficient for survival? If a family is working overtime to pay off medical debt, should they be taxed at double or triple the rate of other Americans because of their high earnings?

4) It decreases spending power. Many Americans seem to think that money is wasted in the hands of the wealthy. If it is to benefit America, money must be transferred to the hands and programs of the federal government. But little do we consider that money taken from the wealthy is money taken away from purchasing American products, from building American businesses, and from hiring American employees. Money taken from the wealthy is money taken from the American economy. It is money taken away that could have been generously devoted to churches and charities. It is instead whittled away in a shuffle of administrators, middle men, and pork-laden spending bills.

5) It provokes the talented to leave the country. This may seem far-fetched, but consider all of the foreign professionals who have brought their skills to America because of the economic freedom and wealth they can enjoy here. If American professionals were to leave for greener pastures, we might consider them leaving the country unpatriotic. But is it unpatriotic to leave the country that turns cannibal and makes you the meal? What will happen when the high-flying earners realize that they can apply their skills and talents in other countries where they will be taxed less? What will we do without their skills and talents?

6) Most importantly, a graduated tax scale and the President’s proposed tax increases further erode America’s already shaky protection of property rights. We consider our rights inalienable and God-given. We believe that governments should not be allowed to take them away. And yet we have developed a tolerance to our President and legislature deciding how much of our property they can confiscate in a given tax year. What’s worse, we allow them to pick and choose who they will tax and how much they will tax them. How can the right to own property be God-given and remain inalienable if legislatures can confiscate property at will?

The graduated tax scale and the President’s proposed tax raises are the signs of a fading America. They will weaken America- discouraging production and encouraging the wealthy to quit or leave. They divide America- pitting Americans against each other in a mad scrabble for tax votes. Worst of all, they show that the Americans no longer care to fight to protect their neighbor’s property rights. Does a person who works extra hard and extra long deserve to enjoy the fruits of their labors? Is this still the home of the American Dream where with sweat and determination anyone can rise to any height? Not if the majority has anything to say about it.

Rusty Scalpel

Tuesday, February 23, 2010

Keynes and Hayek Rap Economics

Recommended by my good friend Cato, here's something that is a little outside of the normal tone of Free Market Physician. Because of the tank-tops, I won't put the You Tube video directly on FMP, but here's the link. It's a rap in which John Maynard Keynes and Friedrich von Hayek debate economics. Keynes was a British economist who argued that governments could spend their way out of recessions. Von Hayek was an Austrian economist who argued for free-market capitalism. It's a pretty clever production.

Thursday, February 4, 2010

Hookworms, Tax Hikes, and a $3.6 Trillion Budget

The most successful parasites are undetectable. Silently they feed on their host, drawing from its energy imperceptibly.

Take the adult hookworm, which lodges in the darkness of the bowels and feeds on its host's blood supply. In an ideal hookworm infection, the host never becomes weakened or anemic from blood loss. The hookworms take just enough to survive and grow. Weakening or killing their host by playing the short-term game of gobble-all-you-can-get threatens the hookworms' survival. So silently they sip, with their healthy host completely unaware of their existence.

Washington Democrats could learn a thing or two from hookworms.

Refusing to enact policies that would allow the creation of national wealth, Democrats propose bleeding the strong to fund federal initiatives. President Obama and the Democrats devise plans that further plunge the nation into debt, with tax hikes on the "rich" as their only means of funding.

After presiding over 2009 and its $1.75 trillion deficit (12% of the gross domestic product), President Obama has proposed a $3.6 trillion budget for 2010.

Prior to unveling the budget, the President said he would consider cutting taxes for Americans, but not for people like Warren Buffett. He must have Warren Buffett confused with someone else. His budget runs on new tax hikes on families making over $250,000 a year.

But how long will the host remain strong? The feeding frenzy is on. Democrats have forgotten the rules of successful parasitism. Never weaken the host.

Blood is flowing freely now.

Rusy Scalpel

Saturday, January 16, 2010

America Excluded from Health Care Reform

Taxation without representation. That was one of the sparks that ignited the American Revolutionary War. The American Colonists were tired of being taxed by a government in which they had no representation. King George and the British Parliament were not necessarily out to get the American colonists. But the Americans did not have elected representatives to speak for their interests or protect their rights and for this reason they sought independence.

In the final days of the health care reform bill, millions of Americans are no longer represented in the House or Senate. All illusions of bipartisanship have been thrown aside as Democrats have seized control of the bill and excluded Republicans and the states and districts they represent from the discussion. Unless a posturing moderate like Olympia Snowe votes in favor of the bill, not a single Republican voter will have been represented in health care reform.

Health care reform was supposed to be a great collaborative process. President Obama and the House and Senate Democrats promised involvement from both major political parties and all parts of the health care industry. Everyone would be involved in developing a solid and comprehensive health care reform. Yet, in the final hours, not just Republicans have been excluded. Health care providers and insurers, those who had the most to offer in drafting the bill, find themselves on the outside looking in on health care reform.

In the early days of the debate, many doctors showed lukewarm support of the proposed ideas despite the loss of independence they were likely to suffer. Doctors did have two major priorities for health care reform: medical malpractice tort reform and updating of the antiquated SGR formula that determines physician reimbursement for Medicare Part B. Sure, reform health care, many said. While you're at it, just make sure that we get paid for our work and don't have our earnings stripped by the judicial system.

Not only will the final version of the bill introduce a new nightmare of bureaucracy and host of middle men, but medical tort reform and updating of the SGR will not be included. They never even made it out of committee.

The health insurance industry is the industry that will most be affected by the legislation. It had even less involvement in any collaboration process. From the beginning of the debate, insurance companies were branded by the President and Democrats as crooks. Democrats said the health insurance industry was ripping off Americans, pocketing hard-earned money while denying claims. They needed to be taken over. America swallowed the bait, despite reports showing narrow profit margins by the industry. With the final legislation, the government takes over the health insurance industry.

How can the rights and interests of physicians, insurers, and conservatives in general be represented if they have no part in the legislative process? What sort of bill is written when the legislature does not represent its constituents? We're about to find out. Using the bill that came out of the house, we can make a pretty good guess. The bill is designed to insure all Americans. It helps pay for those who can't afford insurance and criminalizes those who don't want to buy it. It is estimated to cost $894 billion over the next 10 years. Here's who will pay for it:

1) The bulk of this sum will come from the wealthy- individuals who make over $500,000 a year or families who make over $1,000,000. These individuals will have an additional 5.4% tax added to their already considerable 35% federal income tax.

2) Also footing the bill are doctors and hospitals who will be reimbursed even less for Medicare and Medicaid.

3) An honorable mention goes to the insurance companies, whose contributions are not being figured into the $894 billion, but whose cooperation allows the price tag for the bill to be as low as it is. They will be offering special low-priced premiums to all of America while the Legislature holds them at gunpoint. How long these premiums can be maintained before the industry goes bankrupt remains a question.

4) Consideration is currently also being given to those who are already insured with expensive comprehensive plans. Although it may not make sense to the general public why patients with health insurance would be taxed in order to provide health insurance to patients, Democrats are currently working it into the bill.

The Democrats have put together a health care reform bill that does not represent anyone in the health care industry, that threatens to bankrupt health insurers, and that is currently supported by less than half of America. This is the sort of representation they have provided. Instead of thoughtfully voting on a well-crafted collaborative bill, they will try to push through a half-baked, unread 1000+ page piece of legislation this weekend.

I realize that this is not the first time one party has overrun the legislature and left others in the dust. However, Democrats have pitted Americans against each other in a game of winners and losers that is contrary to American Philosophy and rights of representation fought for in the Revolution. Instead of protecting rights or even implementing a more efficient process, they simply take from one group to give to another. They would create prosperity through robbery. They try to stabilize the economy through a smash and grab operation.

Taxation without representation. It is one of the sparks that ignited the Revolutionary War. It is the reason why America is no longer governed by ruling bodies in Great Britain. Taxation without representation is the reason this legislation has been so hard to push through. It is also why Democrats are likely to find themselves out of majority power in the very near future.

Rusty Scalpel

Saturday, October 3, 2009

True Solutions for America's "Status-Quo" Health Care

This is a piece originally written by Rusty Scalpel for publication on another site. Readers of Free Market Physician will recognize common themes accompanied by statistics that have not previously been published on this site. In particular we would point out the author's finding that 24-38 cents of every dollar paid for doctor's visits with health insurance is consumed by the billing process. This number was arrived at through extrapolation of data in a well-known New England Journal of Medicine article. To the best of our knowledge, this figure is not published anywhere else on the Internet.

President Obama says it is time to escape the status quo of the United States health care system. He proposes mandates and funding to provide health insurance for all Americans. Although such a plan may appear reasonable, it will only perpetuate the high costs that now make health care unaffordable. A real solution to high prices is eliminating insurance companies from the doctor-patient relationship. Health care can be made affordable through patients' direct management of their health care expenditures and direct payment for health care services.

Health care plus insurance is more expensive than health care on its own. The price of a health insurance policy is the price of health care, plus the cost of the health insurance industry itself: underwriting, facilities, legal fees, and the salaries of over 469,000 insurance company employees and 881,000 insurance-related employees. Americans pay for these costs, plus the cost of their health care, every time they pay for their health insurance policy. Health insurance cannot make health care cheaper- it inherently adds to the cost.

A classic study published in the New England Journal of Medicine illustrates this point. It shows an average overhead for American health insurance companies of 11.7%, as of 1999. Add to this a very reasonable industry average profit margin of 3.4% and we see that about 15% of money paid to insurers never reaches health care providers. Americans paying for health care with comprehensive health insurance are only using their money at 85% of its potential.

However, this is not the end of money wasted through the use of health insurance. Those involved in health care are acutely aware of how much time and money is spent billing Medicare, Medicaid, and insurance to receive reimbursement for services provided. Many clinics hire as many employees for the billing department as they have doctors and nurses, who also spend significant time in billing. This raises overhead costs, which are passed on to patients.

Doctors offices have an average overhead of 26.9%, according to the NEJM article. Of course, not all of this overhead is due to billing. But the study indicates that a minimum of 10.8% is due to insurance billing. So between 11 and 27 cents of every dollar paid by insurance companies to doctors offices is consumed by the billing process.

A little multiplication (not addition) to combine these losses with the 15% insurance company losses reveals that for every dollar the insured patient spends on health care, only 62 to 76 cents will be applied to true health care costs. The rest is lost in the handoffs between the patient and the insurance company and between the insurance company and the doctor.

This is why President Obama's plan will perpetuate the status quo. It ensures that all Americans will continue to pay into a health care pot that will leak 24 to 38% of the water put into it. His proposed regulations on the industry will not help the situation, either. Profit margins are not high enough to sustain the losses the stick-it-to-the-industry regulations will inflict. The most likely outcome of his health care plan will be the sinking of the insurance industry, with every single American chained to the deck.

What then, is the solution to the status quo? Instead of moving toward a universally insured society, we should be moving to a sparsely insured society. Instead of mandating health insurance for all Americans, we should be liberating Americans to make their own health care decisions. We should allow them to decide whether or not they can afford the additional 24 to 38% they must pay to have health insurance services added to their health care.

Part of the solution requires a cultural shift. America must see health insurance for what it really is. Health insurance does not guarantee health, just as life insurance does not guarantee life. Health insurance is meant to protect finances against health expenditures that would cause a financial wipe out. Most consumers are looking for a plan to protect their finances from a major emergency. A catastrophic (high deductible) plan is what they need and can purchase for well under $100 a month.

Unfortunately, what most consumers purchase is comprehensive health insurance. This insurance costs hundreds of dollars a month. Instead of serving as a rainy-day account for emergencies, it becomes the account through which all health expenditures are paid. The insurance company determines a monthly payment that on average should cover all health expenses, plus operating costs. These plans are too expensive for most Americans. Instead of protecting finances from an emergency, comprehensive plans turn out to be a catastrophe all on their own.

Another part of the cultural shift involves health care providers. They too have fallen into the health insurance net. Involvement with insurance companies proves expensive and painful for them, just as it is for the patients. Not only must they participate in the costly and aggravating billing process, but insurance policies interfere with their treatment plans. Medication and treatment decisions are made not on the basis of patient need, but on the basis of insurance coverage.

The solution to patient problems was catastrophic insurance plans. The solution to doctors' headaches and additional expenses (which they must pass on to the patients) is fee-for-service, cash-only clinics. By eliminating third-party payers these clinics have incredible potential to save patients money. They bill patients directly at the time of service for services received. They restore the patient-doctor relationship. Doctors are able to prescribe and treat based on patients desires and ability to pay, not on insurance companies' payment plans.

Coupling catastrophic insurance plans with fee-for-service clinics can have profound financial effects for patients. Imagine if instead of paying into a comprehensive insurance plan every month, patients paid for catastrophic plans and then deposited the remainder of what would have gone into the comprehensive plan into a savings account. This account could be used to cover routine medical needs and cover the deductible should a true catastrophe occur. The money stays in patients' bank accounts instead of becoming part of the operating budget of the insurance company. Patients earn interest on the account and are actually able to maintain the assets in their accounts from year to year.

Not only are Americans free to grow richer by managing their own medical expenses, but they empower themselves in their relationships with health care providers. They now have bargaining leverage as individuals or groups because they, not insurance companies, are the payers. In addition, instead of getting every possible procedure after a deductible has been met, they become conservative spenders. They analyze whether a service has value to them and spend accordingly. They ration their own health care based on their needs instead of allowing insurance or government to do it for them.

In short, we turn patients into consumers. They are not beggars or government dependents to be seen at the leisure and pity of physicians, politicians and third-party payers. They are empowered American consumers. They are free men and women, masters of their own lives and their own property. Such liberty is not status quo. It is an American phenomenon and America's legacy. Let's not forfeit that legacy for President Obama's status quo government-controlled health insurance.

Rusty Scalpel

Saturday, September 12, 2009

Conservatives Visit Washington for Tea Party

Conservatives- Welcome to Washington DC!

It's obvious that you are new in town. You don't show up for rallies like this one very often. You don't hire former salesmen to represent your voting blocs to the Washington legislators. In fact, the White House doesn't even know who you are.

When questioned about the rally on Friday, White House Spokesman Robert Gibbs shrugged and said, "I don't know who the group is."

Con-serv-a-tives. Yes- they are the ones who wanted the other fellow to be president. Yes they're the rowdy ones at all the town hall meetings recently. No, I guess they weren't convinced by President Obama's speech on Wednesday. Yes, there do seem to be quite a lot of them. Do they vote? I'm sure they do. Yes, I would be worried if I were up for re-election in 2010 as well.

Rusty Scalpel

Friday, August 28, 2009

How is the Health Care System Broken?

The phrase "We all agree that the system is broken" has become common in the health care reform debate. Politicians and commentators invoke it to show that we have a common value or belief that should compel us to desire reform. The phrase has been used to justify every type of reform on the table. But in truth, we agree on very little about this 'broken system.' We can't even agree on what 'the system' is and much less how it is broken.

Imagine a professional basketball team that has trouble winning games. They have defensive and offensive strategies that they prescribe to and develop a rotation for the players. Despite their efforts, they are not winning. The players come to an agreement. "This is not working. We need a change," they tell each other.

But what is not working? Some of them are referring to the defense. Some of them are referring to the offense. Some of them are referring to their player rotation. Little does the team understand, but several of the players are even referring to the sport of basketball. When they say it isn't working, it's because they want to give volleyball or soccer a shot.

Such is the situation in our country. People say the system is broken. But what they mean varies. Some are speaking of the health insurance industry. Some are speaking of the high price of health care. But we are surprised to find out that many refer to the American standard of economic freedom. They suggest that we ought to be playing a whole new game.

Like everyone else, I have my own opinions as to what is broken in the American health care system. I could write pages (I have written pages!) about interferences in the patient-doctor relationship, the money wasted on the insurance industry, and about how government and insurance involvement in the market create artificially high prices. But there is one 'system' that is definitely not broken. There is one 'system' that keeps the industry afloat despite all other missteps. That system is the American 'system' of a free market.

If we are more precise in our description of a free market, we cannot even call it a system. The free market is the state of the economy in a free nation. In a free market there is no government organization that coordinates buying and selling. There are no laws about how much of a product someone can buy or how much it can be sold for. The free market is the economic result of a nation recognizing the God-given, inherent rights of humanity. It is a natural state that allows the rise and fall of man based on his actions.

Anyone involved in the medical field can see that the above description of the market does not completely fit the medical industry. A huge part of health care really has become a government system. There are huge government organizations- Medicare, Medicaid, and even the FDA- that coordinate buying and selling. There are laws governing who can buy health care products and how much they can be sold for. There are laws in place that do not allow man to rise and fall based on his actions, but attempt to enforce a universal mediocrity. In these ways the medical industry has become a controlled system.

However, much of the medical industry is still free- it is not systematized. It is this part of the industry, the free market, that keeps all the rest afloat. The market responds and equilibrates when the federal government refuses to completely reimburse doctors for seeing Medicaid patients. The equilibrium is achieved by paying patients being charged more for their health care. The market responds to FDA regulations on the pharmaceutical industry that make the development of new, lifesaving drugs cost over one billion dollars per drug to develop. The market equilibrates as patients pay incredibly ramped-up prices to pay for the hoops drug-makers must jump through.

It is the free market, and not systematized government intervention, that has brought many recent cost-saving innovations to the market. Surgical centers are popping up all over the nation that perform surgeries at a fraction of the cost of local hospitals. Lower prices for healthcare are appear as midwives, physician assistants, and nurse practitioners become more available. They provide competition that also brings down the price of local doctors. Wal-Mart recently rocked the pharmacy industry by launching their $4 prescription plan, making hundreds of essential medications available for $4 a month. Competing pharmacies nationwide responded immediately by dropping their prices. These and many other occurrences in the free market have helped keep health care afloat despite all other system interventions.

So perhaps we do agree that the system is broken. It does need to change. It needs to release its death-grip on the medical industry and the free market. Sacred freedoms must be preserved and the market must be obstructed. If freedom of the market is preserved and enthroned, health care prices will go down. Patient access to doctors will increase. The poor will be able to afford health care. Health care will not just survive or stay afloat, but thrive.

Rusty Scalpel

Thursday, August 27, 2009

My submitted topic for Senator McCaskill's "Healthcare Listening Forum" (Town Hall Meeting) in West Plains

We hope Senator McCaskill understands that government involvement in either the health care or health insurance industry is the last thing that many of her constituents in the West Plains area want. We keep hearing about industry reform, but it is not just an industry that will be affected. Washington is threatening to take over our jobs and tell us how to do them, to tell us how we have to interact as patients and providers, and even manage our lifestyles to fit their definition of healthy. We consider our freedoms in these aspects sacred and God-given. So we are not looking for Washington to produce the 'right' plan for us to support. We want Washington to stay away from attempting to centrally plan our economy and dedicate their efforts to defending our liberties.

Friday, August 14, 2009

Boogeyman, Wild Misrepresentations, and Blatant Falsehoods

David Axelrod, the Senior White House Advisor, recently sent out an email meant to calm public outrage and 'dispel myths' about health care reform. In it he quoted President Obama at a recent town hall meeting saying, “Where we do disagree, let's disagree over things that are real, not these wild misrepresentations that bear no resemblance to anything that's actually been proposed.”

Here is my disagreement with the President and his staff and the whole Democratic Party. I object to the President and Legislators enslaving an entire industry, stripping Americans of their rights and livelihood, and putting them at the mercy of the government for survival. This may sound like one of the President's 'wild misrepresentations,' but it is a very real claim and the essence of the legislation that the President is promoting. For evidence I quote Mr. Axelrod's email (material also available here) under the heading "8 ways reform provides security and stability to those with or without coverage".

1. Ends Discrimination for Pre-Existing Conditions: Insurance companies will be prohibited from refusing you coverage because of your medical history.
2. Ends Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays: Insurance companies will have to abide by yearly caps on how much they can charge for out-of-pocket expenses.
3. Ends Cost-Sharing for Preventive Care: Insurance companies must fully cover, without charge, regular checkups and tests that help you prevent illness, such as mammograms or eye and foot exams for diabetics.
4. Ends Dropping of Coverage for Seriously Ill: Insurance companies will be prohibited from dropping or watering down insurance coverage for those who become seriously ill.
5. Ends Gender Discrimination: Insurance companies will be prohibited from charging you more because of your gender.
6. Ends Annual or Lifetime Caps on Coverage: Insurance companies will be prevented from placing annual or lifetime caps on the coverage you receive.
7. Extends Coverage for Young Adults: Children would continue to be eligible for family coverage through the age of 26.
8. Guarantees Insurance Renewal: Insurance companies will be required to renew any policy as long as the policyholder pays their premium in full. Insurance companies won't be allowed to refuse renewal because someone became sick.

After years of immersion in liberal philosophy, the above proposals may sound like a good thing. Discrimination for pre-existing conditions may be considered unjust. Incomplete coverage due to chronic illness because of lifetime caps may seem unfair. But let's use regular language to explain what the government is trying to do to the insurance industry. Uncle Sam is telling the men and women who make a living by selling insurance policies the following:

You must sell policies to everyone for the same price, no matter how much money you know you will lose in the process (points 1 and 5). You must bear the full burden of their care to extent that the Legislature deems necessary, irregardless of how much it will cost you (points 2 and 3). No matter how much money you lose on the customer, even if it sends your company to bankruptcy and your family to bread lines, you may not decline them coverage (points 4, 6, and 8). Despite the fact your customers are paying much less for their polices than the actual cost of the medical care, you may not increase their out-of-pocket expenses (point 2). Oh, and you've got to cover their adult children too (point 7).

This is slavery. Slavery is what the legislature is proposing for the insurance industry. Imagine such rules being implemented in any other industry. Imagine, for example, if you had the job of mowing lawns and these regulations were established in the lawn mowing industry: Imagine that you were told that you must mow everyone's lawn for the same price, regardless of how many hours it takes to mow or how big the lawn is. Imagine being told you have to accept every customer that came your way for that price, even if you knew you would lose money on the contract. Imagine being told that you had to mow your customers lawn as often as they wanted without charging them any extra. Imagine being told that not only did these customers had lifetime contracts with you, but so did their children. From here it's easy to imagine quitting the business or shooting yourself in the head.

Americans are intelligent enough to realize that the insurance industry cannot continue to exist under the proposed policies. If a company is not allowed to compensate for increased costs by raising prices, what will happen to it? It will cease to exist. Instead of coverage for all, there will be coverage for none. But of course, that may be the true purpose of the legislation- setting our path for true socialization of the entire health care industry.

President Obama and the opponents of freedom in the Legislature figure that Americans won't stir against such abject tyranny because they are picking on a despised industry. President Obama points out that the insurance industry profits have been 'too high.' Apparently he believes it is the job of the government to make sure we don't make too much money. We all have had beefs with insurance companies, so he and our representatives figure we won't mind if the government takes over their jobs. Here they are wrong.

Health insurance providers have been collectively written off as an evil industry in an effort to dehumanize them. We don't think of the reform bill affecting fellow Americans, but that it will punish a greedy profit-seeking industry. But that industry is privately owned and provides employment for over 400,000 Americans who count on those profits to feed their families. They are no different than Americans in any other industry, all of which are profit-seeking. Why should we expect or allow them to roll over and become a national sacrifice?

We will not allow their sacrifice because we know that freedoms taken away from one group of Americans means a loss of freedom for all Americans. If we begin to sacrifice the unalienable rights of some for our comforts and commodities, then our rights will never be safe again. Once we find ourselves outside of the majority interest, we too will find our rights forfeited for the 'good of society.' And so we will fiercely and passionately fight, since our own God-given liberties are at stake, for the rights of the men and women of the insurance industry. We see all too clearly that if they go down, we may find ourselves next on the chopping block of socialism.

Rusty Scalpel

This blog can be submitted for White House correction at

Ronald Reagan Speaks Out Against Socialized Medicine

President Obama certainly has a gift for oration, but he doesn't hold a candle to this Reagan fellow. The guy just seems to make plain sense. In contrast to the nonsensical politically-calculated speeches we hear these days, this appeals to reason and logic. It stirs our better feelings, glorifying instead of condemning the freedom, independence, and national virtue that is our heritage. It is truly refreshing. This Ronald Reagan fellow should run for public office.

Saturday, August 1, 2009

When the Majority of Health Care is Government-Funded

I wish I could say that I believed the Blue Dog Democrats will stand firm on health care reform issues. But I am afraid that the party-line vote in the House Energy and Commerce Committee on Friday night is a preview of what we will see in the final House and Senate votes on health care reform in September.

As I contemplate the bill my heart fills with sorrow. Where are the righteous legislators who should be defending against such a breach of freedom and logic? Have we fallen so far into ignorance and selfishness as to have elected a body who will allow this legislation to pass?

Medicare and Medicaid enrollment already stand at nearly 100 million, about one third of our nation's population. (45 million and 42 million respectively) In many regions (like where I live), Medicare and Medicaid patients already make up the majority of health care visits. With the addition of the government public insurance option and government subsidies of private plans, government control of the health care industry will increase.

As health care providers are painfully aware, the national legislature controls reimbursement rates to physicians for visits from Medicare and Medicaid patients. In perhaps the majority of cases (especially in non-rural designated areas), government reimbursement for care rendered to these patients does not cover the cost of the care. In other words, health care providers lose money every time they see a government patient.

Economically speaking, the legislature has established price controls for over one third of all health care visits. Doctors make up their losses by overcharging their other patients. Thus, patients who pay with cash or through a private insurance plan lose money twice: once when they are overcharged for their visits to compensate for government patients and a second time when their taxes cover the bill for these patients.

We can see that Uncle Sam has already torn a sizable hole in the pocket of self-paying, self-sufficient Americans by forcing them to fund the care of 1/3 of the population. How much more will he siphon from their bank accounts with the addition of the government public insurance option and subsidies to pay for the insurance of millions of more Americans?

We can see that additional government funding of health care will be a major problem. The problem is made much worse when we consider other goodies (check out this link) that have been included in the House Version of the Bill. This bill, laced with measures that strip freedom and human dignity and provisions for future federal power grabs, is a collection of sophisticated price controls. As we have discussed in the past and well understand, such measures must fail, regardless of their sophistication.

I cannot emphasize enough how disastrous the bill will be if passed. American health care survives today even with the existing burden of heavy price control. But the bill is too much. It will not "fix" health care. It will cause the health care industry to grind to a halt, necessitating further government takeover. Please let your legislators know about your feelings on this issue.

Rusty Scalpel

Wednesday, July 22, 2009

Ron Paul: Health Care is a Good, Not a Right

It is incredible to see how much of the health care reform debate is centered around whether health care is a right or a good. It seems that if we understood this simple concept, the role of government in health care would be understood and the reform debates would be over.

I believe that this may be the first American generation even capable of sustaining this good vs. right debate. If our ancestors were asked to name American rights they would have mentioned the right to worship, to right to free speech, and the right to bear arms. If asked, the current generation might mention some of these, but would also include the right to education, the right to Medicare, Medicaid, or Social Security or the right to government disaster aid.

As we have discussed in length in the past (see Health Care: a Right or a Commodity), the Declaration of Independence sheds light on what true rights are: “Men… are endowed by their Creator with certain unalienable Rights.” True rights are endowed by the creator- not distributed or rationed by governments. They are also unalienable or inseparable from the human existence. Neither health care, education, nor any other social program fits this description. They are not God-given, nor are they unalienable.

Ron Paul pegs many of the central issues of the right vs. goods debate in his weekly message. We thank our readers for sending this on to us. You can read the text of his address here.

Rusty Scalpel

Saturday, July 18, 2009

Where Can Virtue be Found?

A while back I found myself in a classroom listening to a self proclaimed “independent” spokesman. He represented the political arm of a religious-affiliated hospital located in an underserved area of a major city. The man was giving a lecture on how he thought medical care should be delivered. He proceeded to present his liberal agenda starting off by laying a philosophical framework which he claimed to be centered, ironically, on the very principle it lacked – virtue.

The man was very well versed in speech, even using ancient philosophers as examples. He stated the framers of the constitution were absolutely wrong because they did not include healthcare as a right (see Rusty Scalpel article - definition of a right - Healthcare is not a right) and that the only way society could be virtuous is if it provided for the healthcare of everyone. He then proceeded to say that one person in society cannot provide all the goods and services for himself (i.e. the farmer has a social responsibility to the doctor and vice-versa.) In the end he claimed the only way to properly take care of the healthcare needs of the society is to have a government mandate.

A government mandate in its simplest form is force. In “The Adventures of Jonathan Gullible” Ken Schoolland pointed out that a government mandate or law is like an "Invisible Gun." If an individual resists complying with the government mandate the ultimate punishment is imprisonment or death. It is invisible because few individuals resist and realize the final punishment.

During the lecture I was reminded of an economic concept which is poorly understood - spontaneous order. (See video below) The lecturer believed that the only way people will act “virtuously” is through government coercion. However reality seems to counter this notion. Every day individuals come together, voluntarily, and make decisions for themselves that in turn benefit society. Adam Smith, the father of economics, referred to this phenomenon as the “Invisible Hand” that would lift society to an optimal state.

It should be asked - Where is virtue derived from? Where can virtue be found? To start, it must be understood that virtue can only exist when there is free choice. Thus an individual’s actions can only be virtuous when preformed voluntarily. Forcing one man to “give” to another is not only immoral- it frustrates the very principle of virtue.

It is very popular to blame the free-market capitalism for the state of healthcare. However realizing that healthcare is the most regulated industry, we can see that free-market capitalism is not failing but only the reverse - the long history government interventionalism is failing. To conclude - virtue in society can only exist by promoting, not limiting free choice, thus encouraging the morally superior “Invisible Hand” instead of frustrating virtue by the immoral and all too often impractical consequences of the “Invisible Gun.”


Saturday, July 4, 2009

Price Controls, Medical Shortage, and Apples

In the face of rising health care prices, price control may appear a reasonable means to keep health care accessible to the masses. If health care is becoming too expensive, why not lock in prices to a rate that will insure that everyone gets the care that they need? To answer the question, let's apply it to a field that appears much more simple and economically fundamental. Let's apply it to apple selling.

Suppose that a late frost killed the blossoms of the apple trees of North America. By late summer, the shortage really starts to show as prices triple what they were in previous years. We understand why prices are high because we remember the supply and demand curves taught us in high school economics courses. The curves really work in the real world. Apple supply has fallen and demand has remained the same. There is a relative shortage of apples and price goes up.

Let's suppose the Secretary of Agriculture declares an apple state of emergency and appeals to Congress for help. The poor who depend on apples for survival are going hungry. The rich who can afford high prices are hording apples for themselves. Congress must recognize that a disaster is at hand and take stringent measures. Congress responds to the national crisis by establishing price controls in the apple industry. By law, apples can not sell above a given price. Problem solved and constituents appeased.

We, with our rudimentary understanding of supply and demand, can anticipate what effect the new law will have on the apple shortage. The past high price of apples had ensured that they stayed stocked in supermarkets. They were available so that those who really needed them got them. As Congress stomps down the price, consumers rush to stores to buy apples. The precious few apples are squandered on ordinary uses. The produce section of grocery stores are emptied and there are no more apples to replace those sold. The prices that kept apples available are now gone and we have a real shortage on our hands.

Empty shelves are evidence enough that demand for apples is greater than available supply. In a free economy, this would push up the price of apples and encourage suppliers to produce more of them. But in our economy, Congress has set the price of apples. It cannot rise. Suppliers had very few to sell in the first place and selling at an artificially low price, they cannot make up their losses and many of them go out of business.

What's more, Congress did not realize that the international trading partners of the United States were shipping apples to our apple-starved country even as the price control was being passed. They had seen the high prices and realized that they could make a profit by selling their apples here. Had those apples arrived, supply would have increased to meet demand and the prices of apples would have fallen. However, when news got out that had Congress passed the price control bill, those apple-laden ships turned around and returned to their own countries without selling a single apple. With price controls in place, it was no longer worth it to sell their apples here.

After the first year of price controls, many apple growers are unable to stay in the market. They leave the business and further decreased the available supply. Those still in the market still face the price control. They are unable to invest in their apple crop as they would other years because they know they will have to sell low. They try to cut production costs to make up for their low selling price. They skimp on fertilizers and pesticides. As a result, it is a crop of puny, wormy apples that hit stores that summer.

It is plain to see that without price controls, the apple market would have soon recovered. The high prices would have rationed the use of apples to the most important uses. The prices would have helped apple growers survive a hard year to be able to grow in the next. The high prices would have ensured that quality apples continue to be grown (with a variety of lower-quality apples available at lower prices). What's more, the high prices would have attracted additional suppliers who would have ended the shortage of supply and brought down the price.

The lessons learned from price controls in the apple market apply to all free markets, even the supposedly impossible-to-understand medical market. As with all other goods and services, the price of health care is determined by the balance of supply and demand. If supply is high compared to demand, prices drop to increase demand for the product. If supply is is low relative to demand, high prices ensue which dictate a natural rationing of the the product. It is reserved for the most urgent purposes and a true shortage never occurs.

Just as in the apple business, the imposition of price controls in the medical market will cause an increase in demand. Artificial low prices will ensure that available medical care is "used up" instead of being reserved for the most important purposes. Here a real shortage will occur (think of the stories of 7 month waits to use an MRI in Canada).

Just like in the apple business, the imposition of price controls will decrease available supply. It will make the delivery of health care services financially unattractive, if not impossible for many providers. They will drop out of business and the shortage will worsen. Remaining available services will drop in quality. What's more, medical providers who would otherwise be willing to come to the rescue for financial motives will no longer have any incentive to do so. The care they would provide and the resulting price relief will never come.

It is interesting to note that government programs that provide "free care" to patients have many of the same effects as price controls. They lead to unbridled consumption of available health care resources by enrolled patients. Reimbursement for these services is a price control- reimbursement rates are set by Congress. These artificially low prices discourage medical care suppliers from providing services and further aggravate the medical "shortage." I would be fascinated to see a study demonstrating how much of the "high" price of health care for privately-paying citizens can be directly attributed to federal aid programs.

We live in a time of rising prices and decreased medical availability. Our legislators may be tempted to consider price-control as a means to improve access to medical care. But we know that price controls will cause true shortages. A free economy regulates itself, increasing supply to meet demand to ensure access to care by all paying customers. The solution to high prices is high prices.

Rusty Scalpel

Wednesday, June 17, 2009

Recommended Reading: A Trillion Dollars in Incompetence by Robert M. Goldberg

Bonaparte famously said to "never ascribe to malice that which can adequately be explained by incompetence."

Thus stands the Kennedy health care bill, placeholder for the hard left dream of a government takeover of the American health system. The bill is a taxpayer-supported monument to the lethal stupidity of this statist objective that will leave Americans with fewer choices, more government control over medical decisions....

Continue reading here at The American Spectator

Tuesday, June 16, 2009

Holding Their Feet to the Fire

Among the disturbing proposals for health care overhaul legislation is the so-called "public insurance option." The idea is to form a state-owned health insurance company that will compete with the currently existing insurance companies. How exactly the program would be administered and run is an idea in flux, but it's purpose is clear.

“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,” President Obama said in a speech last week.

Senator Baucus, chairman of the Senate Finance committee was reluctant to call the new company public or state-owned but was likewise clear as to its purpose: “It’s not going to be public, we won’t call it public, but it will be tough enough to keep insurance companies’ feet to the fire.”

Keep them honest? Keep their feet to the fire? The President and Senator make thinly veiled accusations: 1. Health insurance companies are dishonest. 2. Insurance companies somehow need to be pressured, coerced or punished.

What does President Obama feel the insurance industry has been dishonest about? What law have they broken? If they have used fraudulent practices, it is his duty as chief executive officer in this country to see that they are prosecuted. Have they broken anti-trust laws? If so, it is his duty to see they are prosecuted. Likewise, what has the insurance industry done that requires having their feet held to the fire? Shouldn't whatever action or inaction that justifies government intervention be legally prosecutable? Why doesn't the senator suggest a prosecution?

From hearing and reading much discussion on health care reform, I could make a guess at the crimes alluded to. I believe that they might be the crimes of being expensive and of having exclusion criteria. Insurance companies are guilty of offering policies that cost too much and of having exclusion criteria that limit which customers are eligible for those policies.

Before we condemn the entire insurance industry as being greedy and immoral, let's review why prices are high and why there are exclusion criteria for plans. I say let's review because I believe we already know the reasons. Despite our knowledge we have branded the insurance industry as the enemy. We falsely brand the industry as criminal and strip market rights for our own personal gain. What a sad state for our democracy.

The high prices for health insurance are a direct function of the price of health care itself. Health insurance costs the going rate of health care, plus a little bit. The cost of maternity insurance is the cost of a delivery, plus a little bit for administration, losses, and the risk of emergency procedures. The cost of catastrophic insurance is the average cost of health care due to catastrophes among the policy holders, plus a little bit for administration, employee salaries, etc. The cost of any health insurance from any company that plans on staying around long enough to pay policy holder benefits must be the cost of the health care, plus a little bit.

The high prices for health insurance are also a direct function of regulation of the market. Each time a state legislature mandates that insurance companies cover this or that illness, insurance premiums must go up to compensate for new expenses. Every time a state legislature mandates coverage to see this or that specialist or to receive this or that test, the price of premiums must go up to compensate.

As for exclusion criteria, we know how difficult it is for those who do not qualify for certain insurance programs. But we also know that insurance companies maintain these criteria in order to keep the price of premiums low enough for the general populace to afford. Any plan to enforce removal of exclusion criteria may be noble, but is not based in reality. A plan without exclusion criteria is a plan that most people will not be able to afford.

Health insurance is a business. It is not a charity. There are many wonderful private charities and programs available to help those who cannot afford health care, but the insurance industry is not one of them. This is not a crime. Insurance companies must make a profit so their employees can take money home to feed their families. There may have been criminal acts committed within the industry. There may have been unethical behavior. These should be prosecuted. But the cost of health insurance is no crime. The existence of exclusion criteria is no crime.

When we understand the nature of health insurance and how its price is determined, we begin to see that the institution of a national health insurance plan does little to solve today's health care problems. The best any free and true health insurance company can charge is the true cost of health care, plus a little. The only way a national plan can compete with free market is for it to be non-profit earning. It must become a charity. In order to do so, it will require financial support. And so our tax dollars will go to support a failing insurance company, just as they now go to support failing banks and auto companies.

How will insurance companies owned and run by American citizens compete with such a national company? They can't. They cannot drop their prices enough to compete with a "company" that doesn't care about profit margins or the bottom line. Their customers will slowly trickle to the national insurance policy and one by one they will go out of business. As Americans, we will have the privilege to use our tax dollars to put our fellow countrymen out of business. It won't matter if the government did not initially take over the entire industry, because government will have successfully run its citizens out of the market.

Rusty Scalpel

Monday, May 18, 2009

Review of Mitt Romney's "The Answer is Unleashing Markets- Not Governments"

What is Mitt Thinking?

I believe I have a pretty good feel for Mitt Romney. I share his conservative philosophies. I think I understand his cultural and religious background. But my understanding for who Mitt is does not necessarily translate into an understanding of what Mitt does.

Take the op-ed piece that we're about to critique. Mitt Romney wrote this interesting piece on health care policy that appeared in the May 18 edition of Newsweek. In it he promotes aspects of the Massachusetts Health Care Reform law of 2006 that he helped enact as governor. His views in this editorial may be influential in providing congressional Republicans the backbone for the compromise on health care reform that they will make with Democrats this summer. But why does Mitt, a self-proclaimed free market guy, make the recommendations that he does? For example, why does Mitt claim to support a mandate that every person must be insured? (The first point in his essay.)

Mitt proposes tax penalties for those who by state standards can afford insurance, but do not buy it. That's the sort of argument that should be coming from the managed-market guys, not the free-market guys. The managed-market guys would claim that forcing everyone into the market, especially the healthy and deliberately-uninsured young adults, will bring more people into the insurance pool and bring down the price of premiums for everyone. We would expect Mitt to argue that mandating the use of a certain commodity runs counter to market principles and counter to freedom in general. Obligatory purchase of commodities negates the free in free market.

It turns out that the historical Mitt, the Mitt we think we know, would agree with us. The plan that he proposed as governor of Massachusetts had no individual mandate attached. The state was struggling with free-riders showing up at the emergency room without health insurance and leaving the state with the bill. Mitt proposed that state residents without insurance post a $10,000 bond to cover unpaid hospital bills. Mitt opposed the individual insurance mandate. It was the democratic legislature pushed the compulsory individual insurance mandate.

Why then, is the mandate the first point of his health care proposals? Why not a plan that directly addresses the issues of free-riders at the emergency room or on bankruptcy law instead of a direct attack on the market? In fairness, we point out that the Massachusetts individual mandate was softened with provisions allowing the purchase of catastrophic coverage and Health Savings Accounts to fulfill state requirements. But should we have to have health insurance to be law-abiding Americans? Does Mitt really believe in mandatory health insurance (history says no), or is this just political expediency?

Mitt's plan would use funds once dedicated to the payment of emergency room bills to the payment for health insurance for the Massachusetts's needy and projects huge state savings with the change. Whether this change is financially advantageous for the state in the long run remains to be seen. We have to be wary of any state-provided service. It seems human nature, even for Americans, to like all things "free" and politicians love to win votes with the promises of increased government services. Mitt cites the original Medicaid bill, which was supposed to cost $500 million, but now costs $500 billion to operate. I think we can safely assume that the overall cost of his state-purchased health insurance policies will similarly balloon.

The rest of the essay is more what we would expect from Mitt. He proposed increasing the portability of health insurance, touted the effectiveness of co-insurance plans, supported increasing patient information about cost and quality of care, and recommended reform of Medicaid and Medicare. Very importantly, he states that any health care reform should occur on a state, not a national, level.

So, what are we to think overall of Mitt's proposed plans? Regardless of objections we may have, his proposals are going to be much more conservative and market-oriented than anything that comes out of Congress this summer. And as the Heritage Foundation pointed out, the mandates in Mitt's plan are less problematic than they appear.

And yet, as freedom loving Americans, we should be able to expect something more from conservative leadership. As the editorial title states: the answer is unleashing markets, not government. I believe I speak for true conservatives and freedom-lovers when I say I believe the state has no business whatsoever providing health care for its citizens. Ideal health care reform removes government from health care. Ideal health care reform removes restrictions on the market. Innovation becomes legally possible, the patient is empowered as a consumer, prices are driven down and accessibility increases. The ideal reforms removes tax burdens on Americans and allows them to care for and rely on each other instead of picking their pockets and forcing reliance on Uncle Sam.

These are the principles that should be promoted by conservative leadership. Compromise happens after we champion the ideal. I worry that Mitt may be rejecting the ideal and his past principles in order to embody the compromise. I like Mitt, so I hope I am wrong. Conservatives everywhere are being tempted and taunted to embrace this new moderate Republicanism with which McCain lost the election. I hope that Mitt and other conservative leaders hold to their principles and continue in honorable service promoting the ideal.

Rusty Scalpel

Monday, April 27, 2009

Andrew Lloyd Webber and Ayn Rand on Mob Politics and Targetted Taxation

We live in a time of world-wide economic difficulty, a time when everyone is cutting spending, tightening their belts and budgets, and preparing for some lean times. That is, everyone except for the world governments. They, some some reason, have ballooning budgets and unchecked ambition for expansion. (President Obama promised 3% of the national GDP for development of science technologies today. He forgets that social security and other national obligations of debt already eclipse the GLOBAL gross domestic product.) So where is the funding for these programs to come from, with money so scarce among the citizenry? For politicians who have won office on the vote of the poor, the answer comes easily: tax the wealthy.

But what happens when a majority of voters chooses to strip the rights of the few? What happens when we begin to single out members of society to carry a country's financial burdens? Can a country sustain itself with such policies? Can we escape a recession with such legislative looting?

Andrew Lloyd Webber, the British broadway behemoth, spoke out today against a new 50% income tax on in an editorial in the London Daily Mail. Great Britain has upped their 40% income tax with a 50% income tax on anyone earning over 150,000 pounds. Here's what he had to say:

"The opinion polls have uttered. The country loves the new 50 per cent top rate of income tax. Soak the rich. Smash the bankers. So Government spin doctors are in second heaven...

The next few years are going to be horrendous in the UK. The last thing we need is a Somali pirate-style raid on the few wealth creators who still dare to navigate Britain's gale-force waters...

I write this article because I fear the inevitable exodus of the talent that can dig us out of the hole we find ourselves in. It is inevitable, given that other countries are bidding for entrepreneurs. The Government must modify its proposals...

So I ask the Government to reconsider what it is doing. More than ever before we need to keep high-flying professionals in the UK. We can't, as we have done in the past, dump on them through penal personal taxation."

Andrew Lloyd Webber's points out that not only is such taxation unfair, it is ineffective. Industry leaders and highly-trained professionals, or "High-flyers" as he put it, are not going to stay in a country where they are enslaved. They will take their talents and the jobs and revenue they would generate elsewhere. Individuals who would generously "take one for the team" when done voluntarily may not feel so generous if they feel they are being robbed at gunpoint. They can afford plane tickets and they will leave.

His point is eloquently reinforced by an email titled "Who is John Galt?" sent to me today:

"We all hear about the need to protect patients' so-called "right" to health care. But we don't hear about protecting the rights of the doctors or the doctor-patient relationship. This issue is eloquently summarized by Dr. Thomas Hendricks, one of the characters in Ayn Rand's novel, Atlas Shrugged:

'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?'

We need to protect the rights of doctors and patients to trade on a free market to mutual benefit. Otherwise we will see more and more doctors silently shrugging off the burdens of being controlled by collectivists."

We've seen historically what happens when a nation tries to enslave portions of its population. The population rebels, especially when the population is already a motivated and hard-working demographic. Look at the American Revolution. When Britain tried to impose taxation without proper representation on its hard-working entrepreunerial colonists, those colonists rebelled. Great Britain lost the incredible wealth and talent that developed from this continent by its targetted taxations. This sort of rebellion and exodus is likely to occur in any democracy where a majority mob vote determines to strip the rights of the minority.

Not only is targetted taxation a formula for economic failure, but it is a sign of a failing democracy. A democracy is a meaningless institution without guranteed rights. When rights are eroded for any portion of population, they are eroded for all. Those who find themselves in power with the majority in one moment are liable to find themselves isolated and enslaved as a minority in the next moment. We cannot expect the good favor of the Creator, or durability as a republic if we trample those rights that we once held to be God-given.

Rusty Scalpel

Friday, April 24, 2009

Helping Patients Take Charge of Their Health (Part II)

Might God help them get better?

Helping patients make life-saving changes can be a challenge. Many of the behaviors that contribute to the development of preventable illness are habitual and some are even addictive. Last week we talked about using money as a motivating factor to help patients to take responsibility for their health. We showed how a fee-for-service system and a personal assumption of medical costs might help diabetes patients to better control their disease. But we acknowledge that even patients who are resolved to make major lifestyle changes may fail to do so. Changes, even the major changes that survival often requires, are often difficult to pull off.

A couple of weeks ago I attended a meeting where visiting physicians talked about their past histories of drug abuse. They talked about how they, even with their understanding of medicine and the body, became desperately addicted to various drugs. They knew the effects of what they were doing. They saw the havoc the drugs were wreaking on their professional lives and on their families, but they would not quit.

One physician told about his addiction to prescription painkillers. At night he would return to the the hospital he worked at and rummage through the garbage and sharps containers looking for old needles and syringes that might have residues of the painkillers he was addicted to. He would collect these residues little by little until he would have enough to take a hit of the drug. Another physician told of a crack house in Detroit that he often visited. He had a credit card with a $100,000 line of credit. Seeing his affluence and his dependence on the drug, the crack house opened a room just for him to stay in during his frequent visits.

But a couple things happened to these physicians to help them turn their lives around. First, they hit rock bottom and realized they had to change. Second, they found God.

The physicians described the desperation they felt when they realized that their lives were out of control. They were losing everything that was dear to them. They realized they had to change and made the decision to change. They told us about the support they received from professional organizations and the Twelve Step Program. The physicians then related, boldly and unabashedly, that only through the help of God were they able to break free from their addictions. Without Him, they would have been lost. Every single day, they told us, they thank Him for helping them escape and remain free from the drugs that once dominated them.

Let's return to our patients who struggle with habits that impact their health and shorten their lives. As physicians we counsel, we educate, we set goals and do everything in our power to help these patients change life habits. But our experience demonstrates that most patients will not change their behavior. Have we come to believe that change is impossible? Are our patients helpless? Are they irreversibly locked in habits of smoking, drinking, over-eating, drugs, inactivity, and damaging sexual practices?

Most physicians and patients believe in God. Do physicians believe that God can help patients overcome their habits? More importantly, do patients believe in a God that would help them change their lives?

As physicians we use all sorts of tools to try to help our patients to change unhealthy habits. Have we tried applying the patient's own faith to the problem? To the patient that is sincerely but unsuccessfully trying to quit smoking, we might ask, "Do you believe that God will help you have the strength to stop smoking?" How powerful it will be if we can follow their affirmative response with, "I know He will."

Change is hard to make, but it is not impossible. We are not treating animals who have no control of their destiny, but Man. He can choose to change. If our patients need help in making change, why not tap into the resource of their faith to help them clinch that change? If our patients believe in a God who watches after the life of each sparrow and cares for the lilies of the field, then perhaps he will help them control their diabetes or quit smoking.

Rusty Scalpel

Friday, April 17, 2009

Helping Patients Take Charge of Their Health (Part I)

Making Money a Motivating Factor

Americans spend hundreds of billions of dollars a year treating preventable illnesses. The sums of money spent on these illnesses are even more breathtaking when we realize that it is money that does not have to be spent. For example, in 2007 Americans spent $116 billion on medical expenses related to diabetes, according to the American Diabetes Association. The average diabetic spends $6649 a year just on diabetes. The numbers force us to ask: what must we do to prevent this preventable disease?

In this post, I'll use diabetes as a case study for all other preventable diseases. When speaking of preventable diabetes, I am referring to most Type II diabetes mellitus. Although it has genetic components, the onset of this type of diabetes is generally brought on by an unhealthy lifestyle. The landmark Diabetes Prevention Program study showed that type II diabetes could be prevented or delayed by diet and exercise in 58% of cases (compared to placebo). This effect was seen in all individuals regardless of race, sex and class. In short, type II diabetes can be prevented in most patients by diet and exercise.

The American physician struggles to help patients prevent and treat diabetes. The first-line treatment for diabetes is exercise and diet. Doctors tell this to their patients. Yet deep in his or her heart, the doctor knows that the patient probably will not change their lifestyle. They will return to the next visit with the same blood glucose level and without having exercised or dieted. The doctor will be left with only pharmacological and surgical means for treating a disease that the patient should be able to treat on his or her own. So instead of pounds being dropped, medications are prescribed and gastric bypasses are performed.

One reason that patients may be unmotivated is that we have attempted to remove money as a motivating factor in our health care system. We want everyone to get the care they need, regardless of their ability to pay. We try to create a health care system where money is not the object, but in so doing we may be harming our patients.

Consider the Medicaid patient who knows that diabetes is shortening their life and ruining their lifestyle, but is unmotivated to personally address their diabetes. Free visits to the clinic and daily insulin shots are much easier than a massive overhaul of diet and daily exercise. Instead of getting healthy, the disease progresses and the taxpayer shoulders the bills. Patients with comprehensive health insurance may likewise put off taking care of their health. If they stay on their current policy, their premiums will not radically change and the disease may not hit their pocketbooks too hard.

But imagine the patient that is directly confronted with the cost of their poor health in every visit and with every prescription. In every medical bill these patients have a concrete, immediate reason to take diabetes into their own hands. As stated above, diabetes will cost the average patient $6649 a year on top of their other medical expenses. These self-paying patients are immediately aware of this cost and will look for ways to reduce it.

The thoughtful doctor could talk finances with a self-paying patient and encourage health lifestyle with a conversation something like this:

"Bob, you know that I'm concerned about your weight, your blood pressure, and your glucose levels. Unless we get these under control, it's not a question of if you'll get diabetes, but when you'll get diabetes. But if we can get your weight and these other things under control, you're going to be healthy for years.

Now I know that work and family keep you busy and you don't feel you have time to take care of yourself. But think of it this way. If you get diabetes, it is going to cost you about $7000 a year to treat. Now that's a lot of money. If we can start preventing the disease now, that's money in your pocket. If we work out the numbers, taking a 30-minute daily walk may save you $20 a day. Earning forty bucks an hour to take care of yourself- that's not bad."

I don't know about you, but if I were Bob, I might start jogging. I could think of a lot better uses for $7000 a year than insulin shots. Seven thousand dollars a year- now that's motivation.

Some might say that having patients to pay for their own care is cruel or unfair. But look at the scenario above- paying his own bill just made Bob healthier. We must pay for our own care. Any other system cannot last- such socialism truly is only a contrivance. When the reality of our personal responsibility for our health is realized (perhaps accompanied with some lessons from the school of hard knocks), we will see the epidemic of preventable disease disappear along with its accompanying epidemic of apathy.

Preventable diseases are prevented when patients are made responsible for their own health. As doctors, we're really missing out on one of our best tools to help patients truly be healthy if we don't make money a motivating factor. As Americans and as children of God, we're not meant to be coddled. When given the responsibility, we take care of ourselves. When entrusted to the system, we all get gastric bypasses.

Rusty Scalpel