Free Market Physician

Senate to Vote on Repeal of Health Care Reform Bill

2011-02-01T14:49:00.000-08:00

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

U.S. District Judge Rules Against Health Insurance Mandate

2010-12-14T09:27:00.000-08:00

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

Both Oranges and Health Care Can Be Substituted

2010-11-22T22:29:00.000-08:00

(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

The Tax Club

2010-02-27T20:19:00.000-08:00

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

Keynes and Hayek Rap Economics

2010-02-23T21:39:00.001-08:00

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.

Hookworms, Tax Hikes, and a $3.6 Trillion Budget

2010-02-04T18:42:00.001-08:00

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

America Excluded from Health Care Reform

2010-01-16T08:46:00.000-08:00

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

Doctors explain the importance of the free market in health care

2009-10-31T14:16:00.000-07:00

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

2009-10-03T19:42:00.000-07:00

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

Conservatives Visit Washington for Tea Party

2009-09-12T21:42:00.000-07:00

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

How is the Health Care System Broken?

2009-08-28T07:40:00.000-07:00

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

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

2009-08-27T19:35:00.000-07:00

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.

Boogeyman, Wild Misrepresentations, and Blatant Falsehoods

2009-08-14T15:25:00.000-07:00

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 http://www.whitehouse.gov/realitycheck/contact

Ronald Reagan Speaks Out Against Socialized Medicine

2009-08-14T14:03:00.001-07:00

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.

When the Majority of Health Care is Government-Funded

2009-08-01T19:21:00.000-07:00

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

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

2009-07-22T21:12:00.000-07:00

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

Where Can Virtue be Found?

2009-07-18T21:33:00.000-07:00

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.”

CATO

Price Controls, Medical Shortage, and Apples

2009-07-04T19:25:00.000-07:00

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

Holding Their Feet to the Fire

2009-06-16T20:20:00.000-07:00

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

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

2009-05-18T15:12:00.001-07:00

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

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

2009-04-27T08:41:00.000-07:00

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

Helping Patients Take Charge of Their Health (Part II)

2009-04-24T11:41:00.000-07:00

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

Helping Patients Take Charge of Their Health (Part I)

2009-04-17T10:30:00.000-07:00

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

Wal-Mart offers Electronic Medical Records System

2009-04-08T13:23:00.000-07:00

In the past we've praised Wal-Mart's $4 prescription plan and in-store clinics. Wal-Mart continues to drop the price of health care in a recently announced move to enter electronic medical records business. The news is a couple of weeks old, but it is interesting and worth discussing.

Wal-Mart is teaming up with Dell and eClinicalWorks to offer a bundled electronic medical records system that would cost about $44,000 to set up and operate per physician. For most doctors, that's about half the price of setting up other available systems.

Wal-Mart is consistently demonstrating that the market has plenty of solutions to medical care problems. Good business is the answer to the high price of care.

Further analysis of the medical records package is far beyond my expertise, but a good analysis of the product and the Wal-Mart/Dell/eClinicalWorks partnership by Don Fornes of Medical Software Advice is available here.

Rusty Scalpel

Those Who Pay the Bills Run the Business

2009-03-31T08:03:00.000-07:00

Several news stories and political developments drive home an important point in health care delivery: Money is power. The person who pays the bills runs the business.

Take for example the dwindling autonomy of businesses and industries that accepted government aid over the last couple of months. 1) The Obama Administration forced CEO Rick Wagoner out of GM after rejecting GM's restructuring plans. The Obama Administration paid to keep GM alive and now runs GM. 2) Recently, the House tried to hammer AIG, another bailout recipient, and passed a 90% tax on AIG's executive bonuses. The federal government owns AIG. It's freedom as a business only extends as far as good favor from the government. 3) Now Barney Frank is pushing a bill that would establish government control of the salaries of all businesses that received bailout funds. If the government pays the bills, they run the business.

Health care providers need to decide who they want calling the shots at their own clinics: do they want government-directed care, insurance company-directed care, or patient-directed care? That will be determined by who they allow to pay the bills.

I believe that most physicians truly believe that patients should be their own health care executives. They should have the final say on all medical decisions. Physicians and other health care workers are contracted to the patient to provide services under the patient's direction. Patients can hire and fire physicians at will. That is the ideal in medicine- the patient is in charge.

Experience and reason show that the responsibility of physicians to patients extends only to the degree that patients pay their own bills. The patient remains the health care executive only as long as they pay the medical bills. As soon as they delegate that responsibility of paying, they are no longer in charge of their care.

Patients' and doctors' experience with health insurance companies supports this idea. When clinics begin working with insurance companies, the whole nature of the practice changes. The insurance company is now making the calls. They determine treatment regimens- declaring some treatments acceptable and ruling others out despite patient wishes. They mandate diagnostics, both requiring redundant screenings and denying more expensive essential diagnostics. They even require additional staff hiring at the clinic, requiring the hiring of billing personnel exclusively for correspondence with the insurance company. Insurance-paid medical care is not patient-driven medical care. Many patients are okay with this- they've contracted insurance companies to manage their care. Insurance pays the bills and insurance runs the business.

What about when the government pays the bills for health care? It seems that the federal government has demonstrated a light touch in the cases of Medicare and Medicaid. Here the government is paying the bills, but they have allowed remarkable autonomy to patients and thus practitioners. Thus the common claim: Medicaid is the best health insurance! However, the reality that government-paid health care is government-controlled health care is present in each health care regulation or bill that rolls through the legislature.

Take for example the conscience-clause regulations that President Obama is about to overturn. Which health care providers do conscience-clause laws and regulations actually effect? Only those who receive federal funding through programs including Medicare and Medicaid. For another example, consider the health care legislation that was buried in the February stimulus package. The legislation establishes a National Coordinator of Health Information Technology with potential powers to establish and enforce a national standard of care. What health care providers will be responsible to this Coordinator? As far as I can see in the bill, only "government-sponsored" health care programs (pp 470) and recipients of Medicare, Medicaid, and state children's health insurance programs (pp 481) are currently marked for integration into the HIT program. When the government pays the bills, government runs the business.

If patients want to control their health care, they must pay the bills. If health care providers want patient-driven health care, they must establish practices where patients pay the bills. As government control increases in the health care industry, the best way to maintain autonomy over a practice may be to refuse third-party funding, especially government funding. Cash-only practices may become the only venue where patients remain health care executives and the doctor-patient relationship is preserved.

The federal government is trying to work up a steam push through government-run health care. They don't call it that, in fact many will sell the package as patient-run or patient-centered health care. But those who pay the bills run the business. You can bet that the same House, Senate, and White House that had so much to say about AIG and GM will have plenty to say about health care. Patient control over health care will be as remote as my control of the House of Representatives. After a few unanswered letters to the legislature, they will be left powerless and blogging.

Rusty Scalpel

Conscience-Clause Law and Religous Freedom in Health Care

2009-03-26T08:06:00.001-07:00

Do health care practitioners have the right to refuse treatment based on religious grounds?

On March 10 the Obama Administration announced a 30-day comment period before rescinding (overturning) conscience clause regulation established during the last days of President Bush's term. To put these soon-to-be challenged regulations in perspective, let's quickly look at the recent history conscience clause laws and religious freedom in health care.

When Roe v. Wade was decided in 1973, there was concern that physicians and other care practitioners would be legally compelled to perform abortions or sterilizations even if they found the procedures religiously repugnant. At that time, Senator Frank Church of Idaho sponsored an amendment that protected federally-funded physicians or hospitals who objected to the procedures on a moral or religious basis from having to perform the procedures. The amendment passed the senate 92-1 and became the first conscience-clause law.

The conscious clause laws were popularly accepted and promoted. Over the next years, nearly every state passed conscious-clause laws. Even Supreme Court Justice Harry Blackman, who had authored Roe v. Wade, approved of such laws as appropriate protection for physicians and hospitals.

In December of 2008, the White House announced that it would be enacting new conscience- clause regulation that would further define the 'right of conscience.' As stated in the new regulation, "The Department is concerned about the development of an environment in sectors of the health care field that is intolerant of individual objections to abortion or other individual religious beliefs or moral convictions. Such developments may discourage individuals from entering health care professions. Such developments also promote the mistaken belief that rights of conscience and self-determination extend to all persons, except health care providers..." The regulation also stated a purpose of aiding for religious entities (such as Catholic hospitals) that might suffer penalties for their abstention from objectionable practices. Bush regulation here

The new regulation established that any health care worker with "reasonable connection to the procedure" could refuse to participate if they found it morally objectionable. This could include nurses, technicians, pharmacy techs, etc. The regulations also left the door open for objections to procedures beyond abortion and sterilization. It could be interpreted to apply to any procedure that health care providers morally oppose.

The Bush regulation stirred controversy and were immediately followed by lawsuits in seven states claiming that the regulation "sacrifices the health of patients to the religious beliefs of medical providers." Organizations like Planned Parenthood called for a recision of the regulation to defend "the rights of patients to receive complete and accurate reproductive health information and services, without fear that health care providers will withhold vital information and services based on their personal biases."

On March 10 the Obama Administration announced a 30-day comment period before rescinding the Bush regulations. The recision of the regulation would not annul standing laws like the Frank Amendment or the Weldon Amendments, but would strike down in its entirety the Bush regulations. And so we return to our original question: What right do medical care practitioners have to decline treatment based on religious beliefs?

The Bush regulations also compel us to us ask specifically, should practitioners' choice to deny treatment be limited to certain procedures? Also, should conscience-clause law protection be limited to the primary provider? Do doctors have more of a right than nurses or technicians to refuse to participate in an abortion?

In contemplating these questions, I can't help but agree with the statement of the Bush regulation that there is a "mistaken belief that rights of conscience and self-determination extend to all persons, except health care providers..." I find myself very uncomfortable with the political wrangling and showdowns between the pro-lifers and pro-choicers when the First Amendment of the Constitution is already explicit:

"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof..."

Perhaps the executive branch can get away with these regulations because the Amendment specifies only Congress' limits to such lawmaking. At any rate, the practice of legislating through White House regulations is probably far outside of constitutional limits.

I believe that it is 'self-evident' that these 'God-given', 'inalienable' rights are truly universal. They apply to doctors, the same as nurses, the same as all Americans and all humanity.

To be truthful, I don't know how meaningful these regulations really are. My understanding of the Bush regulation is that it simply enforces current law. With it being struck down, current conscience-clause law still stands and has not been changed. However, I believe that conscience-clause law will continue to be severely trampled if the regulation is rescinded.

With regards to the Bush regulation. I think it should stand. It upholds current laws, whereas striking down the regulation encourages the disregard of standing law. Striking down the regulation will encourage evil organizations in their fear mongering and efforts to subject American health care providers to their practices. I believe that the right to religious expression, in the workplace or elsewhere, is a God-given right. Infringement of that right is tyranny.

The comment period before recision (overturn) of the Bush regulation ends on April 9. Comments can be sent to proposedrescission@hhs.gov. Or comments can be directly submitted here. Remember that these comments go directly to the Department of Health and Human Services. Demands and impassioned pleas will probably not go as far as well-constructed argument. In particular, the department has asked for:

"The scope and nature of the problems giving rise to the federal rulemaking," including specific examples, "and how the current rule would resolve those problems."
Information, with examples, to support or refute allegations that the regulation "reduces access to information and health care services, particularly by low-income women."
Whether the rule is clear enough "to minimize the potential for any ambiguity and confusion" that might result from it.
Whether the objectives of the rule could be accomplished "through nonregulatory means, such as outreach and education."

Rusty Scalpel

Letter from Reader

2009-03-24T15:06:00.001-07:00

After a couple weeks of break for finals, FMP is back online. We thank Nathan Reed for this submission, with which we wholeheartedly agree.

I've been pretty outraged on a daily basis since January 2009 about the happenings in Washington D.C. Now I'm just sad for our country. What is happening now is the death of the chance for success. That is the “American Dream”; the CHANCE (not guarantee) to raise your lifestyle through dedicated hard work and innovation in any field of your choosing. The “American Dream” is NOT entitlement to free healthcare, housing, etc. It is NOT allowing congress to choose which companies must be saved, which the government should take over, and which companies and EVEN INDIVIDUALS to tax at confiscatory rates. This country is currently on a path that Ayn Rand depicted decades ago. A 90% tax (that members of BOTH parties voted for) on a select few individuals! A confiscatory power that president Obama is now seeking to extend to anything/anyone that our D.C. prima donnas don't like. After legislators ENABLED the behavior they feign outrage about by saving these failing companies in the first place! They are KILLING the wealth, dreams and motivation for anyone aspiring to be more and do more with their lives than merely subsist. Anyone that manages to make a good living is suspect.

Liberals and socialists would like to assume that most people operate from purely humanitarian motivations – that this is how it should be, but our country has proven in the last 230+ years that self-interest is the greatest motivator of the human spirit. This country rose to relative success in the world by refusing to deny that universal truth. Furthermore, self-interest is individual, and the freedom to pursue the goals that tickle our self-interest is another bedrock of our past success. Society cannot reasonably expect an individual to put their all into any task when the effort of their work is not met with some form of compensation that the worker finds acceptable. That is the beauty of money – its buying power allows you to reward yourself in an acceptable way for the job that you completed.

To change tracks due to personal interest, I’d like to predict the consequences of universal healthcare provided by the government. Like with government subsidized housing, costs will inflate as demand increases because going to the doctor is “free”, or at least “cheaper” after D.C. picks up some of the tab. Why go to the family physician in the morning when it costs the same to get fixed right now at the ER? Doctors will be expected to pay off hundreds of thousands in student loans in a payout system that doesn’t rise with inflation, but actually decreases from time to time because government has to squeeze them to help control costs. There will be fewer people that train for the minimum of 11 years to become physicians due to the lack of benefit from that training (that dirty self-interest thing again). After some years comes rationing of care. No, the legislators (not doctors) in charge of deciding what kind of care you can receive won’t come out and say that you’re too old, or the therapy you require is too expensive to be worth saving your life. Instead, they will make people jump through hoops to get their care. You can’t get your lung cancer treatment unless you’ve stopped smoking for at least a year. You can’t have more than one heart surgery every 10 years because it’s been “proven” to congress’ standards that you should be able to go at least 12 years if you had eaten right and lost that extra weight. I know that there are people that don’t believe me, but just look at some of the news coming out of the U.K., our “model system” as touted by Tom Daschle. Good thing he didn’t get the Health and Human Services secretary position he was offered (tax cheat writing/voting for taxing legislation), but do you think the model will change? Yeah, let’s be just like the U.K. because they should be our model, not the other way around? Oh, and throw a little Chavez in there when we don’t like your business.

It’s all just so sad, as well as stressful that I’m going to have to find some place in the not too distant future to make a living doing what I love, and to MY standards. Hopefully it’s here, but then again, who is John Galt?

Nathan Reed

Government Struggles to Grasp Economic Reality

2009-02-20T14:11:00.000-08:00

The nation is struggling to understand true economics. We have a presidential administration, legislature, and news media bent on changing our economy into a controlled economy. And yet, they hesitate to pull the trigger, despite their monopoly of power. The plain truth of economics and freedom is hitting hard, and it's hard to ignore.

I've got a collection of economic-related news stories that I would like to highlight. Many of them are stories that you may have already read, especially if you are a news junkie like myself. I don't have much to say about them, other than they demonstrate the gap in between reality and the ideologies and programs that our elected officials and media are trying to push. Some of them may show a glimmer of hope that our newly elected officials may actually be learning something about economics while in office.

1. Wall Street flips at the suggestion of bank nationalization. Stocks plummeted Friday morning at the suggestion that the government may take over failing banks. What is interesting was the White House response. They attempt to reassure, insisting that they never had any plans to nationalize. Is the administration becoming aware that their policies of change to the nation's economic structure may not be plausible?

2. Wholesale inflation takes a leap. It went up 0.8% last month. The story says economists had only expected a 0.2% jump. Those must have been the economists who approved of the last stimulus package as well. Perhaps flooding the economy with freshly-printed and borrowed money does not make the country any wealthier.

3. The Chicago Tea Party. CNBC's Rick Santelli is an internet sensation in his spirited criticisms of the White House mortgage relief bill. The relief bill rewards bad behavior, Santelli says. "How many of you people want to pay for your neighbor's mortgage that has an extra bathroom and can't pay their bills?" he asks. The floor of traders behind him burst a unanimous boo. Santelli looks into the camera, asks if President Obama is listening and...

4. The White House responds. The very next day the White House already feels compelled to respond directly to criticisms in the cable morning news report. "Santelli doesn't know what he's talking about," the spokesman says. Maybe so, but the attention attracted by the tirade of a lower-profile newsman shows that the White House at least found his comments very compelling. It seems that White House response to media criticisms are usually limited to the big dogs- the Rush Limbaugh's, the New York Times- the big media outlets. The fact that they so immediately respond to Santelli is remarkable.

5. Bill Clinton gets some blame for the economic downturn because of his... "free-wheeling capitalism." It's funny that of all the Clinton's Administration acts that would be blamed, Time targets free-wheeling capitalism. That definitely was not the hallmark of the Clinton Administration. Much more pertinent and logical to point at would be the growth of Fannie Mae and the Community Reinvestment Act passed during Clinton's tenure. The attacks on capitalism continue from surprising sources as...

6. Alan Greenspan supports bank nationalization. We've come full circle now and perhaps see part of the reason why we have executive and legislative branches that are attacking capitalism and American freedom at will. Have American conservatives and patriots forgotten the principles this nation stands on? Economic freedom is not a get-rich-quick scheme. Capitalism is not just another economic system along with socialism, communism, etc. It is not to be swapped out for one of the others because of an economic recession. Capitalism is the state of the economy in a state of freedom. As evidenced in the news, it also happens to be the only system under which mankind will find ever prosperity.

Rusty Scalpel

Step One of Government Health Care Takeover Hidden In Stimulus Package

2009-02-10T08:41:00.001-08:00

Here's the followup on today's earlier post on Bloomberg's piece about hidden health care legislation in the stimulus package. I'm afraid we're a bit behind on this one. My searches today showed that the other bloggers have been talking about it for weeks- we took notice only after Rush and Drudge brought it to national attention yesterday. My only excuse is that the stimulus bill was so depressing that we never looked at it. Maybe that was their strategy all along.

There is a lot of discussion about the hidden health care policy in the bill and I'm not sure how accurate it all has been. I've gone to the bill itself to try to make sure that my description of the health care inclusions in the bill are accurate. I'll also point out that the following discussion is not the only reason to oppose the bill. In principle the whole thing stinks. These are just some of the especially low points. Under the guise of a anything-is-justified-because-the-sky-is-falling stimulus package we usher in the beginning of the Obama socialized medicine era.

The bill establishes a National Coordinator for Health Information Technology. His purpose is to oversee the development of a federal electronic health care system (pp 441). Included among his duties the director ‘‘(2) improves health care quality, reduces medical errors, reduces health disparities, and advances the delivery of patient-centered medical care; ... (4) provides appropriate information to help guide medical decisions at the time and place of care;... (9) promotes prevention of chronic diseases; (10) promotes a more effective marketplace, greater competition, greater systems analysis, increased consumer choice, and improved outcomes in health care services; and (11) improves efforts to reduce health disparities." (pp 442).

Isn't that fantastic? We now will have a government officer, probably to be reverently referred to as Mr. (or Ms.) Coordinator, that will make health care better. He will lovingly "guide medical decisions at the time and place of care." He will promote prevention of chronic disease. He will promote a more effective market place- isn't that great, the federal government will step in to help the market be more of a market! He will help improve health disparity. If we're lucky, he may even turn back death.

‘The National Coordinator shall, in consultation with other appropriate Federal agencies... update the Federal Health IT Strategic Plan... to include specific objectives, milestones, and metrics with respect to... the utilization of an electronic health record for each person in the United States by 2014." (pp 445)

The National Coordinator will appoint the HIT committee (Health Information Technologies Committee) composed of "providers, ancillary healthcare workers, consumers, purchasers, health plans, technology vendors, researchers, relevant Federal agencies, and individuals with technical expertise on health care quality, privacy and security, and on the electronic exchange and use of health information." (pp. 457)

This committee will advise the Coordinator on how to best achieve his stated mission of stepping in to help the market be a safer and more federally-approved market, help doctors make good decisions, etc. Perhaps this group will make the Coordinator's decisions bipartisan if he can't get bipartisan support from democratically elected officials.

The biggest question I have is whether health care practitioners will be forced to use the electronic medical system. Will they will be forced to follow The Coordinator and the People's Committee's recommendations on appropriate medical decisions, having a "more fair" market, spreading the wealth, etc?

I couldn't find a clear answer to that question. The bill talks about paying practitioners to use the electronic system, but those provisions were found under the headings of Indian Health Services and Medicare. However, the following slightly menacing statement is found at least twice in the bill: "The Secretary shall seek to improve the use of electronic health records and health care quality over time by requiring more stringent measures of meaningful use..." (pp 518, pp 541)

I sincerely believe that a national medical database is not a bad idea. It is an idea that deserves discussion. But it's not getting that discussion. It's being ramrodded down senators' throats by President Obama. He tells them we're in a national crisis. Don't think about it- just vote yes.

But this database, and especially the powers attached to the Coordinator, are a big deal. They take up over 100 pages of the 680 page stimulus package. This is Phase One of Obama's Change for socialized medicine. Why is it buried in the stimulus bill? Is the Democratic Force for Change afraid America wouldn't support it in open discussion?

Rusty Scalpel

Government-Monitored Health Care Hidden In Stimulus Package

2009-02-10T06:37:00.000-08:00

Bloomberg: Government Control of Health Care Hidden in Obama Stimulus Plan

An astute reader just sent us this Bloomberg article stating that provisions have been slipped into the stimulus package that would create a federal electronic medical record database. The article states that it also provides for National Coordinator of Health Information Technology that could monitor this database. This coordinator can make sure doctors are using treatments that are federally approved and cost effective, the article says. It also claims that the National Coordinator can penalize doctors who do not utilize the database.

We'll research this and post more later in the day. Get ready to call your senators.

Rusty Scalpel

Wal-Mart President on Medical Market

2009-02-06T14:40:00.000-08:00

How Would Wal-Mart Do Health Care?

All along we've argued the the "problem" with American health care is its high price. We've seen Wal-Mart have significant impact on the retail market, offering goods at prices significantly lower than their competitors and bringing these goods into the budgets of their customers. How would the Wal-Mart model work for health care?

We're going to have the opportunity to find out. Wal-Mart, like other retailers, has been introducing in-store clinics. I'm unsure about how many are now in operation, but 400 were announced in 2007. Some sources say there will be over 2000 in the next four years.

These clinics treat common medical problems for $40-65 a visit depending on clinic location and the health malady. In addition to the cheap office visit, Wal-Mart pharmacies have begun a $4 prescription plan. An impressive survey of medications are available for $4 for a 30-day supply or $10 for a 90-day supply.

Wal-Mart and its clinics certainly have critics, but it seems to us at FMP that these in-store clinics truly address the greatest need of American health care- the need for affordable care. The Wal-Mart mission of "saving people money so they can live better" certainly applies to health care.

Here are some extractions from speeches by former Wal-Mart President Lee Scott at the World Health Care Congress in 2007 and at the National Retail Federation last month on Wal-Mart's clinics and on the role of the market in health care.

"The private sector can make a difference," he said. "I believe American businesses can lead and we should."

"We think the clinics will be a great opportunity for our business. But most importantly, they are going to provide something our customers and communities desperately need -- affordable access at the local level to quality health care," Scott said. "We believe we can deliver effective and efficient health care at the local level."

"Within days of announcing our $4 program, countless other discounters, drug stores and supermarkets dropped their prices on generic prescriptions," Scott said. "That has surely saved our health-care system millions of more dollars. So let there be no doubt that the private sector can lead."

"As businesses, we have a responsibility to society. We also have an extraordinary opportunity. Let me be clear about this point … there is no conflict between delivering value to shareholders and helping solve bigger societal problems. In fact … they can build on each other when developed, aligned and executed right.

At Wal-Mart, we do not really see it as philanthropy or CSR or the Triple Bottom Line. All of those approaches have merit and can have an impact. But what we are talking about is different.

We believe you can bring together the bottom line on a balance sheet … with social and environmental bottom lines. Societal responsibilities and how we fulfill them can align and strengthen the business. When you do that, things really start to take hold, build momentum and make a much bigger difference. We have seen this at Wal-Mart when we have put together the “Save Money” and “Live Better” parts of our mission … and applied them to big challenges like the cost of prescription drugs. And I believe this can apply to all of us.

The principles are very simple. Does how you want to contribute to larger societal issues work with your business model – so it will last during the both good and bad economic times? Does it fit with your mission and culture – so that all parts of your company are engaged, energized and contributing? Does it offer the opportunity to leverage your unique strengths – so you can scale your efforts and make a unique, powerful and meaningful difference? And we can make a special contribution as retailers."

Rusty Scalpel

Recovery of the Medical Market

2009-01-30T12:54:00.000-08:00

American health care is in trouble. America's dependence on third-party payers and courtrooms to determine medical practice and price has placed us on the short path to health care bankruptcy. The simple doctor-patient relationship, a system where the patient pays for physician services and where the physician is responsible to the patient for services rendered must be reestablished. Our current path leads to economic failure, socialism, and a loss of American freedoms extending far beyond the realm of health care. True principles of economics must be applied to revolutionize medical field. We must recover the medical market.

We've been asked what it will take to return to this simple medical market. Here are FMP's keys to the return of the medical market and the return of health care availability and affordability to all Americans.

1) The return of the market must take place by market forces. We will return to the market because it is a system that works and sells itself. There may be laws abridging freedom and market forces that need be amended. Legislators can be won over for this purpose, but no fake economics of tax incentives or federal subsidies should drive the return to a medical market. Functional, profit-earning, fee-for-service clinics should attract customers and patients not because these consumers have subsidized health savings accounts, but because these clinics offer prices and services superior to that of their competitors.

2) The market will return as America escapes the standard of care. We've spoken of this in the past. The standard of care should rest in the hands of patients, not doctors. Patients should hold doctors responsible to their personal standard of care and deny them their business if they do not perform to that standard of care. The current high price of health care can be partly attributed to doctors treating patients by generalized, expensive, and self-serving standards of care that are established by courtrooms. These standards serve to protect the doctor and not necessarily serve patients. Patients are not and should not be responsible to the standard of care, but should only pay for health care that meets their personal standards.

It is worth suggesting that this independence from the standard of care will allow patients to seek non-traditional health care. It is quite possible that many, many consumers would choose the lower prices and competent services of nurse practitioners and physicians assistants if the states were to allow these practitioners due practice rights. It is also quite probable that this injection of medical supply into the market would significantly reduce the price of health care. That's food for thought.

3) The market will return when doctors realize they can escape the medical rat race. Doctors need to discover that they can determine for themselves the scope of their practice. They can escape from the bureaucratic crush of insurance company and government regulation. They can set their own hours and call schedules. For each doctor who wants his or her life and profession back, there are loads of patients who want affordable health care. Doctors just need to step out from the safety of government and insurance reimbursement to meet these patients and strike up a contract where each party gets what they want.

4) The market will return with idealism, sacrifice, and foresight. Once our medical revolution has begun and the medical market returns, the profiteers and followers of the Invisible Hand will get on board. But the path to medical freedom may require physicians who act because they see the oncoming waves of socialism, godlessness, and the loss of American freedom. It requires physicians who see the future and personally strive to change that future. It requires physicians who let integrity and the welfare of their patients dictate their actions. It requires physicians who are willing to ennoble mankind, educate him, and make him the master of his own destiny and health. May we be and inspire others to be such physicians.

Rusty Scalpel

Schiffonomics Concerning Inflation and Healthcare

2009-01-23T06:39:00.000-08:00

The Little Book of Bull Moves in Bear Markets by Peter Schiff, reviewed by Cato

I recently had the opportunity to read a book by Austrian economist Peter Schiff – The Little Book of Bull Moves in Bear Markets. In this book Schiff makes the case that the U.S. economy has transformed from a manufacturing economy that produces to a service economy that consumes. He points out that 47% of the new jobs created since 2000 have been in the service industry related fields and that economic growth along with wealth creation can only be made through production, Schiff argues that these elements have created a bubble economy that will deflate with the collapse of the dollar. The dollar collapse will occur when foreign investors, who are currently financing our annual deficits through credit, lose confidence and demand payment of the treasury bonds. Schiff cautions that the only way to preserve wealth with declining value of the dollar is to move wealth in non-dollar based assets such as precious metals and stocks traded with foreign currency.

Being an individual with not very much wealth, most of his suggestions about wealth preservation did not apply to me. The one suggestion that I did find applicable was his advice towards those with student loans. Schiff advised if you have variable rate student loans you should consolidate them at a fixed interest rate before the dollar collapses and interest rates rise.

Below are some excerpts that I found interesting:

Health Care

“In the face of these harsh realities, legislators on both sides of the aisle have begun calling for universal health coverage, but that won’t solve the problem either. The government doesn’t have enough money to provide health care for all Americans, and it won’t be able to keep borrowing. The only way to pay for universal health coverage would be to tax a populace that is already reeling from economic setbacks, an idea that’s sure to be deeply unpopular. Indeed, in the coming years, the government will have a hard time funding Medicare and Medicaid, the two national health plans already in place.” Pg194 The Little Book of Bull Moves in Bear Markets

“In the end, it may not be the quality of health care that contracts, but the quantity, as a poorer United States seeks to economize and some of the excesses get wrung out of this bloated system. For that to happen, however, the government will have to get out of the health care business and return this important segment of our economy to the private sector, subject to free-market forces—where it should have been all along.” Pg 195 The Little Book of Bull Moves in Bear Markets

Inflation

“I pointed out that mailing checks straight to the taxpayers instead of channeling money through the banking system meant that consumers could bid up consumer prices immediately. This avoids the usual time lag when the Fed’s expansions of the money supply, such as the $436 billion injected recently, have to filter through the asset markets before eventually affecting consumer prices. I’m being sarcastic, of course but the point is valid.” Pg 18 The Little Book of Bull Moves in Bear Markets

Why the Government Likes Inflation

Inflation is used for political reasons to stimulate the economy and counteract down-cycles that are perfectly normal and corrective of excesses but are unpopular with voters.
Government debt and other obligations such as social security become more manageable when payable with cheaper dollars.
Inflated incomes increase government revenues by forcing people into higher tax brackets.
Inflation helps finance entitlement programs that would otherwise cause tax hikes.

Pg 27-28 The Little Book of Bull Moves in Bear Markets

“The motive for choosing to print money is purely political. The other way to do it would be to raise taxes, which would cause a public uproar costing elected officials their jobs. Not that the voters would stand for any reduction in social programs. The voters want it both ways, and the elected politicians have found a way to accomplish that.” Pg 46 The Little Book of Bull Moves in Bear Markets

Inflation is a concept that I am still trying to understand. I remember in college learning about M3, a statistic that The Federal Reserve released each year denoting the total money supply. Schiff mentions that since 2006 The Fed quit reporting that statistic. Steve Morris of the Wall Street Journal recently reported that it looks like the money supply has been increased by 70% since last October! By not reporting M3 and by doing other maneuvers the government is able to misrepresent the actual rate of inflation, which has been said to be “the greatest tax on the poor.”

I think Schiff’s book does a great job of explaining what is going on with our economy. His arguments and the Austrian view fit very well in line with those of FMP. Like many I hope the dollar does not continue to lose value and collapse. However with the current trend of unfunded stimulus packages, government entitlement programs, and current war in Iraq and Afghanistan, one can only wonder how much insult the United States dollar can stand.

CATO

Immediate Savings of Cash-Only Practices

2009-01-16T12:23:00.000-08:00

In the past I've argued that America's health care problems can be boiled down to price. The price of health care is too high. Unequal access to health care, patient dissatisfaction, and the rising price of health insurance are all a result of this high price. I believe that cash-only clinics can bring down the price of health care, making it more affordable and available to all Americans.

For those who may not be familiar with them, cash-only clinics are clinics where patients pay for services at the time they are received. Generally speaking, these clinics do not accept any health insurance. Patients simply pay the doctor (cash, check, or credit card) when they go to the doctor. Both the patient and the doctor immediately save money for the following reasons:

1) Physicians do not have to hire extra staff to work with insurance companies. Many offices have more employees working with insurance companies than they have physicians. Simply dropping those salaries can translate to significant savings.

2) Physicians save money by avoiding insurance claim denials, costs associated with bill collection, and lag time in waiting for reimbursement from insurers, Medicare and Medicaid.

3) Patient compliance improves, decreasing visits to the physician and cost of their personal health care. When faced with directly paying for medical costs, patients are more likely to value and comply with the care recommendations they receive. For example, patients paying for each prescription out-of-pocket will be less likely to blow off taking meds for their full course than insured patients who can get another prescription for a recurring infection with a $5 copay.

4) Patients are more likely to proactively improve their own health. A patient directly confronted with the cost of health care is more likely to use means immediately available to improve health before visiting the doctor. These means may include dieting, exercise, better sleep, and reduced recreational drug intake to improve their health. Patients who make these self-improvements are likely to save thousands of dollars in medical bills. Having to physically pay at the doctor's office can make this difference. Which patient with diabetes is more likely to control blood sugar through weight loss and exercise- the patient whose insurance plan insulates them from the cost of their health care or the patient who must write a check for every insulin shot and doctor's appointment?

5) It costs less to directly pay for health care than it does to pay for health insurance. We might fret after reading points 3 and 4, worrying that patients might put off needed health care when they have to directly pay for it. However, let's remember that health care actually costs less than health insurance. By saving the cost of the middleman, patients can afford more and better health care.

6) Doctors save money by focusing on patients' needs, not on insurance company protocol. Doctors are able to tailor care to patient's needs and budgets. They do not have to run excessive diagnostics. They are able to prescribe the precise medications that patients need and are not confined to the list of meds covered by patients' insurance policies.

A cash-only system redefines the role of doctors and patients. It restores patients' direct responsibility for their health care and doctor's direct responsibility to patients. Patients save money by shouldering this responsibility and by physician competition in a real medical market. In this way cash-only clinics address the real medical problem, making health care immediately more affordable and available to Americans.

Rusty Scalpel

The Economic Burden of Standard of Care

2009-01-09T14:47:00.000-08:00

During our life experience we sometimes make startling discoveries about the institutions and devices that we trust to protect us and benefit us. We discover that some inventions of man, usually without malice by those who implemented them, are hurting us and limiting our progression. Such discovery is normal in the medical field. We regularly discontinue medications and treatments that we discover are doing our patients harm. But sometimes we are surprised and don't know what to do with the truth when it is presented to us.

I believe that our current concept and application of standard of care is one of these long-trusted devices is harming patients. I believe that it must be reconsidered and discarded.

Standard of care consists of the care that experts would consider to be best practice. The standard of care guides physicians as they make treatment plans for their patients. The purpose for having a standard of care is to prevent patients from being mistreated by negligent or malicious medical practitioners. If a court establishes that a physician caused damage by not following a standard care, that physician can be convicted of malpractice. Despite its protecting purpose, I believe that standard of care has contributed to patients' ultimate harm. It has made and continues to make health care inaccessible to them.

To prove this point, let's look at it from an economic standpoint. We've discussed supply and demand in the past. The price of any commodity is a function of the relationship between supply and demand. When demand for commodity increases with regard to supply, the commodity becomes scarce and costs more. When demand decreases with regard to supply, the commodity becomes less scarce and costs less. Now let's examine a scenario to see how standard of care effects the relationship between supply and demand.

Let's assume that American family practitioners read in the New England Journal of Medicine that extensive meta analysis of multiple studies proves that medication XYZ is hands-down the best treatment for ear infection. Within a short time, the data is almost universally accepted by family practitioners and a new standard of care has been established. Medication XYZ is a relatively new product and significantly more expensive than older antibiotics, but a course of XYZ is now the standard of care for ear infection.

Now when the doctor sees patients with ear infections, he prescribes XYZ. It is the standard or care. The medications he used formerly are not less effective than they were. But, if he practices something other than the standard of care he will expose himself to malpractice suits if those treatments fail. In this scenario, what has standard of care done to the price of health care?

First of all, the price of treating ear infections has gone up because the medication used is more expensive. Patients paying cash will feel that cost immediately. Patients on insurance may not immediately feel the change, but they notice it when their insurance premium goes up the following year. Those receiving government assistance may not recognize the change, but everyone's taxes will go up because of it.

Doctor's dedication to the new product will have some effect on the relationship between supply and demand as well. Because doctors are now universally using the XYZ, demand rises dramatically with regard to supply. Scarcity will increase and prices will go up. And so the cost of treating an ear infection has gone up for two reasons: first, because the new standard of care calls for the use of a more expensive medication and second, because the standard of care has created a demand for the product that has driven up its price.

The above scenario characterizes a complex process, but accurately summarizes what may be the leading cause for the rising cost of health care over the last thirty years. Standard of care, a device meant to protect patients from negligence and malice, has made health care unaffordable and inaccessible to them.

What must we conclude then, is it economically impossible to provide Americans with good health care? We've shown that if all doctors use the hottest new medications, the price of health care will continue escalating. Does supply and demand require that quality health care be reserved for the few?

Our problem does not lie in seeking the best health care. It lies in dictating “the best health care” and then force feeding it to Americans. “Best care” cannot be dictated to doctors. Doctors cannot dictate it to patients. Doctors should exert themselves to stay abreast of the latest studies and the best data. They should be held responsible if they do not provide truthful and complete information to their patients. Patients will choose from doctor recommendations a treatment plan that that suits their needs and their budget. They will determine the best care.

I believe that the current concept of standard of care is harmful, both to America as a whole and to patients as individuals. I believe that it does not protect patients, but makes health care inaccessible to them. Consensus of best practice as seen in standard of care has gone too far in bridling physicians and their patients. Freedom must be maintained in all fields, especially health care. As we jettison obstacles to this freedom, American health care, the very best health care in the world, will become accessible to all American citizens.

Rusty Scalpel

FMP Back Online

2009-01-07T13:17:00.001-08:00

After a long break for finals and the holidays, Free Market Physician is back in action with our weekly entries. We start off 2009 with a piece from our guest contributor, Cato.

Rusty Scalpel

The Third-Order Approach to Solve Hunger, Poverty, and Healthcare

2009-01-07T13:10:00.000-08:00

There are many different ways we can approach the problems in the world. Many of the approaches can be classified as good, better, or best. Like many, I want to make the world a better place which has led me to ponder the Chinese proverb: “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” Giving a man food because he is hungry a first-order approach to a problem. It’s simple a simple one-variable equation: if someone is hungry, give them food – problem solved. The third-order approach may be less intuitive and even more complex because it involves asking “Why are they hungry?” or even “Why I am not hungry?” Instead of one variable there are three variables that have to be met which allows the third-order approach to solve the problem and prevent it from recurring.

The third-order approach requires three essential components: a republican form of government, rule of law, and economic freedom. A classic example of a country that overcame poverty by following these components is Hong Kong. In the 1950s Hong Kong looked like most struggling third world countries. Today it boasts of an average annual income above European countries such as Great Britain and Italy. Hong Kong has a land area of roughly 400 square miles with no natural resources to sustain it’s population of 7 million people. Yet its citizens maintain a high standard of living.

We can look at Hong Kong and also at the United States of America as an example of prosperity and freedom. Our founding fathers established the framework for this country to become the richest country in the world. They understood the importance of a limited government and rule of law. In their wisdom they decentralized power and gave us a republic which provided economic freedom, the framework for the “American Dream.”

On the other hand we can look at countries who have centrally planned economies and limited economic freedom. Countries such as India and Sierra Leone have centrally planned economies, yet despite extensive government intervention they have some of the highest rates of poverty in the world. It is counterintuitive to think that government leaders, albeit experts in their fields, can cause such poor outcomes. Milton Friedman once commented on having government officials directing an economy by saying “There is nothing that does so much harm as good intentions.”

Several years ago I had the opportunity to live in the Dominican Republic and was able to see the influence of these principles at work. Like many Latin American governments there is corruption there, but the government is improving and foreign investors are noticing. The government has certain places called “Free Trade Zones” where foreign companies can build clothing factories and take advantage of the cheap labor with limited tariffs. These factories give people work and allow their children to have a better future. The economic pie is not fixed but grows because the universal law of comparative advantage prevails.

So how should one respond to issues such as severe poverty, hunger, and healthcare? I would suggest that it comes down to education, education, and more education. An individual must educate him or herself first and then educate others. Ayn Rand’s philosophy holds that historical trends are the inescapable product of philosophy. Fighting for the victory of ideas can defeat widely held ideologies that threaten liberty, private property rights, economic and individual freedom.

The major battlegrounds in this fight are the very places where students learn ideas that shape their lives such as high schools and universities. There are many organizations that are trying to spearhead a cultural renaissance and reverse trends of anti-freedom and anti-individualism such as the Mises Institute, the Cato Institute, the John Birch Society, etc. Learning from these institution can give an individual the tools necessary to promote the third-order approach.

As mentioned before there are many approaches to solve the problems in the world. The first-order approach is very satisfying for everyone involved, but it is not sustainable and does not address the underlying cause of the problem. The third-order approach, although more difficult to measure, is the best approach. It is incumbent for everyone to learn about these ideas and promote them, whether it be through financial contributions to these organizations or through educating other individuals. I am not suggesting we neglect the needs of people today in order to promote ideas we hope they will grasp tomorrow. By the same token we should not be distracted by doing something good or something better, when we can be working towards the best solution which solves the problem and prevents it from happening.

Cato

The Fall of Capitalism?

2008-11-10T08:24:00.000-08:00

A loving father and mother watch their son grow up and approach an age of independence. Upon reaching that age he leaves home and begins college. However, once in school, the young man begins skipping classes, frequents the bars, and becomes a real party animal. He eventually drops out of school and is unable to maintain a steady job. His parents are heartbroken and comment, "We should have never let him leave home."

Compare this to a situation that is unfolding nationally. Several weeks ago the House Committee on Oversight and Government Reform held a hearing in which they hounded former Fed Chairman Alan Greenspan for the free market policies of his administration. If he had implemented more regulation, they pressed, the economy would not have stumbled. As reported by the forever-impartial New York Times, "A humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending."

The feeling in both above situations is the same: If we had not allowed so much freedom, things would not have gotten out of hand. If the boy's parents had forbidden him leaving home, he would not have wasted his life. If the government had taken control of the economy, we would not have the current recession.

But let's analyze the rationality of these feelings, starting with the parents. We sympathize with them in their sorrowing for their son's wasted years. Yet, we cannot pretend that they could prevent their son's actions once he left home. They could try to influence him, but he is an independent adult. Their belief that they could have controlled his actions is incorrect. Any effort to truly control his life would have been morally wrong.

The national reaction to our economical slump is likewise irrational. "If the Fed had just taken control..." we lament. Here, like the mourning parents we forgot ourselves. First of all, we forget the actions of the past and try to pin the blame on a free market for falling stock prices and bank failures. But more importantly, we forget what America's free-market capitalism is.

These days our free-market capitalism is often thought of as just another economic system. Our European allies have abridged it without regrets. Many, far too many, in our own nation want to do the same.

But capitalism is not an economic system. There is no structure or control involved in capitalism. Capitalism is the free-market economic state that comes as a result of liberty. Thus, if capitalism is substituted by another system, we have not merely swapped one system for another. We have swapped freedom for control. We have taken away American liberties.

The goal of capitalism is not to amass national wealth. The goal of capitalism is not to maintain our status as the world superpower. Capitalism is not maintained for the sake of the stock market. In fact, capitalism has no goal. Capitalism is simply the result of economic freedom. And so, we do not casually give up capitalism because our stock portfolio isn't doing well. Indeed, we fight furiously and bleed and die to maintain it because the loss of capitalism is tyranny. It is the loss of our God-given, won-by-blood American freedoms.

A sound byte from a speech by Ezra T. Benson (Secretary of Agriculture during the Eisenhower Administration) has been floating around the web. In it he describes a confrontation that he had with Nikita Khrushchev ("First Secretary of the Communist Party of the Soviet Union") during the 1959 visit that Khrushchev made to see American agriculture:

"As we talked face to face, he indicated that my grandchildren would live under communism. After assuring him that I would do all in my power to assure him that his and all other grandchildren would live under freedom, he arrogantly declared in substance: You Americans are so gullible. No, you won't accept communism outright. But we'll keep feeding you small doses of socialism until you finally wake up and find that you have communism. We won't have to fight you. We'll so weaken your economy that you fall like over-ripe fruit into our hands."

In a time of economic turmoil, may we stand fast in the liberties with which God has blessed us. May we reject the doses of socialism that are so constantly being offered us. Any threat to the American free market is a threat to American freedom. Let us be alert and treat those threats as such.

Rusty Scalpel

(I regret not having a primary source for the Ezra T. Benson quote. To listen to the quote click here and scroll to 8:15.)

If Elected President, I Will...

2008-10-24T10:14:00.001-07:00

Free Market Physician's guide to solving the "Health Care Problem"

Of course we recognize that the fix that health care needs is not within the constitutional powers of the president of the United States. Any comprehensive plan that a presidential candidate offers is probably going to throw a wrench in the economy and is possibly unconstitutional as well.

What we offer is the hard, but true, solution to the health care problem. It's hard because it is not just an executive or legislative fix. Our congressmen are not going to pass a bill that makes health care affordable and available for everyone. No, the solution is to be found in the market and it requires politicians to do the thing that is most difficult for them- to untie our hands and stay out of the way.

And just to be clear, let's specify what the Health Care Problem really is. It is high prices due to a lack of supply of medical care. So without further ado, here are our three recommended actions for solving the Health Care Problem.

1) Remove the legislation of discrimination that denies non-traditional providers access to the field.

Spurred on by the physicians of the American Medical and American Osteopathic Associations, many state legislatures have passed strict laws regulating the practice rights of physicians assistants and nurse practitioners. Many physicians see them as a threat to their practice and believe that an unregulated medical market is somehow an infringement on their rights as physicians. However, the right to a monopoly of the medical market does not exist.

NP's and PA's, those "masters of the mundane," have the incredible potential of filling the gap in America's primary care services. Their education is less extensive than that of DO's and MD's, it takes less time, and it costs less to receive. They have the potential to drop the floor out of the costs of primary care, offering general care at a fraction of the price charged by traditional physicians. They have the potential to work for traditionally underserved populations, opening branches of practices in new locations.

NP's and PA's cannot do everything a doctor can do. They practice within a scope defined by their education, by their licensing, and especially by the market. If they provide competent medical care at low prices, the market will be very likely to reward them.

2) Remove state regulation preventing physicians from competing against each other.

In what other market is non-competition so actively advocated and enforced as in the medical market? We now have the natural effects of these efforts- a market that is not truly a market. The deliberately-limited supply of physicians and the lack of competition between physicians creates artificially high prices in health care. The medical economy is not consumer friendly. In fact it's nearly impossible to shop around. Medical prices are hard for consumers to verify, illegal for doctors to compare, and made homogeneous by insurance companies.

But remove regulations preventing physician competition, and you will see doctors scramble to please patients. Prices will be dropped, advertised, compared, and then dropped even lower. Doctors will be forced to show ingenuity in the administration of their practices, cutting waste across the board. Now empowered, consumers will swap their comprehensive health insurance plans for catastrophic plans and personally shop for price and quality. Health care prices will drop again.

3) Take the philosophical burden of patient care and place it firmly on the patients' shoulders.

After almost a century of modern medical grind, doctors are realizing that they can no longer be responsible for our patients' health. We deeply desire to keep our patients healthy and we've gone to extraordinary means to promote that health. In our frustration, we have tried to control our patients lives. We have tried to control patients by professional authority, we have tried to control patients by barring other practitioners from the markets, we try to control patients by by lobbying state and federal legislatures to pass laws regulating behavior.

We have had success in convincing them. Patients now see us as responsible for their health as well. This fact is evident in the call schedules we keep and in the onslaught of lawsuits we face. But the burden of responsibility for patient care is one we cannot truly carry. It always was the patients' and it must return to them.

When the true responsibility for patient care is established, medical care will be revolutionized. Doctors will see a reduction in status and income, but they will also see a reduction in call hours, malpractice suits, and headaches from dealing with insurance companies. America will find itself healthier and with a more efficient and less costly medical system. This truly is the final solution for all of our national woes- personal responsibility. The sooner this responsibility is acknowledged, the sooner this nation can begin to truly resolve the problems at hand.

Rusty Scalpel

Reader Recommendation: "Affordable" Health Care

2008-10-22T11:52:00.001-07:00

Thanks for this suggestion to read economist Walter Williams' article "Affordable Health Care." The article points out that socialized medicine schemes in other countries have turned out very poorly. It recognizes some of the following shortcomings:

In Canada, the average waiting time for treatment by a specialist is between 5 and 40 weeks. The average wait time for an MRI or CT is 4 to 28 weeks.

One out of three Canadian physicians refer patients to the United States and the Canadian government pays over one billion dollars for health care in the United States each year.

Great Britain's National Health Services has a goal of having a maximum wait time of 18 weeks for general practitioner services and diagnostic tests. Many people in both Canada and Great Britain have illnesses that become incurable due to lack of care during long waits.

Great Britain Prime Minister Gordon Brown hopes to adopt a "presumed consent" that would essentially make the bodies of Britons property of the state. The plan makes every citizen an organ donor at the time of their death, unless they carry a card or have family at hand at the time of death that state otherwise.

Rusty Scalpel

Reader Recommendation: Hawaii Drops Universal Healthcare Failure for Children

2008-10-18T14:35:00.000-07:00

"And we're supposed to believe that a program that can't work in a state of about 1.3. million people is supposed to work for an entire nation?"

America seems to be in love with universal health care right now, but is any government-administered universal health care system economically feasible? Thanks for this reader recommendation: Hawaii ends universal child health care and commentary- we'll be talking about it more in the future.

Rusty Scalpel

A Conservative Approach to Universal Health Care

2008-10-08T13:12:00.000-07:00

I believe that most Americans believe that all Americans should have access to health care. We believe that in times of necessity, every American should be able to receive health care despite personal economic difficulty. We can all agree that we would not have a single one of our American brothers or sisters suffer when prudent use of medical care could alleviate that suffering. In this I believe we all stand united.

The division of thought perhaps lies in how relief ought to be administered. A part of our population, often referred to as liberals, generally believe that government programs should be put into place to relieve the suffering of the medically uncared. They believe that adequate funds could be taken from the population to provide for basic medical care for the entire populace.

Another part of our population generally disagree with such government-run programs. These are those who are called conservative and the growing population of those called libertarians. There are many reasons they may oppose such programs and among those are the following:

1) They simply oppose big government. They may oppose growth of government beyond traditional constitutional bounds for constitutional reasons.

2) They see government-administered programs as ineffective. They believe that increased taxation actually results in a decrease in tax revenue. They believe that the collected funds are ineffectively administered. They believe that many government programs foster dependence on the system and prevent the development of productive citizens and progressing human beings.

3) They resent government intrusions into personal liberty. They believe that growth of the government comes at the expense of personal liberties. Government programs hit pocketbooks and limit Americans' utilization of personal funds. Government programs often lead to regulations that limit personal choice. They believe that the preservation of liberty is more important than overall economic strength and that liberty should not be sacrificed for any other goal.

4) They recognize that governmental assistance to the needy does not result in the same spiritual or moral growth as personal assistance to the needy. They see no moral progression in being taxed to help the poor. They see little patriotism in having a pocket unwillingly picked. The funds that they might otherwise dedicate to the good of their fellowmen are taken from them. In addition, the substitution of government checks for loving service and assistance from neighbors and friends considerably blunts the moral growth that could take place in those on the recipient end of charitable action. Those who believe in this way believe that there is no institutional salvation for America without the individual salvation of American citizens.

For those who share this mindset and who cherish personal freedoms, might I suggest a potent means of combating the incoming wave of American socialism. Let's use our freedoms to decrease the need for increased social programs now.

What need can there be for liberal social programs if we use our still-present freedom to alleviate the suffering of our fellow Americans? What driving force would there be behind socializing health care if all Americans had adequate access to basic primary care?

As we look beyond ourselves, we will see solutions to the "health care crisis" that require the exercise, not the sacrifice of personal liberty. How striking it would be if we could demonstrate examples of entire communities where the utilization of innovation and personal freedom lead to a complete independence from federal funding for health care. What a statement we would make if without tax impositions we achieved a society where there is no poor among us.

All Americans, compassionate conservatives and bleeding-heart liberals alike, desire the good of their fellow Americans. As conservatives, and especially as physicians, let's use our own agency to benefit our fellow men. Let us show how our to exalt our liberties and what a great loss America will suffer if these liberties are taken away.

Rusty Scalpel

Reader Recommendation: The Four Ways Money is Spent

2008-10-08T13:06:00.000-07:00

We very much appreciate the following recommendation by one of our readers:

I saw this on C4L so I thought I would pass it on...

Milton Friedman brilliantly described the four ways that money is spent.

The first and most common way in the private sector is people spending their own money on themselves. In this case, the buyer is interested in both quality (the best product or service that he can afford) and value (getting it at the best price) because he is both the producer of the wealth being spent and the consumer of the good or service being procured.

The second way is when people spend their own money on others (such as gifts). Here they are still concerned about value (it's their money), but less concerned about service quality as they are not the consumer.

The third way is spending other people's money on yourself. Think of the rich man's girlfriend who buys herself the nicest dresses in the store on his credit card without even looking at the tag. She wants quality, but value is irrelevant since she sacrifices nothing.

The fourth way is when people spend other people's money on other people. In this case, the buyer has no rational interest in either value or quality. Government always and necessarily spends money in this fourth way. This guarantees inefficient public spending because the spenders have no vested interest in efficiently allocating those funds.

Resistance to Federal Assistance

2008-09-26T12:10:00.000-07:00

Yesterday FMP received the following comment to the post Among These are Life, Liberty and the Pursuit of Happiness from our reliable reader, Anonymous:

How can we expect to be "free market" physicians when we don't allow those currently treating our wives and children to do the same? I know it is uncomfortable to talk about this, but by giving in to using social (programs), we are exacerbating the problem rather than solving it. We cannot use these programs now, but expect others not to use them or not accept their payment when we are the ones providing care and paying taxes. Just a thought that we all should consider.

(It is FMP's understanding that Anonymous was referring to medical students who personally may not approve of expanding medicaid and other welfare plans, but nevertheless accept aid from those programs for their families while they are in medical school. Should they utilize a program they personally disagree with?)

The comment raises an important question. As Free Market Physicians, what is our responsibility regarding national and state welfare programs that we don't approve of? In a time when we may disagree with the expansion and universal establishment of federal health care programs, should we deny ourselves federal aid that we otherwise qualify for?

As Anonymous acknowledged, the subject is indeed a little bit sensitive. But let's look at it from a market perspective.

All along we have argued that, like all other markets, the medical market is best governed by the consumer. Low prices and high quality products are achieved, not by government intrusion, but by consumers actively selecting the products that best suits them. With that understanding, let me compare our current discussion with another market movement.

There are those that believe that "Corporate America," or the big national businesses- the Walmarts of the industry, have been unethically driving local businesses and producers out of the market. They are saddened by the loss of culture and personality in small communities when the big national stores arrive. Apparently, people cannot resist the attraction of low prices. As the locals forsake their neighbors' businesses to shop at the retail outlets, local industry dies.

We free marketeers probably see nothing wrong with the situation. We may have sympathy for the local loss. But we argue that the consumer has been presented with a choice. The consumer knows best what his or her needs are and has evidently chosen lower prices because that value trumps other values. The consumer apparently values lower prices and convenience more than he or she values local industry and personality.

Let's go back to the medical market and the enticement of federal aid. In each community a medical market is available with variety of prices and services. The medical care may vary and the prices and means of paying vary. Involved in the market are such commodities such as health insurances, cash-only practices, and government-paid health care.

The decision of which of the products or programs to use is ultimately at the discretion of the consumers. That's us. This is our opportunity to choose a product based on our personal values. In my case, the values that should determine my purchase include the following:

I want my family to receive the medical care it needs.

I would like doctors who view me as an equal and who counsel, not dictate, treatment options.

I don't believe in taking anything I haven't earned.

I rely on myself, my family, and my God before I look to the government for aid.

I do not believe that paying taxes is patriotic.

I would like use my resources to help those around me- not to have those goods confiscated by the government to help those around me.

It is plain to see that my values rule out certain options on the market. Based on my values, I will choose a medical plan and product that best suits me. Other people with other values will choose the plan that best suits them. There are those whose chief value is taking care of their family, but they have no means to do so. I will not criticize their decision to accept federal aid.

In our market decisions, let us always beware of the bargain. It appears to be human nature to purchase an item marked as "on sale," even if we had no intention of buying it in the first place. Even more provocative are those things marked as "free."

The federal government is advertising "free" health care. It will be aggressively advertising it in the presidential election. Let us buy our health products and services wisely, based on our values. With consideration, I think we will find market options that suit us much better than any federal plan.

Rusty Scalpel

Reader Recommendation: Amateurs Outdoing Professionals

2008-09-19T14:40:00.000-07:00

This article, written by economist Thomas Sowell, demonstrates why centrally planned economies will always lag behind free markets. His comments indicate what we can anticipate from a centrally planned medical economy. Thanks for the recommendation!

Rusty Scalpel

Among These Are Life, Liberty, and the Pursuit of Happiness

2008-09-12T10:24:00.000-07:00

We live in a time where phrases from the Constitution and Declaration of Independence are thrown around glibly to achieve personal and financial ends. A current abuse to our great founding documents is the argument for universal health care, construing it as part of our inalienable, God-given right to life.

To put it in context, this reference to the right to life is part of the rationale for breaking away from Great Britain in the Declaration of Independence:

We hold these truths to be self-evident:

That all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness; that, to secure these rights, governments are instituted among men...

We've discussed the subject in length before, but let's briefly use the Declaration to show why the increasingly-popular right to health care is not truly a right.

The “right” to heath care is not self-evident. It is a head-scratcher. There are many applications of the right to life that are self-evident, for example the right to protect oneself against violent assault to preserve life. However, the right to health care (i.e. compel others to care for you) is not one of these self-evident rights.
The “right” to health care is not endowed by the Creator. Our God-given moral agency encompasses the right to do a great many things. We can clearly see that God endowed us with the ability and right to reason, to speak, and to express our thoughts- in other words the freedom of speech. However, to my knowledge, none of us is endowed with the ability and right to free health care.
The “right” to health care is not unalienable. Unalienable means incapable of being alienated, surrendered or transferred. Clearly, the “right” to health care can be transferred or alienated since it does not currently exist in our country. It is not part of our innate human nature. Parts of our population want that right transferred to us by law. By so doing, they blatantly demonstrate that it is not unalienable.
The “right” to health care interferes with the governmental role of securing true rights. Federally-administered universal health care cannot be instituted without the infringement of other freedoms.

The Declaration establishes that universal access to health care is not a right. However, this doesn't mean that universal health care is an undesirable goal. Resistance to a federally-mandated universal health care is not resistance to the goal of making health care accessible to all mankind, or by definition, universal.

It seems very logical and natural to want all members of the human race to have adequate medical care, regardless of their ability to pay. That concept is already incorporated into modern medical ethics. Many physicians volunteer their time and skill to this end. Many non-physicians volunteer their means to fulfill this goal. This service is ennobling and part of that great right to the pursuit of happiness that our Creator has endowed us with.

However, contrast this humane service to a federally-implemented and mandated universal health care system where. What was once a service becomes literal slavery. The difference may appear subtle- in one case we freely serve because of love of God and men. In the other we are legally compelled to support a dependent population.

This is the difference between freedom and slavery, a difference that the Constitution has perfectly defined for over two hundred years. May we understand that difference and cherish and defend those rights with which our Creator truly has endowed us.

Rusty Scalpel

Smoking Bans Are Bad for America's Health

2008-08-29T11:48:00.000-07:00

Main points:

The dangers of smoking and second-hand smoke is scientifically established, however
Smoking bans are an infringement on property rights
Consumers possess economic clout to combat public smoking
Smoking bans open the door for further, more extreme breaches of Constitutional Rights

In light of a consistent stream of research citing the dangers of second-hand tobacco smoke, public smoking bans are seeming to become increasingly popular. I live in a town that passed a ban on public smoking last year. The city ordinance was written as follows...

a. Smoking is prohibited in all bars, city operated facilities, recreation facilities, restaurants, amusement places, bed and breakfasts...

The debate leading up to the decision was extensive and passionate. The public record for the city meeting leading up to the decision is much more interesting than public records usually are. The arguments in favor of the ban were varied and compelling, as seen in these excerpts from the record.

Tom Mayer... works at the lung health clinic. He tests people who have been exposed to second-hand smoke. He has to talk to people who are experiencing health problems due to a smoking environment.

Nicole Stevens... worked two years in a smoking area of a restaurant. She did not have a choice since she needed a job. She asked that smoking be banned.
Fred Peterson... said he is tired of paying for smoker’s diseases. His father, step-father and mother died of smoke related diseases. One-half hour of smoke exposure affects us.
Sarah Shelton stated this is an opportunity for Kirksville to become a pioneer city by passing an ordinance to ban smoking.

Alana DeCooyer... stated it is her right to go into a business without there being smoke there. She does not go into those businesses that allow smoking. Kirksville should set a standard by banning smoking here.

The arguments demonstrate the fact that smoking is indeed dangerous and has had a devastating history of damage. They certainly demonstrate an intellectual progress in that the majority of the participants in the public hearing recognized the dangers of smoking and wanted to halt its destructive effects.

However, was a ban on smoking in public buildings the best course of action to combat smoking? Consider two more excerpts from the record.

Brenda Sewell, owns Uptown Café, presented a petition signed that says business owners should have the right to choose. She said that 80% of her patrons are smokers.

Jan Collins, Washington Street Java, said that her business became smoke free in 2001, and she believes their business has grown.

First of all, let's consider two opposing claims from the record. From the final excerpt from the Pro-Ban group, a citizen claims that she has the "right to to go into a business without there being smoke there." Yet, the owner of the Uptown Cafe states that "business owners should have the right to choose" whether smoking is allowed on the premises.

Whose right is it to determine whether smoking is allowed on a property- the owner of the property or the visitor to the property? I believe that most of us would agree that this is a property right of the owner. Traditionally, the owner of a property determines its use. In addition, many of us agree that it is a constitutional right. It is implicit in the "Nor shall private property be taken for public use" phrase of the Fifth Amendment.

This is not to say that the citizens of Kirksville were obligated to enter smoke-filled public buildings. They still had a right- not the right to "go into a business without smoke being there"- but the right to choose not to go into buildings where smoking is taking place. No one forced them to eat in smoky restaurants- they ate there for reasons of convenience.

This doesn't mean that Kirksville citizens had no say in the use of private buildings. Actually, they had available a means of promoting non-smoking businesses just as profound as the city-wide ban would be. They had an economic vote.

All it would take to bring non-smoking businesses to Kirksville would be for the non-smokers to quit patronizing smoking establishments. The non-smoking establishments like the above-noted Washington Street Java would bloom with such action. Those businesses that continued to allow smoking would be forced to consider prohibiting smoking in their establishment or face the consequences of a smaller customer base.

Within a short amount of time, the policies of businesses would be proportionate to the tastes of the consumers. There would be adequate businesses to accommodate both smokers and non-smokers.

Consider the two votes that Kirksville citizens had. They had a democratic vote, one in which they could compel an entire populace to accommodate to the preferences of the majority. The use of this vote was an attractive option- with it they could significantly decrease public smoking in a single stroke. They also had an economic vote- one in which the local economy would respond to the tastes of its citizens.

Note that by using a democratic vote to establish a smoking ban a precedent would be set. Property rights would be infringed upon by a majority wielding "scientific data" showing harm- a majority enforcing what they felt was "right" and "healthy." But once these rights are infringed, they are forever in jeopardy to the next data-wielding majority who believes they are promoting something "right" or "healthy."

Think of the possibilities-a majority of the population with data showing that organized religion promotes depression, or conversely a religious majority determined to shut down businesses on Sundays. How about a health conscious majority forcing restaurants to serve vegetables with every meal? The action solely depends on a majority view and a rationale.

So even though we understand why Kirksville residents adopted a smoking ban, we must insist that it was bad- bad for the health of America. Freedom, even if it is the freedom to allow smoking in your business, must be preserved. Freedom must encompass the power to choose the wrong. By protecting this freedom, we preserve the power to do right.

Rusty Scalpel

(A final point to consider: how did the smoking ban affect businesses that had already prohibited smoking on their premises. Did they benefit from the ban?)

Reader Recommendation: AAPS

2008-08-26T11:46:00.000-07:00

A couple of alert readers have now recommended the website of the Association of American Physicians and Surgeons. The organization claims to be "...Dedicated to the highest ethical standards of the Oath of Hippocrates and to preserving the sanctity of the patient-physician relationship and the practice of private medicine."

That's certainly something we support here. We like what we see from them- their work seems informed, well-written, and generally in agreement with what we think here. Take a look and let us know what you think.

Rusty Scalpel

A Little Autism Means Big Money

2008-08-16T07:27:00.000-07:00

Reviewed: "New Ways to Diagnose Autism Earlier" by Jeremy Singer-Vine of the Wall Street Journal and "Autism Cures" a critique of the Singer-Vine article by Thomas Sowell.

Pertinent Points from "New Ways to Diagnose Autism Earlier":

New diagnostic methods indicate whether children under 30 months old may be at risk for autism.
"At-risk" children can begin early behavioral treatment. Pre-school treatment is shown to be more successful in raising IQ and improving language in autistic children than later treatment.
New methods provide "useful clues" as to whether the child may have autism. The author notes that "there is something about a clinician that adds to the predictive value."
Early intervention may be expensive, but if successful, may decrease overall spending on treatment of autism.
"Just eight states have passed bills mandating coverage by private insurers for autism and related disorders." The author notes that 27 other states are working on autism initiatives.

Pertinent Points from "Autism Cures"

An "Autism spectrum" allows for easy false diagnosis based on a range of autism symptoms.
Parents that allow children to be diagnosed as autistic can receive funding for desired therapies such as speech therapy. This encourages diagnosis of autism even when the existence of that condition may be questionable.
False positive diagnosis of early autism makes "curing" the disease easy work and generates false data about cure rates.
False positive diagnosis diverts money from truly autistic patients that need treatment.

The implications:

Of course FMP has no problem with parents electing to utilize non-definitive early diagnosis methods and expensive early treatment if they so desire. The problem comes when these elective procedures become the public burden.

For evidence that it is becoming the public burdern, note two excerpts from the Autism Votes website, an activist site dedicated to support bills benefiting autistic patients. These excerpts are two of many such notices.

1)(Baton Rouge, LA - July 2, 2008) Today, Louisiana Governor Bobby Jindal signed House Bill 958, the autism insurance reform bill passed last month by the state legislature, into law. The new law will require health insurance coverage for the diagnosis and treatment of autism disorders in patients under age 17. Benefits are capped at $36,000 per year and $144,000 per lifetime.

2)NEW YORK, NY (July 9, 2008) -- Autism Speaks today commended Pennsylvania Governor Ed Rendell for signing into law the most comprehensive autism insurance bill in the nation. The new law provides $36,000 a year for Applied Behavior Analysis (ABA) and other necessary treatments, and goes beyond many state insurance reform measures by mandating coverage up to age 21 with no lifetime cap. It also creates, for the first time under Pennsylvania law, an expedited appeals procedure for denied claims as a safeguard to ensure compliance by insurance providers. Private insurers will be required to provide coverage beginning in July 2009.

We can't help but wonder how this mandating of particular coverages on the insurance industry is affecting health insurance premiums. Health insurance isn't a charity program. Every time coverage expands the price of premiums must go up. These diagnostic and treatment procedures certainly have a place. But, should the government mandate non-conclusive, early-diagnostic procedures for autism and similar procedures for other illnesses?

Especially in these financially questionable practices, parents and doctors must be the decision makers- not the government. Efforts by the government to enforce a standard of care on the health insurance industry and on taxpayers can only make health care more expensive and less acessible to Americans.

Rusty Scalpel

The Most Important Constitutional Right

2008-08-06T03:58:00.000-07:00

And Health Care's Threat to It
Part I

Of all the rights guaranteed in the US Constitution, which is the most important? Is it a free-speech right, a right to religious observance, or right to vote?

We would hold that the most important of all constitutional rights is the right to hold property. The Fifth Amendment states that "No person... be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."

Property is the exclusive right to possess, enjoy, and dispose of a thing (as defined by Webster). Included in this definition of property could be land, money, commodities, and assets.

Contrary to opponents' inferences, it is not for reasons of greed or to gain dominion over other men that we so cherish this right to property. It is because without property rights, all other God-given, constitutional rights are placed in jeopardy. Consider, for example, how deprivation of property effects the first four of the Bill of Rights:

Amendment 1- The establishment of religion, freedom of the press, etc.: How is religion to be established without private funds and lands dedicated for buildings, publications, support of ministry, etc.? Where are tithes and other contributions without private property? Without private property, churches are established and administered by state funds and state discretion. Also, what happens to freedom of the press without private ownership and thus private discretion for what is printed?

Amendment 2- The right to bear arms: What happens to the private, personal right to bear arms if we are not permitted to own arms? Also, without private property, what are we protecting with those arms?

Amendment 3- "No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner..." is literally obsolete without property rights.

Amendment 4- "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures..." is also literally obsolete without property rights. What houses, papers, and effects are in danger of search and seizure if we own no property?

As John Adams said at the signing of the constitution "'property must be secured or liberty cannot exist.'"

Property is the means by which all other liberties are exercised. With property we are able to support our families and thus maintain independence from the government. In addition, with property we have a constant economic vote. We are able to support those causes and institutions that we find beneficial, good, and just.

What happens then, when this right to property is abridged? What are the consequences?

With a loss of property rights to the state, citizens become dependent on the state and the state becomes a custodian and guardian to its citizens. The state begins to wield an economic vote. It begins to apply moral values to determine which causes and institutions to support. Property-less citizens find themselves not only wards of the state, but find that they have unwittingly surrendered their other rights as well.

Sadly, this doesn't sound too different from our current situation...

To Be Continued

Rusty Scalpel

Reader Recommendation: The Cato Institute

2008-07-30T06:39:00.000-07:00

The Cato Institute is a libertarian think tank in Washington D.C. It's mission is to broaden the parameters of public policy debate to allow consideration of the traditional American principles of limited government, individual liberty, free markets and peace. Toward that goal, the Institute strives to achieve greater involvement of the intelligent, concerned lay public in questions of policy and the proper role of government. Cato provides great resources such as "The Cato Daily Podcast" and "Cato Events" which can found directly at their website or via iTunes.

The Cato Institute was founded in 1977 and is named for Cato's Letters, a series of libertarian pamphlets that helped lay the philosophical foundation for the American Revolution.

The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World, is a policy analysis by Micheal D. Tanner, the director of health and welfare studies at the Cato Institute. It is a 35 page analysis that critiques arguments made for national health care system in the US. To back these claims the author includes 13 pages of 300+ references. The length may seem daunting, but take the time and read the first 7 pages where the meat of the article is. You will find such statements as - "To a large degree, America spends money on health care because it is a wealthy nation and chooses to do so." & "When you compare the outcomes for specific diseases, the United States clearly outperforms the rest of the world." It definitely is a must read.

An ALDI sort of health care

2008-07-28T04:32:00.000-07:00

In the town where I live is a branch of a German-owned, discount grocery store chain. It's ALDI. ALDI takes on interesting strategies to fulfill a simple goal: delivering high quality goods at discount prices. The end result is a quirky little grocery store that fulfills it's goal nicely. The quality of their goods are generally above average and their prices are low, usually lower than Walmart.

So, how does a business achieve rock-bottom, low prices without compromising the quality of their product? In ALDI's case, they focus on this goal and cut out normal grocery store functions that don't lend themselves to fulfilling the goal. The result is a store with less widespread appeal than a Walmart or Krogers, but with lower prices and a devoted customer base.

A person entering our location of ALDI will spot several departures from normal grocery store setups. For example, the customer has to supply a quarter to get a cart that is chained to the front of the store. They get their quarter back when they drop their cart off. That eliminates the expense of lost and stolen carts and the need for employees to gather them up. The customer saves money.

ALDI doesn't supply bags. The customer can buy bags from them or bring their own. And of course, ALDI has no baggers. Thus, ALDI saves paying additional employees. The customer does a little work but saves money.

I don't think I've ever seen more than two employees at any given time at our ALDI. But with a small store and no responsibilities other than checking people out, they are able to push people through at a good rate. I would imagine that ALDI has a much lower employee to customer ratio than most grocery stores. That may sound like a bad thing when considering customer service, but it's a lot less paychecks to pay and those savings are passed on to the customers.

ALDI carries a limited assortment of goods. They buy privately and in bulk and ship out to their stores. Their are able to beat national prices and end up with an impressive (and interesting) assortment of products. Of course their German products are good. Their produce is fresh and beautiful and their breads above average. Customers learn the nuances of their products, find their favorites, and get hooked.

So, ALDI may not be for everyone. But they fulfill their goal: high quality goods at low prices. They reach that goal by cutting out the peripheral services. They may not appeal to customers who like to be waited upon, but for bargain shoppers and those on tight budgets they can't be beat.

Now, we've said it many times on Free Market Physician, but the national health crisis (if such it can be called) can be boiled down to high prices. America is unhappy with the price of health care. For those of us who are business oriented, why not make our goal the ALDI goal: to provide high quality service at the lowest price possible?

To do so, I would like to suggest the ALDI method of price slashing: eliminate peripheral services. Doing so may make us quirky and limit some of the general appeal of our practices, but it will fulfill the crucial need to make health care affordable. What health care features could we slash?

Our favorite feature to slash at FMP is working with insurance companies. In some clinics, employees assigned to insurance billing outnumber physicians. I recently spoke with physicians at a practice who said that they could save up to 30% of their cost by accepting cash only. (Imagine the devoted customer base you would have if you delivered your services at 30% below other physicians' costs.) Patients who have insurance can pay at the office and later contact their insurance companies and be personally reimbursed. It's a hassle for some patients, but saves significant money for all of them.

Of course there are all sorts of other features that could do with some slashing. The goal is high quality service at rock-bottom prices. The current alternative is allowing the government to take control of the industry. So, what can we do to make our services more affordable? We'd love to hear your slashing ideas- post them in the comment box or send them to us at freemarketphysician@gmail.com.

Rusty Scalpel

What is the SGR?

2008-07-25T05:24:00.000-07:00

The SGR is the Sustainable Growth Rate Forumla that determines physician pay rates for Medicare B patients. The plan is meant to control overall Medicare B spending.

For the last several years physicians have been seeing an increase of Medicare B patients and have been billing more for those visits year in and out.The SGR adjusts for this increase in spending by reducing payments to physicians- by about 4 or 5% a year. These cuts come to a field where prices generally increase about 7% each year. As a result physicians are increasingly underpaid for their Medicare patients.

For the last 5 years, those paycuts have been overridden by legislation. This year's threat of "Medicare Meltdown" was another SGR scheduled paycut. Currently, about 90% of physicians will take Medicare patients. The "Meltdown" occurs if paycuts are implemented and physicians find the Medicare patients to be too much of a financial burden and begin to turn them away. Annual overrides postpone this "Meltdown."

The problem with these temporary annual fixes is that they are refactored into the SGR. Each time a paycut is postponed, it is factored into the future Medicare budget. If the SGR remains as currently stands, annual paycuts will increase to higher percentages that will continue to have to be overridden year to year.

Scheduled paycuts that must be overcome by annual legislation: another reason I don't want to be part of a U.S. Government-run health care industry.

Rusty Scalpel

Medicare Bill Passed and We Smell a Rat

2008-07-23T19:51:00.000-07:00

As our readers already doubtless know, last week President Bush vetoed the Medicare Improvements for Patients and Providers Act of 2008 (HR 6331), a veto which was promptly overturned.

President Bush’s move certainly did not make him popular with the AMA and AOA, which had been whipping their constituents into a frenzy to get the act passed. Of course, both organizations responded to the veto with an even greater vigor, calling for another volley of communication to representatives. As stated by ACOFP President Ronnie Martin in the July 15 newsletter, “The danger lies in not letting our voices be heard loudly and often as we face this final hurdle in our attempt to reform Medicare and the SGR.”

The AMA and AOA had their way and physicians have avoided their scheduled Medicare pay cuts again this year. They’ve done their annual civic duty. But what else did they do in getting HR 6331 passed?

The money to cover not cutting physician fees from the Medicare budget had to come from somewhere. The source of that funding probably passed unnoticed in the radar of many AMA and AOA constituents. That funding came from the Medicare Advantage program, which will now lose $14 billion in funding over the next five years.

Medicare Advantage, or Medicare C, is the branch of Medicare that allows its enrollees to use Medicare funding to select a private insurance plan instead of using Medicare A and B. The plan is sort of stepping stone towards privatizing Medicare, allowing enrollees to let insurance companies compete for their business, potentially driving down prices and improving quality.

Analysis of the aftermath of the bill by insurance rating and analyst company A.M. Best shows that less insurance companies may now participate in Medicare Advantage plans and that many enrollees may switch over to Medicare A and B. It stands to reason that with less funding available to purchase private plans, the quality of plans available decreases and that more seniors will be back on government-prescribed health care.

Free Market Physician won’t go so far as to call foul play on the act. The physician cuts for Medicare patients are ridiculous and needed to be dealt with. However, the means of fixing it in HR 6331 were only a temporary fix and played perfectly into the hands of those who advocate increased government control in the health field. For example, the AOA received a special letter of congratulations and thanks for their leadership and work in securing passage of the legislation by Senate Majority Leader Harry Reid of Nevada.

Free Market Physician won’t go so far as to out rightly condemn the AMA or AOA for using the Medicare pay cuts to motivate their constituents to fall in with a political agenda at this time, either. However, this act is just one of many examples of how the professional organizations have contributed to higher prices for health care, physician shortages, and increased government meddling in the industry.

Nancy Nielson, MD, President of the AMA thanked the physicians who had fallen in line for preventing a “Medicare meltdown.”

“I am so grateful to all of you, the patients and physicians of America. Without your effort this victory would not have been won,” she wrote on the AMA website.

She also stated that only the health insurance industry, for purely selfish motives, opposed the bill. She can put Free Market Physician on the list of those who are at least a little cynical about it. FMP will certainly have a more skeptical eye out in 18 months when Congress proposes its next “solution” to Medicare pay cuts.

Rusty Scalpel

Opposing Tides

2008-07-18T15:11:00.000-07:00

While Free Market Physician advocates free market solutions and shaking off debilitating government restrictions to resolve health care problems, other entities continue to push increased centralization to try to control the industry. For such entities, a "smoldering crisis" justifies increased government control. We affirm that these efforts to control the industry are the core cause of its current dysfunctions, and further efforts to do so will cause increased dysfunction.

An example of these attempts to control is evident in a new publication from the Association of Academic Health Centers (AAHC) addressing problems in the healthcare workforce. The publication is available from the AAHC site. The stated premises are as follows:

• The dysfunction in public and private health workforce policy and infrastructure is an outgrowth of decentralized decision-making in health workforce education, planning, development and policymaking;
• The costs and consequences of our collective failure to act effectively are accelerating due to looming socioeconomic forces that leave no time for further delay;
• Cross-cutting challenges that transcend geographical and professional boundaries require an integrated and comprehensive national policy to implement effective solutions;
• The issues and problems outlined in the report have not been effectively addressed to date because of the inability of policymakers at all levels to break free from the historic incremental, piecemeal approaches; and
• Despite many challenges, the prospects for positive change are high.

We encourage our readers to examine the publication and comment on its merits and downfalls.

Rusty Scalpel

The Invisible Hand

2008-07-18T14:49:00.000-07:00

A Concept All Too Often Forgotten or Not Understood and Left Out of the Debate

(Free Market Physician welcomes its first guest contributor, CATO, to the forum. Thanks for your submission.)

Earlier this week I watched a documentary, made by a physician, addressing the problems facing our medical system. I was hoping that the physician would reach a free-market based conclusion. However the documentary appeared to be more of an elitist version of Michael Moore’s “Sicko.” The producer/physician made the following statement: “Our healthcare system is a bizarre blend of the worst of capitalism and the worst of socialism. It isn’t a system at all. We need to get over our fear of the government and embrace the idea that in healthcare somebody needs to be in charge so we can keep our eye on the prize which is health, not profits.”

I’ll have to admit the first part of his comment tugged at my heart strings. I remember thinking - has capitalism failed us? After all, the only logical approach to fixing healthcare is the free market system, right? After much thought I realized that we don’t even have a capitalistic system and I guarantee that we don’t have the worst of a socialistic system. We should call our system for what it is - interventionism and corporatism. Capitalism implies that a free market is in place. Our healthcare system is so heavily regulated from state and federal agencies that hardly any free market forces exist.

Another statement in the movie that I found to be disturbing was when a former editor of the New England Journal of Medicine said “I don’t believe that Americans are born as greedy cowboys who don’t care about the community and who’s aim in life is to be richer than anyone else. This happens to many Americans because they are bathed in that ideology.” After hearing these comments I started to wonder if they had forgotten, do not understand, or have lost faith in the “invisible hand.”

The invisible hand is a fundamental economic concept that is all too often forgotten and left out of the debate. Adam Smith, the father of economics, described this concept in his magnum opus The Wealth of Nations. Smith said that when man intends only to increase his own gain he is “led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.” In other words when everyone does what is in their best interests, society benefits as a whole. It is as if by pursuing individual self interest there is an invisible hand pushing society towards it’s best interest as well. Smith did not state that when government does what appears to benefit itself it in turn benefits society. He was referring to individuals.

Capitalism is one of the purest forms of democracy. With each dollar, individuals are able to vote and give proper value to the goods and services they consume. Our current healthcare system is almost void of capitalism and it is not surprising that there is not an invisible hand pushing society towards an optimal state. Consider these questions - Who owns your healthcare dollars- your vote in the system? and - Do you own the decision what to do with those healthcare dollars? More than likely, half of it is owned by an employee-based health insurance company, and the other half is owned by government to fund Medicare and Medicaid. The decision on how the dollars are spent are left up to those respective single payer systems.

Before World War II American’s paid cash for medical expenses. Rich and poor received care regardless of ability to pay and government intervention. During WWII the government implemented wage restrictions to reduce incentives to work in the private sector. To counter that obstacle the private sector offered health insurance to compete with government restrictions. In 1965 the Medicaid and Medicare was signed into law. Then in 1973 the Health Maintenance Organization Act was passed.

All these programs have transferred ownership of healthcare dollars from individuals to a select minority with the promise of managing healthcare dollars more wisely. Unfortunately this has not been the case. With the convergence to single payer systems our healthcare system has been insulated from free market forces, driving up costs and thwarting the invisible hand. To counter and restore capitalism to the healthcare industry, health savings accounts are starting to appear, returning ownership of healthcare dollars to the individual.

The concept of the invisible hand may seem contrary to utopian ideals because it implies that individual greed is good. The concept that American’s “aren’t born greedy and it is explained by an ideology they were taught” is completely erroneous. It is human nature to pursue one’s personal interests. We need to get over the concept that greed, doing something for personal benefit, is a bad thing. We need to embrace the idea that individuals, not government will serve the best interest of not only themselves but society. Putting everybody in charge by giving individuals ownership and the power to decide how their healthcare dollars are spent, returns the incentive to reach the prize which is health and profit.

CATO

Reader recommendation- biggovhealth.org

2008-07-17T12:47:00.000-07:00

Here's a great recommendation sent to us by one of our readers- biggovhealth.org. The site has great arguments for why government-run health care is not for America. Thanks for the submission!

Congress Overrides Medicare Veto: So Did America Win?

2008-07-16T10:03:00.000-07:00

We're looking for some feedback from our readers. As we all know, the AMA and AOA were pushing pretty hard to have this bill passed and now they've had their way. Doctors are now protected from a 10.6% funding to treat Medicare patients. One of many adequate news pieces on the subject is available at: http://www.usatoday.com/news/washington/legislative/2008-07-15-congress-veto_N.htm?csp=34

So did doctors, patients, and America win on this one? Let us know what you think! Please post your comments in the comment box or email them to freemarketphysician@gmail.com.

Maytag and Rusty Scalpel are doing some additional research on the subject and their take may surprise you. Check back in the next couple of days for their analysis of the bill and veto.

Rusty Scalpel

Economics Dictate the Health Care Solution

2008-07-03T08:25:00.000-07:00

The fact of the matter is that many Americans feel that the price of health care is too high. Lawmakers and pundits have confused this problem with the price of insurance, but that price is secondary to the high cost of health care.

Why then, is the cost of medical care high? Let’s boil it down to the simplest answer. Economically speaking, medical care, like all other commodities, is scarce. It is limited. Like every other good or service on this planet, there is only so much medical care to go around. There are only so many doctors who can work only so many hours. There is only so much staff to help those doctors. There are only so many pharmaceutical companies making so many medications. The price of health care reflects this scarcity.

Realizing that commodities are scarce is the bedrock concept of economics. Only accepting the fact that health care is a limited or scarce commodity and understanding its implications will allow Americans to crack the nut of health care prices.

Such a degree of emotional irrationality has been connected with health care, that let’s simply refer to it as Commodity A in this commentary. Commodity A is expensive because it is scarce. What can be done about it?

First and most obviously, we can produce more of it. To produce more of Commodity A, America needs more physicians, nurses, medical staff, pharmacists, chemists, research, chemical resources, etc. It needs more educational institutions and it needs greater focus from the consumer population. Without going into long economical explanations, we can with complete assurance say that if the market is undisturbed by external tinkering and if health care remains a priority for American consumers, then more of Commodity A will be produced. It’s availability will increase, scarcity will decrease, and prices will drop.

What else can be done to deal with the scarcity of Commodity A? Let’s think of a shortage in another commodity, say oil. That’s one we can comprehend. If America was faced with a shortage and thus high prices in oil, how would consumers respond?

Americans might be a little bit slow to respond to the price changes at first, but they would eventually become more frugal in their use of oil. They would try to use less of it. The high price of oil would force them to determine which uses of oil were most important. Is the use of oil for heating important? Is the use of oil for transportation important? Are there substitutes for oil that might be more cost efficient?

Compelled by high prices to make responsible decisions, American consumers would decrease their dependence on oil. They would find other fuels for transportation. They might decrease their overall need for transportation, perhaps by working from home and carpooling when necessary. They would find new ways to heat their homes and produce synthetic goods.

It may require a lifestyle change, but through conservation and substitution, Americans would reduce their need for oil if prices stayed high. Demand would decrease. Supply will be better suited to meet demand and the price of oil would fall as suppliers were forced to entice a now diminished number of demanding consumers. The oil crisis, if that’s what it is, would be over.

Let’s assume that the market for Commodity A were similar to what it is for oil. Commodity A is limited. The product is scarce. Demand exceeds supply and as a result, prices go up. American consumers for Commodity A are forced to start making decisions. How important is Commodity A to them? Are there ways that they can reduce their need for Commodity A? Are there substitutions for Commodity A? Are there some uses for Commodity A that are more important than others?

American consumers might be slow to respond and adjust, but they would be compelled by the high price of Commodity A to start making responsible decisions. They would find ways to decrease their dependence on Commodity A. High prices may compel them to better eating, exercise, reduced alcohol, tobacco, and other drug consumption. High prices would compel them to determine which uses of Commodity A were more important than others.

Eventually, through conservation and substitution, overall dependence on Commodity A would decrease. As demand fell to more closely match supply, scarcity would decrease. Prices would drop as suppliers were forced to entice a now decreased demand. The health care crisis, if that’s what it is, would be over.

Unfortunately, it is the sad truth that the market for health care (calling it now by its true name) is not a normal market. Americans have attempted to insulate themselves from the price of health care in order to avoid tough decisions about substitution and conservation. They try to avoid allowing cost to play into their health care decisions. They argue that health care should be obtained regardless of the cost and then complain about the cost.

Their philosophy is apparent in the health insurance industry. Americans choose comprehensive insurance plans that cost more than the actual price of health care, but allow them to be insulated from and thus escape facing the cost of each purchase of health care. Americans on comprehensive health insurance plans often behave as though health care were not a scarce commodity. They make office visits and obtain procedures without regards to cost, trying to "get their money‘s worth," since they have already paid their premium. As they use up available health care, scarcity increases. Supply decreases. The price of health care and thus their insurance premiums go up.

The philosophy is apparent in Medicare and Medicaid. Americans are opposed to certain populations going without health care. These populations are insulated from cost or even given free health care. As a result they do not seek substitution or conservation as they otherwise would and consume health care at an increased rate. The scarcity of health care increases. Supply decreases. The price of health care goes up.

Many politicians propose solutions to the “crisis” in health care. Such solutions generally involve more extensive insulating of consumers from the price of health care. For example, Hillary Clinton proposed that all Americans have access to the same level of health insurance that members of congress receive as a means of bypassing price and increasing access to health care. However, it is apparent that such a plan would only encourage an increased consumption of Commodity A. It does not address scarcity, nor encourage conservation or substitution for the commodity. Supply decreases. Scarcity increases. The price of health care goes up.

The same result can be anticipated with any plan to socialize health insurance or directly socialize health care. Any plan that treats health care as if it weren’t scarce will increase its scarcity. Price fixing, price subsidization, and increased numbers enrolled in Medicare and Medicaid- all these will encourage consumption, increase scarcity and thus raise the price of health care and likewise insurance premiums.

So, what can be done to decrease the price of health care? Of course, supply should be and is increasing. However, a rescue by increased supply will seriously lag as it becomes apparent that government tinkering in the market will increase.

The principal solution for the scarcity and thus the high price of health care is found in allowing the consumer to be exposed to and thus compelled by high prices to make responsible decisions about health care. There is no terror to be found in conservation and substitution. Consumers will face the scarcity in health care as they do with any other commodity- by limiting their use of the commodity to the most important purposes. As consumers shoulder this responsibility, they will find financial prosperity, increased health education, and an overall increase in good health.

And of course, demand will decrease. Scarcity will decrease. Supply will be better suited to meet demand and suppliers will be compelled to entice consumers to use their product. And the price of health care will fall.

Rusty Scalpel

The Proper Role of Health Insurance

2008-06-04T19:11:00.000-07:00

Poll a hundred Americans and ask them what the purpose of health insurance is. The majority will tell you that it is important to have health insurance in case something happens to them medically that they can’t afford.

The general understanding of insurance is as follows: A large number of people make periodic, relatively small payments (insurance premiums) to a common fund. The payers do so with the understanding that, in the off-chance that physical hardship should strike, they will have access to the common fund so they won’t be ruined financially. Each payer must anticipate that they will probably not ever get back the money they put into the system. They are paying for insurance- the assurance or security that should something really bad ever happen to them, there will be funds to cover the medical care necessary.

The system makes sense. Each individual payer parts with the money paid as periodic insurance premiums, knowing that they will probably never see that money again. They are paying for the “just in case.” Their payment leaves them with enough income to cover their standard of living, and it is worth a small sacrifice to prepare for the future. They feel they are doing something responsible and they probably are.

Contrast the generally understood, common-sense version of insurance with what Americans are doing in practice. Americans forfeit significant percentages of their income, either personally or through their employers, to cover a different kind of medical insurance. The money paid is not dedicated to in-case-of-a-rainy-day medical problems. It is paid to insurance companies to cover routine prescriptions, health screenings, runny noses, ear aches, and allergies- health situations not in the least bit unexpected or catastrophic.

Comprehensive insurance moves beyond covering just the rainy-day emergencies. It expands beyond- is more comprehensive- than a catastrophic plan. It serves to allocate and manage routine medical payments and spread those medical costs among the customer base. Comprehensive insurance buyers pay insurance companies to manage their funds and even make some medical decisions for them. These managerial decisions include which medications they can purchase, which doctors they can see, and even how much money they can spend on medical expenses in a year.

The majority of Americans have bought into the comprehensive insurance system. But it is apparent that Americans are not happy with the system they are practicing. They gripe about the costs of their premiums. They mutter as they pay hundreds of dollars per person per month for health insurance. They rage when after paying a hefty premium, they are stuck with a co-pay at the end of each doctors visit. They complain when their insurance will not allow them to buy their medications of choice. Why, after dropping $250 as an insurance premium, should the payer still have to pay out $40 out of pocket as a co-pay for a $150 visit?

Americans have forgotten that they are no longer paying for the insurance of possible catastrophic problems. They are paying for comprehensive management of their every-day health problems and every-day health expenditures. That comprehensive management costs money. That comprehensive management requires extensive manpower. In fact, Americans are paying the salaries of nearly 500,000 health insurance personnel with their insurance premiums. That is the salary of 500,000 individuals that they are covering in addition to the cost of their medical care with each monthly payment.

Comprehensive insurance is not for all Americans. In fact it probably isn’t for most Americans that are now on it. Many Americans pay for a policy, thinking that it will somehow save them money. The brutal truth of the matter is that the average American MUST by all the laws of logic, mathematics, and physics pay more money for their health insurance than they would otherwise pay if they directly managed their health care. In using comprehensive health insurance they are paying to have medical decisions made and their medical funds managed, a service most Americans would probably rather perform themselves. In so doing, they are covering the salaries of nearly 500,000 health insurance employees (see reference). How could they save money in the process?

In addition, we should not forget what the insurance industry costs the clinics. To maintain contact with insurance companies and maintain a current understanding of the ever-changing policies, medical practices must hire individuals especially for working with insurance companies. Primary care clinics often must hire MULTIPLE “insurance people” per physician to work with insurance companies. Thus American consumers are doubly charged for their health insurance: once when they pay for comprehensive services with their premiums, and a second time when clinics raise their rates to cover the manpower to correspond with insurance companies.

And so, in a time when America looks to decrease spending on health care, suggestions to legislatively increase the numbers covered by comprehensive insurance should appear absolutely ridiculous. Assertions that comprehensive health care should become mandatory should appear perfectly insane. Those who make such suggestions either do not understand the nature of health insurance or have sinister and damning plans for America’s future.

Rusty Scalpel
Reference- http://www.epi.org/content.cfm/webfeatures_snapshots_20070919

2008-06-02T19:57:00.000-07:00

Free Market Physician's Response to an Invitation to Investigate the Wyden-Bennett Bipartisan Universal Health Care Bill
See:http://bennett.senate.gov/press/record.cfm?id=273815

My thought- a terrible idea.

Why? It doesn't address the real issues in health care. The real issue is the rising cost of health care itself. America is fixated on health insurance, thinking that solving insurance problems somehow fixes problems in the medical system.

It doesn't, though. Increasing the number of individuals covered by insurances simply continues to bloat the insurance industry. That's just another level of administrators to pay- another hand reaching into the pocket. The addition of a another level of bureacracy can in no way reduce the cost of health care. The rising costs of medical care cannot be blunted by the insurance industry- it can only be further accentuated by the salaries of insurance employees.

In addition, making the insurance required limits individuals' control of their own health care and limits automony of physicians and other health professionals.

Consider the money spent by physicians performing unnecessary tests and procedures covering them from liability and conforming to insurance companies requirments. Now imagine them conforming to the requirments of a government subsidized and controlled insurance industry by which every American citizen is covered. I foresee an astronomical and loss of autonomy and money. I would consider the autonomy (both of patients and physicians) the most shameful of the two losses, since it would be the loss of the true means for solving health care problems.

The plan to maintain employers' contribtutions to 2006 levels is all fine and well, except it presents the prospect of either the federal government (and thus the taxpayers) coughing up the difference between 2006 rates and future inflated insurance costs OR the now federally-funded and embraced insurance industries locking down their reimbursments rates to health care providers. Since medical market economics have been legislated out of the picture, that is a very real possiblity.

Providers are already in a fix as the federal government does not fully reimburse them for Medicaid patients. If the plan goes through, essentially all patients are medicaid, and providers find themselves subject to the whims of insurances companies and senators as to whether they will actually be fully reimbursed. We think, poor physicians, they won't be able to make any money. But the real problem will be, poor America, it no longer has any health care.

The plan is simply a numbers game. The senators from Utah and Oregon say that they can make 2+2=3. But at some point 2+2 must equal 4. That difference will have to be made up.

Rusty Scalpel

Canada, 30th in the World Heath Care Ranking

2008-06-02T14:46:00.000-07:00

While Canada ranks 30th in the world for health care according to the World Health Organization, United States ranks only 37th.

World Health Organization's Health Care System Rankings

2008-06-02T14:44:00.000-07:00

1 France 2 Italy
3 San Marino 4 Andorra
5 Malta 6 Singapore
7 Spain 8 Oman
9 Austria 10 Japan
11 Norway 12 Portugal
13 Monaco 14 Greece
15 Iceland 16 Luxembourg
17 Netherlands 18 United Kingdom
19 Ireland 20 Switzerland
21 Belgium 22 Colombia
23 Sweden 24 Cyprus
25 Germany 26 Saudi Arabia
27 United Arab Emirates 28 Israel
29 Morocco 30 Canada
31 Finland 32 Australia
33 Chile 34 Denmark
35 Dominica 36 Costa Rica
37 United States of America 38 Slovenia
39 Cuba 40 Brunei
41 New Zealand 42 Bahrain
43 Croatia 44 Qatar
45 Kuwait 46 Barbados
47 Thailand 48 Czech Republic
49 Malaysia 50 Poland
51 Dominican Republic 52 Tunisia
53 Jamaica 54 Venezuela
55 Albania

Health Care: A Right or Commodity?

2008-01-18T10:51:00.000-08:00

Little introduction is needed to the topic, considering the social and political climate of our nation. The question is proposed as to whether health care is a basic human right. For many, the answer to the question dictates whether a national health care policy should be implemented. The key to the argument lies in what we understand a right to be. For my argument I will appeal to the Declaration of Independence. This argument may appear outdated, but it has endured nearly 250 years while many other popular notions have come and gone.

What constitutes a right? Do rights change according to time and place? Are rights determined by their availability in a given economy? Who has the authority to determine what rights are? Or to suspend them? The Declaration sheds some light on these questions when it states that “Men… are endowed by their Creator with certain unalienable Rights.”

The Declaration describes rights as unalienable, meaning they cannot be surrendered or transferred. These rights are innate and inherent to humanity. They come inseparably coupled with man’s ability to think, to reason, to moralize. The rights are generalized as Life, Liberty, and the Pursuit of Happiness. They are specified as the right of free speech, the right to assemble, the right to pursue religion, property rights, the rights of self protection, and others.

The Founders’ claim to King George III was that he could not separate them from these rights, according to the Laws of God and the Laws of Nature. Those rights came not by the allowances of men or government, but as part of the package of human existence. God had bestowed them, and no earthly power could remove them.

Compare such rights with the proposed right to health care. The argument is now common: “In a nation as wealthy as ours, it is ridiculous not to have health care available to everyone.” The point has validity, but it demonstrates that universal provision of health care does not pass the criterion of basic human rights. The argument demonstrates that one motive for extending health care as a right is its availability. Health care, unlike true rights, is not unalienable- it is subject to economics, legislatures, the locations of clinics and doctors, and the goodwill and disposition of mankind.

This is not to say that it is not our responsibility as physicians to make health care available. We do have the moral responsibility to serve our fellow man, even at sacrifice to ourselves. However, this responsibility does not make health care a right or entitlement. It is not a basic human right any more than owning a home, owning good shoes, having high speed internet, or having any other available commodity that is so easily alienable from humanity.

The true rights, God- given rights, are not commodities. They are inseparable from our natures. They are God’s gift to us to choose our course and pursue our happiness. They are not the happiness in and of themselves, but the opportunity to embark on the chase.

Health care is not a right. It cannot be expected because of human existence. However, it may be part of that happiness and security mankind is chasing. May mankind treasure, understand, and exercise their true rights to obtain it. As a physicians we must do all we can to make it increasingly catchable.

Rusty Scalpel

Free Market Physician

Senate to Vote on Repeal of Health Care Reform Bill

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Both Oranges and Health Care Can Be Substituted

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Keynes and Hayek Rap Economics

Hookworms, Tax Hikes, and a $3.6 Trillion Budget

America Excluded from Health Care Reform

Doctors explain the importance of the free market in health care

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

Conservatives Visit Washington for Tea Party

How is the Health Care System Broken?

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

Boogeyman, Wild Misrepresentations, and Blatant Falsehoods

Ronald Reagan Speaks Out Against Socialized Medicine

When the Majority of Health Care is Government-Funded

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

Where Can Virtue be Found?

Price Controls, Medical Shortage, and Apples

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

Holding Their Feet to the Fire

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

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

Helping Patients Take Charge of Their Health (Part II)

Helping Patients Take Charge of Their Health (Part I)

Wal-Mart offers Electronic Medical Records System

Those Who Pay the Bills Run the Business

Conscience-Clause Law and Religous Freedom in Health Care

Letter from Reader

Government Struggles to Grasp Economic Reality

Step One of Government Health Care Takeover Hidden In Stimulus Package

Government-Monitored Health Care Hidden In Stimulus Package

Wal-Mart President on Medical Market

Recovery of the Medical Market

Schiffonomics Concerning Inflation and Healthcare

Immediate Savings of Cash-Only Practices

The Economic Burden of Standard of Care

FMP Back Online

The Third-Order Approach to Solve Hunger, Poverty, and Healthcare

The Fall of Capitalism?

If Elected President, I Will...

Reader Recommendation: "Affordable" Health Care

Reader Recommendation: Hawaii Drops Universal Healthcare Failure for Children

A Conservative Approach to Universal Health Care

Reader Recommendation: The Four Ways Money is Spent

Resistance to Federal Assistance

Reader Recommendation: Amateurs Outdoing Professionals

Among These Are Life, Liberty, and the Pursuit of Happiness

Smoking Bans Are Bad for America's Health

Reader Recommendation: AAPS

A Little Autism Means Big Money

The Most Important Constitutional Right

Reader Recommendation: The Cato Institute

An ALDI sort of health care

What is the SGR?

Medicare Bill Passed and We Smell a Rat

Opposing Tides

The Invisible Hand

Reader recommendation- biggovhealth.org

Congress Overrides Medicare Veto: So Did America Win?

Economics Dictate the Health Care Solution

The Proper Role of Health Insurance

Canada, 30th in the World Heath Care Ranking

World Health Organization's Health Care System Rankings

Health Care: A Right or Commodity?