Government-Monitored Health Care Hidden In Stimulus Package

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

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

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

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

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

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

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

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?

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...

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

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

"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

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

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

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

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

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.

1. 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.

2. 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.

3. 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.

4. 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

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

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

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

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

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

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?

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

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

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

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