health care

Archive for Tag “health care”


What would American health care look like if the government didn’t control it?

6869336880_31ae61b74a_bAlmost 50% of all health care dollars in the United States are spent by the government, and the other half is spent by private insurers and individuals on a market that is heavily regulated and controlled by government.

What might medicine look like if government weren’t so deeply entrenched in it? It can be a tough thing to imagine, since government and medicine have been “joined at the hip” (to borrow a recent phrase from Obama) for more than half a century.

There are some Americans, however, who have lived long enough to remember the state of medicine when it was freer. In a recent op-ed in the Wall Street Journal, a doctor describes how his experience in medicine dramatically changed over the course of his medical career—and not for the better. Dr. Marsh says:

When I graduated from medical school in 1962, the profession of medicine was for many graduates an opportunity to provide care—as distinguished from, though aligned with, treatment—and to provide it to individuals, not to populations or governmentally specified groups. Young doctors hoped to establish an independent business, enjoy lifelong intellectual excitement as knowledge and therapies expanded, and have an income sufficient to live decently and support a family….

After eight years of postgraduate study, I opened a solo pediatrics practice in a community of 10,000 souls an hour from Boston. A number of lean years passed before I could build a robust practice. Yet the experience was exactly what I—and I think many of my colleagues—sought: a personal, direct and unimpeded relationship between me and those who chose to become my patients….

I had to give my acute attention to the price of every medical intervention. The costs could have a direct and painful impact on a family’s budget. So I had to know the prices for most of the medications I prescribed and of most of the tests I might order. I learned to play for time by waiting, when it was safe to, before ordering an X-ray or a test—and to substitute less-expensive medications for more costly ones wherever possible….

Then, in the mid-1970s, things changed, and we became enlightened. Third parties, typically the insurance companies, were interpolated between the physician and the patient. Some of the consequences were unfortunate….

Physician compensation is tied to “efficiencies,” which means reducing the outlays and costs to the group (translation: skimp where possible) and thus generating for internal distribution a larger share of the prepaid premiums….

Insurance relationships drove practice relationships.

What Dr. Marsh is referring to is the rise of HMOs in the 1970s, propped up by government subsidy. He describes how these government-bred entities transformed his relationship with patients from one in which their interests were aligned (the better care he took of his patients, the greater rewards he received) to one in which doctors had incentives to sacrifice the quality of patient care to pad their pockets. The whole editorial is worth reading.

Dr. Marsh describes how the quality of medicine fell as government intruded further in health care. His observations suggest that medicine would look radically better if it were completely unchained from government control, especially considering the remarkable technological advancements made in the last fifty years.

Photo Credit: Alex E. Proimos via Compfight cc


Topix.com: How Obamacare Fleeces the Young

I have an op-ed today on Topix.com’s Politix page about Obamacare’s age-related rate restrictions, which require younger people to pay higher insurance premiums in order to subsidize the coverage of those older. I say in the article:

No one, presumably, would be comfortable with the idea of fleecing our children and grandchildren in order to lighten our bills. But supporters of the Affordable Care Act have taken to arguing that forcing young people to subsidize older people isn’t some new consequence of the health law—all insurance, they claim, requires some people to subsidize the expenses of others. Take fire insurance. Ten thousand people might sign up to insure their homes, but only a couple of those homes may end up burning down. The premiums paid by those whose homes did not burn down go toward rebuilding the homes of those whose did.

“That’s how insurance works,” insists health policy analyst Aaron Carroll, who concludes that the health law’s age-related rate restriction is “really not much different than how insurance is supposed to function, by transferring money from the more-healthy to the more-ill.”

But by equating traditional insurance with the health law’s age-related rate restriction, commentators like Carroll ignore a key component of insurance in a market absent government intrusion: the freedom to buy a policy that is priced according to your own risk—a policy that subsidizes no one.

Check out the whole article here. I previously addressed another argument made by proponents of this restriction, here.


What’s too often missing from the health care debate

Welcome_to_VermontA recent editorial in the New England Journal of Medicine discusses Vermont’s single-payer health care system and makes the case that other states have a lot to learn from the Green Mountain State. What struck me was what the piece left out of its discussion.

Here are the alleged positives of socialized medicine in Vermont, according to the article:

  • “Transparency” and the “engagement of all stakeholders”
  • An “independent” five-member board that controls every price, every product and every medical provider
  • A state-run health insurance market
  • Cost savings

If you needed heart surgery and were considering where to have it, and somebody handed you this list of the benefits of Vermont’s scheme, my guess is you’d toss the list aside and ask, “But are there surgeons in Vermont who have a higher success rate for my particular surgery than those in other states? What are their protocols for reducing medical errors? Are they particularly good at dealing with complications that might arise when I’m on the table?”

There is no mention of the quality of health care in Vermont in the NEJM article, and this article is not an exception—it is all too common for discussions of greater government intrusion in health care to proceed without any consideration for what this will mean for the quality of care available.

The reason there is such little concern with the quality of care is that the leading advocates of government control over the medical field are motivated by egalitarianism—the notion that everybody should have equal health care, even if that care is equally shoddy. To learn about the quality of health care that ultimately results from such an approach, you need only listen to the recent interview I conducted with Sally Pipes, in which she discusses her harrowing firsthand experience of socialized medicine in Canada. (Though Vermont’s scheme is relatively new, there’s reason to expect the same kind of downward trend in quality.)

If advocates of increasing government control were motivated by making possible the highest quality health care, they would talk more about the indisputable fact that freedom and free markets were essential preconditions for the unprecedented human advancements of the last 150 years, including in medicine.

Image: Wikimedia Commons


Do Canadians have it better? A conversation on the future of American health care [podcast episode #03]

On this episode of Eye to Eye, I had the opportunity to interview Sally Pipes, a leading proponent for greater freedom in health care. In discussing health care policy issues in this country, people often make comparisons to the health care systems of other nations—the Canadian system is often brought up. I discussed with Ms. Pipes her firsthand experience of socialized medicine in Canada.

One point she made that I found particularly interesting was her discussion of the factors that lead people to have a skewed view of a health care system. When you have routine medical needs (which is the category most people fall in), a health care system fraught with government intrusion may look as if it is working decently. The shortcomings of such a system often only become apparent when you experience out of the ordinary illnesses that require experimentation, innovation and state-of-the-art care. This is important to keep in mind when you hear Canadians saying, as they often do, that their government-run health care system works great.

Another subject we discussed is the frequently cited fact that Canadians spend a lower percentage of their GDP on health care than Americans (11.4% vs. 17.6%). In my view these kinds of collective statistics are dubious and misleading (given the impact of regulatory controls on costs, and the disparate quality of service from one country to another—to name just two problems).

Some of the other topics Ms. Pipes discusses in the podcast include:

  • Why private health care is outlawed in Canada
  • The part of the American health care system that most closely resembles Canada’s
  • Where doctors and patients are going, to escape government intrusion in their medical decisions
  • Why health care in Canada is getting worse

Ms. Pipes is president of the Pacific Research Institute. She writes a column for Forbes.com and is most recently the author of The Pipes Plan: The Top Ten Ways to Dismantle and Replace Obamacare.


Spotlight on antitrust #4

Photo Credit: DanBrady via Compfight cc

People take antitrust for granted in this country, but it’s worth tracking the ill effects it wreaks, especially upon the nation’s most successful businesses:

  • Antitrust is the conduit through which America’s top businesses are subjected to intense political pressure. Just look at this: the U.S. Senate will hold hearings on US Airways’ proposed merger with American Airlines, then “go from deal to deal” while grilling the new head of the Federal Trade Commission.
  • Dozens of companies applied for new Internet domain names, but only Amazon is singled out for antitrust pressure. (My post on why is here.)
  • U.S. antitrust enforcers are boasting about how they are “litigation-ready,” meaning ready to bring the crushing force of antitrust law down on any company that dares to defy demands for changes in business practices, payment of fines without trial, etc.
  • Priceline’s $1.8 billion deal to buy Kayak Software has been delayed by an antitrust investigation. Ho hum, who cares—market conditions will pause and wait for them to catch up, right?
  • In a recent blog post, I talked about how antitrust is just one more weapon among the many that government uses to beat up on the health care system. Here’s another example: an antitrust challenge to an Idaho transaction involving a hospital and a physicians group.
  • Despite objections, a court forced Apple CEO Tim Cook to testify in an e-books antitrust case. I’m sure that doesn’t take any time or energy away from managing innovation at Cupertino headquarters.

Photo Credit: DanBrady via Compfight cc


Yet another way government controls health care

6869336880_31ae61b74aThe headline says it all: “FTC Gets More Muscle in Policing Hospital Mergers.” That’s how the Wall Street Journal described the Supreme Court’s recent decision in the Georgia hospital controversy.

Muscle? Police? You’d think this was a case of Mafia thugs fighting it out with machine guns to gain territory. But it’s not. When you boil down all the complexities (and there are a lot of them, believe me), the federal government is saying in effect: “We order you to maintain two entirely separate administrations for the two hospitals in this Georgia county, population 94,565, instead of bringing them under one management.”

This kind of decree is not that unusual in the world of antitrust. Organizations that want to merge are frequently told they have a duty to go on competing, despite their better judgment. But it’s especially troubling here, in light of all the other ways government manipulates the health care industry.

My colleague Rituparna Basu has written about the widespread government control over medicine at length on this blog (here, here, and here, for example) and in op-eds (here and here). I’ve blogged about it (here, here and here) and written op-eds (here and here) on the topic. The Ayn Rand Center’s commentary is gathered in one place here.

Do you really want to find yourself sick in a health care system where nobody can sharpen a pencil without looking over their shoulder for a bureaucrat’s permission? If not, it’s time to think more seriously about the value of a free market in medicine.

Photo Credit: Alex E. Proimos via Compfight cc


A Conversation on Health Insurance with John C. Goodman [podcast episode #02]

On this episode of Eye to Eye, I had the opportunity to interview John C. Goodman, an economist and a leading proponent for greater freedom in health care. We discussed a variety of issues surrounding health insurance.

One point he made that I found particularly illuminating was his attitude towards the possibility, on a free market, of being charged higher premiums when you have higher expected medical costs. Most people would consider this a flaw of the free market (charging higher risk individuals higher premiums is severely restricted under Obamacare), but according to Dr. Goodman, we should view this as a good thing. Listen to the podcast to hear his reason why.

Another subject we discussed is why health insurance is so controlled when other types of insurance, such as life insurance, are left relatively free. Dr. Goodman mentioned the role of pressure groups such as the American Medical Association in suppressing market forces.

I suspect an additional factor was at play, which the AMA surely cashed in on: people’s underlying moral views. A common view is that it’s immoral to pursue profit in the field of medicine and that health care is not a good to be earned but a right. These kinds of views are incompatible with a free market and have surely contributed to the growth of government in medicine.

Some of the other topics Dr. Goodman discusses in the podcast include:

  • His view of the most problematic government interventions in health insurance
  • How Obamacare will impact the health insurance market
  • If we’ve ever had a free market in health insurance
  • Why health insurance looks nothing like other types of insurance (e.g., auto, homeowners, life), which work relatively well
  • How our health care system compares to those of other countries

Dr. Goodman is president of the National Center for Policy Analysis and a research fellow at the Independent Institute. He is most recently the author of Priceless: Curing the Healthcare Crisis. He provides daily commentary on his blog.


Sunshine or sunburn?

A while back, I wrote about the Physician Payments Sunshine Act, a small part of Obamacare that may nonetheless have a large impact. Essentially, the law requires companies in the medical field to report in detail on every item of value they convey to doctors.

What’s the alleged justification for this new reporting burden? Basically this: Since some doctors might allow conflicts of interest to undermine patient care, every doctor’s financial transactions with industry have to be scrutinized in minute detail.

If you want a taste of what the new law will require in practice, check out this article on the “Top 50 Things to Know” about the law. Here’s a sample, elaborating on the basic reporting requirement for meals supplied to doctors (boldface and underlining are from the “Top 50″ article):

5. The per person value of the meal must be reported as a payment or other transfer of value only for covered recipients who actually partook in the food or beverage.  Applicable manufacturers are not required to report or track buffet meals, snacks, soft drinks, or coffee made generally available to all participants of a conference or similar events where it is difficult to identify the identity of those who partook in the offering.

The premise there is that you can trust your doctor to cut your chest open and remove a tumor from your lung, but you can’t trust him to be objective about prescribing drugs made by the manufacturer that offers him a free Coca-Cola.

Now, here’s an item that elaborates on the requirement that each valuable item be linked up with some product of the company that’s providing the item:

46. If a “payment or other transfer of value is not related to at least one covered product, then applicable manufacturers should report “none.”  Conversely, “if the payment or other transfer of value is related to a specific product, which is not a covered product, then applicable manufacturers are to report “non-covered product.”  Finally, if the payment or other transfer of value is related to at least one covered product, as well as at least one non-covered product, then applicable manufacturers must report the covered products by name (as required), and may include non-covered products in one of the fields for reporting associated product.”

Confused? Just think about the number of man-hours that will be diverted away from medical research and into the task of figuring these regulations out.

Finally, put yourself in the position of a pharmaceutical company that has made a payment to a practice group of multiple doctors. How do you allocate the value among them?

49. “. . . payments provided to a group or practice (or multiple covered recipients generally) should be attributed to the individual physician covered recipients who requested the paymenton whose behalf the payment was made, or who are intended to benefit from the payment or other transfer of value. “This means that the payment or other transfer of value does not necessarily need to be reported in the name of all members of a practice.” For example, many payments or other transfers of value may need to be divided evenly, whereas others may need to be divided in a different manner to represent who requested the payment, on whose behalf the payment was made, or who was intended to benefit from the payment or other transfer of value.

If you’re in a business or profession other than medicine, just try to imagine how a “sunshine law” would impact the way you do business.

Meanwhile, what’s most important is to condemn laws that authorize government coercion—even in the superficially innocuous pursuit of “transparency”—before there’s any evidence of particular wrongdoing.


Who can argue with sunshine?

A little-known section of Obamacare called the Physician Payments Sunshine Act will start being enforced this year. The Act treats all doctors who collaborate with the pharmaceutical industry as potential criminals whose private financial affairs must be exposed to the world by government order.

Just recently the federal agency in charge of enforcement released a 285-page set of regulations and explanations, detailing which payments and benefits to doctors must be reported by pharmaceutical companies. All the info will be posted on a government website, with hefty fines for non-compliance.

The background here is this: Over the years, physician-industry collaboration—which often involves substantial payments of money to highly skilled doctors—has not only helped in the development of effective new drugs, but also in marketing those drugs to the doctors whose patients need them, and in teaching those doctors how to prescribe and use the drugs. But critics have pointed to a few doctors who allowed conflicts of interest to undermine their patients’ welfare.

Now all doctors, innocent and guilty, are expected to endure in perpetuity the medical equivalent of an airport TSA search, on the premise that they, too, could be betraying their patients. “Sunshine is said to be the best of disinfectants,” said future Supreme Court Justice Louis Brandeis in 1914. In a similar vein, Senator Charles Grassley, one of the Sunshine Act’s authors, stated: “This bill is about letting the sun shine in so that the public can know.”

What does the “sunshine” metaphor imply? That physician-industry collaboration is inherently a dirty business, “infected” by financial self-interest. That the physician of integrity, who refuses to allow any conflicts of interest in his practice, is just a myth—or, if a few exist, they should not resent being forced by government edict to allow their financial affairs to be scrutinized by every nosy reporter, plaintiff’s lawyer, and government regulator in search of a criminal or civil case.

Innocent until proven guilty? That’s so old-fashioned.

This article in The Atlantic makes it all sound so natural and uncontroversial. Of course, maybe that’s because the author interviewed only supporters of the Act. “Why would a doctor resist having payments made public?” the article asks. Who better to answer that question than the author of Bad Pharma: How Drug Companies Mislead Doctors and Harm Patients. It turns out all he can think of is that doctors are “embarrassed” to be exposed, and: “That in itself is enough to tell you that this is something that needs to be in the open.”

Embarrassment, guilt—are these the only reasons a conscientious doctor might resist coercive disclosure of his financial relations with industry? I suggested another reason here. What do you think?


Younger People Should Not Be Forced To Subsidize the Health Coverage of Older People

An issue receiving some attention recently has been the age-related rate restriction in Obamacare. Under the law, starting in 2014, health insurers may charge older people no more than three times higher premiums than they charge younger people.

But restricting how much insurers can charge older people does not remove the higher costs associated with covering such individuals. For example, 64-year-olds tend to have six times higher health care costs than 18-year-olds. If insurers can’t charge older people according to their risk, this means they have to make up those costs by charging higher premiums to younger people. A new study estimates that once Obamacare’s various rate restrictions and other provisions kick in, 27-year-old non-smoking males may see premiums rise, on average, by up to 190%, while 55-year-old women who smoke may see their premiums fall, on average, by almost 20%.

There’s been much debate about whether this subsidization from the young to the old is proper. Matthew Yglesias of Slate says that “today’s young people will be tomorrow’s old people,” so while this system may not be good for young people right now, they will eventually benefit from it. A senior official at the AARP echoed this sentiment, saying, “If a younger, healthier person is spending a little more now, it’s okay because at some point they’re going to be a less healthy, older person too.”

There’d be nothing politically objectionable with such an arrangement if it were voluntary—if the individuals in it decided this was the arrangement they wanted to be in, and if they came to think differently, they were free to leave.

But in today’s health care system, this arrangement is not a choice. If you buy insurance, the government forces younger and healthier people to subsidize the health coverage of older and unhealthier people—and this has gone on long before Obamacare. The only alternative has been to forego carrying an insurance policy, which starting next year, Obamacare will make illegal.

The fact that these kinds of provisions are coercive is too often left out of the conversation. If a 27-year-old decides that he does not want to shell out higher premiums in order to subsidize those older than he, if he’d rather purchase a policy from an insurer willing to charge him according to his own risk and use the money left over for his own purposes—such as saving for a down payment on a home or buying a new computer—can he exercise that choice under Obamacare? If he does, he is breaking the law and will be punished accordingly.

It’s not the purpose of government to conscript people into such schemes. Individuals should be left free to act on their best judgment. If an insurer is willing to charge a young and healthy person a low premium and that person wants to buy the coverage offered, by what right does the government ban that trade and force him to enter another arrangement? This is the question we should be asking when thinking about rate restrictions and other such controls in Obamacare.