We will have socialized medicine. Offered are the following 2 reasons;

1) costs are astronomical and increasing.

2) it’s unfair that there are 40 million uninsured

Proposed solutions, near the bottom, will make sense only in light of fhe following  in depth analysis that supports my proposals

I have a special interest in this; as a semi-retired physician, I’d like to see the physician's role and place of honor among people continue. Not only do I have 35 years of experience with the business and practices of medicine, but I also have an MBA and some training in economics.

Socialized medicine will be non medical care with astronomic costs. There is an inverse relationship between costs of medical care and a whole series of moral issues that cannot be resolved by the currently proposed one-size-fits-all schemes to federalize medicine completely

In this policy study, I will try to elucidate the issues, financial, moral and political. In order to do this I will try to define my terms, and lay some of the groundwork so that our thinking and expression remain lucid.

Economics in general

There is the fundamental distinction between costs and prices.

Any impediment to your doing something that you want to do or factor that will consume time or resources in a project or product is a cost. An impediment might be waiting 6 months to get surgery to relieve pain, or going down to Indiana to get lithotripsy. Service organizations usually impose their costs on callers by using a automated phone answering system (dial 1 for...), or by imposing bureaucratic hairsplitting, or by not having anyone responsible for stuff that is done.

Measuring costs is an economic principle. One has to factor in depreciation, opportunity costs of the resources used, research and development of the project necessary for its evolution, and environmental and the liquidating costs of a project. If after you have spent a lot of time and money trying to start a venture, and it becomes obvious that it will never get off the ground, those costs are called sunk costs. The cost of doing something with resources rather than the best other alternative is an opportunity cost. Costs are really what economics is about, and it is what guides all human activity.

Prices are supposedly rationalized costs. The businessman tries to collect all his costs, and estimate how much he can charge for a product, and how many he can sell at that price, and hopefully make a profit.

We will hear nothing of costs and everything about prices during the debate on socialized medicine. Prices can be measured by accountants (but it’s an art, subject to manipulation) and bragged about by politicians and business people.

Economics as a factor in government programs.

1) What is free especially in governmental programs is worthless to the person favored. How can he know how much it is worth? What yardstick will he use to measure?

2) Leona Helmsley was right. Rich people and corporations do not pay taxes; they collect taxes by setting prices so that they make the profit that they must have to rationalize their acts. Poor working men pay all taxes and costs (regulation etc) that their governments impose, disguised as high prices. As an example, when the city of GR puts a million dollar tax on Meijers, that store does not lose a million dollars of profit; rather the store raises prices on all the stuff sold at that store to make up for the million dollar cost. Businesses and rich people don't care how much they pay for taxes; they just raise their prices and let the common man pay for them. The common man is always the fall guy, and he even votes for the politicians who help swindle him.

The general principles are as follows; People who set prices do not set prices so that they will lose money net of taxes and other costs. Poor people, on the other hand, have to take whatever jobs are available at whatever salaries are paid, and pay whatever prices that they are charged which always have imbedded in them the cost of taxes.

3) Cost of all sorts are not only impediments to enjoying the stuff that we want, but also serve as information that keeps a capitalistic society prosperous, and ever mobile economically and socially. Socialism, in contrast, can never work because it distorts prices so that the consumer does not know how much he should use or conserve of a particular product, and the supplier has no idea about how much of what he should produce. Prices are more than costs; they are also invaluable information in the market place. The USSR had a quota for tractors and these were produced although no one had any idea how many were needed. Ditto steel, vodka, bread; the latter was fed to swine because it was cheaper than grain. In the USA, in contrast, the market price and demand tells auto manufacturers to produce small, fuel efficient cars just now. It tells pharmacists to stock lots of health foods, etc. Because of huge government programs and employer supplied health insurance, patients do not know how much their medical care costs, physicians and hospitals don't have any incentive to limit care. Financial brokers like the insurance companies and government just keep on raising their premiums since it makes them more important and they pass the costs onto the premium payers and taxpayers.

4) Government is much less efficient in delivering services; there is graft/corruption, and favoritism. The US postal service as against Fed Ex are usually cited.

5) The great marketing principal holds that you can get rid of the middleman, but you can’t get rid of his function. You can get rid of insurance companies by socializing medicine, but you still have to have claims adjusters, folks who collect taxes, administrators, etc. Instead of having private industry do these functions, you have civil service employees, hard working and efficient as they are touted to be.

6) Deferred costs are costs nevertheless. The average hospital building in the USA is about 15 years old; in Canada over 30. Obsolescence in old buildings makes for inefficiencies, depressing surroundings, and dangerously outmoded work flows. Eventually, these building will have to be built new at great cost.

7) 60 % of medical care costs already come from government programs, and everything in medicine is regulated, so we already have socialized medicine in everything except in name. This is probably the main reason why health care costs are out of control, (if we assume that these things are controlled).

8) About 2% of the GDP is for nursing home care and is reckoned to be a medical cost. This element is not included in the reported medical care costs of countries to which the US medical care system are oft compared.

9) Comparing medical care results in the USA to those of Western Europe or of Japan seems to be non relevant. These countries are small, and have morally homogeneous populations. It’s best to compare it to Russia with a large diverse population spread out over many time zones. The average Russian male now lives to be age 58 and enjoys free socialized medical care.

10) At the natural (1900 era or during the Depression) rate, medical care use is probably around 3% of GDP in civilized countries. Medical care probably adds little to longevity, but can prolong health, and relieve pain and suffering in healthy people. Once health has been squandered, medical care is only marginally effective. See next section.

11) It is estimated that over 50% of medical care money is spent in the last 6 months of a person’s life, ie. managing dying. It turns out that the incidence of dying is still one per person, so that is unlikely to change no matter who is in charge, or what system is in vogue.

12) Virtually all governmental programs buy stuff at the behest of the interested minority that no one wants to pay for. An example would suffice. The public schools in Grand Rapids cost about $12,000 per pupil per year. I know of no one who would be willing to fork over that kind of money out of pocket to subject his kids to that kind of experience. The school board and the education associations want to control that money, and play the politics so that the state and city government force people to pay for what these organizations want, but no one asserts that the folks paying for it would be willing to pay for this service. How much would you be willing to pay for the war in Iraq?

13) Insurance is a financial means to protect against unacceptable loss. Everyone realizes that there is a risk of the unexpected, the catastrophic. In order to avoid the disastrous, a group can band together in a kind of mutual aid society forming contracts among themselves, which is all that insurance is. The terms of the contract might include payment or making a member whole after he has suffered a huge loss; as examples, the resources that he needs to continue in business, or a home, or faces devastating medical costs. Smaller loses, or routine maintenance costs are not insurable. Ship owners in times past realized that 5% of the fleet would be lost, and so pooled and put aside an amount of money to allow the deprived owner to rebuild. No one offered to replace his ship when it wore out, or to refurbish it, or to compensate him when he lost a rowboat. Our government has encouraged “insurance” policies among insurance companies and in its own medical programs, comes close to first dollar coverage; the co-pays and deductibles are generally laughably small.

14) Poor and poorly educated folks use fewer medical resources. At the other extreme, physicians, as an example,  have a much larger number of surgical procedures than do their economic peers. In Britain, the upper class uses two times as much medical care than do the commoners. Inequality is pandemic.

15) Related to this is the observation that public systems like Medicaid which covers poor people and the VA system are expensive, that the quality is suspect, and care is rationed by queues. One hopes that health care would give value for money, no matter what its source or who is insured.

16 Because of Federal government tax policy, most health insurance is tied to employment. This creates several problems; A. People lose their insurance when they move to another job, or lose their jobs causing changes in coverage and in the providers who participate in various plans. B. Lapses or no insurance for people without jobs. C. differing levels of government subsidies with the greater subsidy going to wealthier, more stable and probably healthier individual. D As mentioned elsewhere, it penalizes self insurance, that is to say, the clearest expression that we can get as to what and how the individual is willing to pay for medical care, and what measures he wants to take to preserve health. E. the disconnect between who, nominally at least, pays for the insurance, the beneficiary, and the provider, all of whom have vastly differing incentives and values for what they see as the goal of the jape.

17) There is in medical care, as in almost everything else, the “law of diminishing marginal utility” obtains. The first dollar spent probably will buy a lot of medical benefit, but as the amount of money spent for medical care increases (for and individual, or for a group) the benefits diminish. As an example, at some point, no matter how many more antibiotics and tests to find even one more disease that can be treated you do on the stroked out old lady in room 714, she’s still gonna die in 2 weeks, whether it's in the ICU at 5000 dollars a day, or in Hospice at 100.

18) Markets make no claims to justice; they are the natural mechanism that has arisen in societies to allocate scarce resources. They are efficient, that is, the result in a distribution such that no can be made better off without making someone else less well off.  A true market based system of health care would be the optimal.

19) Justice is the elimination of arbitrary distinctions among individuals and the establishment of a reasonable balance between competing claims or rights, a process, not a result. Note, it requires not the elimination of unpredictable distinctions among people, but the elimination of arbitrary distinctions.  When someone arbitrarily chooses to ruin his health, he should not be able to make a claim based on justice.

20) Markets do not claim to allocate rights, but they can allocate risks by insurance mechanisms. We can have a perfect market based insurance market, but, given the already huge and probably irreversible involvement of government in the insurance industry, it seems that we may have to compromise and use the exixting insurance markets as we find them, to allocate medical care risks.

Health care is not the same as medical care; conflating the two is a fundamental misunderstanding that leads to sloppy thinking and policy.

Health is something that most everyone enjoys from birth. It is the default position. You better maintain your own health. Remember, it is not given to you by someone else or granted by government. Senator Kennedy once asserted that he would make Americans healthy. Baloney Ted, you could make Americans healthy by instituting a police state, forcing folks to get up every morning to exercise for an hour, and then starving them to lose weight, proscribing alcohol, that’s booze, Ted, you first.

There are a few things that you ought to do to retain your health, to wit, exercise, control BP and weight, eat a reasonable diet, avoid smoking and excess alcohol, etc. The effort is a personal responsibility, and the rewards of retaining your health redound only to your self. You cannot make sone one else be healthy against their will or without their active cooperation.

You actually have to work very hard, and expend resources to wreck your health. The medieval Christian 7 deadly sins (sloth, lust, gluttony, anger, envy, pride, and greed) explain most deviations from health; the injunction to avoid booze, bad women and cigarettes gets you a long way towards an earthly heaven. You have to spend extra money to buy drugs, alcohol, food, the company of women etc…. Live cheaper and be healthy.

Once health is ruined, it seldom returns to normal. The hospitals and doctors’ offices are full of folks who have ruined their own health; seeing a patient with the bad luck of having cancer, Alzheimers, or other diseases that are not the result of poor personal health management is almost unusual. We spend a lot of money in medical care on folks who don't care about maintaining their health, and that is a moral issue beyond the reach of a free and democratic government

Medical care is a good deal more expensive, and comes with other costs. It probably does not much to extend life span, but it can make life more bearable and maybe healthier. Simple meds and prescribed self help exercises can help manage blood pressure, stop smoking, control appetite within limits. Hernia repairs, back operations, orthopedic procedures all make life less painful and more productive. Antibiotics occasionally clear up life threatening infections, and cancer chemo occasionally prolongs and tames an otherwise lethal disease. Medical care is very poor at managing obesity and its many complications, or high blood pressure when the patient won’t take his medications even if they are “free”, or alcoholism, or homosexual behavior without protection, or impulsiveness, or, come to think of it, avoiding the 7 deadly sins cited above.

Health care, elementary public health measures, and the general lowering of physical stress countries is greater. Medical care, in truth, does little.

Health care is continuous and a form of self discipline, habits of living, if you will. Even minor lapses can destroy health.

Medical care, in contrast, is much lumpier in its time occurrence. An accident, cancer, and misery of old age come on irregularly and incurred costs must be anticipated with either some kind of sinking fund, or with insurance.

Poor people and especially African American and other minority men don't live to be very old. Black babies have double the infant mortality rate of Whites. Some of these differences (the higher infant mortality) have been shown to be constitutional. Others, I suspect are cultural, much as in the case of Russian men. How does the taxpayer get to pay for another’s self destructive behavior?

I propose extending the moral hazard argument; we should not pay to help repair other’s offenses against the 7 deadly sins, as it will encourage even more dysfunctional health destroying behavior.

Proponents of socialized medicine recognize the moral hazard, and one hears continuously campaigns to adopt a healthy life style and the like, but Alas! These appeals fall upon stony ground. There is a public health initiative to make Americans exercise, eat less and lose weight. Good luck. Even more inane is the current craze to make restaurant portions smaller, to deny fat people meals, and (horrors) of selling my favorite snack, pork rinds in 1 ½ ounce bags instead of the much more satisfying 2 ounce size. Public health and the public information as gotten from the media are always wrong. Like generals, they are always fighting the last war. The incidence of tuberculosis has been falling by 5% of the residual amount per since 1875. Atherosclerotic heart disease has fallen in half since 1960. Toxic shock syndrome and rheumatic fever have disappeared. I have no idea where these diseases came from nor why they fade. In medicine, our ignorance about some very fundamental things is remarkable. On a personal note, I’ve been on the Atkins diet for years and love it. I get almost all my calories from animal fat, and feel fine. My laboratory values, for what it’s worth, are perfect. My eating nearly pure grease affronts some self righteous vegetarians with their pasty faces, worried looks, and flatulence. A lot of these twits fantasize that their diet is saving the planet, or healthier, or socially trendy. A lot of folks believe in the various superstitions promulgated by public health, it’s a kind of substitute for a belief in God.

Historical costs/factors; As governmental involvement in medical care increases, costs go up.

There had been an attempt to limit physicians by licensing practitioners in the early 1800s. However, this was swept away in the populist Andrew Jackson presidency, and thereafter physicians and medical schools proliferated. The USA was full of "medical men" in the late1800s competing for patients with low fees and personalized services. (I have to mention that the History of Grand Rapids published 1890, has a section on non MD practitioners. Fully a third of them were women). Every small town had their beloved doc who wasn’t very busy, who seemed to care for his patients, but who was really poorly trained and experienced. The doc was also a near pauper. All that he could do was use aspirin, opiates, deliver babies, do simple surgery, set bones, drain abscesses, reassure the well, and comfort the dying. He took hs fees in kind as often as not. He was justifiably a fatalist.

There was a proprietary medical school in every backwash. Grand Rapids had a medical school. In NY State, Buffalo had 3, Geneva had one. All you had to have was the money for the fees and two years or so to get your MD. There were 250 US medical schools around 1900. Philosophical orientation ranged from allopathic (like me, university medical school trained, certified etc.) to chiropractors, naturopaths, and especially the homeopaths; all pledged allegiance to “SCIENCE”.

The AMA was the largest of the numerous medical organizations, and were composed of allopaths who had gone to university, or who had European (mostly German) background training that promised greater skill. This organization concerned itself mostly about the poor economic condition of practitioners, and understood that there was too much competition. The AMA worked for over 60 years to restrict the number of physicians under color of improving quality. Accordingly, they lobbied state legislatures to license physicians. In 1913, the AMA employed an insect scientist, Samuel Flexner, to produce a report saying that there were too many doctors, and that the only way to improve quality of physicians was to force them to be trained only in universities, and of course, to complete AMA approved internships before starting practice. The period just before WWI was a good one for the AMA; There was one small failure; Congress also passed the Harrison Act which was intended to give MDs the monopoly on prescribing heroin but they only got morphine and lesser opiates. Health care costs during the late 1920s was 4 % of GDP

Amazingly as a result of the Flexner report, hundreds of medical schools voluntarily went out of business; the notable exceptions were the osteopathic and chiropractoric schools.

Physicians were in serious financial trouble during the depression. There was still the overhang from the huge number of physicians trained before 1913. The percent of GDP that went to medical care went down toward 3%. Physicians developed Blue Cross/Blue Shield in the mid 1930s. This prepayment scheme guaranteed the doc at least some payment, and eventually became the monster that we confront today.

The excess numbers of physicians didn’t die out until after WW2, and after this there was a real shortage of physician. Practitioners were very hard working, died early, and were often very dedicated to their art. Our GP in Buffalo, NY took care of our family, did surgery, delivered kids, and took care of them. He died of overwork at age 56. Giants walked upon the earth in those days.

Most medications had been produced by pharmaceutical houses. Before 1938 these companies had submitted these medications to 2 testing labs; one was a subsidiary of the AMA, and the other the Underwriter’s Laboratory. These two organizations were hired by the pharmaceutical houses to test drugs submitted for efficacy and safety; they usually finished the study in 1-2 years, and would then issue a report. The drug companies could use this report to market drugs to physicians and other users. These reports were never redacted and the testing companies had enormous credibility. From the economic prospective, there were advantages because the testing house provided a second kind of insurance for the drug company; not only would the drug company, but also the testing/certifying organization could be sued for issuing a bad drug. In 1938, there was some sort of event which the Agriculture department used as an excuse it insert itself into the medical world and form what became the FDA. The FDA is basically a review organization which forces drug companies to do clinical research with drugs that they hope to market on patients and report these test results to the FDA. The review/approval process takes 5-10 years, and a fair number of FDA approved drugs have had to be recalled; the FDA does not risk being sued, only the Drug company. When Doctors at the Cleveland Clinic described the cardiovascular problems caused by Vioxx after five years of clinical use, Merck was responsible. The FDA reviewed its policies and failures, and went to Congress to have its budget increased. There has been at least one major scandal in the FDA where decision makers took bribes to certify OTC drugs. The latest twist on this Faustian bargain is the case of Riegel V. Medtronic, in which the Supreme court found that the manufacturer of a defective medical device was protected from lawsuits because the device had been approved by the FDA!!!! There is now a case pending Wyeth v. Levine in which the same protection will be granted to manufacturers of pharmaceuticals. This leaves the individual physician and pharmacists as the only folks who can be sued for product and possibly medication defects. I suspect that these latter two victims will demand a return of independent testing labs to provide a better way of doing these tests, and too provide a legal barrier against lawsuits.

For a series of causes, but no discernable reason, employer provided health insurance became tax deductible during WW2. This was a subsidy for the rich, as they got more of a tax break due to higher marginal rates of taxation, and generally had more expensive insurance premiums.

Health care costs went to around 5% of GDP in the 1950s.

The federal congress saw the shortage of physicians and applied some money for some medical research in the medical schools in the 1950s. They also encouraged hospital construction as a kind of pork barrel project. In the early 1960s, medical care costs rose to 6% of the GDP.

The real money spigot was opened in the mid 60s when medical schools were given a large bonus for every medical school graduate that they produced. The number of US medical school entrants was 6500 in the early 1960s, went up up to 6800 or so when I entered in 1964, and up to 15000 by 1980.The number approaches 20000 now with a population growth of about 50 Percent since 1960. In addition to the increased number of US graduates, about a third of physicians practicing in the USA are foreign medical graduates. Every physician develops some kind of business, and generates costs to justify his keep.

1965 saw the institution of Medicare/caid. Medical care costs that were growing at 8% per year went up an average of 12 percent per year for the next 5 years, and have remained in a supercharged range of growth since.

In 1973 and thereafter, the federal government encouraged the institution of Certificate of Need (CON) laws in the various states. These were designed to restrict cost increases by requiring that hospitals/doctors etc get permission before buying and using/billing for expensive technology. The rather primitive reasoning was that if one limited competition, one could lower medical costs. The effect, of course was to produce monopolies all around the country. No one has ever shown an example of where a government sponsored monopoly (the only kind) ever works, but about half of the states bought into this scam. This was the great opportunity for students trying to do dissertations in economics 25 years ago. There were 14 scholarly economic studies done in the 1980s of which 12 showed that CON increased costs substantially. A 13th one contradicted the other 12, but was disavowed by its authors some years later in the 14th published study. The average cost increase in states with CON laws was 10 percent. Regina Herzingler, now professor of medical economics at Harvard Business School did the major one when she was at the FTC. We will hear more about Regina later. One cannot get rid of CON politically once it is established in a state; the favored holders of the facilities built under CON and the state bureaucracies that feed on this system will never allow it. I published my review of CON economic analysis in the Michigan State Medicinal Society Journal around 1989. I testified in front of a Michigan state legislative subcommittee, and was bluntly told that the legislators knew about that CON increased medical care costs, but that it could never be removed from the laws of this state because of the political cost to legislators was too great.

Patients, listening to the popular media, wanting everything done since the cost to the individual was nil, got more and newer medications, and diagnostic studies. As money in medicine increased, drug companies joined universities as centers of technologic advancement.

The vast increase in medical research led to cascade after cascade of new toys. There is a study done by the government showing that about 60% of increased medical care costs are due to new devices, medication, procedures; the so called “technologic imperative” is what drives health care cost increases.

There were other regulations that made medical care costs explode, like mandating certain services, eg.  mammograms have to be covered in every insurance policy written in the state of Michigan. Radiologists love it, and won’t let this contribution to their early retirement plan lapse.

The baby doe rule mandated that all neonates be resuscitated making neonatal units assembly lines for badly damaged kids.

Emergency rooms had to see and care for all patients, flooding these institutions with routine medical patients who did not have insurance. You can make the argument that socializing medical care (free) will not increase costs as virtually everyone in the US is getting care one way or the other anyway. We will merely rationalize the costs.

Medical insurance companies have to be licensed in each state, and then they are not allowed to sell insurance across state lines. Makes no sense, but it sure diminishes competition.

"Socially" justifiable scams that protected large transplant centers and surgeons from competition set up organ donor lists, and made selling one’s organs illegal because it would prey on poor people, were ensconced in law.

Malpractice became  huge area for trial lawyers, and forces physicians to look under every rodk for a possible diagnosis, really ups the cost of medical care.

The AMA lost sight of its role of maximizing physician income and with it lost most of its membership and influence. This shift could possibly be due to the shortage of physicians and their consequent ability to command high prices around 1960. Most physicians were men, and, until around 1970, had served in the armed forces, basically as draftees. These men were disgusted by the inefficiencies and poor care that they saw given to active duty soldiers and veterans by government. They hardened their hearts against involvement by government in medical care and their attitudes were taken up by the large organization. The AMA opposed the institution of Medicaid/care in 1965. As the AMA turned its back on trying to increase the monopoly powers of physicians, it has also lost membership and influence for many years now. In recent years, the older generation of physicians who had seen government medicine up close has faded, and younger physicians find themselves losing status and income; The AMA is now supporting socialized medicine so that it can reclaim members and influence by enriching physicians, ie give them monopoly powers by using government money and power. What has happened in the interim is an explosion of “providers” in the form of physician assistants and especially nurse practitioners who form a kind of alternate, cheaper, competing cadre, with  philosophies, public images and approaches different from physicians. Many physicians and alternative healers eschew traditional scientific medical care in favor of herbal and similar treatment for patients, and these are paid for out of pocket. There are now many philosophies in medical care. Physicians are back to 1900, and times will be tough. But maybe, if medicine is socialized, and they can manipulate politicians and bureaucrats…..

The system that we have now has been called the survival of the sickest.

Moral issue I; The uninsured.

We hear repeatedly that 40 + million Americans are uninsured. That number is misleading. 12 million are illegal aliens. A fair number are temporarily without insurance due to recent job change, or temporary change in finance. A fair number are young and healthy, and prefer to buy a red sports car and fore go what they see as unnecessary health insurance. (I never knew whether or what kind of health insurance I had when in my 20s; didn’t care).

The self employed have to pay for medical insurance with after tax dollars, and they are justifiably miffed, and likelier to skimp. We hear that the uninsured are denied access to medical care (which is not true, they just have to pay for it out of pocket; most just go to the ER and skip paying the price). These “free riders” are usually cited by proponents of Free Medical Care because they are “not paying their fair share”, and that the system needs to tap their resources (tax them) to pay for sicker individuals

I’m not sure why we consider medical insurance or “health” care to be such a godsend that it becomes a right. We have legitimate rights (penumbras and emanations of the federal constitution) to travel or to initiate lawsuits, but no one offers to give me a free Chevy, or to indulge my litigiousness by paying my attorney fees. The countervailing force for granting me a right to have these very reasonable governmental programs, is that we would expect UAW members and Attorneys to work for minimum wages in the interests of the “common good”, and that ain’t gonna happen.

We do have a right to maintain our health, but nowhere in the constitution can I find the penumbras and emanations of a right to free medical care. It would seem that medical care does not extend life much, and doesn’t do an effective job of reversing the health-destructive habits of most of the public so the arguments of public health that free medical care will make people happier or more productive are mute. (That also raises questions about whether our government should or can make us to be better, or more productive; what are we? Public health officials would like to think that we are like cows on the farm whose production and health has to be maximized).

There is the study by two physicians, Himmelstein and Warren asserting that 54% of bankruptcies are caused by unpaid medical bills. This badly flawed assertion is constantly trotted out by the media as they tout “Free Health Care”. The problem is that H and W cited only bankruptcy filings that included a medical bill. It turns out that if you owe 100,000 on your mortgage, 20k on your credit card, and 1500 medical bills, the medical bills ain’t causing your financial problems.

Moral issues II; How do we do the payment thing?

Taxpayer funded insurance from the beginning A to Z?

Co-pays for those able to pay?

Mandated insurance for those able to pay, and tax subsidized premiums for the impoverished? Will one be able to get supplemental insurance, or pay for more care out of pocket?

I suppose that political considerations mandate that costs will be obscured so that the citizenry is kept in the dark about the true costs of the services that they are using. Payments that are covered (no deductibles) require an expensive review for a myriad of small bills. This is a major cost with insurance companies, and will get much worse when we have socialized medicine and the civil service performing these functions.

Moral issues III Abortion/end to life/baby doe.

This is actually the major reason why “Hilliary care” failed in 1994. The plan as it was about to be finally passed was  found to include payments for abortions. The Catholic Church and conservatives informed about 20-25 Democratic representatives from heavily Catholic, mostly North East states that they would not be re-elected if they voted for the plan. The plan was abandoned within a week, after nearly 2 years of work.

The extent of services that could be offered could be infinite. At the margins, lurk services like elective plastic surgery and psychological services. Then the whole problem with nursing home services will have to be taken out of offerings since these are not really medical care, or even health care issues.

Now come harder decisions. The treatment of hopelessly brain damaged infants and old people have powerful lobbies.

About terminal patients; who will make the decisions and what bright line will we use to decide when to stop supporting the process of dying?

Will the government cut off funding for medical treatments which are only possible with very expensive and often invasive/painful procedures with doubtful benefits?

We are in a position in which we must do whatever we can because the technology, legal/malpractice mileau, and medical culture allows no other option. The fundamental problem is that we developed these new technologies so rapidly (government inspired research) that mankind did not develop the moral language to deal with the consequent human life without the human soul. Had the current state of medical technology developed over a hundred years, then the language used 50 years ago that “we’re doing everything that is possible for granny” would have faded and replaced some other expectations by patients and the legal community. Patients have come to think that every complaint has some sort of medical solution. Especially galling to me is the expectation that medicine has solutions for the 7 deadly sins.

There are any number of moral communities whose religion/beliefs demand adherence to widely different expectations of the medical care system. Witness Catholics, who eschew abortion and birth control, want to have “ routine” care for hopeless cases, ie the kind of care where no bright line exists to separate a tiny chance of surviving as a badly damaged, probably totally disabled, possibly pained, and depressed human being, from care that at best prolongs dying. Atheists and groups (ZPG, Hemlock Society) advertising in liberal magazines might advocate abortion, infanticide, euthanasia, eugenics, etc.. It will be impossible to write laws that balance accommodating the high cost of Catholic care (Viaticare?) and the demand that atheists foot the bill.

Amish pay for their individual medical costs out of pocket. They deal with catastrophic costs with either hi deductible insurance, or by passing the hat around the families in their churches, easily collecting 100s of thousands of dollars to fund a transplant, or life saving operation. A member who is in good standing may well get more consideration, but I don’t really know that for sure. What is sure is that paying for small bills on the spot allows doctors and hospitals who cater to Amish to have lower costs, and hopefully lower bills. Black and Hispanic cultures generally demand more end of life care than do whites, but actually get less medial care during their prime years. What to do about the myriad hypochondriacs who crowd into medical offices?

The countries of Europe, Canada, Japan and a few others have morally homogeneous communities that have only limited expectations for medical care. Case in point; a British GP routinely would tell a 60 year old that his kidneys have failed, and that he is not a candidate for dialysis or for transplant. He makes arrangements for Hospice, and the patient, his family and the community accept this prescription without a whimper.

I have no idea about the number of moral communities in the USA. As a libertarian, I regard the only moral community to be that of one, ie. the individual. To think otherwise, is to make Socialized Medical care in the USA impossible to pass politically

Proposed solutions

Libertarians sign a pledge when joining the party that they will not initiate force or fraud to gain political or social gains. I intend to remain within these constraints, at least to the extent that I will not initiate but rather try to mitigate the force and fraud that political activities by physicians and other medical providers have already inflicted on medicine and on American citizens

This exercise has had two objectives: 1) to identify ways in which government policies create perverse incentives and problems that in turn cause many to appeal to government to solve; and 2) to identify what policy changes would be needed to make government a neutral player in the medical care that most want for themselves. And if government were removed as a source of problems, the resulting system would have some remarkably attractive features. The following is a brief summary. .

I start with a plan that was first proposed by the libertarian Cato think tank over 20 years ago, and commonly called the Medical Savings Account (MSA), or (less correctly IMHO) Health saving accounts. These have been part of federal policy for years, but have become much more popular in the last few years and have been promoted by President Bush, among others.

There are two components to MSAs:

1)the high deductible health insurance plan and

2)the MSA which is very much like an IRA, a tax deductible contribution into a fund that can be used to pay medical costs now or in the future. The two components are paired together in order to insure maximum benefit to the consumer.

One of our children (a poor grad student) had an MSA for a few years. The high deductible (3000 per year) insurance cost about 35 dollars per month. It had an upper limit of 5 million dollars.

The cost of funding the Savings account was 750 per quarter or 3000 per year, each year.

She got a book of checks that could draw on the Savings account to pay for any medical care costs that she might incur. Any money that she didn’t spend stayed in the account drawing 3% interest. Each year she put in an additional 3K, and any unspent money would continue to accumulate, draw interest, and be available to pay for medical costs. It would have been part of her estate. If enough money accumulated, it might be enough so that the yearly interest would pay for the high deductible insurance portion. Eventually the money could be used to pay for nursing home coverage, or a few other disability type expenses. It could not be used to pay for non medical expenses. The fact that using the MSA was spending her money gave her a fairly strong incentive to be careful about using medical resources. If she used up more that the 3000 dollars, the high deductible insurance would have kicked in.  She was in charge of how her medical dollars were spent.

I, and others, find that this is the basis for a Form of Universal Coverage.

A true Libertarian plan would get government out of health care altogether. But more realistically, since the only thing a good libertarian can accomplish is to ameliorate the economic and moral damage already done to the medical care system, I offer the following at the national level:

Get rid of CON-enabling federal laws, by advertising their monopolistic results and get the federal government to stop encouraging this swindle

Get rid of the FDA; it has no economic role and is subject to bribery and gross error. The Underwriters Laboratory would soon have many competent competitors who can share the legal liability risk.

Stop legislatures from demanding that all policies in the state cover politically correct stuff, like mammograms for all women.

The premiums charged would go down by the market rate if the physician and patient agree to arbitrate malpractice type claims, and that there will be no punitive damages awards

Encourage outsourcing of procedures, ie globalize medicine.

No licensing, only the requirement that one’s claims for degrees and training be truthful

Get rid of the Organ transplant list; organs can be purchased, and sold at market rates, or donated at the pleasure of the donor.

Electronic medical records follow the patient along with his insurance. Privatize the VAH and military medical care systems. These are wasteful.

Stop subsidizing research, medical schools, hospital buildings.

Public health should be restricted to finding and preventing external threats from the environment, not from guiding personal morality

Consumer driven health care

The following is basically a variant of the so called Consumer Driven Health Care advocated by Regina Herzlinger of the Harvard Business School;

Each individual would be given Money to pay for a Medical savings account with tax deductible contribution to an IRA like account out of which the individual can pay for routine medical costs. Each individual will get a tax deduction equal to the contribution. The poor would have to be subsidized.

The high deductible insurance policy premiums will be determined after each individual seeking insurance files his Advanced Directives and has an individual evaluation for how much of a risk he is to incur medical costs. He will also select whether he wants to retain the right to sue his health care providers, or to submit disputes to arbitration.

This high deductible insurance will be a taken out of the MSA and so it will be seen as an expense by the individual, putting some pressure on him to ask for fewer death prolonging features in his advanced directives. It will also, because of the increased spending of money for medical care if his health is poor, encourage healthy habits.

Also, a portion of the savings portion of the HSAs will be sequestered for preventative care. If not used, the government will take it back as a tax contribution, ie. use your preventative health money or lose it.

Those who choose this form of private insurance would get a tax credit

They will have routine health care, as they want it, with the power to select their providers.

For those who are uninsured, the money that they could have claimed would be used to fund a health care safety net in their locality, at a county level, let’s say. They may not like going to some public clinic, or they can pay for their care out of pocket, but the uninsured have made their choices even if it was a poor one.

Since money follows people, there would always be a minimum amount of funding - regardless of how many people are uninsured.

I dislike forcing the taxpayer to pay for medical care costs because of my libertarian beliefs, but I can justify it because I’m offering a respite from a century of government abuse by greedy professionals, and institutions.

The consequences

The plan above will cause an enormous increase in the savings of American families, and may help alleviate the economic doldrums that seem likely with the so called housing inflation/banking crisis (actually a sign that the Fed has printed too much money). It will let poor people keep their money, and be able. in many cases, to pass substantial assets on to their heirs.

Physicians will lose a huge portion of their business since patients will be less likely to pay visits for minor problems. Desperate measures will be less likely to be elected near the end of life. Providers can shield themselves by citing the patient's own wishes expressed when he was healthy and in possession of h is faculties. On the other hand, they will not have to beg and scheme to get paid, worry that much about malpractice, and that should make up in part for their losses of business

Hospital, and pharmaceutical houses will have to produce, or else go out of business.