Medical Students’ Debt and Other Symptoms of the Government’s Meddling With Health Care
It is indeed hard to find an industry in the United States that has been more stifled, choked, besieged, corrupted, and interfered with through government interventionism and subsidies than healthcare. It is, from the point of view of pure evil, really quite a beautiful example of how in a few decades you can turn a complete sector into a gigantic mess on all fronts by slowly getting your sleazy fingers deeper and deeper into it.
The attack on health care by bureaucrats is such a fascinating and instructive example because it is blatantly pursued through numerous different angles, way out in the open and clearly visible, while the public kneels down in awe and, in truly masochistic fashion, asks for more and more abuse, year after year.
I already outlined the economics behind the government’s health care meddling and how the establishment of lasting industry monopolies and the deliberate restriction of supply cements and aggravates high cost of goods and services rendered:
The problem with health care in the US, but in virtually every other country in the world as well, is a simple one: The goods (products and services) offered on the market that address illnesses and and improve our well being are offered at prices that are so high that most consumers are unable to afford a sufficient amount to address their demands.
On top of that, these prices are continuously rising. All other health care issues stem from this simple fact. Health insurance premiums, for example, are charged based on the prices that competing insurers expect to end up paying for health care goods. Thus, naturally, health insurance premiums are on the rise as well, even in the current deflationary environment. The rapid increase in government expenses for its entitlement programs Medicare and Medicaid, too, is simply the result of these ongoing price increases. It is thus not a coincidence that today the US government spends more than any other industrialized nation on health.
On the market, such imbalances are, under free competition, swiftly addressed via a simple process: High prices for certain consumer goods indicate a high demand and an insufficient supply. Thus profit seeking entrepreneurs have an incentive to shift from what they are currently doing to focusing on producing more of such highly demanded goods, by employing more commensurate factors of production that turn out the demanded goods. This leads to a decline in their prices, moving the market closer to equilibrium and thus restoring balance.
But when a group of people which obtains its means of operation via aggression and theft, the government, imposes decrees that prevent the voluntary market participants to perform such balancing acts, and threaten them with imprisonment and fines should they not oblige, the imbalance will persist. If that group’s actions are such as to bring about even more shortages for the demanded goods, the imbalance will grow, prices will keep rising.
As an outcome of such an interventionist policy, there will always be a small group of entrepreneurs that benefits from the protection awarded against competition and voluntary action on the part of consumers and new entrepreneurs. They naturally reap the benefits from the ability to charge prices that are not being bid down by potentially competing entrepreneurs. It is important to keep this fact in mind when members of such groups utter statements that attempt to justify the policies that have brought about and continue to maintain the imbalance.
It is really an impressive spiderweb of all round government control:
On the drugs side, the FDA decides which drug may or may not enter the market and imposes lifecycles of up to 15 years before a drug is approved. 80% of drug costs can be linked directly to FDA rules that need to be followed.
On the services side, state and federal laws require practitioners to obtain government licenses in order to practice.
Institutions that teach medical practice are naturally also subject to such regulations and medical degree programs thus take an enormous amount of time and capital to complete. Students need to incur debt in order to be able to afford the studies.
Well, at least the market for those student loans is free and unhampered with by the government … right? Well, wrong! This is what I mean when I say what a beautiful, flawless, and fascinating example of all round government meddling and control we have here. The feds of course heavily subsidize student loans through the government sponsored, and now outright nationalized corporation Fannie Mae.
On the fiscal side, through the programs of Medicare and Medicaid, the federal government alone is responsible for 50% of all medical expenditures made in the country.
If health products and services weren’t so expensive, the need for health insurance would be virtually non existent, except for truly catastrophic events, which is what insurance is all about in pretty much any other sector. But since government intervention has created the problems outlined above, it also deems it necessary, as always, to regulate the effects of its meddling, an iron law of interventionism. Thus the government also heavily regulates the business of health insurance, making it illegal to purchase health insurance across state lines and legislating premiums and insurance policy requirements wherever they see fit.
In light of all this it is rather funny that people would act surprised about constantly rising health costs and insurance premiums and on top of that demand that of all people the government step in and “solve” the problem by grabbing more power. The most recent legislation that aims at regulating health insurance more tightly is just another example for this. Soon we will once again see the good old, so often tried, and so consistently failing measures of price control and rationing as the “solution” to health premiums.
A predictable side effect and yet another reason for rising cost that I would like to touch on here is the phenomenon of enormous debts owed by medical students after they graduate, incurred during their long and expensive studies at government accredited institutions. In order to pay off these debts, medical doctors are practically required to charge higher prices for their services.
The AMA provides background information on medical student debt:
Student debt statistics
* $156,456 – According to the Association of American Medical Colleges (AAMC), the average educational debt of indebted graduates of the class of 2009.
* 79 percent of graduates have debt of at least $100,000.
* 58 precent of graduates have debt of at least $150,000.
* 87 percent of graduating medical students carry outstanding loans.Source: AAMC 2009 Graduation Questionnaire
Why medical education debt has increasedMedical education debt is driven by rising tuition. AAMC data show that median private medical school tuition and fees increased by 50 percent (in real dollars) in the 20 years between 1984 and 2004. Median public medical school tuition and fees increased by 133 percent over the same time period. Other recent 20-year periods show similar trends.
Tuition is just one source of increasing debt burdens. Other causes include:
* Interest accrued on loans over time significantly adds to the total cost of student debt.
* Students are now entering medical school with more education debt from undergraduate education.
* Increasing numbers of “non-traditional” students who have children to support.Debt crisis harms both students and patients
The increase in debt not only burdens medical students, but can have effects on the entire health care system. Some of correlations found include:
Decrease in primary care physicians
* Students with high debt may be less likely to pursue family practice and primary care specialties and instead seek specialties with higher income or more leisure time.
Decreased diversity of physician workforce
* The cost of tuition can prevent students from low-income/minority and those with other financial responsibilities from attending medical school.
* Physician diversity is necessary to address the needs of heterogeneous, multicultural patient populations.Promoting unsafe physician behaviors
* Residents with high debt are more likely to moonlight.
* Increasing debt leads to more cynicism and depression among residents.How can we reduce debt?
The MSS has come up with recommendations for legislative and administrative remedies to resolve the medical education debt crisis. These recommendations focus on controlling tuition, the principal component of education costs, but include a number of relatively simple administrative measures that could be taken immediately and at a low cost to individual medical schools.
And again: the AMA concludes that the solution to the problems created by government legislation and intervention is to “come up with recommendations for legislative and administrative remedies to resolve the medical education debt crisis.”
The best comedian couldn’t make such a farce up :))
The real solution is a lot more simple, intuitive, and measurable than such nonsense: Stop using guns against people who have done you no harm, get the government out of the way, and society will flourish. For guns are not the answer to complex and structural problems, voluntaryism is.
Former CBO Head on Healthcare Reform – “government is bigger, entitlement programs have expanded, spending has increased and taxes are higher”
The former CBO head at Yahoo Tech Ticker:
Walker states the simple fact that …
… “government is bigger, entitlement programs have expanded, spending has increased and taxes are higher” as a result of the law.
… those points should be listed in the default template header for any bill brought forth in Congress.
In addition to that, multiply any expense number presented by 10 and you’ll usually have a rough approximation of where a government program is headed.
Government always grows, it’s inevitable so long as people cling on to this mad fantasy.
The Government’s Healthcare Takeover in Numbers
A friend just posted a neat list of new government offices and programs created by the new health care bill. Of course it opens up a beautiful playground of uncontrollable corruption for federal bureaucrats and lobbyists to make out like bandits, kindly funded by YOU, The People:
1. Grant program for consumer assistance offices (Section 1002, p. 37)
2. Grant program for states to monitor premium increases (Section 1003, p. 42)
3. Committee to review administrative simplification standards (Section 1104, p. 71)
4. Demonstration program for state wellness programs (Section 1201, p. 93)
5. Grant program to establish state Exchanges (Section 1311(a), p. 130)
6. State American Health Benefit Exchanges (Section 1311(b), p. 131)
7. Exchange grants to establish consumer navigator programs (Section 1311(i), p. 150)
8. Grant program for state cooperatives (Section 1322, p. 169)
9. Advisory board for state cooperatives (Section 1322(b)(3), p. 173)
10. Private purchasing council for state cooperatives (Section 1322(d), p. 177)
11. State basic health plan programs (Section 1331, p. 201)
12. State-based reinsurance program (Section 1341, p. 226)
13. Program of risk corridors for individual and small group markets (Section 1342, p. 233)
14. Program to determine eligibility for Exchange participation (Section 1411, p. 267)
15. Program for advance determination of tax credit eligibility (Section 1412, p. 288)
16. Grant program to implement health IT enrollment standards (Section 1561, p. 370)
17. Federal Coordinated Health Care Office for dual eligible beneficiaries (Section 2602, p. 512)
18. Medicaid quality measurement program (Section 2701, p. 518)
19. Medicaid health home program for people with chronic conditions, and grants for planning same (Section 2703, p. 524)
20. Medicaid demonstration project to evaluate bundled payments (Section 2704, p. 532)
21. Medicaid demonstration project for global payment system (Section 2705, p. 536)
22. Medicaid demonstration project for accountable care organizations (Section 2706, p. 538)
23. Medicaid demonstration project for emergency psychiatric care (Section 2707, p. 540)
24. Grant program for delivery of services to individuals with postpartum depression (Section 2952(b), p. 591)
25. State allotments for grants to promote personal responsibility education programs (Section 2953, p. 596)
26. Medicare value-based purchasing program (Section 3001(a), p. 613)
27. Medicare value-based purchasing demonstration program for critical access hospitals (Section 3001(b), p. 637)
28. Medicare value-based purchasing program for skilled nursing facilities (Section 3006(a), p. 666)
29. Medicare value-based purchasing program for home health agencies (Section 3006(b), p. 668)
30. Interagency Working Group on Health Care Quality (Section 3012, p. 688)
31. Grant program to develop health care quality measures (Section 3013, p. 693)
32. Center for Medicare and Medicaid Innovation (Section 3021, p. 712)
33. Medicare shared savings program (Section 3022, p. 728)
34. Medicare pilot program on payment bundling (Section 3023, p. 739)
35. Independence at home medical practice demonstration program (Section 3024, p. 752)
36. Program for use of patient safety organizations to reduce hospital readmission rates (Section 3025(b), p. 775)
37. Community-based care transitions program (Section 3026, p. 776)
38. Demonstration project for payment of complex diagnostic laboratory tests (Section 3113, p. 800)
39. Medicare hospice concurrent care demonstration project (Section 3140, p. 850)
40. Independent Payment Advisory Board (Section 3403, p. 982)
41. Consumer Advisory Council for Independent Payment Advisory Board (Section 3403, p. 1027)
42. Grant program for technical assistance to providers implementing health quality practices (Section 3501, p. 1043)
43. Grant program to establish interdisciplinary health teams (Section 3502, p. 1048)
44. Grant program to implement medication therapy management (Section 3503, p. 1055)
45. Grant program to support emergency care pilot programs (Section 3504, p. 1061)
46. Grant program to promote universal access to trauma services (Section 3505(b), p. 1081)
47. Grant program to develop and promote shared decision-making aids (Section 3506, p. 1088)
48. Grant program to support implementation of shared decision-making (Section 3506, p. 1091)
49. Grant program to integrate quality improvement in clinical education (Section 3508, p. 1095)
50. Health and Human Services Coordinating Committee on Women’s Health (Section 3509(a), p. 1098)
51. Centers for Disease Control Office of Women’s Health (Section 3509(b), p. 1102)
52. Agency for Healthcare Research and Quality Office of Women’s Health (Section 3509(e), p. 1105)
53. Health Resources and Services Administration Office of Women’s Health (Section 3509(f), p. 1106)
54. Food and Drug Administration Office of Women’s Health (Section 3509(g), p. 1109)
55. National Prevention, Health Promotion, and Public Health Council (Section 4001, p. 1114)
56. Advisory Group on Prevention, Health Promotion, and Integrative and Public Health (Section 4001(f), p. 1117)
57. Prevention and Public Health Fund (Section 4002, p. 1121)
58. Community Preventive Services Task Force (Section 4003(b), p. 1126)
59. Grant program to support school-based health centers (Section 4101, p. 1135)
60. Grant program to promote research-based dental caries disease management (Section 4102, p. 1147)
61. Grant program for States to prevent chronic disease in Medicaid beneficiaries (Section 4108, p. 1174)
62. Community transformation grants (Section 4201, p. 1182)
63. Grant program to provide public health interventions (Section 4202, p. 1188)
64. Demonstration program of grants to improve child immunization rates (Section 4204(b), p. 1200)
65. Pilot program for risk-factor assessments provided through community health centers (Section 4206, p. 1215)
66. Grant program to increase epidemiology and laboratory capacity (Section 4304, p. 1233)
67. Interagency Pain Research Coordinating Committee (Section 4305, p. 1238)
68. National Health Care Workforce Commission (Section 5101, p. 1256)
69. Grant program to plan health care workforce development activities (Section 5102(c), p. 1275)
70. Grant program to implement health care workforce development activities (Section 5102(d), p. 1279)
71. Pediatric specialty loan repayment program (Section 5203, p. 1295)
72. Public Health Workforce Loan Repayment Program (Section 5204, p. 1300)
73. Allied Health Loan Forgiveness Program (Section 5205, p. 1305)
74. Grant program to provide mid-career training for health professionals (Section 5206, p. 1307)
75. Grant program to fund nurse-managed health clinics (Section 5208, p. 1310)
76. Grant program to support primary care training programs (Section 5301, p. 1315)
77. Grant program to fund training for direct care workers (Section 5302, p. 1322)
78. Grant program to develop dental training programs (Section 5303, p. 1325)
79. Demonstration program to increase access to dental health care in underserved communities (Section 5304, p. 1331)
80. Grant program to promote geriatric education centers (Section 5305, p. 1334)
81. Grant program to promote health professionals entering geriatrics (Section 5305, p. 1339)
82. Grant program to promote training in mental and behavioral health (Section 5306, p. 1344)
83. Grant program to promote nurse retention programs (Section 5309, p. 1354)
84. Student loan forgiveness for nursing school faculty (Section 5311(b), p. 1360)
85. Grant program to promote positive health behaviors and outcomes (Section 5313, p. 1364)
86. Public Health Sciences Track for medical students (Section 5315, p. 1372)
87. Primary Care Extension Program to educate providers (Section 5405, p. 1404)
88. Grant program for demonstration projects to address health workforce shortage needs (Section 5507, p. 1442)
89. Grant program for demonstration projects to develop training programs for home health aides (Section 5507, p. 1447)
90. Grant program to establish new primary care residency programs (Section 5508(a), p. 1458)
91. Program of payments to teaching health centers that sponsor medical residency training (Section 5508(c), p. 1462)
92. Graduate nurse education demonstration program (Section 5509, p. 1472)
93. Grant program to establish demonstration projects for community-based mental health settings (Section 5604, p. 1486)
94. Commission on Key National Indicators (Section 5605, p. 1489)
95. Quality assurance and performance improvement program for skilled nursing facilities (Section 6102, p. 1554)
96. Special focus facility program for skilled nursing facilities (Section 6103(a)(3), p. 1561)
97. Special focus facility program for nursing facilities (Section 6103(b)(3), p. 1568)
98. National independent monitor pilot program for skilled nursing facilities and nursing facilities (Section 6112, p. 1589)
99. Demonstration projects for nursing facilities involved in the culture change movement (Section 6114, p. 1597)
100. Patient-Centered Outcomes Research Institute (Section 6301, p. 1619)
101. Standing methodology committee for Patient-Centered Outcomes Research Institute (Section 6301, p. 1629)
102. Board of Governors for Patient-Centered Outcomes Research Institute (Section 6301, p. 1638)
103. Patient-Centered Outcomes Research Trust Fund (Section 6301(e), p. 1656)
104. Elder Justice Coordinating Council (Section 6703, p. 1773)
105. Advisory Board on Elder Abuse, Neglect, and Exploitation (Section 6703, p. 1776)
106. Grant program to create elder abuse forensic centers (Section 6703, p. 1783)
107. Grant program to promote continuing education for long-term care staffers (Section 6703, p. 1787)
108. Grant program to improve management practices and training (Section 6703, p. 1788)
109. Grant program to subsidize costs of electronic health records (Section 6703, p. 1791)
110. Grant program to promote adult protective services (Section 6703, p. 1796)
111. Grant program to conduct elder abuse detection and prevention (Section 6703, p. 1798)
112. Grant program to support long-term care ombudsmen (Section 6703, p. 1800)
113. National Training Institute for long-term care surveyors (Section 6703, p. 1806)
114. Grant program to fund State surveys of long-term care residences (Section 6703, p. 1809)
115. CLASS Independence Fund (Section 8002, p. 1926)
116. CLASS Independence Fund Board of Trustees (Section 8002, p. 1927)
117. CLASS Independence Advisory Council (Section 8002, p. 1931)
118. Personal Care Attendants Workforce Advisory Panel (Section 8002(c), p. 1938)
119. Multi-state health plans offered by Office of Personnel Management (Section 10104(p), p. 2086)
120. Advisory board for multi-state health plans (Section 10104(p), p. 2094)
121. Pregnancy Assistance Fund (Section 10212, p. 2164)
122. Value-based purchasing program for ambulatory surgical centers (Section 10301, p. 2176)
123. Demonstration project for payment adjustments to home health services (Section 10315, p. 2200)
124. Pilot program for care of individuals in environmental emergency declaration areas (Section 10323, p. 2223)
125. Grant program to screen at-risk individuals for environmental health conditions (Section 10323(b), p. 2231)
126. Pilot programs to implement value-based purchasing (Section 10326, p. 2242)
127. Grant program to support community-based collaborative care networks (Section 10333, p. 2265)
128. Centers for Disease Control Office of Minority Health (Section 10334, p. 2272)
129. Health Resources and Services Administration Office of Minority Health (Section 10334, p. 2272)
130. Substance Abuse and Mental Health Services Administration Office of Minority Health (Section 10334, p. 2272)
131. Agency for Healthcare Research and Quality Office of Minority Health (Section 10334, p. 2272)
132. Food and Drug Administration Office of Minority Health (Section 10334, p. 2272)
133. Centers for Medicare and Medicaid Services Office of Minority Health (Section 10334, p. 2272)
134. Grant program to promote small business wellness programs (Section 10408, p. 2285)
135. Cures Acceleration Network (Section 10409, p. 2289)
136. Cures Acceleration Network Review Board (Section 10409, p. 2291)
137. Grant program for Cures Acceleration Network (Section 10409, p. 2297)
138. Grant program to promote centers of excellence for depression (Section 10410, p. 2304)
139. Advisory committee for young women’s breast health awareness education campaign (Section 10413, p. 2322)
140. Grant program to provide assistance to provide information to young women with breast cancer (Section 10413, p. 2326)
141. Interagency Access to Health Care in Alaska Task Force (Section 10501, p. 2329)
142. Grant program to train nurse practitioners as primary care providers (Section 10501(e), p. 2332)
143. Grant program for community-based diabetes prevention (Section 10501(g), p. 2337)
144. Grant program for providers who treat a high percentage of medically underserved populations (Section 10501(k), p. 2343)
145. Grant program to recruit students to practice in underserved communities (Section 10501(l), p. 2344)
146. Community Health Center Fund (Section 10503, p. 2355)
147. Demonstration project to provide access to health care for the uninsured at reduced fees (Section 10504, p. 2357)
148. Demonstration program to explore alternatives to tort litigation (Section 10607, p. 2369)
149. Indian Health demonstration program for chronic shortages of health professionals (S. 1790, Section 112, p. 24)*
150. Office of Indian Men’s Health (S. 1790, Section 136, p. 71)*
151. Indian Country modular component facilities demonstration program (S. 1790, Section 146, p. 108)*
152. Indian mobile health stations demonstration program (S. 1790, Section 147, p. 111)*
153. Office of Direct Service Tribes (S. 1790, Section 172, p. 151)*
154. Indian Health Service mental health technician training program (S. 1790, Section 181, p. 173)*
155. Indian Health Service program for treatment of child sexual abuse victims (S. 1790, Section 181, p. 192)*
156. Indian Health Service program for treatment of domestic violence and sexual abuse (S. 1790, Section 181, p. 194)*
157. Indian youth telemental health demonstration project (S. 1790, Section 181, p. 204)*
158. Indian youth life skills demonstration project (S. 1790, Section 181, p. 220)*
159. Indian Health Service Director of HIV/AIDS Prevention and Treatment (S. 1790, Section 199B, p. 258)*
And of course the IRS will be given more powers of enforcement, because, you know, when you tack on government programs you kinda wanna get the guys with the guns involved, it’s completely inevitable:
A report on the New York Post website yesterday reports the IRS may hire as many as 16,000 new agents.This is estimated to add another $1 billion dollars to the federal budget. This is alleged by Republicans on The House Ways and Means committee. Under the Obama plan the IRS would be given new powers of enforcement. The IRS will be given the charge to see every American has “acceptable” health insurance. If your plan is not acceptable the IRS may be able to withhold your income tax return and or levy fines due to your non compliance. Everyone under the Obama plan will be required to purchase insurance. If you can’t pay for the insurance the subsidy to purchase will come through the IRS in the form of a tax credit. Under one version of the plan the money will come from a Health Choices Administration. Do we really want the IRS involved in assessing our health care and possibly releasing our tax information to other agencies?
He also aptly points us to this passage from this old and forgotten piece of paper:
“He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.” – Declaration of Independence
This, me friends, is the shape of things to come …
Healthcare – Monopoly, Cost, Sustainability, and the Final Convulsions of an Imploding Government
Some great comments from Stefan Molyneux:
Health care monopoly, high health costs, unsustainability & people opting for the $695 fine:
Health care mess in the UK, government bureaucracy, medical students’ debt, mandated charges & the last convulsions of an imploding system:
Cheaper health care, unions, subsidies, special interest groups & fighting tooth and nail:
Health Care Reform Nonsense – Don’t Hurt Your Head About It
Once in a while these days I happen to catch the talk on the news media about the passage of the health care bill. I see pictures of heroic congressmen and officials, and praise for their stunning “Victory”. I see talking heads on CNN and FOX news in the famous 4 headed hydras talking about a bill which they haven’t read.
Every single one debates this bill with such amazing certainty, it’s really quite amusing. Because nobody, not one single person, knows the full content of this 2400+ page monster.
I don’t know what specifically is in it because I have not taken the time to read through the entire bill, just as no single Senator or Congressman has, but one thing is for sure: it satisfies all the different lobbyists who needed to get their pork in order for their representatives in Congress to vote for the bill.
I wrote before what would need to happen in a hypothetical world where politicians really care about fixing health care in the US. (*chuckle*) Of course none of this is going to happen.
Politicians will do everything in their power to loot the public purse at an accelerating speed and government will continue its long lasting and inevitable growth.
There is no use in hurting your head about it or shouting at them on Capitol Hill. Talk to your friends and family about the truth behind what’s going on, try to enlighten those who are interested. Like I said before:
This train wreck is headed for a cliff and the public is cheering on its acceleration. The system will have to play itself out, and in the very process it is going to destroy itself.
All we can do is remain calm and collected, don’t stress over this madness. Educate yourself and your friends and family about the truth about Freedom, Peace and Happiness. Act upon it. Understand the concepts of Ethics, Human Nature, Government, and Liberty. Act upon it.
Once people understand the truth, society will be transformed into a viable, peaceful, and prosperous system.
Pelosi Wants to Pass Health Bill to “Find Out What’s in it” …
… thanks for that one Nancy. It really makes a great case for this pile of crap soon to be shoved down our throats!
History Repeats Itself
Schiff @ Freedomain Radio
While Fox, CNN, and MSNBC discuss why independents’ favorability toward Obama during his State of the Union address went up by 3% during the 10th and 11th minues of his speech, and why Republicans disliked the 15th minute, it’s time for a well deserved dose of truth:
US Health Care in Crisis – Where is the Outrage?
A very informative interview with research scientist Mary Ruwart about the US health care system:
First off, I would like to add one more extremely crucial point to my “Fixing US Health Care Once and for All“: Repealing the Kefauver Harris Amendment from 1962.
It is being estimated that drugs could cost about 80%(!!) less if it weren’t for these burdensome regulations. In addition to that, innovation has been stifled immensely. Most people don’t even begin to realize what a great health system would be possible if our government simply reduced its excessive meddling.
I will go on a rather emotional and political rant now. So if you are not into that kind of stuff, consider yourself warned.
Where is the Outrage?
Anyone who closely examines the facts about US health care, or even just watched the interview above, has to wonder: What is going on? Where is the outrage??
Burdensome and often times outright ridiculous FDA requirements, decrees, and restrictions account for as much as 80% of drug costs! Without those, can you imagine how cheaply you or your friends and dear ones might be able to obtain certain, direly needed, drugs? Where is the outrage?
The supreme court told individuals who were suffering from a terminal disease that they could not obtain drugs in an early FDA stage, even through it was their last hope, even through they themselves were fully aware of the risk they were taking! Where is the outrage?
The lifecycle before a drug can go to market has gone up from 5 to 15 (!!) years. Where else does something like this exist? Who would be willing and able to work on complicated drugs, make all the necessary investments, under such circumstances? Is there any other industry where after over 40 years a process actually takes 3 times longer than it used to?? Wouldn’t we expect the opposite to be the case? Where is the outrage?
The AMA continues to do everything in its powers to limit the number of health practitioners while people are suffering, dying, going bankrupt from medial bills, and seeking treatment in emergency rooms. It does so through its control of the governmental State Medical Boards who have a monopoly on medical licenses. Why is nobody examining this relationship and practice more closely? Where is the outrage?
It is estimated that the loss of innovation in the field of drug and medical research may be linked to as much as 16 million health related deaths! This is a number that dwarfs US deaths from wars any day. Where is the outrage?
Burdensome and complicated government rules and restrictions have led to a health care system in shambles, an unmanageable system that is sooner or later headed for a complete collapse. At this point, one would think that there is absolutely no way the people would let their leaders get away with one more bit of the same. Some mentality of hitting the brakes would be expectable. But what has happened now? House Democrats have introduced a 2000 (!!!) page bill that gives the government more powers to issue decrees, restrictions, and make health care expenditures. It recently passed the house. They are NOT hitting the brakes. If anything, they are accelerating full throttle!
I searched for all important keywords in this bill. “Importation”, “Regulations”, “American Medical Association”, “FDA”. But all I can find is either nothing at all, or the granting of more powers to the very culprits. Is anybody out there looking at this closely? Do people realize what is happening?
What does the media have to say about this? They are talking about petty, uninteresting, and completely irrelevant subjects, such as the “public option“, “death panels”, “free health for immigrants”, and what have you.
The CBO estimates that this bill will cost about $1.2 trillion. Based on that alone, I estimate it will cost about $12 trillion instead. Money that the government simply doesn’t have. Money that you and your grandchildren will be on the hook for for many many years. Where in the world is the outrage??
If this bill ever makes it through the senate, the train towards a completely nationalized, and thus all the more disastrous health care system can no longer be stopped. There really is no easier stance to take for you if you care about your own and your friends’ and family’s health, completely regardless of party affiliation: This bill, or ANY derivative of it, has to fail in the Senate, bar none.
This is not a game. It is not a fun little platform for activism. It is crucial. It is probably one of the most important and far reaching political decisions in decades that is being voted on. It will determine whether we completely abdicate from fixing what is wrong with our system, or whether we are capable of hitting the brakes and changing course.
Call both your Senators, call them every day of the week until they do what is right: Vote Nay!
Fixing US Health Care Once And For All – 4 Crucial Steps
The root causes of the problems with health care in the US
The problem with health care in the US, but in virtually every other country in the world as well, is a simple one: The goods (products and services) offered on the market that address illnesses and and improve our well being are offered at prices that are so high that most consumers are unable to afford a sufficient amount to address their demands.
On top of that, these prices are continuously rising. All other health care issues stem from this simple fact. Health insurance premiums, for example, are charged based on the prices that competing insurers expect to end up paying for health care goods. Thus, naturally, health insurance premiums are on the rise as well, even in the current deflationary environment. The rapid increase in government expenses for its entitlement programs Medicare and Medicaid, too, is simply the result of these ongoing price increases. It is thus not a coincidence that today the US government spends more than any other industrialized nation on health:
On the market, such imbalances are, under free competition, swiftly addressed via a simple process: High prices for certain consumer goods indicate a high demand and an insufficient supply. Thus profit seeking entrepreneurs have an incentive to shift from what they are currently doing to focusing on producing more of such highly demanded goods, by employing more commensurate factors of production that turn out the demanded goods. This leads to a decline in their prices, moving the market closer to equilibrium and thus restoring balance.
But when a group of people which obtains its means of operation via aggression and theft, the government, imposes decrees that prevent the voluntary market participants to perform such balancing acts, and threaten them with imprisonment and fines should they not oblige, the imbalance will persist. If that group’s actions are such as to bring about even more shortages for the demanded goods, the imbalance will grow, prices will keep rising.
As an outcome of such an interventionist policy, there will always be a small group of entrepreneurs that benefits from the protection awarded against competition and voluntary action on the part of consumers and new entrepreneurs. They naturally reap the benefits from the ability to charge prices that are not being bid down by potentially competing entrepreneurs. It is important to keep this fact in mind when members of such groups utter statements that attempt to justify the policies that have brought about and continue to maintain the imbalance.
If those who run the government desire, as they profess, to remedy such an imbalance, the course of action they need to take is just as simple as the problem: lift all those decrees that hinder consumers and entrepreneurs from fixing the imbalance.
Moving forward, I will outline 3 simple steps that the US government needs to take in case it is interested in addressing the precise pain points that have precipitated the imbalance outlined above:
3 steps toward affordable health care
1. Get rid of government enforced AMA privileges, restrictions, and monopolies
The American Medical Association (AMA) has, over the course of the past 160 years, done everything possible to utilize government power in order to restrict the amount of health care services, the number and efficiency of health education facilities, the access to drugs in pharmacies, price transparency and negotiation, and the practice of alternative health approaches. It has deliberately and happily reduced the availability of goods that address consumers’ health care needs, leaving many consumers in a desperate situation at the benefit of those doctors whose privileged position it has been protecting.
It is certainly not easy to back up such an outrageous charge against the AMA. Fortunately we have a rather reliable companion to corroborate our accusation – the AMA itself:
… in 1901 the Journal of the American Medical Association released the following statement: “The growth of the profession must be stemmed if individual members are to find the practice of medicine a lucrative profession.”
In order to achieve these objectives, the AMA lobbied heavily with state and federal government institutions – with remarkable success. As Lew Rockwell notes:
To help bring about a higher-paid profession, the AMA in 1904 created the Council on Medical Education, which sought to shut down more than half the existing medical schools by rating them on a scale of A to C. In cooperation with State medical boards composed of what Arthur Dean Boran, head of the council, called the “right sort of men,” the AMA succeeded in cutting the number of schools to 131 by 1910, from a high of 166.
Then the council’s secretary N.P. Colwell helped plan (and some say write) the famous 1910 report by Abraham Flexner. (…)
The Flexner Report was more than an attack on free competition funded by special interests. It was also a fraud. For example, Flexner claimed to have thoroughly investigated 69 schools in 90 days, and he sent prepublication copies of his report to the favored schools for their revisions. Homeopaths noted that his authority derived solely “from an unlimited access to the pocketbook of a millionaire.” Homeopaths did not use synthetic drugs, of course. John E. Churchill, president of the Board of Education of New York, called the report a “menace to the freedom of teaching.” Years later, Flexner admitted that he knew nothing about medical education. But he did not need to in order to serve his employers’ purposes.
Flexner’s attack, stepped up by the AMA’s Council on Medical Education and its State medical boards, closed 25 schools in three years, with more over the years to come, and cut the number of students attending the remaining schools in half. All non-mainstream practitioners were targeted. For example, from the early part of the century, consumers preferred optometrists to ophthalmologists on grounds of both service and price. Yet the AMA derided the optometrists as quacks, and in every State, the AMA-dominated medical boards imposed restrictions on these and other “sectarian” practitioners when they could not outlaw them entirely.
Homeopathy still had a remnant of about 13,000 practitioners, supported by a fiercely loyal customer base, but decades of well-financed attacks had taken their toll. The battle-weary Homeopaths eventually gave in, conceding major parts of their doctrine, but the AMA was not satisfied with anything less than total victory, and today, American Homeopaths practice mostly underground.
With its monopoly, the AMA sought to fix prices. Early on, the AMA had come to the conclusion that it was “unethical” for the consumer to have any say over what he paid. Common prices were transmuted into professional “fees,” and the AMA sought to make them uniform across the profession. Lowering fees and advertising them were the worst violations of medical ethics and were made illegal. When fees were raised across the board, as they frequently could be with decreased competition, it was done in secret.
The AMA, in its constant quest for higher incomes through lower competition, also battled churches and other charities that gave free medical care to the poor. Through lobbying, it attempted to stamp out what it called “indiscriminate medical charity.” A model 1899 law in New York put the control of all free health care under a State Board of Charities dominated by the AMA. To diminish the amount of free care, the board imposed fines and even jail terms on anyone giving treatment without first getting the patient’s address and checking on his financial status.
Then there was the problem of pharmacists selling drugs without a doctor’s prescription. This was denounced as “therapeutic nihilism” and the American Pharmaceutical Association, controlled by the AMA, tried to stamp out the low-cost, in-demand practice. In nearly every State, the AMA secured laws that made it illegal for patients to seek treatment from a pharmacist. But still common were pharmacists who refilled prescriptions at customer request. The AMA lobbied to make this illegal, too, but most State legislatures wouldn’t go along with this because of constituent pressure. The AMA got its way through the federal government, of course.
There were other threats that also had to be put down: “nostrums,” treatments that did not require a visit to the doctor, and midwives, who had better results than doctors. Also a danger was “contracting out,” a company practice of employing physicians to provide care for its workers. This was “unethical,” said the AMA, and should be illegal. Fraternal organizations that contracted out for their members were put out of business with legislated price controls, and hospitals – whose accreditation the AMA controlled – were pressured to refuse admittance to patients of contracting-out doctors.
By the end of the Progressive Era, the orthodox profession as led by the AMA had triumphed over all of its competitors. Through the use of government power, it had come to control education, licensure, treatment, and price. Later it outcompeted fraternal medical insurance with the State-privileged and subsidized Blue Cross and Blue Shield. The AMA-dominated Blues, in addition to other benefits, gave us the egalitarian notion of “community rating,” under which everyone pays the same price no matter what his condition.
Thus, more importantly than anything else, the federal government needs to lift all federal laws, rules, and decrees that restrict the supply of health care services and stifle competition between health care providers. Regulatory hurdles for alternative medicine and services performed by non-doctors, such as registered nurses need to be removed.
There is a hole slew of health services that can be performed without knowledge of biochemistry, neural sciences, or similar fields. Lots of diseases can be diagnosed rather easily and treated just as easily.
Interestingly, nurses are very popular with many people because they are known to take a more holistic and personable approach to dealing with patients’ concerns.
Anyone in favor of the status quo, such as AMA members will come up with an entire list of arguments against such changes in the system. This should not surprise us, as I outlined above: There will always be a small group of entrepreneurs that benefits from the protection awarded against competition and voluntary action on the part of consumers and new entrepreneurs (in this case alternative practitioners and nurses).
There will be the most popular argument of safety and protection against quacks. But how about we let the consumers and independent rating agencies make this decision? What gives us the right to force them into arrangements? If these potential competitors are all quacks, then surely their customers and professional raters will post horrible reviews on Yelp.com and other sites and drive tons of traffic back to AMA approved doctors. On top of that, how do we know the state commissioners are such better raters than the customers and competing agencies?
To bring up an example in a different field, when you are looking for a good restaurant, whom do you trust more? Private raters such as Zagat and Michelin, or the FDA? Who trusts a monopoly institution which has no pressure of performing over a profit seeking entrepreneur whose very existence depends upon making successful recommendations? I will not here delve into the terrible judgment that the FDA has displayed again and again when it came to approving drugs, and the many people whose lifes have been destroyed, if not taken, due to malpractice on the part of these bureaucrats.
In fact, ironically, under free competition consumers would be a lot more safe than they are under a system where the current sellers are constantly protected against and unchecked by potential competitors. If state licensure were so indispensable, why don’t we do away with free competition in all other fields? Why not let all services be sanctioned by a federal board and protected against more apt service providers? Because it doesn’t make any sense at all.
All other arguments you will hear against free enterprise from those who are privileged by a government enforced monopoly can be debunked just as easily and need not concern us at this very point.
2. Legalize importation of drugs
What I wrote regarding doctors and the AMA applies almost verbatim to pharmaceuticals and the The Food and Drug Administration (FDA). Pharmaceutical corporations in the US have, over decades, pushed through federal regulation that shields them from competition. The Food and Drug Administration (FDA) acts as their protector and deliberately restricts the supply of pharmaceuticals that are available on the market, all in the name of “drug safety”.
An important part of limiting the supply of goods is always restricting importation from abroad. Federal legislation, as per US Code Title 21, 384 prohibits and restricts the importation of prescription drugs from abroad. Where it permits it, it imposes burdensome rules and restrictions, the compliance with which costs time and money which, again, makes these goods more expensive to the consumer than they could be.
The quickest and most effective way to put an end to this would be to lift the ban on the importation of drugs from abroad. If our domestic drugs are so much better an safer, then surely the domestic producers should be delighted about an influx of inferior products which will only reaffirm their position as producers of quality. But what if the imported drugs are actually just as good, or better, or cheaper than domestically produced drugs. Well, this would precisely constitute the other piece of our puzzle.
While the AMA has, through federal and state legislation, restricted the number of practitioners available, and prolonged the process of educating such professionals, the pharmaceutical corporations have, through the FDA, limited the amount of drugs on the market and prolonged their approval processes, shutting out small innovative entrepreneurs with less means at their hands, and foreign producers who might have better and certainly cheaper drugs to offer.
Allow at least pharmacists and doctors to import pharmaceuticals from abroad, and prices for such goods will fall rapidly, getting us closer to a state of affairs where medication is affordable to everybody.
3. Allow Medicare/-aid to negotiate prices with drug companies
The federal government collects Medicare and Medicaid taxes from employees to pay for these two programs. This in itself is bad enough. But at the very least, if they do so, they should assure us that they put this tax money to proper use and that they will try to get the best deals out of any purchases they make on our behalf. This in itself is virtually impossible due to the Trouble With Bureaucracy. But it is downright destructive if the law completely prohibits Medicare/-aid purchasers from negotiating with the drug companies. Such is unfortunately the case, due to a program called Medicare Part D:
By the design of the program, the federal government is not permitted to negotiate prices of drugs with the drug companies, as federal agencies do in other programs. The Veterans Administration, which is allowed to negotiate drug prices and establish a formulary, pays 58% less for drugs, on average, than Medicare Part D. For example, Medicare pays $785 for a year’s supply of Lipitor (atorvastatin), while the VA pays $520. Medicare pays $1,485 for Zocor, while the VA pays $127. Former Congressman Billy Tauzin, R-La., who steered the bill through the House, retired soon after and took a $2 million a year job as president of Pharmaceutical Research and Manufacturers of America (PhRMA), the main industry lobbying group. Medicare boss Thomas Scully, who threatened to fire Medicare Chief Actuary Richard Foster if he reported how much the bill would actually cost, was negotiating for a new job as a pharmaceutical lobbyist as the bill was working through Congress.
This creates nothing but a giant bonanza for these corporations, and ends up driving up costs to everyone.
Change these nonsensical laws, allow the DHS to negotiate drug prices and another important step toward lowering health care cost is taken.
Moving forward
There are many other things that can and must be done in the long run. The government will have to get out of the way of restricting competition between health insurance providers across state borders, Medicare and Medicaid will have to be phased out for new workers who join the workforce, by enabling them to choose between paying taxes or paying the money into his own health savings account. And there are probably myriad other things that the government needs to be removed from in order to allow for a dynamic and efficient health care market.
But without addressing the 3 steps I outlined above, all other efforts will be completely and absolutely futile. Without addressing the root of high health care costs, it does not matter whether we let government alone take care of health insurance, or whether we completely liberalize the health insurance market. Nothing would change substantially. We would still be paying high premiums that go into a pool that pays for overly expensive health care products and services. We would still be faced with an inherent shortage of health care goods and services.
If the cost for medical products and services were to come down significantly, it won’t even be necessary to have an insurance for regular treatments and checkups. Most expenses could be paid out of pocket. There exists no other market where routine procedures and operations are so expensive that people need insurance to cover them. Insurance, by its very definition and in every other field, is supposed to be for rare and catastrophic events only.
Only by tackling the root structural, regulatory, and political causes of our problems will we make the dream of affordable health care for everyone a reality.
Update: I would like to add a 4th point: Repealing the Kefauver Harris Amendment from 1962. I outline why in more detail here:
It is being estimated that drugs could cost about 80%(!!) less if it weren’t for these burdensome regulations. In addition to that, innovation has been stifled immensely. Most people don’t even begin to realize what a great health system would be possible if our government simply reduced its excessive meddling.
Community Activity- EconomicsJunkie posted an update in the group Philosophy: I changed point 8 in my UPB summary as follows, after some feedback: 8. Universally [...] April 25, 2010
- EconomicsJunkie and Will Moyer are now friends April 22, 2010
- Bivi joined the group Philosophy April 22, 2010
- EconomicsJunkie posted an update in the group Philosophy: I participated in the last call in show on Freedomain Radio ... http://www.freedomainradio.com/Traffic_Jams/FDR_1644_Sunday_Show_18_Apr_2010.mp3 - had [...] April 21, 2010
- Will Moyer became a registered member April 20, 2010
Recommended Books
-
