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March 2, 2010

Alice in Health Care, Part I    (Go to:    Part I    Part II     Part III     Part IV )

Thomas Sowell

Most discussions of health care are like something out of Alice in Wonderland.

What is the biggest complaint about the current medical care situation? "It costs too much." Yet one looks in vain for anything in the pending legislation that will lower those costs.

One of the biggest reasons for higher medical costs is that somebody else is paying those costs, whether an insurance company or the government. What is the politicians' answer? To have more costs paid by insurance companies and the government.

Back when the "single payer" was the patient, people were more selective in what they spent their own money on. You went to a doctor when you had a broken leg but not necessarily every time you had the sniffles or a skin rash. But, when someone else is paying, that is when medical care gets over-used — and bureaucratic rationing is then imposed, to replace self-rationing. Money is just one of the costs of people seeking more medical care than they would if they were paying for it with their own money. Both waiting lines and waiting lists grow longer when people with sniffles and minor skin rashes take up the time of doctors, while people with cancer are waiting.

In country after country, the original estimates of government medical care costs almost always turn out to be gross under-estimates of what it ultimately turns out to cost.

Even when the estimates are done honestly, they are based on how much medical care people use when they are paying for it themselves. But having someone else pay for medical care virtually guarantees that a lot more of it will be used.

Nothing would lower costs more than having each patient pay those costs. And nothing is less likely to happen.

One of the big costs that have actually forced some hospitals to close is the federal mandate that hospitals treat everyone who comes to an emergency room, whether they pay or not. But those who talk about "bringing down the cost of medical care" are not about to repeal that mandate. Often they want to add more mandates.

The most fundamental issue is not whether treating everyone who comes to an emergency room is a good policy or a bad policy in itself. If it is a good policy, then the federal government should pay for what it wants done, not force other institutions to pay for it. Then let the voters decide at the next election whether that is what they want their tax money spent for.

Confusion between costs and prices add to the Alice in Wonderland sense of unreality.

What is called lowering the costs is simply refusing to pay all the costs, by having the government set lower prices, whether for doctors' fees, hospital reimbursements or other charges. Surely no one believes that there will be no repercussions from refusing to pay for what we want. Some doctors are already refusing to accept Medicare or Medicaid patients because the government's reimbursement levels are so low.

Similarly, if it costs a billion dollars to create one new pharmaceutical drug, then either we are going to pay the billion dollars or we are not going to keep on getting new pharmaceutical drugs produced. There is no free lunch.

Virtually everything that is proposed by those who are talking about bringing down the costs of medical care will in fact raise those costs. Mandates on insurance companies? Why are insurance companies not already doing those things that new mandates would require? Because those things raise costs by an amount that people are unwilling to pay to get those benefits.

If not, it would be a slam dunk for the insurance companies to add those benefits to the policies and raise the premiums to cover them. What politicians want to do is look good by imposing mandates, and then let the insurance companies look bad by raising the premiums to cover the additional costs.

It is a great political game, but it does nothing to lower medical costs.

Politicians who want a government monopoly on health insurance can easily get it, just by making it impossible for private insurance companies to charge enough to cover the costs mandated by politicians. The "public option" will then be the only option — which is to say, we will no longer have any real option.




March 3, 2010

Alice in Health Care, Part II    (Go to:    Part I    Part II     Part III     Part IV )

Thomas Sowell

What is most like Alice in Wonderland is discussing medical care reform in the abstract, as if there are not already government-run medical care systems in this country and elsewhere.

Yet there seems to be remarkably little interest in examining how government-run medical care actually turns out — medically and financially — whether in Medicare, Medicaid, Veterans Administration hospitals in this country, or in government-run medical systems in other countries.

We are repeatedly being told that we need to have a government-controlled medical care system, because other countries have it — as if our policies on something as serious as medical care should be based on the principle of monkey see, monkey do.

By all means look at other countries, but not just to see what to imitate. See how it actually turns out. Yet there seems to be an amazing lack of interest in examining what government-controlled medical care produces.

While our so-called health care "summit" last week was going on, British newspapers were carrying exposes of terrible, and often deadly, conditions in British hospitals under that country's National Health Service. But this has not become part of our debate on what to expect from government-controlled medical care.

Such scandals are an old story under the National Health Service in Britain, one repeatedly producing fresh scandals that their newspapers carry, but ours ignore.

In addition to a whole series of National Health Service scandals in Britain over the years, the government-run medical system in Britain has far less high-tech medical equipment than there is in the United States. Neither in Britain, Canada, nor in other countries with government-run medical care systems can people get to see doctors, especially surgeons, in as short a time as in the United States.

It is not uncommon for patients in those countries to have to wait for months before getting operations that Americans get within weeks, or even days, after being diagnosed with a condition that requires surgery. You can always "bring down the cost of medical care" by having a lower level of quality or availability.

But, again, you may never learn any of this by following most of the American mainstream media. It is not that they don't make comparisons between medical care in different countries. But they tend to feature news that will promote government-controlled care.

One of the statistics they spin endlessly is that life expectancy in some countries with government-controlled medical care is higher than in the United States. What they don't tell you is that, in some of these countries, all the infants that die are not included in infant mortality statistics, as they are in the United States.

More important, both political and media supporters of government-controlled medical care consistently confuse medical care with health care.

Much, if not most, of health care depends on what individuals do in the way they live their own lives — including eating habits, alcohol intake, exercise, narcotics and homicide. A study some years ago found that Mormons live a decade longer than other Americans. But nobody believes that Mormons' doctors are that much better than other doctors. When you don't do a lot of things that shorten your life, you live longer. That is not rocket science.

Americans tend to have higher rates of obesity, narcotics use and homicide than people in some other countries. And there is not much that doctors can do about that.

If those who make international comparisons were serious, instead of clever, they would compare the things that medical science can have a great effect on — cancer survival rates, for example. Americans have some of the highest cancer survival rates in the world, and for some particular cancers, the highest.

When you can get to see a doctor faster, and get treatments underway without waiting for months, while the cancer grows and spreads, you have a better chance of surviving. That, too, is not rocket science. But it is also something that you are not likely to see featured in most of the media, where people are promoting their own pet notions and agendas, instead of giving you the facts on which you can make up your own mind.




March 4, 2010

Alice in Health Care, Part III    (Go to:    Part I     Part II     Part III    Part IV )

Thomas Sowell

With all the controversies, charges, counter-charges and buzzwords swirling around the issue of medical care in the United States, there is a lot to be said for going back to square one and asking just what is the fundamental problem.

The quality of the medical care itself is not the problem. Few — if any — countries can match American medical training, medical technology or the development of life-saving pharmaceutical drugs in the United States. Most countries with government-controlled medical care cannot come close to matching how fast an American can get medical treatment, particularly from specialists.

Political hype is no reason to throw all that away. In fact, policies based on political hype over the years are what have gotten us into what is most wrong with medical care today — namely, the way it is paid for.

Insurance companies or the government pay directly for most of the costs of most medical treatment in the United States. That is virtually a guarantee that more people will demand more medical treatment than they would if they were paying directly out of their own pockets, instead of paying indirectly in premiums and taxes.

Since people who staff either insurance company bureaucracies or government bureaucracies have to be paid, this is not bringing down the cost of medical care, but adding to it.

What also adds to the costs are politicians at both state and federal levels who mandate additional benefits to be paid for by insurance companies, thereby driving up the cost of insurance.

If medical insurance simply covered risks — which is what insurance is all about — that would be far less expensive than covering completely predictable things like annual checkups. Far more people could afford medical insurance, thereby reducing the ranks of the uninsured.

But all the political incentives are for politicians to create mandates forcing insurance companies to cover an ever increasing range of treatments, and thereby forcing those who buy insurance to pay ever higher premiums to cover the costs of these mandates.

That way, politicians can play Santa Claus and make insurance companies play Scrooge. It is great political theater. Politicians who are pushing for a government-controlled medical care system say that it will "keep insurance companies honest."  The very idea of politicians keeping other people honest ought to tell us what a farce this is. But if we keep buying it, they will keep selling it.

One of the ways of reducing the costs of medical insurance would be to pass federal legislation putting an end to state regulation of insurance companies. That would instantly eliminate thousands of state mandates, which force insurance to cover everything from wigs to marriage counseling, depending on which special interests are influential in which states.

It would also promote nationwide competition among insurance companies — and competition keeps prices down better than politicians will. Moreover, competition can bring down the costs behind the prices, in part by forcing less efficient insurance companies out of business.

Another very real and very big cost behind the high prices for medical treatment are the many forms of expensive "defensive medicine" that doctors and hospitals have to practice, in order to avoid being sued by unscrupulous lawyers. Expensive and unnecessary tests and treatments cost even more than the multimillion dollar awards that clever lawyers can get from gullible juries.

Tightening up the laws, so that junk science does not prevail in courts, would create some real savings in medical costs. But, since plaintiff's lawyers are big financial contributors to the Democratic Party, that is unlikely to happen during this administration.

Finally, there are costs that are high because people want medical care in more comfortable surroundings — a private room rather than a bed in a ward, for example — and are willing to pay for that. This is more common among Americans.

There is no reason for others to interfere with that, just because of a mindless mantra of "bringing down the cost of medical care" or class warfare rhetoric about "Cadillac health plans."




March 8, 2010

Alice in Health Care, Part IV    (Go to:    Part I     Part II     Part III    Part IV )

Thomas Sowell

Some years ago, one of my favorite doctors retired. On my last visit to his office, he took some time to explain to me why he was retiring early and in good health.

Being a doctor was becoming more of a hassle as the years went by, he said, and also less fulfilling. It was becoming more of a hassle because of the increasing paperwork, and it was less fulfilling because of the way patients came to him.

He was currently being asked to Xerox lots of records from his files, in order to be reimbursed for another patient he was treating. He said it just wasn't worth it. Whoever was paying — it might have been an insurance company or the government — would either pay him or not, he said, but he wasn't going to jump through all those hoops.

My doctor said that doctor-patient relationships were not the same as they had been when he entered the profession. Back then, people came to him because someone had recommended him to them, but now increasing numbers of people were sent to him because they had some group insurance plan that included his group.

He said that the mutual confidence that was part of the doctor-patient relationship was not the same with people who came to his office only because his name was on some list of eligible physicians.

The loss of one doctor — even a very good doctor — may not seem very important in the grand scheme of heady medical care "reform" and glittering phrases about "universal health care." But making the medical profession more of a hassle for doctors risks losing more doctors, while increasing the demand for treatment.

A study published in the November 2009 issue of the Journal of Law & Economics showed that a rise in the cost of medical liability insurance led to more reductions of hours of medical service supplied by older doctors than among younger doctors.

Younger doctors, more recently out of medical school and often with huge debts to pay off for the cost of that expensive training, may have no choice but to continue working as hard as possible to try to recoup that huge investment of money and time.

Younger doctors will probably continue working, even if bureaucrats load them down with increasing amounts of paperwork and the government continues to lower reimbursements for Medicare, Medicaid and — heaven help us — the new proposed "universal health care" legislation that is supposed to "bring down the cost of medical care."

The confusion between lowering costs and refusing to pay the costs can have a real impact on the supply of doctors. The real costs of medical care include both the financial conditions and the working conditions that will insure a continuing supply of both the quantity and the quality of doctors required to maintain medical care standards for a growing number of patients.

Although younger doctors may be trapped in a profession that some of them might not have entered if they had known in advance what all its pluses and minuses would turn out to be, there are two other important groups who are in a position to decide whether or not it is worth it.

Those who are old enough to have paid off their medical school debts long ago, and successful enough that they can afford to retire early, or to take jobs as medical consultants, can opt out of the whole elaborate third-party payment system and its problems. What the rising costs of medical liability insurance has already done for some, other hassles that bureaucracies and politicians create can have the same effect for others.

There is another group that doesn't have to put up with these hassles. These are young people who have reached the stage in their lives when they are choosing which profession to enter, and weighing the pluses and minuses before making their decisions.

Some of these young people might prefer becoming a doctor, other things being equal. But the heady schemes of government-controlled medicine, and the ever more bloated bureaucracies that these heady schemes will require, can make it very unlikely that other things will be equal in the medical profession.

Paying doctors less and hassling them more may be some people's idea of "lowering the cost of medical care," but it is instead refusing to pay the costs — and taking the consequences.



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