"The prevailing attitude of the American people is that everyone has a right to medical care. This is an intellectual error that will lead us down the path of destroying what is good in he current system and replacing it with a system
that will be terrible for everyone. The supposed right to medical care can only be guaranteed at others' expense. The transfer can only be arranged by force. This creates oppressive bureaucracies, encourages overutilization of
resources, and leads to technological stagnation and inevitibly to rationing and deprivation. Its true that everyone has a right to pursue
medical care without being hindered by government policies. But
that is not the system we have today. Today's messed-up medical system is a result of forty years of government interference in the process. Regulations, inflation, tax laws, and federal mandates to provide care through
corporate-run HMOs, intereference in providing insurance, massive subsidies, and licensing have all played a negative role in the delivery of medical care in the United States.
The zealots now demanding even more government involvement do not realize that those in need and the people who require better care are victims of previous misdirected policies. All the well-intentioned humanitarian programs are of no benefit if they are based on false premises.
Can one imagine what it would be like, if thirty years ago, for national security reasons, the U.S. government took responsibility for guaranteeing that every man, woman, and child had a cell phone, called it a right, and
justified it for national defense purposes? It would have been a nightmare. Quality would have never improved, prices would be sky high, and distribution lousy. But we now have affordable cell phones and the prices will
continue to drop as more and more competition is encouraged by the market.
Its only through government interference thata hospital can charge $1,000 for a toothbrush and get paid for it. In the same way, its only the Department of Defense that pays $700 for a $5 hammer. Its the nature of government to produce low-quality products and services at extremely high prices. Socialist, bureaucratic, and interventionist economic systems inevitably injure most of the people who are supposed to be helped, and at a very high cost.
Modern Technology has been with us for several decades. It has been a real asset to all industries and has helped to keep prices in check as quality improved. This has been especially true in electronics like cell phones, TV's,
and computers. Tough medicine has greatly benefitted from new technology, the cost of medicine, instead of dropping, has significantly increased.
There's a reason for this. Managed care and government interference for the past fourty-five years, with huge amounts of government money injected into the system, achieved only higher prices and poorer distribution of all
The system of government managed care has caused doctors, medical insurance companies, managed care companies, hospitals, and especially patients to be unhappy with the system. Very few are satisfied. Even those with Medicare or Medicaid realize that both programs are bankrupt and are unsustainable under the current conditions.
Important in this debate over medical care is a proper understanding of what insurance is and is not(see the section on insurance for a more in-depth discussion). True insurance measures risk, and is an important tool for
free markets to function. The current use of the word "insurance" in dealing with government-managed health care has been deliberately substituted for government social welfare schemes. Since the majority of Americans see medical care as a right, the assumption is that "insurance" is a right and thereby qualifies for total government control.
Authentic price competition exists in providing car insurance for all Americans. It's sold across state borders, and different policies are available. Owners of older cars frequently drop collision insurance, and the amount of
coverage varies. Though auto insurance is required by the states, its a far cry from required health insurance. Since government has placed so many mandates on the health insurance companies and doesn't permit market-based
pricing in either premiums or service delivery, the services they offer can no longer qualify as insurance. Its obvious to me what would happen if similar rules were placed on the purchase of car insurance. Suppose the
benevolent planners decided that a car was crucial to hold a job, and so the job provided car insurance, which was, in turn, declared a right. It would then be quite logical to say that a person couldn't get to work unless the
insurance companies paid for all services, gasoline, and all repairs. Older cars that went ten miles to the gallon and needed constant repairs would not be charged more, or it would be claimed that the insurance companies were
discriminating against a "precondition" and the poor. Once the "insurance" was provided--with government subsidies--every little problem would be taken care of, whether
it was critical or not. It would invite abuse of the system. Excess fuel usage, repairs, and even fraud would prompt a need for thousands of bureaucrats to monitor the whole program, and people would be required to get prior
approval. But then again, it is claimed that by rooting out waste and fraud, the government could save enough money to pay for the program and have enough money left over to pay for the national debt. Suddenly, all the problems are miraculously solved!
Obviously car insurance companies could not survive if they were forced to repair every car that was damaged or non-functional prior to the purchase of insurance. How efficient would it be for government-mandated food insurance, including first dollar purchases, to assure good eating habits to provide good health? It would be argued that it would "save" billions by promoting good health and eliminating obesity. Reasonable people would laugh at such a proposal, and yet that's parallel to what is being proposed for the medical care system.
Once insurance companies are required by the government to insure against preconditions, its no longer insurance--it's a social welfare mandate that will result in bankrupting the insurance companies, or they will be
bailed out by a government subsidy, further bankrputing the government. So far no one has mandated insurance companies sell fire insurance to a person whose house is on fire, or insurance on a beach house once the hurricane
is a few miles offshore. Most people understand this, but for some reason they refuse to draw the analogy to medical insurance.
True deregulation of the insurance industry would legalize various options that would appeal to individuals who don't want to pay for care they do not need. Instead of making all preconditions insurable, adjusting coverage to
the wishes of the individual would drive costs down. Rating smokers and motorcyclists and overweight hypertensives makes economic sense. Why should those who have better health habits pay more to take care of those who don't? When buying home insurance the customer picks exactly what he wants covered and fits it to his budgetary needs. This discretion for productive purposes must be allowed in buying medical insurance. The interstate commerce clause was designed to allow all goods and services and people to cross state lines and not be hindered, as current laws have done for the sale of medical insurance.
Mandating first-dollar expenditures to be covered by medical insurance, something that has been going on for years, can't work. It only raises the cost of insurance. Coverage for office visits and prescription drugs are
though to be wonderful cure-alls, but they aren't. They have to be paid for by higher insurance premiums. Medical insurance has turned into a system of prepaid services dictated by government rules, dominated by a convoluted
system of HMOs and PPOs, and has its roots in the Nixon administration of the early 1970's.
I entered the medical field when government involvement was low and third-party payments were mostly for hospital care and emergencies, not for first-dollar expenses. For the most part charges were always a minimum. With managed care and the first dollar payment, the charges are always the maximum because there is no incentive for either the patients or the providers to keep the charges down. Third-party payments encourage abuse, which prompts price controls. All price controls lead to shortages. Today, we have high costs, controls, and a lot of unhappy people. More government only means the problems will get worse.
Someone might say medical insurance can't be compared to care insurance since medical care is vital, a car isn't. In fact, the greater importance of anything, the stronger the reason not to depend on a government redistributionist
A government system of anything has a nearly perfect record of failure--whether its stopping war, preserving liberty, guaranteeing sound money, or generating economic prosperity.
I grant you the emotional argument for government intrusion in medical care is different from that of car insurance, but the two sectors are operating under the same set of economic laws. Those economic laws give us cheap
cell phones, TVs, and computers with constant improvement in quality in every sector that is more or less free of direct government management. The same system could give us quality health care at decreasing costs. Congress, the President, and the courts may tamper constantly with the laws of the land to favor the special interests. They also try to interfere with the laws of economics, but those laws can't be repealed, and since that is not understood we all suffer the consequences.
Politicians and their constituents are always trying to circumvent the annoying rules of the market, but that only brings about the opposite of the results they seek. Instead, worse conditions result for the very people
they're trying to provide services for qithout requiring that they pay for them.
The misunderstanding about the notion of individual rights and insurance contributes significantly to the medical care crisis and the economy in general. Most Americans know there are ongoing crisies, but some people suffer much
more than others. Those who have not been hit hard and those who are quite happy with their medical care whether its coming from Medicaid, Medicare, the VA, or active military or private insurance should be concerned as well because government distortion of distribution and costs is ingrained withing the system. The system is fragile as is the economy, and a lot more people are going to become unhappy with their current coverage. One main reason is that inflation is alive and well in this country.
Patients most common complaint is that medical care costs too much. We hear about this more often than we hear about complaints about the quality of care. Mismanagement by government surely does push costs up, as do AMA and government restrictions on competition, and old-fashioned inflation is a major contributor as well.
Inflating the money supply never pushes all wages and prices up equally. If it did, there would be a lot less complaining about it. Of course, malinvestment would still be a serious concern. Some prices go up and others can
actually drop. Those areas that governments "stimulate" by additional legislation will cause greater inflationary pressures in those areas, such as housing, education, and medical care. The escalating cost of medical care cannot
be completely solved unless the source of inflation and excessive government mandates are addressed.
Even with all of those changes, there must still be some attention given to reforming tort law. Defensive medicine is epidemic and is unbelievably expensive. Tort law today benefits most the trial lawyers and only helps injured
patients modestly or not at all. Doctors' additional expenses and pressure to run every test conceivable contribute much to medical care cost increases, especially amplified with third-party payers.
Too often doctors and hospitals are successfully sued for injuries when no one with certainty knows who is to blame. Conservative react by hastily endorsing national tort reform with restrictions on awards. Constitutionally,
this is the wrong approach. Morally, injured patients deserve compensation. Only a free market approach can solve this dilemma.
Legalizing contracts could go a long way to solving this problem. Today, an agreement between patients and doctors on limiting liability and establishing third-party arbitration does not hold up in court. Antitrust laws
prohibit doctors from working together to devise contracts for a no-fault type of insurance that would exclude the lawyers from ripping off the system.
Unfair arbitration and settlements would prompt patients to look for only those who offer fair settlements. When we buy a car, most purchasers know exactly what the warranty promises and how long it lasts and how much an extended warranty costs. With no lawyer fees, cases would be settled quickly and patients would recieve benefits. Criminal acts obviously would not be protected, only bad outcomes.
In obstetrics, the doctor is blamed for all bad outcomes regardless of fault and held responsible for any problem developing for twenty-one years. A policy for nine months and delivery paid for by a doctor and patient to
compensate for any bad outcome is a policy that could probably evolve. Trial lawyers would be hysterical if this free market solution ever became legal. Tax credits should be offered for all medical care costs, including insurance for care as well as problems of shared liability. What if every fender-bender car accident rewuired a trial to determine the degree of injury and benefits and faults? Car insurance companies work out the details rather quickly without trial lawyers receiving the greatest benefit. There must be more competition for individuals entering into the medical field.
Licensing strictly limits the number of individuals who can provide patient care. Many of these problems trace to the Flexnor report of 1910,
which was financed by the Carnegie Foundation and strongly supported by the AMA. Many medical schools were closed and the number of doctors was drastically reduced. The motivation was to close down medical schools that catered to women, minorities, and especially homeopathy. We continue to suffer from these changes, which were designed to protect physicians' income and promote allopathic medicine over the more natural cures and prevention of homeopathic medicine.
The point is not to endorse one or another theory of medicine. The point is that we need consumer choice and the process of market-based improvements to take over. To this end, we need to remove any obstacles for people seeking holistic and nutrional alternatives to current medical care. We must remove the threat of further regulations pushed by the drug companies now working worldwide to limit these alternatives. True competition in the delivery of medical care is what is needed, not more government meddling.
Obama has been accused of pushing for socialized medicine. This is not exactly true. Maybe in time it will become a total government program. But actually his reforms are similar to the reforms pushed by the Republicans over the
decades. The Republican Party under Eisenhower established the Department of Health, Education, and Welfare in the 1950s. Nixon pushed through managed care ERISA laws in the early 1970s after a decade of Democrats implementing their Medicare and Medicaid programs with strong Republican support. The Reagan administration expanded medical transfer payments. Prescription drug programs were passed by the George Bush administration and a Republican Congress.
And now its a Democrats' turn once again. Republicans shout "socialized medicine" as they become the nominal opponents of Obama Care. A better description of what has helped over the past forty to fifty years is the takeover of the medical care by the corporations. We now have a form of corporatism veering toward fascism. We all know about the military-industrial complex; few understand the danger of the medical-industrial complex. Though we hear rhetoric condemning the drug and insurance companies, you can be sure that no changes will be made in the system without prior approval of the biggest players in the industry, Regardless of party, corporate special interests are
protected. This involves medical management companies, hospitals, organized medicine like the AMA, drug companies, and insurance companies. It is these corporate entities that must come to Washington, spending millions on lobbying efforts to protect their financial interests; concern for the patient is a smokescreen. Corporations, unions, and governments stand between the patients and their doctors regardless of motivation. The quality and cost of medical care can never be improved by forcing on the American people greater debt-financed involvement in medical care. Medicare and Medicaid are already bankrupt. Creating a new trillion-dollar system will
only hasten the day of reckoning.
Dr. Ron Paul,
Feel free to discuss or ask questions.