America has produced the most advanced medical technology the world has ever seen. All around us there are more and more advancements each year. Already there are things like ‘clot buster’ drugs which have helped patients to survive heart attacks, which in the past would have killed them. There are new forms of keyhole surgery to help patients with appendicitis, allowing them to be treated and discharged in 24 hour or less, in the past this could have taken at least a week. America has improved tremendously in the advancement of cancer treatment, allowing bicyclist Lance Armstrong to live through a testicular cancer which would have killed him had he lived 40 years ago. (Zinzer and Hsieh)
The problem lies in many Americans getting access to this health care, and deciding what the best way to distribute the care is. With health insurance getting higher and higher, and medical costs are soaring. Medicines are becoming too expensive to buy and Medicare is not covering many of the elderly enough to pay for their health costs. Geri Barbera, a 79 year old grandmother, had to dip into her and her husband’s savings as well as sell their truck just to be able to afford the extra costs in medicine she needed for her husband’s treatments, Alzheimer’s, and prescription medicine. (Barbera) One of the many things that compound this problem of Americans not having access to the treatment they need is a decline of medical doctors and overall medical care.
Decline of Medical Doctors
Currently there is a problem with burn out in doctors, including many doctors not wanting to see patients who are now on Medicaid and Medicare. The American Medical Association’s survey indicates a massive 90% of doctors turning down patients who are on Medicaid, making the shortage of doctors available to those people even higher, while at the same time 99% will see anyone on private insurance. Lin Zinser a 20 year litigator in the medical and business field, and Paul Hsieh A medical doctor in Denver Colorado and co founder of Freedom and Individual Rights in Medicine foundation (FIRM) wrote an article titled Moral Health Care vs. Universal Health Care. They had this to say about a decrease in doctors.
“According to a recent survey of doctors, 30 to 40 percent of practicing physicians would not choose to enter the medical profession if they were deciding on a career again, and an even higher percentage would not encourage their children to pursue a medical career.” (Zinzer and Hsieh)
Health Care Spending
Right now the money spent on health care in America is totaling around 17% of our entire economy, which according to many economists like Walter Williams, will increase to at least 20 percent by 2019. Also in the report by Zinser and Hsieh on health care, “annual spending [is] consistently growing faster than the overall economy… because of skyrocketing health care costs, the U.S. federal Medicare trust fund is expected to go bankrupt in 2019… potentially leaving millions of elderly American’s without health insurance coverage.” (Zinzer and Hsieh)
Main Proposed Solutions
The two proposals in America are to make all Americans purchase insurance through government mandates, and those who are unable to purchase their own insurance will receive subsidies from the government. Or the other proposal is to have a ‘single-payer’ system in which the government is the only insurance company, and all private insurance companies are to be utterly wiped out. According to the executive director of Americans for Free Choice in Medicine and author Richard E. Ralston in his article titled Free-Market Health Insurance is Not the Enemy, “Insurance companies do not pay all of every claim, but neither does Medicare. Yet history indicates that Medicare and Medicaid spending is out of control.” (Ralston). There are many problems in our current system; however the concept that what we currently have is a ‘free market’ is vastly mistaken.
BACKGROUND: HISTORY OF OUR CURRENT MEDICAL INDUSTRY
There are many misconceptions of the medical industry, such as the difference between ‘cost’ and ‘price’, the difference between ‘health care’ and ‘health insurance.’ First, is the difference between price and cost. Prices pay for costs, yet if someone were to ask a politician they might hear them say “I will bring down the cost of medical care.” This according to author and economist Thomas Sowell simply means, “… A quick fix that will win votes at the next election, regardless of what the repercussions are.” Because prices cover costs, if the prices a doctor charges does not cover the cost this will always lead to a decline in supply and in the quality of the service and or products. In Dr. Sowell’s article The Cost of Medical Care he says “the average medical student graduates with a debt of more than $100,000. The cost per doctor running an office is more than $100 an hour. The average cost of developing a new pharmaceutical drug is $800 million. These are among some of the costs of medical care.” (Sowell)
Secondly is the difference between health care and health insurance. Health insurance helps to pay for catastrophic health care costs, such as cancer, diabetes, heart attacks and other problems that cause long hospital stays and extreme prices. In the past when someone were injured they would simply go to the doctor and pay cash for service, or the hospital would put them on a payment plan. Those who could not afford even the payment plan had the option to use some of the many charitable organizations. What America has now is the idea that health insurance should cover the cost of all their medical needs, including normal checkups with their doctors. Again this misses the point of insurance, which is designed to spread risk. Most people would not say their house insurance should cover everything from lawn mowing services to fixing shingles and painting their fence. Home owners insurance merely protects against catastrophic incidents such as hurricanes, floods, fires. Health insurance is the same thing.
Government Interference in the Health Insurance Industry
There are many regulations, mandates, and unequal taxation of health insurance companies that give the appearance of a free market but which in actuality is far from it. Insurance companies are taxed on the premiums they collect but are in many cases also ordered to set aside a certain amount of reserves to cover future claims.
BLUE CROSS AND BLUE SHIELD
One problem happened when during the great depression some of these insurance companies were exempt from these tax laws. They were called; Blue Cross and Blue Shield. These two organizations successfully lobbied the government to be considered ‘non-profit’ and thus exempt from many of the tax laws. The two ‘Blue’ companies offered community rating which allowed everyone in the same community to pay the same premium, based off of that particular community.
These two organizations which by the 1950’s became the biggest providers of health insurance in America wanted mainly to provide steady income for doctors and cover all expenses of medical treatments even the routine, which in the past had never been done. The problem occurred when the blues were able to get special privileges from the government in the form of their nonprofit status. This in turn harmed other insurance companies and turned health insurance into a ‘pay for all’ expense rather than a service which covered costs that would normally bankrupt a family. Eventually more and more insurance companies began to offer similar packages to their customers in order to compete with the two blue companies.
According to Zinser and Hsieh, “this new model [for health insurance companies] was a disaster in the making. In addition to minimizing incentives for insured customers to comparison shop for medical services, it also minimized incentives for doctors and hospitals to compete on price.” (Zinzer and Hsieh) Unfortunately this model did not come about by free market thinking it was a direct result of a government getting involved in the health insurance industry.
1942 STABILIZATION ACT
Another major impact on the health insurance industry was the 1942 Stabilization Act that was passed during WWII in order to freeze wages in America. The effect was that a business in order to attract new and better employees would offer health insurance coverage instead of giving a pay increase. This gave rise to the idea that it is an employee’s ‘right’ to have health insurance provided by their employers, which simply is not the case. Businesses do not cover an individual employee’s home insurance or their car insurance or other such things. This Stabilization Act was followed quickly by the IRS decreeing that health insurance premiums paid by employers are not taxable income. Another thing they decreed was that these premiums were a legitimate cost of doing business and can be deducted from the employer’s taxable income. (Zinzer and Hsieh)
This led to the major problem of employees not knowing the ‘cost’ of their health insurance and therefore to increase many employees anger at having some of that cost shifted towards them. Also these acts caused an enormous explosion in employer purchased health care, rather than individually purchased health care.
STATE AND FEDERAL MANDATES
There are over 1,900 different state and federal mandates across America which increases the cost of insurance for two main reasons. First are the mandates, usually from special interests groups like Parkinson’s advocates. These advocates lobby the government to then force insurance companies to cover Parkinson’s for all customers. This mandate leads to higher costs, as the insurance company is forced to take into account people who will need this type of coverage, whether an individual customer needs to be covered for Parkinson’s or not.
Second are the guaranteed issue laws, which force insurance companies to take on a new customer with previous ailments allowing people to wait till they are sick in order to get insurance coverage. Insurance companies must than increase the prices of their policies to their pre-existing clients and to new clients. A guaranteed issue law is equivalent to passing a law allowing someone to purchase home owners insurance for fire after their house burns down.
Government Interference in the Medical Industry
Many of the laws that have been passed cause doctors to pay fines and sometimes even jail time for things other than malpractice, such as simply making a mistake on their documentation of patient’s records. Programs like Medicaid and Medicare also have lead to a tremendous overcrowding in emergency rooms. Many of the people who go to ERs do not have critical problems but since they are covered under Medicare or Medicaid they go for ‘free.’ This makes it harder for those with serious problems to get the care they need when they need it.
EMERGENCY MEDICAL TREATMENT AND LABOR ACT OF 1985 (EMTALA)
The EMTALA law requires a hospital which accepts Medicare or Medicaid patients to accept anyone within two hundred feet of an emergency room, whether the person can pay for treatment or not. If a doctor or hospital fails to comply with this law they are subject to fines up to $50,000 for each infraction. To give an example, this would be like forcing grocery stores to allow anyone within two hundred feet to get any amount of food they say they need. A law like this would bankrupt most grocery stores. According to the American College of Emergency Physicians, from 1993 to 2003, while the U.S. Population grew by 12 percent, emergency room visits grew by 27 percent – from 90 million to 114 million visits. In the same period, however, 425 emergency rooms closed (14 percent of the ERs that existed in 1993), along with 703 hospitals and nearly 200,000 beds. (Zinzer and Hsieh)
HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA)
This is an act that was passed in 1996 which requires by law that all doctors and any institute that provides medical services to fill out enormous amounts of paperwork saying they acknowledge their patients right to medical privacy. Dr. Reinhardt a retired surgeon in Pueblo Colorado said this about HIPAA “Every doctor needs to plan for the possibility of several fines every year.” (Reinhardt) Physicians must also have their own ‘specialized’ insurance that covers millions of dollars for fees and fines. This cost is than shifted to their patients.
Laws such as HIPAA merely turn Doctors into criminals for a simple error in paperwork. Penalties can range anywhere from $100 all the way up to $25,000 per year. Doctors are also able to be prosecuted for these errors, again this has nothing to do with actual malpractice but simply a failure to disclose or fill out all the proper paperwork. In the report done by Zinser and Hsieh a doctor told one of the authors that emergency room doctors are constantly breaking the HIPAA laws simply because it would be unethical to do otherwise.
“Complying with HIPPA… Would delay emergency medical treatment, keep families from understanding their loved-one’s condition, and preclude the crucial sharing of knowledge between family members and doctors about the history and condition of the patient.” (Zinzer and Hsieh)
The laws HIPAA enforce are the same things doctors have been acknowledging without these laws anyway, these laws simply add to the paperwork a doctor must fill out. This additional paperwork just takes away time a doctor should spend on saving lives.
DISCUSSION: ECONOMIC IMPACTS OF SOCIALIZING MEDICINE
There are several negative economical impacts socialized medicine has had on other countries. First, are the immense waiting lists many individuals are subjugated to in order to ration the medical services to everyone. Another problem that arises in these countries is the exodus of doctors and an overall decline of the medical care provided by the doctors in the system. Lastly is the loss of innovation, most countries currently and have always relied heavily on the innovativeness of America.
Waiting lists
Many advocates of socialized medicine in America point out the fact that America is the only industrialized country without a ‘single-payer’ system. One thing these advocates do not discuss is the enormous waiting lists these other countries must comply with. A major problem happens when people who normally would not go to see a doctor are now allowed to see one for ‘free’, at the expense of the taxpayer. People begin seeing doctors in droves for any ache or pain they might have, whether they would normally see a doctor or not.
In an article written by author and professor of economics Walter Williams Free Health Care in Canada? Dr. Williams quoted several sources from the Fraser Institute, a Vancouver based think tank. Showing some of the waiting lists Canada has to deal with. “The average time a patient waited between referral from a general practitioner to treatment rose from 16.5 weeks in 2001-02 to 17.7 weeks in 2003.” The research found that Saskatchewan had the longest wait time with thirty weeks, and Ontario was the shortest at fourteen weeks. As far as Diagnostic procedures; Computer Tomography (CT), Magnetic Resonance Imaging (MRI), and Ultrasound, ranged anywhere from two to twenty four weeks. (Williams, Walter E. Williams)
Exodus of Doctors
Another problem industrialized countries with socialized medicine are having is a decline in medical doctors, as well as low enrollment for medical schools. A study conducted by the Canadian Medical Association Journal showed an exodus of thousands of doctors leaving Canada. The study shows over the past 30 years 19,000 Canadian trained physicians left Canada for America. In 2006 there were 8,162 physicians who left Canada for America, “That figure accounts for about one in nine Canadian-trained physicians, which is equivalent to having two average-sized Canadians medical schools dedicated entirely to producing physicians for the United States.” (Arvantes) Two medical schools may not sound like a lot; however Canada only has 17 medical schools.
This decline in medical doctors and enrollment is a direct result of a human being not being willing to dedicate a lifetime to the perfection of a craft, than to be told how they are to operate and who they are allowed to see. A doctor is no different than any other individual who wishes to provide a service and or product and be compensated for said product/service.
Loss of Innovation
One of the most important attributes of America is its ability to create new products for itself and the world. This is shown in every aspect of Americans daily life. From telephones, cars, planes, televisions, computers, internet and more it is this ability to be innovative that has allowed America to remain the most powerful country in history. This innovation remains because of one fact, America allows individuals the freedom to create new products and then sell them however they see fit. In other words America allows for incentives, and very powerful incentives. Dr Reinhardt, although an advocate of a ‘single-payer’ health system in America, admitted America is by far the most innovative country in the world in the medical field. (Reinhardt)
CONCLUSIONS AND RECOMMENDATIONS
The research in this report was extracted from; lead economists, authors, statistical data from World Health Organization and the Fraser institute, as well as individuals in the current American Health industry, and has lead to the following conclusions on Socialized Medicine in America.
Conclusions
1. The current system in America is far from an actual free market, and many of the problems America is now facing are a direct result of the thousands of mandates and regulations both the health insurance industry and the medical industry are subject to in America.
2. Countries around the world currently under a form of socialized medicine have many problems of their own, such as the waiting lists, exodus of doctors, and an overall decline in the quality of medical services.
3. Some of our current government programs like Medicaid and Medicare will go bankrupt, without changes, by 2019.
4. The majority of the world depends on America for new life saving procedures and medicines. With a loss of incentives to create these new innovations, America is at risk of losing its ability to keep innovation going in this industry.
Recommendations
1. From the research and findings of this report it is recommended that the solution to the health care problems in America is not more government intervention, but less. It would however be a grave mistake to simply eradicate any and all government programs immediately. The best solutions are to start slowly, with for example the repealing of EMTALA. This can allow doctors and hospitals to set their own terms for garnering payment for their services.
2. Eliminate any type of special treatments certain companies might get, such as allowing ‘The Blues’ companies to have non-profit status. Repealing acts such as HIPAA can be done immediately, since these laws do nothing but add to the useless paperwork doctors and hospitals must do and adds tremendously to the amount of money they must pay out for malpractice suits.
3. The things that need to be done are to eradicate any and all government interference in the medical industry. As was mentioned before it has been this government interference that has caused the high costs of insurance and medical services we now have. To add more would only compound the problem.
Works Cited
Arvantes, James. Canadian Physician Exodus Benefits United States, Hurts Canada . 2 May 2007. 18th April 2008
Barbera, Geri. Interview. Kirk Barbera. 18th March 2008.
Ralston, Richard E. Capitalst Magazine. 5 February 2008. 10 February 2008
Reinhardt, Eric. Interview. Kirk Barbera. 8th April 2008.
Sowell, Thomas. Capitalism Magazine. 4 May 2004. 21 February 2008
Stossel, John. Capitlalist Magazine. 10 August 2007. 2 March 2008
Williams, Walter. "Walter E. Williams." 21 July 2004. George Mason University. 18th Jan 2008
—. "Walter E. Williams ." 1 July 2004. George Mason University. January 2008.
Zinzer, Lin and Paul Hsieh. The Objective Standard. 2007-08. 1 March 2008
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