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Healing the Health-Care System


HISTORY CAN OFTEN yield insights into our dilemmas. Health care is no exception. The Founders of America envisioned a health-care system based on principles of the dignity and liberty of every person. They were:

1. A right to work. England’s system of guilds and licenses kept many people out of the healing arts. America would allow anyone to become a doctor or to open a healing school or clinic.

2. A right to choice. America would permit a variety of healers and healing modalities. Benjamin Rush, physician to the Continental Army and a signer of the Declaration of Independence, wrote, “To restrict the practice of medicine to only one class of men would constitute the Bastille of medicine.”

3. A limited role of government to protect the right to contract and to prevent fraud. Article I, Section 10 of the U.S. Constitution reads, “No state shall … pass any … law impairing the obligation of contracts.” Laws against fraud were to protect the health consumer. The government was not to play favorites and could not pay for, restrict, or subsidize any group or healing method.

Free-market care

A few licensing laws existing at the time of the Revolution were soon repealed. The three principles outlined above elevated America in the 19th century to the healthiest nation on earth, although the American people were mainly poor immigrants. Innovation produced many new systems of healing. However, if you wanted to visit a witch doctor, it was your right.

Herbalists, nature-cure therapists, hydrotherapists, nutritionists, osteopaths, allopaths, homeopaths, and eclectic practitioners offered services. There were a variety of healing schools and clinics. No healing modality or group of healers had a legal advantage over the others. Whoever helped people the most prospered.

The large number of practitioners kept prices down and made health care very accessible to the population. There was no need for insurance. Organizations similar to consumers’ unions sprang up to inform people about the best doctors and the best methods of treatments. Certifying groups set standards for quality and training.

Many people used private doctors. Others joined associations such as the Lions Club or the Order of Elks. They paid annual dues and their families were taken care of if they became ill or unable to work. Often these societies hired doctors called “lodge doctors” to care for their members. Government welfare later drove these societies out of the health-care business.

Others in early America formed community health associations. These were cooperatives that hired doctors to take care of their members. A variety of church-supported, community-supported, and other private charities served those unable to pay for health care.

The winds of change

Doctors at this time didn’t make much money. This angered one group — the allopaths, or drug doctors. In 1847, they formed the American Medical Association (AMA). A report submitted at the AMA convention in 1847 was unusually candid:

The very large number of physicians in the United States has frequently been the subject of remark…. No wonder that the merest pittance in the way of remuneration is scantily doled out even to the most industrious in our ranks.

The AMA decided to increase their members’ income by outlawing their competition. This is a standard way to raise prices, for it reduces the supply of a commodity. They would lobby the government for licensing laws. The laws would limit the number of doctors. In their excellent volume on American health care, Patient Power: Solving America’s Health-Care Crisis (Cato Institute, 1992), John C. Goodman and Gerald L. Musgrave wrote,

Virtually every law restricting the practice of medicine in America has been enacted not on the crest of public demand, but due to intense pressure from the political representatives of physicians.

The AMA’s efforts culminated in 1910 when Abraham Flexner, a former school director and not a physician, was commissioned by the Carnegie Foundation to evaluate medical schools. He was the brother of Simon Flexner, head of the Rockefeller Institute for Medical Research. Working closely with the AMA, he completed a survey of medical schools that was practically a carbon copy of a report the AMA had done several years before. The report found most schools to be “substandard.”

Flexner and his AMA friends convinced Congress that to “improve health care,” most healing schools should be closed. They also recommended licensing of doctors and hospitals and government subsidies to drug-medicine schools and drug research.

Because of heavy lobbying and because people were frightened into thinking they needed licensing, these measures were adopted by Congress and state legislatures between 1900 and 1920. The medical-licensing laws violated Article I, Section 10 of the Constitution. To circumvent the Constitution, they invoked another legal doctrine — the “police powers” of the state.

The new laws caused the number of medical schools to fall from 140 in 1900 to 77 in 1940. The closings meant fewer physicians were trained. Schools either were shut down or failed because their graduates could no longer get a license. All schools that accepted women were closed. All but two schools that trained blacks were closed. Only the drug-medicine schools remained.

This was the end of the right to work, the end of the right to choose, and the end of an impartial attitude by the government. A monopoly drug-medicine cartel replaced freedom of choice in health care.

Later, chiropractors, physical therapists, psychologists, and others would push through their own licensing laws, joining the horrendous system that persecuted them for so many years.

Interestingly, the medical monopoly was imposed about the same time as the FDA (1906) and the IRS and Federal Reserve System (1913).

From bad to worse

Costs began to rise because of a doctor shortage, the outlawing of less-costly healing methods, and monopoly laws. For instance, in Mexico one can walk into a laboratory and have one’s cholesterol level checked. In America, one needs a doctor’s permission to go to a laboratory and a second doctor visit to obtain the result. A $10 test can cost you $100.

In the 1930s, a group of doctors started the first modern health-insurance company — Blue Cross and Blue Shield — as a way to keep their hospitals full. By the 1960s, pressure was brought on the government to do something about rising costs. Few people remembered it was government intervention (licensing laws) that created the mess in the first place.

In response, Congress enacted Medicare and Medicaid around 1967. They were hailed as the mark of an advanced and compassionate nation. However, the official U.S. government health statistics show that costs exploded after 1967, and this continues today.

A physician who worked in an emergency room at that time told me that when Medicare and Medicaid passed, prices tripled overnight. Essentially, the government told hospitals and doctors to charge whatever they wished and the government would pay for it.

Not only did doctors raise their prices dramatically, patient demand for services skyrocketed with the new “free” health system. Market controls and common sense were removed, replaced by an Alice-in-Wonderland “free-lunch” mentality. Exploding demand for services further drove up prices.

Health-care costs in America doubled between the 1960s and the early 1970s from about $35 billion to about $70 billion. This obviously couldn’t continue indefinitely. Instead of repealing the government programs that were causing the mess, in 1983 Congress changed Medicare, adopting what are called DRGs or diagnostic-related groups. This replaced the cost-plus system with fixed reimbursement for different categories of illness. Since then, many more restrictions, rules, and penalties have been added to rein in the costs.

None of the rules have stopped the spiraling costs. How can they, when the cartel is still firmly in control, there is little competition and few market forces at work, and responsibility for health care remains shifted from the individual to the government? These factors guarantee failure. The authors of the book Why We Spend Too Much on Health Care (1992) summarized it well when they wrote, “Government’s entry into the health care market dramatically expanded the volume, intensity and price of health care.”

Also to control costs, Edward Kennedy sponsored the HMO Act of 1973. The idea was to herd everyone into “managed care.” The law forced employers with more than 25 workers to offer an HMO option and offered $373 million in subsidies to start HMOs.

HMOs and other managed-care options have failed to control costs for the same reasons. The medical monopoly remains intact, and consumers don’t control their health care. Now Kennedy wants a patient’s bill of rights to fix the system. It won’t work either, but it will destroy the privacy of medical records.

It is interesting to note that our senators and congressmen are not subject to the health-care laws they pass for us. They have their own health-care system. The Federal Employees Health Benefits Program is wonderful, with more than 20 choices of health-care plans.

Another consequence of the government-sponsored monopoly is the overuse of dangerous surgery and drugs, instead of safer methods. In a landmark article, the Journal of the American Medical Association recently revealed that medical mistakes are now the third leading cause of death in America, just behind cancer and heart disease. Aside from the human cost, malpractice costs are enormous.

Many people believe the real intent of the patient’s bill of rights is to destroy the HMOs so that Americans will believe they have no choice but to adopt socialized medicine. Before discussing a better solution, let’s examine socialized medicine.

Socialized medicine

The first socialized medical system began in Germany on January 1, 1884 under Kaiser William I. Its purpose was to displace the ideas of the Enlightenment and reinvigorate support of the monarchy by forcing everyone into one state-controlled system of medical care. The program spread to other European nations in the early 20th century. It was accelerated and further centralized by Adolf Hitler. As Melchior Palyi explained,

The ill-famed Dr. Ley, boss of the Nazi labor front, did not fail to see that the social insurance system could be used for Nazi politics as a means of popular demagoguery, as a bastion of bureaucratic power, [and] as an instrument of regimentation.

Many people say to me, “Universal free health care sounds pretty good.” I ask, “Do you really think it is free? Do you really think it will be universal?” That is never how it works. Just ask any Canadian or Englishman. Canadians pay an extra 15 percent tax on everything they buy, and their system is still failing. The right to free health care becomes the right to stand in line for what the government decides to give you.

Socialized medical systems require large, costly bureaucracies. Government administration is five to ten times the cost of private-sector administration. Special interests always infiltrate the bureaucracy, so it rapidly becomes corrupt. Doctors find ways to defraud the system, so massive paperwork is required in an attempt to control fraud.

They also require high taxes. Including time spent and fees for lawyers, accountants, and tax preparers, individuals and companies in America spend more to comply with the tax laws than the income tax actually collects. That does not sound like an efficient system. Taxes, of course, are collected under the threat of force. That hardly sounds like a compassionate system.

While the IRS code and regulations are only some 10,000 pages, the Medicare law is 110,000 pages. Socialized medicine would be a jumbo form of Medicare. Are you sure that is what you want? Do you really think a Washington bureaucrat knows better than you do which healing modality and how much care is best for you? When you go to the doctor, do you really want to pay for a swarm of paper-pushers to monitor every aspect of the transaction?

I think the Germans had it right. Socialized medicine is not about health. It is a government power grab to control a trillion-dollar industry and a critical area of people’s lives. It would also further entrench the drug monopoly, ensuring poor quality care and high prices. It appears compassionate, but it is actually akin to the compassion of a Mafia boss. Driving costs through the roof, confiscating the money at gunpoint through taxes to pay for it, and establishing a wasteful system do not seem compassionate, charitable, or “advanced.”

Dismantling and repealing

The alternative to socialized medicine is to dismantle the monopoly. When special interests pass laws that do not serve the public, eventually they must be repealed. America did this with the trucking industry, the phones, the airlines, and many others.

Getting rid of the medical-licensing laws, HMO laws, and government subsidies to medical schools and drug research would terrify the monopolists but it would return the health system to health and sanity. Competition would increase, prices would drop, insurance might not even be necessary, and access to care would increase.

Lower-cost alternative health-care methods, now shut out of mainstream medicine, would be given a chance. In case replacing mandatory licensing with private certification seems odd to you, here is what Nobel Prize-winning economist Milton Friedman wrote,

I am persuaded that licensure has reduced both the quantity and quality of medical practice…. It has reduced the opportunities for people to become physicians, it has forced the public to pay more for less satisfactory service, and it has retarded technological development…. I conclude that licensure should be eliminated as a requirement for the practice of medicine.

Lori B. Andrews, professor of law and Norman and Edna Freehling Scholar, Chicago-Kent College of Law, explained,

Licensing has served to channel the development of health care services by granting an exclusive privilege and high status to practitioners relying on a particular approach to health care, a disease-oriented intrusive approach rather than a preventive approach…. By granting a monopoly to a particular approach to health care, the licensing laws may serve to assure an ineffective health care system.

I was trained within the monopoly system. I left it for the alternative health field because orthodox methods were unable to help my family with a cancer problem. Thus I have worked on both sides. Americans have been thoroughly misled about their medical-care system. Slowly, the same people are urging you to accept an inferior government-controlled system.

“Control” is the key word. The choice is whether to deregulate and return to a consumer-controlled health system or drift into a totalitarian system that isn’t working well anywhere in the world. Health-care goods are a commodity like any other. They will be rationed. Either you will control how to spend your health dollars, or the bureaucrats will decide for you.

The choice is yours. But make no mistake about it: your health and maybe even your life turn on it.

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    Dr. Wilson has a medical degree and works as a health consultant and writer in Scottsdale, Arizona.