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Ron Paul's Freedom Report
A publication of the Foundation for Rational Economics and Education
VOLUME 3, NO. 6 SEPTEMBER 1999
Medical Care and The Patient's Bill of Rights
Where government mismanagement is the problem, another level of
bureaucracy, however well-intentioned, cannot be helpful.
When I advise on medical legislation, I know that I may be influenced by my emotional experience as a physician. Nevertheless, my role is that of legislator politician.
Unfortunately, the medical degree grants no special wisdom about the correct solution to our managed-care mess. As it is with all goods and services, how efficiently we deliver health care is determined by the degree to which the market is allowed to operate. Economic principles are what determine efficiency of markets, including the medical market, not our emotional experiences dealing with managed care.
An Unworkable System
On the surface of the current debate, it appears that the interest of the patient is in conflict with the rights of insurance companies and health-maintenance organizations. In a free market this could not happen, because everyone's rights are equal and agreements on delivering services of any kind are entered into voluntarily, thus satisfying both sides.
Only true competition assures that the consumer gets the best deal at the best price possible by putting pressure on the providers. Once one side is given a legislative advantage in an artificial system (as managed care has been given), making an effort to balance government-dictated advantages between patients and HMOs is pointless. These differences can't be reconciled by more government mandates, because they will only make the problem worse. Because we're trying to patch up an unworkable system, the current impasse in Congress should not be a surprise.
I take a back seat to no one regarding my disdain for the HMOs' role in managed care. This entire unnecessary level of corporatism that rakes off profits and undermines care is a creature of government interference in health care. It's artificial - government could only have gained control over medical care through a collusion of organized medicine, politicians, and the HMO profiteers in an effort to provide universal health care.
No one suggests that we should have "universal" food, housing, TV, or car programs. Many of the "poor" do much better getting these services through the marketplace where prices are driven down through competition.
We all should become suspicious when it's declared we need a new "Bill of Rights," such as a taxpayer's bill of rights, or a patient's bill of rights. Why don't more Members ask why the original Bill of Rights is not adequate to protect all rights and enable the market to provide all services? If over the last 50 years, we had shown a lot more respect for property rights, voluntary contracts, state jurisdiction, and free markets, we would not have the mess we're facing today in providing medical care.
We are destined to make the problem much worse if we pursue the course of more government management in an effort to balance things. After all, if government mismanagement of an area which it should not be managing at all is the problem, another level of bureaucracy, no matter how well-intended, cannot be helpful. The law of unintended consequences will prevail, and the misguided principle of government control over how a service is provided will be further entrenched in the nation's psyche. The choice is actually between government-provided medical care with its inevitable mismanagement, and medical care provided by a market economy.
Partial government involvement is not possible; it inevitably leads to total government control. All the plans laid today for the so-called "patient's bill of rights" fully endorse the principle of government management. All of them will expand government involvement, even if the stated intention is to curtail the "abuses" of the HMOs. The bill-of-rights concept is based on the same ill-conceived principles that have given us the mess we have today.
The power of special interests to influence government policy has brought us this managed-care monster. Doctors are unhappy, HMOs are being attacked for the wrong reasons, and patients have become a political football for demagogues from all sides.
From Tiny Acorns Giant Oak Trees Grow
The problems started early on when the medical profession used its influence to get the insurance industry to begin paying for medical services and abandon the insurance principle of paying for major illnesses and accidents for which actuarial estimates could be made. A younger, healthier, and growing population could easily afford the fees required to generously care for the sick.
Doctors, patients, and insurance companies all loved the benefits of this generous third-party payment system until it was discovered to be closer to a Ponzi scheme than true insurance. That discovery came when the elderly started living longer, medical care became more sophisticated, demands increased because benefits were generous and insurance costs were moderate, and the demographics were changing with fewer young people working to accommodate a growing elderly population (just the problem we see developing with Social Security). To make matters worse, at this same time governments at all levels became much more involved in mandating health care for more and more groups.
The markets could have sorted all this out, but in the 1960s government energetically entered the process and applied post-office principles to the delivery of medical care with predictable results. The more the government got involved, the greater the distortion.
Initially there was little resistance because payments were generous and services were rarely restricted. Doctors liked being paid adequately for services that in the past were done at discount or for free. Medical centers that were always willing to receive charity patients for teaching purposes liked this newfound largess of being paid for their services. This in itself added huge costs to the nation's medical bill, and the incentive for patients to economize was eroded. Stories of emergency-room abuse are notorious, since "no one can be turned away."
Artificial and generous payment of any service, and especially medical, produces a well-known cycle. Increased benefits at little or lower costs to the patient lead to an increase in demand that removes the incentive to economize. Higher demand raises prices, in this case doctors', labs', and hospitals' fees. As long as the payments provided by the third-party payer are high, the patients and doctors don't complain. However, when it's discovered that the insurance companies, HMOs, and government can't afford to pay the bills, price controls are demanded. In turn, government pricing leads to rationing of care through limiting choice of doctors and decisions on lab tests, restricting length of stay in the hospital and the particular diseases and conditions that can be treated.
HMOs and the government, who are the payers, start making key medical decisions. Because HMOs make mistakes and their budgets are limited doesn't justify the misguided notion that politicians are better able to make these decisions than the HMOs. Forcing HMOs and insurance companies to do as the politicians say, regardless of the insurance policy agreed upon, will lead to higher costs and limit the availability of care.
The results are predictable: quality of medical care declines, services become hard to find, and the three groups - patients, doctors and HMOs - blame each other for the problems. This pits patients against HMOs and government, doctors against the HMOs, the HMOs against the patient, and the HMOs against the doctor, with the result that we destroy the cherished doctor-patient relationship.
That's where we are today. Unless we recognize the nature of the problem, Congress will only make things worse. More government meddling will surely not help.
In a free market, HMOs and prepaid care could and would exist; there would be no prohibition against it. The Kaiser system, for instance, was not a creature of the government as is the current government-created, universal-HMO chaos we have today.
The current HMO mess is a result of our government interference through the ERISA laws (Employee Retirement Income Security Act), tax laws, labor laws, and the determination of many in this country to socialize medicine, American-style, with a corporate level of management that rakes off profits while draining care from the patients. The more government has assumed the role of paying for services, the more pressure there has been to manage care.
Unfortunately, free-market health care is not an issue in the current debate. The contest now is between those who believe they speak for the patient and those who believe they must protect the rights of corporations to manage their affairs as prudently as possible. Since the system is artificial, there is no "right side" of this argument. Only the political forces of the competing special interests are at work, and this is the reason a resolution has been so difficult.
Only the free market protects the rights of all persons involved, and it's only this system that can provide the best care for the greatest number. The goal of so-called "equality" in medical-care services can be achieved only by lowering standards for everyone. Veteran-hospital and Medicaid patients have suffered notoriously from poor care compared to private patients, and we're fast moving toward a system where the quality of medicine for everyone will be met at the lowest standards.
Since the problem with our medical system has not been identified in Washington, the odds of any benefit coming from the current debate are remote. It looks like we will actually make things worse through politicians believing they can manage care better than the HMOs, when neither side is capable of such a feat.
Excessive litigation has significantly contributed to the ongoing medical-care crisis. Greedy trial lawyers are certainly part of the problem, and our legislative bodies throughout the country are greatly influenced by trial lawyers. While this is significant, there is more to it than that. People do sue, and juries make awards that qualify as "cruel and unusual punishment" even at the expense of some who were barely involved in the care of the patient who is suing.
The welfare ethic of "something for nothing" that developed over the past 30 to 40 years has played a role in this serious problem. This mentality has allowed judges and juries to sympathize with unfortunate outcomes not related to malpractice, and to put responsibility on those most able to pay rather than on those most responsible. This distorted view of dispensing justice must someday be addressed or it will continue to contribute to the deterioration of medical care.
In addition to a welfare mentality, many have developed a lottery-jackpot mentality and hope for a big win through a lucky lawsuit. Fraudulent lawsuits against insurance companies now are epidemic, with individuals feigning injuries in order to receive compensation.
Finding Solutions ...
To find moral solutions to our problems in a nation devoid of moral standards will be difficult. However, difficult medical cases will not be undertaken if outcome is the only determining factor in deciding lawsuits. Federal legislation prohibiting state tort-law reform cannot be the answer.
Legalizing contracts between patients, doctors, and hospitals would be a big help in keeping down the defensive medical costs that fuel the legal cost of medical care. Contractual arrangements between patients and doctors allowing specified damage clauses and agreeing on arbitration panels would certainly be a big help. Employing the "loser pay" principle would also help.
Indeed, the litigation epidemic could be ended if we were to accept the principle of the right of contract. Doctors and hospitals could sign agreements with patients to settle complaints. Limits could be set and arbitration boards could be agreed upon prior to the fact. Limiting liability to actual negligence was once automatically accepted by our society, and only recently has this changed to granting huge awards for pain and suffering, emotional distress, and huge punitive damages unrelated to actual malpractice or negligence.
Managed care cannot work. The market in medicine has been so distorted by government and artificially managed care that it's the only industry where computer technology adds to the cost of the service instead of lowering it. Government management of Microsoft was not required to produce great services at great prices for the masses of people.
Whether it's services in the computer industry or health care, services are best delivered in an economy ruled by market forces, voluntary contracts, and the absence of government interference.
Mixing the concept of rights with the delivery of services is dangerous. The whole notion that patients' "rights" can be enhanced with more edicts by the federal government is preposterous. People have no more right to medical care than they have a right to steal your car because they are in need of it.
Furthermore, it is dishonest to provide free medication to one segment of the population for political gain without mentioning that the cost is passed on to another segment. Besides, it only compounds the problem further to separate medical services from any market force, let alone to yield to the force of the taxman and the bureaucrat.
If there were no evidence that freedom enhances everyone's well being, I could understand the desire to help others through coercive means. But delivering medical care through government coercion means not only diminishing the quality of care, it means undermining the principles of liberty. Fortunately, if a system strives to provide maximum freedom for its citizens, it also supports the highest achievable standard of living - and that includes the best medical care - for the greatest number.
Nowhere in history have we seen medical-care standards improve through nationalizing its delivery system. Yet, the only debate here in Washington is how fast we should proceed with the government takeover.
Prescription for Healthy Change
Instead of the continual demagoguery of the issue on both sides of the aisle for political benefits, we ought to consider getting rid of the laws that created this medical-management crisis.
1. The ERISA laws requiring businesses to provide particular programs for their employees should be repealed.
2. Anti-trust laws affecting the medical profession should be repealed as well.
3. The tax codes should give equal tax treatment to everyone whether self-employed or working for a large corporation or small business.
4. Standards should be set by insurance companies, doctors, patients, and HMOs working out differences through voluntary contracts. (For years it was known that some insurance polices excluded obstetrical care. This was known up front and was an acceptable provision providing discounts for certain patients.)
5. The federal government should defer to state governments to deal with the litigation crisis and the need for contract legislation between patients and medical providers.
6. Especially to get a market force operating immediately, MSAs (medical savings accounts) should be made generously available to every person desiring one. Patient motivation to save and shop would be a major force in reducing costs, as physicians would once again negotiate fees downward with patients (from the patient's point of view government reimbursement is never too high, and as for the care providers, hospital and MD bills always come in at the
maximum levels allowed).
There is nothing wrong with charity hospitals, and churches might go back to providing care for the needy rather than through government-paid programs which only maximize costs. States can continue to introduce competition by allowing various trained individuals to provide the services that once were only available from licensed MDs.
We don't have to continue down the path of socialized medical care, especially in America where free markets have provided so much for so many. We should have more faith in freedom and more fear of the politician and bureaucrat who think all can be made well by simply passing a Patient's Bill of Rights.
The Draft
By a vote of 232 to 187 on September 8, the House terminated the Selective Service System. No other vote that a Member of Congress can cast will better define one's belief and understanding regarding the principle of personal liberty than a vote supporting or rejecting military conscription
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The Appropriations Committee wisely deleted the $24.5 million annual expenditure for the Selective Service System. After all, we have not had a draft since 1973, and when we did in the 1960s, it served to tear the nation apart. Furthermore, for the past 25 years, the selective service operation has served no useful purpose while spending hundreds of millions of dollars. It should end. We should not support any ill-conceived effort to restore its funding.
The only purpose of registration is the draft. The government with all its record keeping already knows how many 18-year olds there are and where they live. Requiring 18-year olds to register is a conditioning process to remind all young men that the State ultimately is in charge and their lives belong to the State.
Conscription is that institution, as old as recorded history, used by totalitarian governments to force one group of people to sacrifice their lives for the benefit of another group who choose to initiate some unwise foreign war. The kings did it, dictators have done it, and now the political elite of our modern day democracies do it.
The politicians who start the wars never serve in them. In the name of a twisted version of patriotism, some expect that our young men and women must be ready to sacrifice their lives in wars totally unrelated to protecting our own national security. There will always be those who learn how to avoid the draft as young men, but later are willing to start wars that demand the next generation of young men be sacrificed.
The Military Perspective
A Department of Defense document was released a few years ago saying that the time had come to end the inefficient Selective Service System. In fact, the report stated draft registration could be stopped "with no effect on military mobilization requirements, little effect on the time it would take to mobilize, and no measurable effect on military recruitment."
From the military's perspective, the world of the 1990's is quite different from that of previous generations. Today, the lowest ranking soldier is more likely to use specialized computers than magnetic compasses, even in the field. The skills needed by modern soldiers cannot be taught in a six-week boot camp before shipping conscripts to the front, as was the case in World War II.
Many military historians have consistently pointed out that not only is there no military advantage to the draft, there are many disadvantages. For instance, draftees can't be taught to kill in the manner desired, especially in the more recent offensive wars in which we have been involved. What's more, conscription only encourages politicians to get involved in wars where we have no business, and every year technological advances make the foot soldiers more obsolete.
Although conscription is principally an issue dealing with liberty, there are practical reasons to reject outright any notion that it is a worthy program in a free society.
All efforts to draft are unfair; a nation can never draft all 18-year olds or 19-year olds at the same time. There are always exceptions and deferments. Inner city youths, the less educated, and the less politically connected are the least likely to beat the draft. The 40-to-50-year old well-to-do class is always anxious to pass the responsibility on to the 18-year olds who have little representation in the Congress.
The draft should never be available to compensate for the bad foreign policy decisions of our presidents and congresses.
There are no proven economic advantages to the draft, and the current $25 million annual appropriation could well be spent on improving our veterans' programs, or raising salaries of our military personnel.
The Congress has the authority to "raise" an army, but it does not have the constitutional authority to enslave a certain group to bear the brunt of the fighting.
A society that cherishes liberty will easily find its volunteer defenders if it is attacked. A free society that cannot find those willing to defend itself without coercion, cannot survive and probably doesn't deserve to. A free society that depends on the vicious totalitarian principle of conscription is by its very nature no longer free. As we have gradually lost our love for individual liberty and sense of individual responsibility throughout the 20th century, so have the people and the congresses capitulated to the notion of the military draft.
The vote on Selective Service System funding was a welcome sign that we are willing to take a positive step in the direction of more liberty by rejecting the appropriation. It gave us a rare opportunity to reverse the trend toward bigger and more oppressive government. We must applaud the heroic step the Appropriations Committee took by deleting the funds for the ill-conceived and dangerous Selective Service System, and the courage of the Members who refused to restore the funds for this program.
Yes, preserving liberty is worth fighting and dying for. But conscription is incompatible with this goal. You cannot make men free by first enslaving them and forcing them to sacrifice their lives and liberty for the policies conceived by misdirected politicians and international warmongers.
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