Letters: Allotting Blame for Today's Health-Care Crisis (Sept 2000)
Allotting Blame for Today's Health-Care CrisisThe following letters are a debate in response to the interview with Dr. Richard Kossman which appeared in the November 1999 issue of issue of Navigator.
The latest entries were added on September 7, 2000.
William Dale, M.D., Ph.D.
December 25, 1999
To the editor:
As a young physician with a Ph.D. in Public Policy, as well as a long-time Objectivist and Sponsor of IOS/TOC, I was bothered by a number of objectionable statements by Dr. Richard Kossmann ("The Education of Richard Kossmann," Navigator , November 1999, p. 7-9). Most personally, I found his recommendation not to "not commit scarce resources in cultivating young physicians, as a likely source of new Objectivists" needlessly negative. This attitude is particularly troubling coming from a physician who should understand the natural attraction of the medical profession to young minds for its challenge of integrating scientific understanding with concern for human well-being.
In addition, there are a number of errors in his assessment of medicine's social situation; I confine myself below to the two most egregious mistakes. The first, most obvious mistake is his attack on HMOs as the primary villains in the current medical-care system. The second mistake is his misunderstanding of the history of government intervention in medicine. In my experience, both of these mistakes are remarkably common among the supposed defenders of freedom in medicine, but I was astonished to see them casually repeated in an Objectivist publication.
It's astonishing to hear Objectivists, of all people, attacking businessmen for pursuing a profit . If there were a one group I would expect not do this, it would be the defenders of egoism and capitalism. Yet this is precisely what Dr. Kossmann does. He repeats the lament of our anti-Enlightenment opponents that it is the profit-seeking businessmen who are to blame for medicine's problems. If one wants to attack the government for establishing laws that are non-objective, that violate people's rights, then I support the attack. But don't attack the businesses for successfully offering cost-cutting products in the marketplace. Not if you're an Objectivist.
Dr. Kossmann counters the above by saying HMOs are businesses which function in a market that's not completely free, and that this implies something insidious about their success. This is an attack on a straw man-the economy has never been completely free in the sense he implies; we've never had the libertarian utopia he insinuates is necessary to justify the existence of HMOs. The economy we have now and have always had, including the medical portion of it, is a mixed economy. Yet, we don't object to all of the other successful businesses operating within this sub-optimal economy; these are precisely the businesses we Objectivists rightly go out of our way to praise for their success in spite of government restrictions . Why single out HMOs for condemnation?
Dr. Kossmann further states that, "medical care was carried out pretty much the way it had been for two hundred years until World War II." This is a gross misrepresentation of history. Government intervention into the economy began before the turn of the century, initiated primarily by the physicians themselves. It was the allopathic practitioners, the forefathers of today's doctors, who used the medical societies to exclude other health providers from the marketplace. As carefully documented by Paul Starr, it was the physicians who enlisted the state through licensing restrictions, limitations on entry to medical schools, and limitations on pharmaceutical-prescribing privileges to exclude entry into the medical-provider marketplace-i.e., to monopolize it-at the turn of the century, long before the initiation of Medicare and Medicaid (Paul Starr, The Social Transformation of American Medicine , Basic Books: New York, 1982). While these later interventions were terrible, they were certainly not the first entry of the government into medicine. Furthermore, many physicians welcomed the initiation of Medicare and Medicaid-they created an economic boom for physicians who now got paid handsomely for care they had previously provided pro bono . The physicians of today can "thank" the physicians of the past for giving an engraved invitation to the government to enter medicine.
On this note, I suggest physicians like Dr. Kossmann, in fighting for a freer medical economy, stop attacking businessmen. They should stick to advocating the opening of the medical marketplace. In particular, they should look to opening the market to any and all providers . In this spirit, I suggest two policy changes that would dramatically decrease medical costs by eliminating a crucial monopoly: 1) remove all licensing restrictions for entry into medicine and, 2) rescind physicians' monopolistic pharmaceutical-prescribing privileges. Of course, these would decrease the salaries of physicians by removing their government-enforced monopoly-but that's the nature of a competitive, free market. Both of these changes would do more good than attacking HMOs and discouraging young Objectivists from entering the field of medicine.
Todd H. Goldberg, M.D.
January 25, 1999
To the editor:
As a physician and fellow supporter of IOS/TOC, I was very interested to see the profile of Dr. Kossmann. Objectivist or libertarian viewpoints are not uncommon among physicians, but definitely the minority. Old-time physicians who grew up in the era of private practice, like Dr. Kossmann, are more protective of their traditional privileges and income than young employed physicians such as myself.
Dr. Kossmann is of course absolutely correct about any variety socialized medicine being inherently irrational, as described by Mises, and his citations of the "criminalization" of well intentioned physicians are right on target. I strongly agree with Dr. Kossmann that most of the problems in our health-care system are "Made in Washington."
But the problems is also made in the ideas of the people and intellectual leaders and policy-makers. I strongly agree with Dr. Dale that the main problem is not the HMOs and insurance companies, as annoying as they are to deal with. They are only a symptom of our society's general socialization of medicine via the government, and general perception of health care as a "right." Federal programs like Medicare subsidize the completely control most of the medical system, and the remainder is controlled by government-subsidized, -sponsored, and -protected HMOs and other insurance programs. Health-care inflation caused by government subsidies and controls further makes medical care so expensive that consumers and businesses have no choice but to go with cost-cutting, bottom-of-the-barrel plans. And government tax policies favor employer-sponsored, -subsidized health insurance as opposed to individual responsibility for one's own health care or insurance. Finally, government antitrust laws prohibit physicians from banding together to boycott or fight in any way against insurance-company or government restrictions. Thus, the deck is totally stacked against us. But even more importantly, most physicians see nothing inherently wrong with the system or the idea that health care is a right that must be guaranteed and controlled by the government, and they can't understand why things have gone so wrong. They focus their anger and frustration on the insurance companies when the real problem is the government and our own altruist colleagues.
Like Dr. Kossmann, I too have tried to get involved in state and county medical societies, hoping to have some impact. And I too have become disillusioned about the prospect of doing anything substantive in organized medicine, due to the mixed premises and altruist/collectivist viewpoint of most medical society leaders. Despite feeble protestations about the preservation of the "doctor-patient relationship," many if not most physicians accept the fatal altruist premise that "health care" is a "right."
As an eloquent demonstration of this: The same day that I received Navigator 's interview with Dr. Kossmann, I also read an editorial from the Annals of Internal Medicine (available online at the URL http://www.philamedsoc.org/community/publications.html ), in which the past president of the Philadelphia Medical Society and the editor of the journal proposed a "28th Amendment" to the U.S. Constitution guaranteeing "All citizens and other residents of the United States shall have equal access to basic and essential healthcare. . . "! It is this altruist/collectivist attitude even among physicians that is the main reason medicine does not and cannot fight back against the insurance companies and government, not the existence of HMOs who just take advantage of business opportunities that are offered to them on a silver platter by that same government.
As to the issue of whether HMOs would exist in a free market: Who knows what might have been if the world had been otherwise? There is nothing inherently immoral about the idea of employed physicians or plans offering prepaid health care, as long as it is voluntarily agreed upon by the physicians and the patients. But, as Kr. Kossmann points out, most of the early health insurance plans were formed in response to government-created conditions (war, depression, etc.), and were mostly supported by government and organized medicine. Government tax and price-control policies in the WWII era encouraged employers to offer fringe benefits like health insurance rather than increased wages. Government-controlled Medicare further solidified the position of the health-insurance industry in the 1960s and made physicians heavily dependent on insurance and government reimbursement. The final rise of HMOs was totally supported by government policymakers and legislators. In fact, the HMO Act of 1973, I believe, required that all employers of a certain size had to offer an HMO plan, since the government believed its consultants' claims that this would make health-care costs and practices more controllable (which was true to some extent). And again it was government-caused health inflation which made low-cost prepaid plans more appealing. And currently the government is pushing HMOs for Medicare patients, making billionaires of HMO entrepreneurs like US Health Care here in Pennsylvania, which is paid exorbitant monthly capitation fees directly by the government for each patient enrolled in its plans. Only a pittance trickles down the physicians who have all the expertise, responsibility, and risk. And again, due to antitrust laws, physicians simply cannot fight back against this system.
Medical Savings Accounts seem like a good interim system for reintroducing some individual responsibility for health-care expenses. But even this would be a government-regulated benefit; ultimately, all government involvement in any aspect of the health-care system must be totally eliminated.
Finally, I strongly agree with Dr. Dale that the other major part of saving the free market health-care system must be the elimination of physicians' monopoly on practicing medicine and prescribing medications. Physicians bring controls upon themselves by insisting on being the exclusive source of health care; any monopoly must be government supported and regulated (or else it could not be a monopoly). This is another viewpoint which is strongly opposed by most of my colleagues in organized medicine in Pennsylvania, who are currently fighting vehemently against an expansion of nurse-practitioner prescribing privileges.
James J. Campbell, M.D.
January 29, 2000
To the editor:
I have had the opportunity to read Dr. Kossmann's interview and Dr. Dale's comments upon it. The topic of HMOs and the economics and the practice of medicine is immense and complex, and it would be unfair to criticize anyone for leaving out some of the history given the constraints of a short interview. It seems to me that Dr. Kossmann took the present mixed-economy situation as his context.
Dr. Dale is quite right that the American Medical Association promoted various restraints of trade in the medical marketplace, including the medical insurance market. It was largely, though not exclusively, responsible for the intrusion of government in medical services, education, and insurance. But Dr. Dale is a bit careless in characterizing "the allopathic practitioners" as the evil-doers who got us all into this mess. In fact, allopathic practitioners who did not subscribe to AMA policies and methods were as much objects of AMA ire, prejudice, and censure as other health-care providers. (This is the principal reason I have not been a member of the AMA.) And surely, Dr. Dale must know that a substantial number of contemporary physicians are neither members of the AMA nor regard the AMA as "the voice of medicine." The real villains were those physicians who sought government power to coerce patients and protect themselves from competition.
Likewise, one should not condemn businessmen who function in a mixed economy to provide services to others for profit. Here again, Dr. Dale is careless in lumping all businessmen into one group deserving admiration simply because they seek profit. I think that there is a substantial difference between the businessman who relies on his own efforts in the business context that prevails, and the businessman who looks to government to restrain his competitors and grant him economic advantage through subsidies, concessions, and (tax) money. Consider the difference between, say, James J. Hill, who built the Great Northern Railroad without government subsidy (and, who, incidentally opposed government involvement in principle and in public); and Leland Stanford, who could not have built the Central Pacific Railroad (or any successful business) without the help of government coercion (and who, incidentally, promoted and actively sought government intervention).
Dr. Dale praises HMOs without making this distinction. In fact, he leaves out of his remarks the fact that since the 1970s HMO industry leaders have been active seekers of government intervention and largess, promoting their model (falsely) as the answer to rising medical costs. Collectivist politicians in both parties have recognized that the HMO model is good for something else: creating the bureaucratic apparatus and the changes in professional and patients' mentalities that are needed to make socialized medicine politically palatable. Let the "private sector" take the public beating for the inefficiencies and delays, the intrusions into decisions and privacy, increasing costs, etc., and the public will be ready to have government save them from "for-profit" medicine by taking over the HMO structure. (This was Hillary Clinton's basic approach, although she took it to the level of fascism.)
It is impossible, as I mentioned, to recount all the details of the changes in medical practice over the past 30 years. However, in general, HMOs have not profited primarily from provision of better or more efficient care. They have benefited from subsidies and grants, selective markets, legalized coercion, and transferring costs to other parties, among other things. I agree with Dr. Kossmann that the level of irrational and inappropriate interference in medical practice is significant, and getting worse. The HMO industry not only contributes to these trends, but also accelerates them by its deliberate seeking of government favor. Ironically, the AMA, which sought the economic protection of its members, is now the major proponent of HMOs and socialized medicine in this country. (The conjunction is, of course, no co-incidence!)
There is no question in my mind that the quality of medical care in this country is deteriorating, and that progress in medicine will be compromised in the long term. Think of the degradation of our educational system over the past 70 years, and you will have an approximate notion of the trajectory of the medical profession at the present time.
I would not discourage young people from pursuing a medical career. But I would not hide the context of contemporary medical practice from them. It is far from ideal for those of an independent mind and spirit, who may be considering medicine as a career precisely for the reasons of intellectual challenge and independence.
Walter Donway
February 1, 2000
To the editor:
Dr. Richard Kossmann ( Navigator profile, November 1999) is fighting the good fight for all of us. He has an incisive way of putting both the ethical and economic principles that government is trashing in the field of medical care.
I do think, however, that Dr. Kossmann beclouds his discussion with his references to Health Maintenance Organizations. Yes, he ably describes how they would fit into a laissez-faire economy, but he says they have "given us a care crisis." I don't see how, in principle, that is true (even though Oxford just refused to pay a $2,000 bill of mine because I made one misstatement in a telephone conversation). HMOs are conducting business in a market where government intervention, in multitudinous ways, has driven up costs. HMOs are operating in that environment as businesses want them to operate-and businesses (only secondarily the patients) are their customers.
Organized medicine resisted HMOs for decades, with laws in most states against the "corporate practice of medicine." But in a country where the corporation was so magnificently successful in so many areas, it was inevitable that the corporate practice of medicine would be tried. Of course, the Kaiser system and other early HMOs were lauded by many physicians not for cost control but because HMOs, unlike fee-for-service doctors, seemed to have a built-in incentive to provide more preventive health care. Hence the "M" in Health Maintenance. And there was evidence that the Kaiser system did devote more resources, and more physician time, to maintaining healthy patients. Today, I venture, the HMO is more about managing costs than maintaining health-but so are most doctors and hospitals. The only exceptions are doctors who can remain unaffiliated with an HMO. The cost-cutting pressure on HMOs, hospitals, and doctors alike originates in the distortion of supply and demand created by government.
From the point of view of the doctor, day to day, I know that the raw spot is where he meets the managed care organization. But stepping back a bit, to get the full perspective, HMOs and doctors are in it together. The enemy is government.
Stephen A. Moses, President
Center for Long-Term Care Financing
February 2, 2000
To the editor:
I admire both Dr. Dale and Dr. Kossmann for their intellect, dedication, and passion for the truth. Therefore, what luck that they're both right (mostly)! No, I'm not saying A is non-A; rather, they're both right, but in different respects.
Dr. Kossmann lived the tragic history of government intervention in American medicine first hand. He knows how the medical profession fought socialized medicine for decades, before finally "going along to get along" and then, as Dr. Dale points out, getting along very well indeed, at least financially. Dr. Kossmann was there at the beginning of Medicare and Medicaid when "poor, as well as elderly, were receiving access to and quality of care comparable to the middle class." He watched the gradual corruption of medical care service delivery and financing as the government wedged itself between doctor and patient and violated that sacred bond. He saw his colleagues first seduced and then spurned by public financing of their services. He and his lifelong colleagues experienced growing disillusionment, frustration, and anger as control of their profession and their livelihoods was slowly wrenched away from them by the collective. No wonder he and they are disgusted with the outcome and the tending future direction of U.S. health care policy.
Dr. Dale, a relatively new M.D. and Ph.D., also brings important historical perspective to the issue because of his training in public policy. He is correct that physicians brought government control on themselves by insisting on medical licensing and other protected monopolistic practices. He speaks the truth when he observes that America has never had a completely free market in medicine. He's right about the financial bonanza doctors received from Medicare and Medicaid for decades until the fiscal well ran dry. Certainly, young physicians-as pre-eminently men and women of the mind-must be considered promising candidates for Objectivism, even if Dr. Kossmann believes their education and socialization may have made them less amenable than some of their forebears. Finally, managed care is a viable business model and businessmen should not be reviled for doing whatever they can ethically do to succeed within the regulatory parameters imposed upon them by government.
I said both doctors were mostly right. Here's the qualifier. I could not find in Dr. Kossmann's article the vehement attack on "businessmen for pursuing a profit" that Dr. Dale emphasizes in his letter. Of course, the article does not defend managed care's Wesley Mouchs and Orren Boyles-with whom that industry abounds-but who would? Rather, I think Dr. Kossmann attacked the system, not its commercial practitioners. There, he has a point. The modus operandi of managed care is to pay physicians for withholding care instead of providing it. While it is a viable and legitimate service delivery and cost-control method that would have earned some market share in its own right, managed care would never have achieved the dominance it has today without strong government encouragement and interference. Until individual patients have the financial power to pick their own doctors and the same freedom to change physicians or hospitals as they have to change car companies or soap brands, consumers of medical care will remain unhappy and ill-served. Dr. Kossmann is correct that medical savings accounts and high-deductible indemnity insurance are the keys to empowering patients to be able to choose and pay for the medical care they want and need. In a free market, these two financial products would flourish and health care consumers would benefit. Managed care would
wither, but survive.
Thus, I think Drs. Kossmann and Dale mostly agree on what really matters. I hope they'll resolve any differences, shake hands, link arms, and rally an army of Objectivists to pursue the real culprit-government intervention in the health care marketplace.
James Lee Brooks, Jr., M.D.
February 6, 2000
To the editor:
Dr. Richard Kossmann's comments in the Navigator interview on the destruction of our profession by government were, I think, completely on the mark.
A major factor in this has been the intrusion of the "third party payer," both government and "private," as a primary intermediary between the doctor and patient, distorting therapeutic decisions by physicians and fatally insulating patients both from their treatment options and the true costs of their care. This last has been essential for the politicians who have steadily expanded Medicare and its punitive controls and built up a tremendous constituency of medical dependents, assuring that "free" medical care will be a permanent part of our welfare state until reality finally brings the whole edifice down.
The growth of government-backed HMOs is the next disaster we will have to endure. I say this because, given politicians' predilection for the fascist order of nominally private companies acting as shills for government control, this is probably the form in which national health care will be shoved down our collective throat (of course with the Republicans dribbling lip-service to "market-based" solutions).
In a free market, HMOs would probably arise for a certain class of consumer, e.g. young healthy workers whose use of services would be low; but today's HMOs are not a true market response to health-care problems. As Terree Wasley points out in her excellent primer What Has Government Done to Our Health Care large-scale HMOs were a brainchild of the Nixon administration and were backed with favorable legislation and start-up money. Since 1973, Federal law has required companies with more than twenty-five employees to offer an HMO plan, creating a completely contrived market for them. As a "vested interest," they have worked hand-in-glove with the government in bundling Medicare patients into HMOs to get their snout into the public trough and most recently have lobbied Congress for liability protection from their own members (not exactly the first priority of a business with satisfied customers).
Thus, as a going concern, HMOs have benefited from government policies, which have raised the cost of medical care to its present stratospheric levels. Private employers, sagging under the costs, increasingly have converted to HMOs that the law already required them to offer. The HMOs (in my experience) have run straight to the bottom rung in lining up physicians for their plans, devouring the patient base (which could have supported alternate market solutions), denying care or ruinously delaying it to keep down costs. Meanwhile physicians have been slowly squeezed out of business between the niggardly rates paid by HMOs and the huge administrative costs associated with dealing with insurance companies.
In a mixed economy in which government and business are so intertwined, it hard to see how HMOs could have become anything other than what they are-a distorted semi-government entity with the predictable labyrinth of rules, shabby treatment of patients, delays, and denial of care. Undoubtedly there are well-intentioned people involved everywhere, but the incentives created by this bastard system have yielded both a poor market product and bad medicine. In fairness, there are still many good company health plans and maybe some decent HMOs (though I have not seen them), which have avoided the collapse to mediocrity. In my area, for example, the Disney plans seem to be honest brokers both for patients and doctors. Unfortunately and increasingly for many, however, today's HMO is Orren Boyle come to medicine.
Terree P. Wasley
Greater Phoenix Chamber of Commerce
Author of What Has Government Done to Our Health Care? (Cato Institute)
I must say that I found myself in agreement with Dr. Kossman, and also with Dr. Dale on many points. However, I do not see where Dr. Kossman attacked HMOs as the primary villain - his statement that "there would be no medical cost crisis had there been no government intervention in the first place" really says it all. HMOs were created and encouraged to grow by government, so the initial blame must be placed there. HMOs certainly have had distortive effects on the health care system, but are just the latest in a long line of government-induced distortions into the economy.
I agree with Dr. Dale that government intervention did not occur in a vacuum, and in my lectures I am clear that both the medical profession and health care related businesses were instrumental in pressuring government to interfere and regulate. It is probably wishful thinking about human nature to believe that individuals and groups will not lobby their government for programs and regulations that are not within the role of government. On the other hand, that leaves us with the realization that need to elect "statesmen" able to resist such pressures, not the "politicians" we actually send to office.
Dr. Dale exhorts Dr. Kossmann to "stop attacking businessman for pursuing a profit" yet he attacks physicians themselves for doing the same thing by lobbying for regulation and protection of their profession. Both Dr. Dale and Dr. Kossman are correct that in their prescriptions for change...1)remove all licensing; 2) rescind physicians' grip on the pharmaceutical market; 3) lift all government mandates and regulations; and 4) allow the consumers and providers of health care services to have a direct relationship with, and responsibility to, each other on cost and services.
— Terree P. Wasley
Posted 5/25/2000
To the Editor:
I have been a general surgeon in private practice for 20+ years, so have seen the deterioration of the "practice" in the face of remarkable technological achievements not withstanding.
I am convinced that the deterioration is unstoppable unless Objectivists are able to convince physicians and the public in general that the essence of the word "altruism" is not compassion and benevolence, but human sacrifice. In fact, if you asked 99.5% of the public and/or physicians what they think "sacrifice" means, they would equate it with great effort and commitment to a cause they believe worthwhile that necessitates giving up immediate comforts, sleep, regular meals, ect. It seems that only Objectivists have come to understand "sacrifice" to mean giving up a greater value for a lesser one. All the rest of the public have been sold a huge "package deal". Hence, physicians are completely disarmed when it comes to defending themselves against what's being proposed.
Our task as Objectivists is to somehow get a forum and convince others that our definition of "altruism" is the correct one, and that rather than embrace it, they should run for their lives from its essence. I have found this to be a nearly impossible task, however.
—Kyle VerSteeg
To the editor:
After reading the excellent letters on your website concerning the health-care crisis, I am struck by two facts. One is that the prime HMO owner, Aetna, has recently had its stock taken apart by the last remaining free market — the stock market; and, two, Medical Savings Accounts were only briefly mentioned. Well, I sell them. And I would like to add that I do so because they are an antidote to government. This is not a sales pitch from me. Anyone who is self-employed, or gets their employer to form a group plan, can have one. Golden Rule would be a good company to contact. But the concept is what attracted me to the insurance field in the first place, as an early (age 17) reader of Ayn Rand. The insurance concept produces independence from relying on others, or being forced to, including government. It is a fantastic invention of man to have a lot of people pay in very little and if disaster strikes, an individual gets the big payoff — to either rebuild a burned house, or provide an estate for children. The same concept can be applied to medicine. If more doctors recommended Medical Savings Accounts to their patients, it might put us back on the footing we need — having the patient choose and allocate resources according to their wishes and the recommendations of the medical professional they trust. This puts accurate demand back in the market and forces "supply" to conform to it. The individual is back in control. I would suggest all health-care professionals look into what could be done for their standing — vis-a-vis government control — if they also concerned themselves with the financial arena. With your bill for the treatment of a case of flu is a flyer for Medical Savings Accounts.
Please keep up the good work. I rarely see a letters column with anything other than fluff. I will be checking it regularly.
— Dave Blackmon