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Aug. 18, 2010 - Freedomain Radio - Stefan Molyneux

16:31

1727 Freedomain Radio: Schooled by Dr Mom!

An orthopedic surgeon, and President-Elect of the Association of American Physicians and Surgeons, clarifies and corrects some of my arguments about the American Medical Association, and the facts behind the crazy costs of American healthcare. http://www.AAPSonline.org

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	Hi everybody, it's Stefan Molyneux from Freedomain Radio.
	This is a great series of articles written to correct and clarify some of my arguments about health care costs and particularly the AMA. Thank you so much to the fine doctor who took the time to write them and these are the letters.
	Dear Mr. Molyneux, my son is a great fan of yours and your philosophy has stimulated quite exciting dinnertime debates at our house.
	I am an orthopedic surgeon and the president-elect of the Association of American Physicians and Surgeons, the free market alternative organization to the AMA. We have been, quote, the voice for private practice since 1943.
	And you can look at our informative website at aapsonline.org.
	At my son's suggestion, I listen to your healthcare true news items.
	You are exactly right in your assessment that healthcare is too expensive, but you are completely wrong in suggesting that the cost is due to physicians' self-imposed, in your mind, monopoly.
	There is a monopoly, but it is created by the federal government.
	The high cost of medical care is due to over-regulation by the government, the cost of litigation, and the administrative costs of third-party payments, and the idea that hospitals should function like Four Seasons hotels Not like hospitals in any other country.
	Physician's fees are a very small percentage of healthcare costs.
	A total joint replacement surgery, which costs approximately $40,000, pays the surgeon exactly $1,200.
	Thank you. That's amazing. And he may wait up to six months to be paid.
	During that time, the doctor will have spent $15,000 on malpractice insurance, a cost he cannot pass along to the consumer.
	Why? Because doctors no longer set their own fees.
	Their fees are determined by the Medicare fee schedule, which all insurances use as a basis for their payments, although their payment, in most cases, is more than Medicare.
	The best surgeon and the worse get paid exactly the same.
	Medicare pays so little that many physicians are limiting the number of Medicare patients in their clinics.
	They simply cannot afford to stay in business.
	At this time, 20% of orthopedic practices in California are nearing bankruptcy.
	And while squeezing the doctors financially, the government also makes sure I am not able to be charitable.
	I cannot legally see you for free or write off your copay if, for example, you are 40 years old and without insurance, because I cannot legally charge less than the Medicare rate.
	That would be discriminating against Medicare patients.
	Finally, all this third-party involvement makes me less productive and costs at least 15% of my income just in billing the third-party payer.
	It is not the AMA which tells me I cannot have a nurse taking off a wart in my office.
	It is the federal government regulators.
	The reason, quote, eliminating the monopoly was never even discussed, is because the monopoly is held not by doctors or the AMA, although trust me, I am no friend and no member of the AMA, but by the federal government.
	And as you are so fond of pointing out, the government never easily relinquishes its power.
	Are you aware that the government can come into my office without a warrant, take my patients' records, my computers, etc., even information on privately non-federally funded patients, if they suspect that I am somehow illegally charging Medicare or discriminating against Medicare recipients?
	There are approximately 160,000 pages of Medicare regulation.
	And anything less than 100% compliance can be deemed fraud.
	They can audit a few charts and determine that I overcharged Medicare.
	Undercharging never gets credited.
	Then they can multiply that error, deemed fraud, by the total number of charts and add triple penalties.
	In response to all this threatening, I must hire a lot of staff to help me ensure compliance.
	Hospitals, which are the major cost generator in the system, have the same problem, and the six dollar aspirin is the result.
	Additionally, hospitals have become luxury rooms.
	Trust me, the patient you discussed in China did not have the latest decor, color TV, and the latest technology NICU standing by just in case.
	While I agree in investing in technology, I do not agree with taxing everyone so patients can have a color television.
	In Japan, when I lived there, the hospital only did medical care.
	Your family was responsible for bathing you, feeding you, providing blankets, etc.
	Comparing China to US hospital costs is comparing apples to oranges.
	There are other ways in which the government magnifies the cost and inefficiency of medical care in the form of the FDA, misguided research funds, regulations on medical education, interfering with the free market in insurance, and so on.
	Insurance companies have contributed to the problem by selling overly expensive insurance to business.
	My employees can buy individual insurance for two-thirds the cost of my business-funded insurance.
	And insurance companies abandoned true actuarial-based insurance in favor of prepaid, low co-pay health schemes which escalate costs through over-utilization.
	Imagine the cost of auto insurance if your boss bought it and if you were covered for every oil change you might decide to get at any little nick in the paint.
	There is a free market alternative.
	Mr. Obama gives lip service to ending waste, fraud and abuse.
	I can end it tomorrow. Go to a cash system for all outpatient services.
	I cannot defraud the patient paying me for a service at the window.
	He knows if I gave him an injection or not.
	By paying cash, we eliminate 15% for billing costs and probably another 30% in staff costs.
	It is also hard to overcharge a cash patient you look in the eye while giving him a bill.
	Costs would fall dramatically if doctors competed with open prices, even if the patient ultimately was reimbursed by the government.
	Insurance would then be, once again, actuarially based, major catastrophe insurance.
	Let physicians and hospitals visibly pass on the surcharge for the litigation they risk by seeing patients.
	And let patients realize the cost of the current legal pot of gold scheme.
	And or allow physicians and hospitals to forgo buying malpractice insurance.
	Lawyers don't want your hard assets.
	They want the quick cash available from your policy.
	If you don't believe me, consider this.
	The only areas of medicine where costs have decreased It's in private cash care, such as LASIK. When it was first introduced, having your eyes corrected with radial keratotomy was $5,000.
	Now I see it advertised for $500.
	No Medicare, no insurance.
	Same highly trained doctors and high-tech equipment.
	It's called free market competition, and the government is trying desperately to squelch it.
	You might consider coming to our meeting on free market medicine in September in Salt Lake City.
	I'm sorry, I simply won't be able to attend it, but thank you so much for the invitation, and thank you so much for those absolutely fascinating facts, most of which were completely new to me, and I consider myself completely, utterly and totally schooled.
	Milady, thank you so much. Here's a follow-up post that she made on the message board.
	Since my son posted my letter, there have been a number of very thoughtful responses, so I will try to clarify some of the points raised.
	I agree that the AMA was and is complicit in trying to establish a regulated doctor market.
	You can read my article at the archive section of humanevents.com.
	The AMA doesn't speak for most doctors.
	The AMA today only represents about 15% of the doctors actually in practice.
	We may not be as smart as the Molyneux bloggers, but we eventually catch on.
	I know the AMA is feeling the decline, the pressure of declining membership, because after getting no letters from them for years, I'm suddenly receiving multiple deals if I rejoin.
	A monopoly only makes prices, or in this case doctor's fees, go up if there are no price controls on the monopoly.
	In the underserved area where I practiced until recently, We functioned with four orthopedic surgeons, when statistically we needed ten.
	We were worked into the dirt, but because there is no free market, a shortage did not command bigger prices or fees.
	In a free market, a shortage causes a price increase.
	Then other producers jump in at the new profit level to fill the demand until prices decline at a new stable balance.
	Monopoly would help doctor's fees if we could raise our fees.
	But there are wage and price controls on doctors.
	Market forces are active on the supply side.
	No one wanted to move into my area with 70% Medicare funding, by which she means underfunding.
	We are approaching a very significant crisis in Medicare and medicine, and not for the reason people think.
	The only way to create shortages in a free market is to artificially cap prices.
	When rents were capped, rental property became scarce.
	When gas prices were capped, we stood in line for gas.
	Now, medical prices are capped, even though the average consumer who sees runaway prices doesn't realize that the cost has been siphoned off to third parties who do not directly care for patients.
	The actual producers, i.e.
	the doctors, are getting squeezed.
	I make less than half from Medicare and insurances than I did 15 years ago.
	The upshot is the young people today are not investing in becoming highly trained specialists.
	After four years of medical school, it doesn't make sense to spend another seven years of ball-busting hours training for a specialty and then to make so little that you can't pay back your student loans.
	Cardiac surgery programs aren't filling for the first time in history.
	We produce very few general surgeons.
	Most of us who take ER calls are over fifty years old.
	I recently gave it up and moved to a daytime job.
	It just wasn't worth it.
	See humanevents.com medicine and the new slavery.
	Many of us older physicians are limiting our practice or retiring early.
	The downturn in the market kept many working, but at some point you can't make up in volume when you lose on every transaction.
	When we baby boomers give it up en masse, we are in deep doo-doo.
	Mr. Molyneux is right that the states regulate doctors by licensing, but they generally grant a license to anyone with appropriate MD or DO credentials and a clean record.
	So the limiting force in the number of doctors is not licensing, but the number of medical students trained.
	And this is limited by funding and demand.
	On the other hand, you as a patient can choose to visit a chiropractor, a nurse practitioner or a PA, who in some states can practice independently, an herbalist or a naturopath or acupuncturist.
	Do you need a surgeon to remove a wart?
	No, and you have a choice.
	See your family doctor or a nurse practitioner.
	But unfortunately, their fees are set by the government and insurance company fee scale, so if you are paying cash, you're screwed.
	There is hope, due to the number of physicians leaving the government plantation and developing cash practices with transparent lower prices.
	I predict the outcome will be either a return to a free market in medicine with mostly cash and true catastrophic insurance for big-ticket items, just like car and house insurance, which work quite well, or And this is how it would probably shake out unless the new wave of limited government enthusiasts win out.
	The government will demand participation and completely kill the free market.
	Obamacare is step one.
	It is instructive to consider the Soviet Union experience.
	Medical care was free, but lousy.
	When government pays, they won't invest in technology such as an MRI because it is negative on the balance sheet.
	When private people supply the service, that MRI cost is an investment that can be turned into profit.
	That is why there are more MRIs in Seattle than in the whole province of British Columbia, a stone's throw away.
	Richard Eberling tells the story of his wife's family who lived in the Soviet Union.
	When her father or some relative got sick and needed gallbladder surgery, they had to bribe The anesthesiologist and surgeon with real goods to borrow the equipment from the hospital and perform the surgery on their kitchen table.
	There was a black market in medical care, just like any other artificial shortage creates a black market.
	There may come a day when I get my dad's black bag out again and make house calls once more.
	One of the great tragedies is the degree to which the government prevents innovation In medicine.
	People clamor for safety, but the government can never give you perfect safety.
	The common perception is that the FDA keeps our drugs safe.
	By the by, I did an interview with Dr.
	Mary Grewart, the recent presidential candidate for the Libertarian Party on this.
	The reality is that the FDA causes huge price increases due to the onerous processes required to bring a drug to market.
	It encourages lying.
	Because when so much is invested, companies want to hide any problems to keep solvent and, in short, prevents new drugs from coming to the market, which might save lives.
	Now they want to shut down compounding pharmacies and the customized, tailored treatment these pharmacies can facilitate.
	In an age when we have sequenced the genome and can provide a truly individualized medicine, we are doing a one-size-fits-all thanks to government regulation.
	And state medical boards guarantee mediocrity in medicine.
	We know a lot, but we practice 30-year-old medicine because the state medical licensing boards judge doctors using the rule of 90%.
	Unless you are doing what 90% of the doctors in your area are doing, then you are not doing, quote, standard of care and may be penalized.
	Of course 90% of any herd are not leaders.
	The board assumes that those 10% of doctors are wrong instead of those leading the pack.
	If the computer industry used that formula, we'd still be using punch cards and a Wang calculator because no one would try anything new.
	There are some very good articles on free market medicine for those who wish to read more by visiting aapsonline.org.
	I'll put the links below. I'll quit with two of my favorite quotes.
	The first is from Vladimir Lenin, who opined that, quote, medical care is the keystone in the arch of socialism.
	And the second is by Charlie Reese, who said, I may be paraphrasing slightly since I don't have the quote in front of me, it is one thing to lose your liberty to an overwhelming military force, but quite another to sell your freedom for a filled bowl of oatmeal.
	The promise of security from liars.
	Well, thank you so much for correcting my mistakes.
	Thank you so much for sharing your experience.

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