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Aug. 7, 2013 - Freedomain Radio - Stefan Molyneux
28:28
2447 Health Care is Actually Really Cheap!
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Hi, everybody.
It's Stefan Molyneux from Freedom Main Radio.
I hope you're doing very well.
I'm here with Dr.
Keith Smith from the Surgery Center of Oklahoma and I'm sure other affiliated institutions.
And I've never actually felt degree envy until I saw the backdrop.
So in post-production, we're going to put in a nine-dimensional matrix of pseudo-degrees behind me, though I'm sure yours are all real.
Thank you so much for taking the time today.
Thanks for having me.
Now, just to be clear, this is where I went to have something removed from my neck.
It was supposed to be hubris, but they couldn't find any of that.
Then they looked for vanity, couldn't find any of that.
Anyway, they took something out, and so this is a hearty endorsement of this entire approach.
The surgical team was fantastic.
The facility was fantastic.
And having grown up in Canada and the US and gone through the grinder of socialized medicine, having what I would consider real patient care for the first time in my life was fantastic.
So this is a huge endorsement for this group, with the caveat that if my head actually falls off during the show, that might put a bit of a hiccup in the actual endorsement.
But other than that, unless the head actually detaches from my body.
So thanks so much for taking the time.
I wanted to start off by talking a little bit about...
There's this kind of conception that the U.S. suffers from an excess of liberty in medicine.
And this is why, you know, costs are so high.
And in the U.S., for instance, per capita costs can be 1.5 to 2 or even more times that of socialized medicine.
As far as I understand it, you guys don't share this particular opinion that the U.S. is suffering from an excess of liberty in the field of medicine.
So where do you see the constrictions occurring that are driving up costs?
Competition, as you know, in every industry causes quality to soar and prices to fall.
That's all you have to know to really know that what the United States has is a mixed system.
It's more of a corporatist model.
There's very little of the free market in medicine in the United States, but where you do find it, you find that quality is very high, prices are reasonable, and patients have great access.
The two most common examples are plastic surgery and LASIK surgery, where the market really is at work, people receiving the care, the ones paying for it.
We've just decided that we were going to emulate that on a larger scale for surgical procedures, keeping in mind that lots of private practice, family practice, internal medicine, pediatric doctors are doing the same thing.
We decided to do it for surgical procedures.
The free market is working.
People are having to respond to our prices, even in remote locations far away from Oklahoma City, because they're finding patients leaving on an airplane like you did, and so they either have to respond to that or perish from the competition.
Okay, this is a strange thing, right?
So if you go to buy a car, one of the first things you're going to see is the price.
And these are big ticket items, usually more than what people are going to spend in any decade on any kind of surgical procedure.
Why is it such a Byzantine, confusing, foggy mess to try and get prices out of a healthcare system?
I mean, if it's so free market, shouldn't the price and negotiation be upfront?
Why is it so opaque?
Well, it is Byzantine and opaque because there are a lot of layers and a lot of people that benefit from that opacity.
And the free market is not at work and the people who run what I call the healthcare industrial complex or the healthcare cartel in the United States, they want no part of price transparency because then all of the layers of people who make money skimming off of patients that don't deliver any care at all, they all go away.
Keep in mind that Professor Robert Higgs, the author of Crisis in Leviathan, very clearly, and von Mises too, very clearly stated that without prices, without transparent and rational prices, there can be no market.
There can be no market of any kind.
And that basically describes the healthcare system in the United States.
And I would imagine a lot of that has to do with the fact that consumers are kind of far removed from prices themselves.
Very few people pay directly out of pocket, even for relatively minor stuff.
I mean, as I think many libertarian theorists have pointed out, it's sort of like getting car insurance for an oil change, you know, stuff that you know needs to be done and so on.
So what are the layers that are keeping people from accurately viewing and negotiating prices in this central area?
Well, the giant corporate hospitals are part of the problem.
They don't want anybody to know that the truth is that healthcare doesn't cost that much.
Sorry, I'm just going to take a moment for the internet to collectively have some sort of aneurysm at that statement, because for most people, the idea that healthcare doesn't cost that much, it sounds like you should be opening up and selling some snake oil from your left jacket pocket or something like that, because that's a surprising statement for most people.
Well, it doesn't cost that much, but what the hospitals charge for it is another matter altogether.
I run a facility.
I mean, I run an outpatient surgical facility, as you know.
And so I'm an insider, and I know what it costs, and I know what the supplies cost.
And when we put our prices online, which was a radical move, it's still very unique, we started at one-tenth of what the so-called not-for-profit hospitals across town charge.
We thought that was a good starting spot.
But we really don't know if that is the market clearing price or not until someone really starts to compete with us.
The answer to your question is the big hospitals, they represent a layer.
The insurance companies represent a layer.
There are lots of vendors that engage in all sorts of schemes to take giant hospital bills and reduce those bills supposedly for the sake of the buyer.
And everybody takes a percentage and a skim all along the way.
We just decided that we would just put prices on things and tell the whole world and say, here's what we do and here's what we'll do it for.
And that's pretty scary to all of these layers that are just skimming billions, hundreds of billions of dollars off of the healthcare consumers in the United States.
And I think I remember hearing a story just before I went into surgery about the degree to which your open price transparency has actually affected other service providers elsewhere where people are coming in waving stuff saying, you know, how come you guys are charging me five or ten times this amount?
Yes.
I get several emails a week from people who go into the hospital and they have a plane ticket in one hand and our price is printed out in the other hand.
And they tell the hospital, are you going to step up or am I flying to Oklahoma City?
And that's happening outside of Oklahoma City.
So we're actually saving people money when we're not even doing the surgeries many times.
But locally in Oklahoma City, we've had a tremendous deflationary effect on the price of healthcare services in this area.
It's truly been remarkable.
And just as a sidebar, that is the nightmare.
That is a nightmare that the Obamacare bureaucrats Never and ever anticipated is that the insanity of this legislation would create true market consumers in competition and would drive prices down because that defeats their effort to get single payer in this country, which is their goal.
That's very interesting, and I never thought of that, but I think I understand what you're saying.
So as the hundreds of thousands of pages of regulations, the endless complexity, and I actually was just reading the other day that the public sector unions are turning against Obamacare because they're undercutting what the public sector unions can provide in terms of health care, that it may actually provoke people to look at more direct relationships rather than wander into this Brazil-style bureaucratic maze.
It's very paradoxical, but I believe the intent of the Unaffordable Care Act, as I like to call it, was to introduce chaos into the marketplace and intentionally drive the price of care and insurance so high that people would beg for the sequel, and they would beg for single-payer.
What's happened, though, is it's created shoppers.
It's created shoppers out of American healthcare consumers, and now they have that sticker shock that Jim Epstein from Reason Magazine said is mostly absent.
So they're looking online and they're saying, well, wait a minute, I can have my knee arthroscopy done for half of what my deductible is on my insurance policy if I go to the Surgery Center of Oklahoma.
So they're asking for prices, they're demanding prices because people with health savings accounts, high deductibles, People that are part of self-funded businesses that pay for their employees' care out of operational revenue.
They're shopping, and that is a nightmare for the bureaucrats in Washington, D.C. that want all of the layers and want all of the price opacity so that their cronies can clean up.
Right, right.
Now, I mean, of course, there's several things that are interfering with free market operation.
One, of course, is the tax deductibility of the usually employer deductibility of the insurance plans, right?
Which comes out of the Second World War when you couldn't give people raises and instead you had to give them some other benefit.
And what they did was said, okay, we'll pay your health care.
I mean, don't pay your life insurance, don't pay your car insurance, but healthcare becomes one of these things.
And it seems to me like of all the things you'd want in human life to really feel like you have visceral connection and control over, healthcare is one of those things.
And yet it seems that people seem almost desperate to find some way of abstracting themselves from direct price consequences, direct negotiations.
And that seems...
Kind of strange to me.
I don't know if that's the result of all these regulations or if that desire is driving the regulations, but boy, it seems to me, I mean, the degree of control that I felt over my own health care when I could simply go and pay something and get something done was a huge relief.
I mean, I think the anxiety that people face with all these layers and bureaucracies and crossing their fingers, I hope this is covered, this is rejected, and so on, it distracts people from, I think, taking more control over their own health care and feeling like they're a player in really the most important market, which is your own health.
Yeah, I would agree.
And you pointed out something very important.
You would think that providing health care for yourself or your family would be top priority when, in fact, contributing to your pension that's held by Wall Street is a tax-deductible activity when your health care is not.
So that gives you That gives you an idea of the power of the health insurance lobby that they've prevented that.
The health insurance lobby does not want the tax deductibility of purchase of health insurance because right now with employers in charge of purchasing health care, they can write one policy that covers thousands.
If the tax treatment of healthcare purchases is equal between employers and employees, the insurance brokerages have to write thousands of policies to cover thousands of people, so their overhead goes way up.
It's much more difficult.
People cannot be herded and controlled into these cartelized PPO networks so that they can funnel business to their pals, and it becomes a much, much different game.
Well, and there's, I think, a terrible thing that occurs in the American lobby process with regards to health care, which everybody wants their pet illness, you know, and I say that with a degree of sensitivity.
Everybody wants their pet illness to be covered by everyone so that they don't have to pay for the cost themselves.
And this is why you get some very obscure things trying to be written into everyone's policy, which is a purely political process, would not be supported by the free market at all.
And this is why you end up with these monster things where, you know, 20-year-old guys have to buy fertility insurance.
You know, for infertility issues and so on, which they'd never in a million years want to buy, but because everyone's piling on using the government to try and get their pet peeve, pet cause, pet illness on everybody's insurance, I think that's another thing that drives things up and reduces choice that would be much more carefully tailored to people's actual needs.
And while the insurance companies complain many times about these mandates that, like you say, make a 20-year-old buy fertility insurance, they actually profit from that wildly because the risk-benefit proposition of a 20-year-old having to buy pregnancy insurance, it's very likely that the insurance company is not going to have to pay out a claim on that.
So they actually like that arrangement.
Keep in mind, too, that the presence of insurance and the presence of third-party payment, the somebody else is paying for this kind of effect, is a huge part of why healthcare is so expensive in the United States.
Where insurance is absent, for instance, in LASIK and plastic surgery, like I said before, you find prices very reasonable.
At our surgery center where insurance is absent, you see prices like you saw when you came to our facility.
And the care is affordable because that's one of the great myths.
It doesn't cost that much, but once you introduce these third parties, go get an estimate to get your roof replaced and tell the guy you're going to pay cash.
And you'll get a much better price than if he has to deal with your insurance company.
Well, I mean, one of the visceral things with that was when the biopsy was taken from my neck, the first bill that came back was crazy high.
And then they said, oh, no, no, he's not covered by insurance.
He's paying.
And they're like, oh, okay, well, then it's, you know, X amount less.
And this is another thing.
You just don't haggle for price.
I mean, I was thinking about that after the fact.
And I thought, you know, well, if I'd been covered by insurance, would I really have gone to the wall to fight that price and to ask for some, you know, something more reasonable?
Yeah.
And of course, no, I would have just sent it off to the insurance company and it would have gone into the great glom of bureaucratic payments.
But I thought, well, because it's coming to my bank account or my visa statement, that's something that I'm going to push back on.
And I think that's not something that happens.
And of course, people who are making bills love to deal with insurance companies because there's much more bureaucracy and procedural.
They just tick their boxes.
They don't fight for price in the way that individual consumers do.
That's right.
Keep in mind, too, there are a couple of scams and scandals in the United States where people have figured out a way to make money from the fact that the bills are gigantic.
There's a whole army of people who reduce medical bills and charge a percentage of the extent to which they reduced it.
Many of those people are inside of the big insurance carriers.
The insurance carriers are paradoxically incentivized to seek out the highest bills in order to maximize that repricing revenue.
Particularly the not-for-profit hospitals, they claim that what they don't collect was a loss.
So they are incentivized to charge $100 for an aspirin because then when they only collect $5, they claim they lost $95.
That allows them to maintain the fiction of their not-for-profit status.
But they also then throw that $95 loss at the federal government and receive a kickback the next year for having done so.
So there are so many scams where the federal government has really enabled this mess.
Right, right.
Now, there's something else.
This is something I feel delicate talking about because nobody wants people to suffer and die, of course, right?
I mean, I think that's just a natural human instinct to take care of your fellow man.
But there's something that I find fundamentally troubling about...
Pre-existing conditions and insurance.
I mean, I think that insurance is a fine thing to buy for those weird things that happen out of nowhere.
You can't anticipate or whatever.
I think that's fine.
And we do that for cars.
We do that for accidents and so on.
We do that for health care.
The problem, it seems to me, and this is what Obamacare is to some degree about, is you can't disqualify people for pre-existing conditions when they apply for insurance.
Now, again, I'm no actuarialist and I'm certainly no mathematician, but it seems to me that that's the entire opposite of what insurance should be.
Because if you can't be disqualified for a prior condition, why not just wait until you get sick and then apply for insurance, which is like applying for life insurance after somebody has died.
It seems to me that everybody is just going to make...
Like, people who don't buy insurance and get hit with hard bills, I think there should be charities I would contribute.
I have contributed to help people out in those situations.
But I think if you make it so easy to get your healthcare covered, even if you've not prepared for it, it really pushes the costs on the conscientious people who are going to buy insurance and not wait and do the kind of slippery move of just apply after you get sick.
And it seems to me that's just going to drive prices through the roof and therefore be another way of saying, well, we tried the free market, we tried reforming the free market, we're just going to go socialist because blah, blah, blah, blah, blah.
It seems like that's just another step in that direction of driving prices up.
That's exactly right.
It's like someone calling an insurance agent to buy insurance on their home while it's on fire.
And there definitely are people that are in line that need heart-lung transplants and all kinds of procedures like that that are just waiting for this law to be implemented.
And what they're going to find is that they're going to have a card in their wallet That's going to say that they have Obamacare.
And what they're going to find is there's not going to be anyone there to see them for a couple of reasons.
One is that the demand will overwhelm the supply because that's what happens when stuff is free.
The second reason is...
is that the government anticipated this, and the Obamacare bureaucrats anticipated this, and they have this tool called the Independent Payment Advisory Board, the purpose of which is to lower the price that physicians and facilities are paid below the market clearing price.
So they will use that price control mechanism as a rationing tool So that the lines will be very, very long.
And yeah, there will be people that will have all kinds of pre-existing conditions that will be celebrating and dancing in the streets because tomorrow I can have my whatever operation only to find themselves, as many Canadians are, in long lines and no one to take care of them.
And a pretty surly person on the other end that does take care of them who is probably doing so at gunpoint, not some mutually beneficial arrangement.
Oh, yeah.
I think Ayn Rand pointed that out, that one of the most terrifying things is a healthcare provider that you're not financially helping out in a mutually beneficial arrangement because then they're just there for some other reason that's usually not that great.
This is another thing, too.
They're talking about putting tens of millions of more people into the healthcare system.
Again, I mean, you just wish people had had, you know, Econ 101 in grade 7 would cover this, you know, which is that if you're starting to jam tons more people into a healthcare system without a concomitant or simultaneous increase in the number of doctors, what are people that think are going to happen to waiting lines?
I mean, the number of doctors is calibrated at least roughly in some vague free market sense what's left of it.
To the demand.
But if you're going to suddenly increase the demand without increasing the supply of doctors and you can't increase the price because it's legislated, I mean, it's not brain surgery to figure out what will happen from there.
But people don't seem to even, they just think there's going to be magic, what, you're going to clone doctors and just have everyone in your living room?
It doesn't make any sense.
People expecting things that simply in reality can't happen.
Well, and I believe that it's all intentional.
Because you can look at this Unaffordable Care Act and you can pick it apart with a thousand points like what you just made.
And there's no doubt in my mind that it's created intentionally to create chaos so people will beg for a single payer.
And then the government will have complete control, which is their goal.
Well, and one of the things about healthcare, too, is that you don't generally get very politically active in healthcare if you're healthy, because you're living your life.
And then when you get sick, you're kind of focused on getting better.
And so it is one of these things where government can really grow.
You know, like the gun rights stuff.
I mean, people really fight tooth and nail for that stuff.
But healthcare is kind of a different thing.
You're not that interested until you're too vulnerable to fight it.
And then...
You really are dependent on a system, and if it doesn't work, I mean, I had the opportunity to leave the country where I was told it would be months' wait even to get any kind of surgical attention, and I had that opportunity.
Lots of people don't have that freedom, and that, I think, is one of the most dangerous things about a growth in healthcare, is it really is one of the areas where government can grow so much, and very quickly it becomes...
In people's minds, you know, there's this logical fallacy, you know, the government provides X. Well, if the government doesn't provide X, then X won't be provided.
You know, the government suddenly owns the whole healthcare thing, and then you face that horrible argument, which is always happening in Canada, where you say, you know, we should have voluntary private charity free market stuff.
Oh, well, then you want all these people to, you know, die in the streets, the usual cliched arguments that you hear.
But the reality, of course, is that in Canada, there are a million people on waiting lists for some pretty essential surgeries, and a lot of them are dying.
This idea that you've waved this magic wand called the state gun, and you've just magically solved all of these problems, it's so delusional, that, and it's so common, but once it gets into healthcare, it seems especially difficult to uproot.
Yeah, I live in Oklahoma City, and the surrounding area has been devastated by tornadoes.
And one of the things that fascinates me, whenever we have a natural disaster like this, in Oklahoma anyway, It's the amount of charitable giving, the amount of help that happens completely voluntarily.
And one energy company in Oklahoma City and one professional basketball player, Kevin Durant, gave more money within 24 hours than the federal government of the United States pledged through the Federal Emergency Management Administration.
Pledged.
Hasn't delivered, but just pledged.
And so there are millions and millions of dollars that became available really within 24 hours to the poor victims of this natural disaster.
And I think that if you just didn't tax people to death, you would see the very same kind of charitable activity in healthcare.
As a physician, I'm happy to give away my service.
And the surgeons I know are happy to give away their service.
And as a facility, I'm telling you right now, it doesn't, healthcare really doesn't cost that much.
Yeah, there are things like stem cell transplants and there are some very, you know, liver transplants.
There are some things like that that are very, very expensive.
But that's what insurance is for.
It's for those rare catastrophic events where a large pool of people pay in and the events are very unlikely.
But I think you're right.
I think that the whole, if we don't have the government as a safety net, people will be dying in the streets.
I think about what the old Congressman Senator Phil Graham from Texas used to say.
He said, show me a government safety net that hasn't become a hammock.
Or a noose.
Now, I'm just curious.
The last question I really wanted to ask you, and please make sure that you get your vital statistics, the website, the name, and all that for people.
Again, I heartily recommend what you guys do.
It was a fantastic experience for me.
What is it for other doctors when you talk about this stuff?
I heard a statistic that between a quarter and a third of doctors' time is spent on paperwork.
God, that's so frustrating to think of the skills that are being wasted on typing and writing.
When you talk about your approach and your direct relationship with the customers and the efficiency and the fact that you can really help a lot more people, Are you like the freedom crack dealer for your local hospital, local doctors and so on?
Are they like, show me a little bit more leg and maybe I'll get in that car?
Are they tempted?
How do they respond to it when you talk about your approach with other doctors?
Yeah, almost every physician that I talk to wishes that they were in the same situation or had created the same situation that we have.
We basically just identified all of the things that we think are nightmares for our patients and all of the things that we think are nightmares for our ability to practice, and we've systematically eliminated those things, one of which was dealing with the federal government.
We haven't taken a dime of federal money since we opened in 1997.
So, the reception that I've had, and I'm speaking all over the country, the reception that I've had has been very warm and physicians want to know, how did you do this?
What are the logistics?
They're very, very interested.
Large businesses are very interested in what we're doing and they're flying people to Oklahoma City from all over the country.
The people that hate what we're doing are the people who benefit from the price opacity.
It's the big corporate hospitals and the big insurance carriers.
They don't like this one bit.
Ah, well, the price of virtue is always the hatred of the greedy.
So, I want to make sure that we get your vital statistics.
It's the Oklahoma Surgery Center.
You guys have a website, and if people want to contact you to arrange for you to come and speak or interview and so on, how would they get in touch with you, and how can people find you?
It's actually called the Surgery Center of Oklahoma.
And our website is surgerycenterok.com.
And there is a link to my blog there.
We're on Facebook.
We're on Twitter.
I can be...
Facebook or Twitter, there is an internet hotline that's 405-475-0678.
And a real person answers that in business hours.
So if somebody has a question and they think they might need surgery, the call back that they get will be from a surgeon and they can talk things over.
You know the drill.
That's what happened with you, I think.
But we're happy.
And just what I wanted to really reiterate, I mean, the degree of customer care was staggeringly great.
And staggering not because the free market shouldn't provide it, but just because I crawled out of a socialist rat hole.
So, I mean, the contact was consistent and comforting and helpful, and you guys made it as easy as possible to go through a challenging ailment.
And so, you know, I really thank you for that.
And again, hearty, hearty recommendation.
Thank you.
I'm glad you're doing well.
I appreciate being on the show.
And again, I'm kind of on the tour speaking all over the place because people are thirsty for this message because it's good news.
You know, the free market's not supposed to apply to health care.
And so this is really good news.
And I appreciate your helping us spread the word.
Well, it's my pleasure.
And thanks again so much for your time.
And I'll keep you guys posted.
Thanks, Stefan.
See you.
Take care.
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