Jan. 20, 2016 - Freedomain Radio - Stefan Molyneux
01:00:36
3180 How the Government Killed Health Care | Jeffrey Singer and Stefan Molyneux
You can't listen to a presidential debate without hearing about ObamaCare or the Affordable Care Act. Even if you don’t follow the news, it’s hard to go for more than a few days without hearing someone mention their insurance premiums or some other frustration with the health care system.Stefan Molyneux speaks with Dr. Jeffrey A. Singer about the state of healthcare in the United States, the dangers brought about by government regulation, the downside of electronic medical records and what things look like "on the ground" in the medical profession.Dr. Jeffrey A. Singer is an adjunct scholar at the Cato Institute and a general surgeon in private practice in metropolitan Phoenix, AZ. He is principal and founder of Valley Surgical Clinics, Ltd., the largest and oldest group private surgical practice in Arizona. He was integrally involved in the creation and passage of the Arizona Health Care Freedom Act, and serves as treasurer of the US Health Freedom Coalition, which promotes state constitutional protections of freedom of choice in health care decisions. CATO Profile: http://www.cato.org/people/jeffrey-singerDr. Singer's Online Course: America’s Health Care System: How We Got Into This Mess and How We Can Get Out: http://www.learnliberty.org/course_details/americas-health-care-system/
Hi everybody, Stefan Molyneux from Freedom Aid Radio.
Hope you're doing well.
We have on the line Jeffrey Singer.
In fact, Dr.
Jeffrey Singer, a general surgeon in private practice in Phoenix, Arizona.
He is a principal and founder of Valley Surgical Clinics Limited.
It's the largest and oldest group private surgical practice in Arizona.
Dr.
Singer, thank you so much for taking the time today.
It's great to be here.
Thanks for having me.
Okay, so a lot of people have a lot of bureaucracy between themselves and their doctors and they don't generally see it a lot.
The view from the doctor's office is usually very different from the view of the patient who's cycling through just looking for treatment or a checkup or something.
And when I say to people who think that America has a free market health care system that usually more than 50 cents on the dollar in American health care is spent directly by governments, you get a kind of double take and people really don't follow it that much.
I wonder if you could help people from outside the system, not just within America, but overseas, see what kind of government intervention you deal with as a practitioner on a daily basis.
Well, just for example, to get to your point about Over 50 cents out of every dollar is paid for by the government.
You have Medicare, which the government has a monopoly on health insurance for everyone over 65.
They basically have eliminated the market for any private insurance carrier.
So when you turn 65, unless you're still working and get the insurance through your job, you cannot access health insurance for yourself.
You have to buy the government health insurance.
You've got the entire over 65 population.
Then you've got the indigent population, which is paid for by something called Medicaid, which involves both federal and state funds.
And that now, after the Affordable Care Act was passed, was actually expanded to cover people up to 138% of the poverty level.
So that's another huge chunk.
In fact, just recent data showed, as an aside, that there were an estimated 10 million people in the United States who now have Health insurance who didn't do the Affordable Care Act, and I think it's like 97% of those have Medicaid.
Those are the people who are added to the so-called insured roles.
So you have Medicare and Medicaid, and then you also have the VA taking care of a huge chunk of veterans' health benefits, and then when the government Pays for things, of course, and it only makes sense.
They're going to demand that things be done a certain way because they're ultimately paying for the bill.
So over the years, how that's translated, you know, at first, when Medicare and Medicaid first came on the scene in the 1970s, it actually was, even though the official organized medicine, as they say, the AMA,
was opposed to it, It turned out that in short-term thinking, it struck gold for the medical profession because the original way it came out, and this probably was, you know, intentional, we're not stupid, the way you get cooperation from the people that you need cooperation from, I'm sure it was similar in Canada, was to be very generous to the providers.
So the original plan was, you seniors, you go to any doctor you want, any time for anything.
You doctors, you do whatever you want to do.
Pay no attention to cost because we're paying for it.
Just send us the bill.
And so what that ended up doing was it stimulated over-utilization by the patients and also over-utilization by the doctors.
They used to joke when I was growing up in New York City in the 1960s, doctors were considered always comfortable, but they were middle class, but they were comfortable.
They always were going to put Feed their family, but they weren't considered affluent.
And the Buick was called the doctor's car.
That was actually the slang term.
Buick is the doctor's car.
By the end of the 70s, the Mercedes and BMWs were the doctor's cars because all of a sudden, people were coming to the doctors much more frequently than they were before.
And it's sort of like if you gave your MasterCard to your child and said, Go to the mall and buy some things.
Have yourself some fun.
The child walks into the store and says to the store owner, I have this MasterCard and I can buy stuff.
What do you got to sell me?
It's the same kind of thing.
You really can't criticize the doctor or the patient.
As Milton Friedman talked about, the different categories of spending money.
You're spending other people's money on something for yourself, so you're really not concerned about costs.
Costs started really going up, and by the early 80s, the federal government said, oh my goodness, we created a monster.
So then, in order to try to keep costs from going out of control, they started, mainly for political reasons, focusing on the providers of healthcare rather than on the demand side, because there are a lot more voting demanders than there are voting suppliers.
Well, and up here in Canada, they've tried little things to limit this constant cycle of, I have a sniffle, so I've got to go see the doctor.
And they tried putting it, like a $5 copay was just floated as an idea.
Like, just pay $5 and go and see the doctor.
I mean, that's like half the price of a movie.
And of course, everyone went insane.
To me, if your ailment is not worth at least $5 to go and get it looked at, you probably shouldn't.
Like, if you've got some weird lump with an eyeball growing out of your cheek, $5 is not going to be the barrier for you going to see a doctor.
So, the other thing I wanted to mention, too, which I've talked about on this show, you know, the process of getting into my 40s, and I guess I'm close to 50 now, is my eyes slowly going out of focus.
I didn't need glasses until I was in my 40s.
One of the things that happens when you socialize a formerly private system...
Is that you inherit all of the work ethic of people who went into that system in order to be customer focused, to be in the free market.
And so those people, they don't just wake up like when Canada socialized healthcare.
They didn't just wake up and say, well, that's it.
I'm going to be a bureaucrat and I'm not going to care that much.
Because they still have that same work ethic they've had for 20 years or 30 years.
They still have that same relationship with their customers.
But what happens is the system slowly goes out of focus in that the new people coming in, Don't have that same free market discipline and work ethic that so much rewarded doctors under a free market healthcare system.
They become a little bit more bureaucratic, a little bit more comfortable.
Like here in Canada, you can bill to a maximum every year.
And the month before that year end, it's really tough to find a doctor because they've all reached their maximum.
So they just don't really show up this way.
They take their vacation.
So when you get a socialized system, usually it's funded through debt.
So it seems free.
And of course, the doctors are happy because there's lots of free money.
The patients are happy because the doctor's work ethic is still very strong.
But a generation later, and this is why it's so hard to fight these systems, a generation later, it's really gone out of focus, and then it's really become very entrenched.
Sorry for that minor sort of intrusion, but I just wanted to get that point across to people.
It's like cocaine.
It's like, wow, this is great.
Why would you never do this?
And it's like, well, because you wake up.
Absolutely.
Excellent point.
As you were saying that, I'm reflecting.
It even impacts the behavior.
So, for example, in an effort to try to keep costs down, obviously, at first, for political reasons, you try to put all sorts of regulations on how doctors practice medicine because the presumption is that the doctor is going to be over-treating because there's no disincentive to over-treating.
By the way, most doctors, in defense of doctors, we are professionals and we're ethical, so we don't want to...
You know, our consciences would bother us if we were doing something that we believed was unnecessary.
On the other hand, we're humans, so we are very good at rationalizing.
So things that might not be essential but are a good idea, you know, I'm sure a lot of us say, you know, why don't you get this in this test?
It's not like you have to have it done, but since you're not paying for it anyway, it's not a bad idea to get it.
So there's that.
But in any case, as the regulations started coming down, So you have all of these bureaucratic barriers between the patient and the doctor.
My generation of doctor, you mentioned it, we were from the private days.
So our concern was in not letting those regulations get in the way of what we thought was the best thing to do for our patients.
So we'd always come up with workarounds because, you know, as they used to say in the Old Story of the Union, you know, we pretend to work and they pretend to pay us.
And it's the same thing with anything.
So they would come up with some regulation and we'd come up with some way.
There's a very short learning curve.
You figure out, you know, which box you have to check off in order to get this particular thing you want to do authorized.
You just have to know, you know, what to say.
Of course, that created sort of a culture of mendacity because you're having to In effect, sort of cheat.
But you got what you wanted done for your patient.
As the next generations come along and the one after that and the one after that, they're being trained in centers where this is the norm.
Whereas my generation was trained in an atmosphere where the norm was a direct relationship between you and your patient.
So the younger guys I'm much more rule followers.
They're compliant.
They're more like bureaucrats.
They don't try to find workarounds to help out their patient.
They just tell their patient, can't do that.
Or they don't even mention certain things to their patients because they know it's not going to be approved by the regulators.
So your point is very well taken.
I'm seeing that actually in the way doctors practice.
There are some doctors, as you know, there's a rising You may or may not know, here in the United States, there's a rising tide on what's called third-party free medicine or direct care medicine.
More and more It's much easier to do, by the way, when you're a primary care doctor, not a specialist like me, who deals in a lot of expensive things.
But more and more doctors are saying, you know what?
I'm tired of playing this game.
I don't feel good about the way I'm practicing medicine.
I don't feel like a professional.
I don't like to have all these rules.
Even though I know this is probably going to be a financial hit, I'm pulling out of all insurance plans.
I'm pulling out of Medicare.
I'm pulling out of Medicaid.
I'm just going to Publish my prices.
I don't have to use these Byzantine coding systems because it doesn't matter.
And I've had conversations with one of them.
What do you charge for, you know, let's say a hernia operation?
And they give me a price.
And I say, well, how do you code that?
And I get back...
Code?
I don't need any code.
Codes are for the regulators.
I just tell them this is my price.
That's it.
Just for those outside of America, this is, of course, a combination of government-driven regulations and some insurance stuff.
There are thousands and thousands of ways in which you have to codify medical treatments, and the prices for those are fixed, right?
And that, of course, is a big problem.
I remember when I was a kid, a friend of mine who was really...
I thought would make a great natural doctor was kind of humming and hawing saying, okay, well, I really like helping people and healing people.
On the other hand, statistically, I can look forward to spending 30 to 40% of my day filling out paperwork.
And so basically, I can really help people a lot stay healthy or become healthy.
On the other hand, I'm going to spend close to half of my professional life doing the medical equivalent of taxes.
And that really made a very person-centered human being want to veer away from the profession as a whole.
And I think that's happening to doctors who are older.
I was reading the other day that, if I remember the numbers rightly, 35,000 doctors a year in America leaving the profession, and the replenishment rate is only 22,000 of, of course, inexperienced doctors who've grown up in a semi-socialist system.
And that's a very different way that it's going to go in the future.
Well, there's electronic health records.
That's another one, okay?
Back in the late 90s, the VA system, which was, of course, we've all heard these horror stories about the VA system.
Well, it was even worse in the 90s.
And some reforms took place.
And actually, they were good reforms.
It was improved for a while.
The reformer who did that has since moved on.
But they, of course, are sort of a closed system.
And they adapted electronic record keeping, which helped them a lot.
And I'm not in any way a troglodyte.
I'm all for, you know, being digital and electronic.
But as I'm sure anybody watching this would agree, that when you decide in your business or whatever enterprise you're involved in that you want to go digital, you usually hire a consultant who studies the way you do things and your particular needs, because everyone's unique and everyone has their own situation.
And then you design a system or program Around what your particular specific needs are to enhance your ability to do things.
Well, what they decided to do back in the early 2000s, actually it was in the Bush administration, was they started a pilot program.
They wanted to do a five-year study.
Where they would give incentives for doctors to adopt an electronic health record system because since the experience at the VA was good with it and at a couple of other integrated health systems like Kaiser Permanente and Cleveland Clinic and Mayo Clinic, then therefore this is good for everyone.
So they designed a system.
It's interesting.
This was funded.
The lobbying for this was heavy from GE and Cerner, two big electronic health record companies, and they had a so-called pilot program that after five years they were going to Sit back and see those doctors that chose to do this, if this indeed led to lower costs, less errors, increased productivity, and that was their plan.
Then, in the so-called stimulus package that was passed in 2009, this is before the Affordable Care Act, this is shortly after the Obama administration took office, They decided they're not going to continue with the five-year pilot program.
It was only one year into it, I think it was, maybe two.
And they just abruptly said, we're going to require all physicians to do this.
And then, as the stimulus was, if you adopt this by a certain date, then the government, out of taxpayer dollars, will reimburse the providers for the expenses that they had to go through to purchase the system.
So, and if you don't do it, then you will get penalized by Medicare.
Eventually, you'll get a 5% decrease in your reimbursement for every single thing that you do for Medicare.
So, most doctors, you know, were pressured into this.
And they adopted this electronic health record system.
But this system was not built around the doctor.
It was instead what we all found us having to do was kind of modify the way we perform to fit the system as opposed to the way around.
And the system was designed to meet the needs of regulators and bureaucrats and data collectors.
So you found yourself like here I'm a surgeon and when I do my electronic health records I'm supposed to make sure that my patient's immunization schedules are up to date and their preventive care is all taken care of, but I'm not a primary care doctor, so that's not what I usually spend my time doing.
I'm a specialist.
I'm a surgeon.
People are referred to me as primary care doctors for problems that require surgery, like a hernia or a gall glider problems or something like that.
So in order to satisfy the demands of the regulator, for me to be in compliance and not be penalized, I have to have all of these different aspects of my electronic record filled in with information that is not of any use to me and is not relevant to anything I'm doing.
Also, when I have to review electronic records of another physician in order for me to, you know, let's say I'm asked to consult on a case or I'm at the hospital and I'm visiting a patient that I'm consulting on and I'm going into an electronic record.
My eyes have to scan over line after line after line of completely irrelevant information that was entered by doctors who themselves knew this is not germane or relevant, but they have to do it.
So, you know, I'm a surgeon and I'm coming to see this patient.
I'm reading how his aunt had gout and his cousin once had venereal disease and all.
And I'm still, Chuck, where is it in this record There's a reason why I, as a surgeon, was called in.
I'm still looking for it.
And what you wind up doing over time is your eyes skim and try to get right down to the bottom line so you can see why the surgeon's called.
And every once in a while, when you do that, you actually skim over some vital piece of information.
Because it's sort of like reading a telephone book and passing over the name and phone number of a person's telephone number you try to look at.
So you make a mistake.
There's been a lot of recent peer review studies done on this that demonstrate that since we've all been forced to go to electronic medical records, it's actually increased our error rate.
You remember the famous He was sent home from this emergency room in Dallas with Ebola.
He went to the emergency department.
He told the triage nurse, I'm from Liberia.
I've been with Ebola patients.
I think I may have it now.
And there was nothing in the electronic record template.
To deal with that kind of complaint.
And everything has to be according to the template.
So the nurse wrote down in hand, the old-fashioned way, important information that needed to be passed on to the emergency physician once the patient got in.
But the emergency physician is running from patient to patient and going immediately to the computer screen.
So the emergency physician overlooked that little note that had vital information.
And he just looked at the computer screen and the template said, nausea, vomiting, and diarrhea, which is almost always in the Western world the case of gastroenteritis.
He went in, spoke to the patient.
The patient didn't restate everything he'd already said because he assumed the doctor knew this.
And the patient was sent home with Treatment for gastroenteritis and of course we know the rest of the story.
So what's happening is doctors are spending a great deal of their time focusing on compliance rather than directly listening to their patient and making judgments.
And another thing is these rules are actually steering us away from our What our judgment, based upon our experience, would tell us.
In the operating room, this is my domain, so in the operating room, they have all of these rules that now have been imposed upon hospitals, where, and again, it was all well-intended.
There's supposed to be, before the surgery has started, there's supposed to be a checklist of Before the surgeon makes his incision, the nurse in the operating room wants to say, this is so-and-so.
We are here to do a so-and-so.
This is Dr.
Jones.
This is Dr.
Smith.
And it's kind of like, it really feels kind of silly because, you know, while a patient was being put to sleep, everybody was watching you talk to the patient and everything else.
But you have to, it's called timeout.
It's called timeout.
And this was recommended actually by the WHO. So, among the things that are stated is, and the patient has received an antibiotic preoperatively or not, okay?
Well, since the patient has received an antibiotic as part of the checklist, that's caused a lot of doctors who don't think that there's an antibiotic necessary for this.
For example, a clean operation that does not require an implant.
Let's say you're doing a breast biopsy.
So you're not putting foreign material in a person.
It's a clean, it's not an infected case.
There's absolutely no indication to give that person prophylactic antibiotics.
We were trained that way not to give them.
There's no reason for it.
But as part of the normal checklist is, and the patient received an antibiotic, yes or no?
So a lot of doctors, because that's one of the questions, they're led to believe, I guess the new rules are I'm supposed to give an antibiotic.
So they give one.
That just happened to me the other day where the anesthesiologist blurted out during the timeout, yes, I gave the patient a gram of cefazolin.
And I said, why did you give the patient a gram of cefazolin?
There's no need for cefazolin.
I thought you overlooked it.
I said, no, I intentionally didn't give the antibiotic.
See, that's what happens.
You understand what I'm saying?
It makes you kind of suspend your own independent judgment and just follow the template and the protocol.
You're like a train on a track.
You know, this is what the bureaucracy has laid out for us.
So we kind of suspend our judgment, just go with the momentum of the rules at a time when, of course, you're dealing with life and death and your alertness and your sense of efficacy and your thinking needs to be front and center.
You're surrendering to the protocol.
And to the algorithm.
And then we're seeing a dramatic increase in antibiotic-induced diarrhea.
You know, I'm sure they have that in Canada also.
There's a kind of colitis that could be life-threatening, a side effect of antibiotics.
Well, I'm sure I haven't done a study, so I can't.
I'm only talking anecdotally here.
I got to think that a lot of it is due to these unnecessary uses of antibiotics because of the time out.
That makes doctors automatically just do it so they can check it off that they did it.
So these things are influencing the way doctors conduct themselves.
And more and more, like I said earlier, more and more of my colleagues are saying, I didn't sign up for this.
I don't want to play this way.
I don't feel good about myself as a professional.
And they're leaving.
Now, at the same time, more and more patients are waiting longer and longer to get to see a doctor.
They're most of the time not getting seen by the doctor, but often getting seen by a physician extender.
I have no objections to that, but if you're paying for or you're expecting to see somebody else, I think you have a right to get what you're paying for.
And then what ends up happening is they're waiting longer.
They're oftentimes getting rushed through.
They feel like they're on a conveyor belt.
Lots of times the doctor's spending more time typing and looking at the computer screen than looking and listening to them, and they're getting dissatisfied.
So there are a large number of them who are saying, you know what, I don't care that I have this insurance that I was forced to buy.
I'm going to go to this doctor who doesn't take insurance and pay cash because he spends time with me.
And a lot of these doctors that I'm talking to are telling me, you know, instead of seeing 40 patients a day, I'm seeing 12 patients a day.
I'm spending much more time with them.
I'm feeling good about what I do again.
I'm actually enjoying work.
And at the end of the day, I'm not really making a lot less money because I only need one assistant in the office instead of six to deal with all of the compliance costs and regulations.
So when you consider that, I'm actually...
I'm not even suffering financially by making that decision.
I'm certainly benefiting, you know, psychically by making that decision.
Yeah, I mean, there's a funny law of unintended consequences that shows up in just about every field where supply and demand is present.
And in healthcare, I think it's particularly egregious, which is if you want to reduce the price of something, you either have to increase the supply of something or you have to reduce the demand.
Now, it seems like there's pretty much a bottomless demand for healthcare in the human condition.
I don't know exactly why.
I mean, those guys don't like going to doctors.
I don't know if maybe it's women or whatever, but there seems to be a pretty bottomless desire for healthcare.
Every sniffle results in a visit.
And so to me, if you wanted to reduce the costs of healthcare, you would increase competition.
You You know, one of the big problems is that insurance companies can't sell across state lines, so there's not competition.
The other thing, too, is you would not mandate what insurance companies have to cover because everybody with an obscure ailment wants to get on the bandwagon of forcing everyone to pay for the insurance costs.
And thirdly, of course, you would increase the supply of doctors.
Now, I guess there's this magic wand that Obama has, or socialists have in general, which is, well, we can massively increase the demand for something while the supply of it is going down, and magically everyone will get great healthcare.
But the problem is, if people think that their healthcare is free, they change how they live.
I mean, if I knew I could never crash my motorcycle, how would I drive?
Well, it would change how I drive my motorcycle.
So the fact that people think there's going to be this infinity of healthcare in the future means that they're changing their decisions.
They're letting themselves get fatter.
Maybe they're not exercising as much because it's like, oh, you know, my treatment will be free or something will happen X down the future.
They're not getting the price signals from their insurance companies about their lifestyles, which would be preventive.
And I think that there's going to be, in 10 or 20 years...
A much escalated demand for healthcare without the doctors there to provide it.
And without the price mechanism, all that you're going to get is the usual socialist, USSR-style shortages.
Well, yeah, it's interesting to say that, but it's what insurance people call moral hazard.
So there's a lot you covered just there in what you just said.
For those who are interested, I... I give a course with a colleague of mine at Arizona State University Extension.
It's going to be given again this January.
It's called America's Healthcare System Historical Perspectives and Current Issues, where we discuss how we got to where we are, starting with colonial times.
There's a lot of history.
And then that course was kind of condensed into about a 90-minute video course That's available on Learn Liberty online, which is a project of the Institute for Humane Studies.
And if you go to learnliberty.org and look under Learn Liberty Academy, it's free.
It's an on-demand course.
But the point I was going to make is we talk about how throughout the 19th century, medicine in the Americas organized to try to create a cartel.
The AMA was created in 1848 with the express mission I'm trying to get states to license doctors, and they did it, again, through typical special interest pleading at the state legislatures.
Originally, in the early 19th century, many doctors had to hold down a second job to make a living.
It's understanding, back then also, medicine was not very effective, too.
So most people kind of trusted mom or grandma, and a lot of things were done.
The most common caregiver was the mother, and things were taken care of on their own.
There were books that were published on how to care for yourself, and they were pretty skeptical of doctors.
There were many different schools of thought because there wasn't a lot of science on it.
But the different state medical associations got organized, and they went before state legislatures asking them to license doctors, of course, to protect the public against people.
Of course, absolutely.
I can't give the public choice in providers because they're idiots.
So let's protect them and fence them in with regulations and everything.
It has nothing to do with us.
It has to do with them.
We're trying to protect the people.
And most legislatures back in the early 19th century responded by saying, license?
You don't need a license to work.
This is America.
You just work.
Well, what about if there are bad actors?
Well, They'll quickly be found out and they'll get punished for it.
So a couple of states were convinced to do state licensing, New York State being one of them.
But even then, the license wasn't required in order to practice medicine.
It was treated like a seal of approval.
So you can go get a licensed doctor or an unlicensed one, just like you have a licensed contractor or an unlicensed one.
So then after Andrew Jackson became president, there was this wave, a populist wave.
The National Bank was terminated.
And those states that had licensed physicians actually repealed their licensing programs.
It wasn't until the late 19th century where the AMA was successful, because by this time, the relationship between the national government and people had changed after the Civil War.
The Progressive Era was coming.
There were people getting already comfortable with the concept of licensing certain occupations, like the trades.
So this time they were able to get states to license doctors.
And initially, the licensing board consisted of the state medical association.
So to be a doctor, you had to join the state medical association, which then determined whether or not you could practice.
And then later, the AMA started ranking and rating medical schools, which is...
Again, this is perfectly legitimate to rank schools.
U.S. News, more important, ranks the colleges.
Princeton Review does.
There's nothing wrong with that service being available as an information source.
But what they got the state legislatures to do was not allow licenses to doctors who didn't graduate AMA-approved medical schools.
So over time, they basically created a cartel And that shrunk down.
To this day, it exists.
Well, and that's the grandfathering in.
So the people who already had the degrees from the non-accredited schools were grandfathered in and therefore didn't oppose what was going on.
And it's a wonderful way.
You use the government to create the electric fence that keep competitors out so you can begin to drive up prices.
So that's part of the supply side.
To this day, in many states, I'm in a state that, aside from the two urban centers, Phoenix and Tucson, it's a very rural state.
You could drive hours between small communities or in the West.
Telemedicine would seem to be perfect for a state like this.
Let's say you're 300 miles from Phoenix and you got a rash and there's no dermatologist around, but you could take a picture of your rash and send it into a dermatologist in Phoenix.
A dermatologist, most of the time, could diagnose it and phone in a prescription to your pharmacy.
However, our state doesn't allow a doctor to prescribe a medication unless the doctor has examined that patient in person.
You can look at it.
You can give an opinion in our state.
Some states can't even do that, but you're not allowed to treat.
That's just one example.
There's all sorts of certificate of need law.
Every part of the medical provision has got its own cartel.
There's a hospital cartel.
There's the insurance cartel, where we have 50 different states, each with their own cartelized insurance systems.
In some states, there's only one insurance company selling insurance.
In Alabama, it's Blue Cross.
That's it.
There's no choice.
So on the supply side, you do have everything's cartelized, which has decreased the ability of people to have choice and competition.
Also, for a lot of services, people might not need a trained physician.
Maybe a paramedical person would be adequate for a routine physical exam and some vaccinations and things like that.
But depending on the state, you may not be able to see a nurse practitioner or a paramedical professional or physician's assistant, depending on the state.
Again, this is all part of the cartel.
So that's, you know, one end of things.
And then there's the whole idea of third-party payment.
And I've written extensively on this.
Insurance, as you know, is a market response to the problem of uncertainty.
That's what it's supposed to deal with.
It's when you can't Because you can't have any certainty, you can't derive at a price.
So that's where the insurance is supposed to solve that problem.
So there's a lot of things.
Healthcare is something that's rife with uncertainty.
You don't know if you're ever going to need healthcare.
You don't know if you're ever going to get sick.
You don't know if it's going to be successful.
And you don't know when it's going to happen.
However, 90% of health expenditures are for things that are knowable, predictable, and reliable.
Don't have that problem of uncertainty.
They're routine maintenance things.
For example, getting a checkup, getting a screening colonoscopy, or we all know we're going to get a cold now and then, or even maintenance things like I get a hernia.
Hernia is not going to kill you.
It's something that needs to be fixed, but it's a maintenance thing.
When you buy homeowners insurance, you still need to do maintenance on your house, and you don't have homeowners insurance for that.
So when your house needs a painting or maybe you want new insulation or new window coverings, you don't have insurance for that.
You have insurance for when your house burns down or the roof collapses or something like that.
These are things you cannot predict and they could be catastrophic.
Well, what's happened, and it's all covered, by the way, in that online course, and in my course.
Yeah, and we'll make sure we link to that below so people can click on it, and definitely it's worth reviewing, but please, go ahead.
Yeah, well, over the years, tax policy, and this is when the government...
So, first, you had the providers using the government to restrict competition, so everyone's got blood on their hands here.
Then the politicians started just throwing money at things to give free stuff away, Because that would help them get into power.
But then when that started costing too much, they started clamping down with all sorts of regulations.
And among the things that they did, the giveaways, was the tax treatment of health insurance.
So if your employer provided you with health insurance, that would suddenly be considered a non-taxable benefit.
Whereas if you bought health insurance out of your own pocket, you'd purchase that with after-tax dollars.
That became law actually in the early 1950s.
And when that happened, all of a sudden, You know, it makes sense.
Market incentives were to compete for employees.
Businesses would offer health plans.
And, of course, the less out-of-pocket that the health insurance covered, then the less after-tax dollars need to be used for paying for your health care because it's all paid for by your employer's provided health insurance.
It made health insurance evolve from being true insurance to basically being a tax-deferred, prepaid health plan.
It's sort of like an IRA. And that is what generated all of the higher demand, because when you get the perception, at least at the margin, your perception is that you're not paying for it.
It's free, so you've got no reason to think about, is this really necessary?
How much does this cost?
And all of that, sorry to interrupt, but all of that came about because in World War II, the U.S. government prevented employers from giving raises to people.
And so what they did was they absorbed health care costs instead.
And because it was tax-free, there was an incentive to load as many medical services as possible onto health insurance.
Like, as you point out, you don't have car insurance.
It's for a catastrophic accident.
It's not for an oil change and a checkup.
But because it was advantageous and this is where people could compete on soaking up as much tax-free healthcare as possible, this is why you have these ridiculous plans that cover entirely predictable things like going to get a health checkup.
And that should have nothing to do with insurance.
So the third party has basically wedged itself between the consumer and the producer slash provider.
And therefore you can't have two market forces.
I wrote an article, it was in a Wall Street Journal, in August of It's a true story.
It was a patient who came to me with a hernia, and he wanted it fixed at a particular hospital, and so he scheduled it there.
And he had insurance which is now illegal in the United States because of the Affordable Care Act.
He had a high-deductible catastrophic indemnity policy Indemnity means that it pays a fixed amount for certain things.
So if you needed a preventative maintenance kind of thing, it would pay a fixed amount.
If you had to be in a hospital for catastrophic illness, then it would pay the full amount after deductible.
So a lot of hospitals are getting into the practice now of when it's a non-emergency thing like this, a scheduled elective surgery, when you check in, they're able to go on And see exactly how much you've met towards your deductible.
And they can estimate what your out-of-pocket participation will be.
And they try to collect it from you upfront because a lot of people, they don't think they should pay anything.
The insurance will take care of all of it.
So after the insurance pays, they don't pay the balance due.
And the hospital ends up eating it.
But the difference.
So they did that with this gentleman.
I get a phone call.
I have a whole bunch of surgeries at that hospital that day.
The clerk says, your next patient wants to cancel because he doesn't want to pay.
I knew the guy and he didn't seem like that kind of guy.
I said, explain to me.
She says, well, he has this ACME indemnity insurance plan and it pays up to $2,500 for the surgeon and the anesthesiologist for the operation.
And it pays up to $2,500 for the use of the room.
It's an outpatient.
I said, okay, so what's the problem?
And she says, well, there's no problem with the doctors, but our charge for the use of the room is $23,000.
So we asked him if he would give us a credit card for his expected payment, which would be $20,000, and he doesn't want to.
I said, I'm not doing a heart operation.
I'm just doing a heart operation.
I'm sorry, doctor.
That's our charge.
So I said, can I talk to him, please?
They put him on the phone, and I said to him, He didn't know he was getting a healthcare wonk as a surgeon.
So I said to him, you're not supposed to see that number.
That's called the list master price.
That's what doctors and hospitals use this high inflated so-called retail price to negotiate with a third party payer.
The hospital says $23,000.
The insurance company says $10,000.
They reach a spot somewhere in the middle.
And if you're in one of these PPO plans, all you have is a copay of $500.
That's all you know about.
But because you wanted a few people left who has insurance that, by the way, I think everybody should have, you got to see that number because they can't budge for that number because that's their official number for negotiating.
So I said, but here's the good news.
Since...
You're not in PPO. Neither you nor I are bound by any contract where we have to stay within the network.
So here's what I propose.
Let's cancel the surgery.
Just because you have insurance doesn't mean you need to use your insurance.
Haven't you sometimes chosen not to use your auto insurance with a little minor fender bender in a parking lot and just kind of settle it privately?
Yeah.
Okay.
Well, there's no reason why you can't do your health expenses that way, too.
I'll be happy to give you a quote, a cash quote.
I'm sure I can get an anesthesiologist to do the same.
Give me about an hour.
Let me have my assistant call.
We can't go here now because they know about you, but call another hospital.
And we'll simply say, I have a gentleman here who is cash pay.
What's the best price you can quote him for the use of an operating room for hernia repair?
And we didn't lie.
We said you're cash pay, which means you want to pay cash.
They're going to interpret that as uninsured.
And they'll...
Come up with a quote because they don't have to negotiate with an insurance company.
And sure enough, within about an hour, we had a quote of $2,000.
So we rescheduled the next day, and he paid a total of a little over $3,000.
So he saved $17,000 by not using his insurance, by bypassing the third-party payer.
Now, that started a whole more...
I actually had a lot of people come into my office because that was in the Wall Street Journal.
Then I was on Fox News about that.
Rush Limbaugh even read that article on his radio show.
People started making appointments, and when they call for an appointment, automatically the receptionist would ask them what their insurance was, and they would tell them.
And then when they would show up at the check-in desk, the receptionist would say, could I have a copy of your insurance card, please?
And they'd say, oh, I'm not going to use my insurance.
I want to pay cash.
Then we'd have a problem because they told us they had insurance, and I'm bound by contract.
So I can't go outside of insurance.
So it led to some awkward moments.
But the point is that by not using insurance, our policies have led to a system where we don't have a market.
So the third party is the problem.
We want to get to a system where 90% of everybody's health expenditures are direct.
And then you'll see differences in utilization because when people are paying, just like when you go to the supermarket, You know, you look at the, you know, the caviar in the freezer, and you really may be tempted by it, but you look at how much money you have in your wallet, and you say, well, you know what, maybe someday, but right now I'm just going to pass on the caviar.
You know, I'll get the salmon roe instead.
So that's what people need to be doing with healthcare.
And there's no, at the moment, there's no incentive for that.
And there is without, I don't know, it sounds harsh, but without catastrophe, there's no efficiency.
So one of the things, of course, if somebody gets sick with some very expensive ailment in a free market system and has not bought health insurance, then that person is in significant trouble.
You know, they're going to have to Really go to their church or go to their friends or go to their family or go into debt.
And some people are just not going to get treated because they didn't get their health care insurance in the same way that if you don't buy home insurance and your house burns down, you've got a nice smoking crater where your house used to be.
And that's why you buy insurance because if you don't, really bad things happen.
And one of the things, of course, that happened in the United States is that you no longer had to buy insurance before you got sick.
And, you know, you can't deny people for pre-existing conditions.
For a lot of people, that meant, I'll wait till I get sick, and then I will apply for insurance, which insanely drives up the price of insurance for everyone who decides to get insurance before they get sick, because they have to pay for all of that risk that wasn't taken by the people who pay later.
Sorry, go ahead.
It's huge.
November 1st is when the new open enrollment begins for the Affordable Care Act for the exchanges.
And in today's Wall Street Journal, but we've been hearing a lot about it last week, huge increases, 30 to 40 to 50 percent increases.
Or cutbacks.
Here in Arizona, for example, people are being told that Blue Cross of Arizona, which for individuals had a PPO, Preferred Provider Agreement, starting with the next cycle, there's not going to be any more PPO. It's going to be the old HMO system that everybody hated with these gatekeepers and authorizations and all, because they're trying to cut back on over-utilization.
But that's largely driven by what's called the Guaranteed issue commuting rating feature.
Under the Affordable Care Act, not only can you not deny someone for pre-existing condition, but you're not allowed to charge them any differently than anyone else.
So you can have a 30-year-old non-smoking, non-drinking triathlete who's got no medical problems wanting to purchase insurance, who obviously should be an excellent risk, and a 30-year-old heroin addict who has a drinking problem, who's already got hepatitis C and maybe HIV positive.
You can't deny him insurance, and you can't charge him any different than the triathlete.
As an insurance company, you have to calculate how much money you need to have in the pool to pay out claims, and you're going to have to jack up the rates on the healthy guy In order to make the rates lower on the unhealthy guy to make them eat.
And that's why they have to force people to buy because the young people who are not math illiterate, right?
They can count without taking their shoes off.
They look at that and say, okay, so there's a lot of old sick people or all the people with chronic health conditions and 70% of people's health issues are lifestyle related, which is a nice way of saying you all caused it by making bad choices.
So young people are looking and saying, well, I think I'll roll the dice because it's coming up snake eyes when I roll it in the existing system.
And then the government has to step in and force them to buy insurance, which they don't want to buy because it makes no sense.
It's a direct subsidy to people who've made bad choices.
Not all, but a lot of it is a direct subsidy.
People have made bad choices or choose to have the good fortune to get old and are sucking up health care costs like crazy.
How is that beneficial to the young from a sort of immediate self-interest financial standpoint?
So the government got to hurt them into the system because there's no incentive for it.
What's happening is, if you read just the other day, the decline of...
I think it's called the decline of Obamacare.
It was in the Wall Street Journal editorial.
I think it was yesterday, maybe.
What they're finding is that people are choosing to pay the penalty because people are not dumb, so they're doing the math.
So you've got a choice.
You can either pay...
You know, $400 a month, which is $4,800 a year.
I'm sorry.
I was a biology major, not a math major.
So you pay $400 a month for a $5,000 deductible.
So that means you're into this thing for about $10,000 before you even realize you have health insurance.
And you're healthy.
You're in your 30s.
Maybe once every year you go to a doctor for a really bad cold.
That's about it.
Or you pay a $695 fine.
It makes sense to pay the fine.
So that's what's happening there.
They're actually choosing to pay the fine and not enroll, which is magnifying the problem because they need them in there paying for healthcare they're not going to use so that the prices don't have to be even higher for the people who are using healthcare, which is driving the premiums up further, and it's creating what they call in the insurance industry a death spiral, where eventually it becomes priced out of range.
Nobody's putting any money in it.
Well, yeah.
Without the moral hazard, insurance becomes a negative overhead.
Like if you only bought insurance after you crashed your car, then insurance would make no sense because you'd have the cost of the car crash plus all the overhead of insurance.
It would just be a net negative.
The whole point is you have to have the moral hazard for it to work.
It's like trying to say the casino can stay in business if everybody's a winner.
No, it can't.
You have to have the hazard.
Now, two other issues I wanted to bring up.
The first is the question of illegal immigration and its effects on healthcare.
It's kind of like a hidden issue.
I was talking to a researcher the other day who was pointing out that, you know, if you come in as an illegal immigrant, you're making 5, 10, maybe 15 bucks an hour.
Well, if you've got a family, you're probably in the hole for like 18 to 20k in health insurance.
Your wages can't even cover health insurance.
So generally, a lot of illegal immigrants end up uninsured and then they end up frog marching into the emergency room when they have an issue, which of course is pretty much the most expensive way to treat health issues.
It's not preventive.
It's hysterically responsive, which is very, very cost prohibitive.
Do you see, and his argument was that Obamacare was to some degree the result of illegal immigration, leaving people uninsured and that driving up health care costs.
Yeah, I don't understand I can say that.
And I live in a state where that's a big issue.
We're a border state.
First of all, as far as the illegal immigration is concerned, the data suggests, I can tell you from personal experience, they don't go to emergency rooms unless they're really sick.
I get a lot of patients in my office who I suspect are illegal immigrants.
I don't ask questions, and they pay cash.
Interestingly, I don't want to digress too much, but just from that third-party analogy, I had two patients the same day who both needed MRIs of the breast, which is not commonly needed.
That's why I remembered it so well.
One had insurance, Blue Cross, high deductible.
The other had no insurance.
She works cleaning houses.
She's a single mom.
And I explained to her, I hate to put you through this expense, but we really need to do this.
And she said, it has to be, it has to be.
So we shopped around and we got her in that day for a breast MRI. She paid $300 cash.
The other patient who had insurance, after authorization, we got her in a few days later, and of course the insurance was billed $1,400 for the breast MRI. It was repriced by insurance to $800, which she paid because she had a $5,000 deductible.
So the person who had no insurance was paying cash got treated right away for less money.
Again, that's the whole indictment of the third-party system.
But I digress.
The fact is there were numerous studies on what's called uncompensated care.
The illegal immigrants are not the large In certain parts of the country, the illegal immigrants showing up in emergency rooms are certainly a major cost.
In other parts of the country, they're not.
It depends on what part of the country they are.
And the federal government, for the most part, pays doctors and hospitals.
It's called federal Medicaid.
So they actually reimburse the doctors and hospitals for taking care of those patients.
I can tell you from personal experience.
So that's not the driver.
The so-called driver was the legal American residents who don't have insurance and supposedly show up in the ER for their care.
Well, there is some of that.
First of all, you've got to realize a lot of these people do pay their bills.
And unfortunately, they're paying that retail price like my man who almost paid $17,000 more.
So there are some of those.
But there have been a number of studies done on just how much uncompensated care there is.
One was done by the liberal Urban Institute, which actually favors the national single-payer system.
And their estimate was less than 2%, I think it was 1.5%, 1.8%, somewhere in there, of health care spending.
It's attributable to uncompensated care.
The Congressional Budget Office, nonpartisan, they also did a study and they came up with almost identical numbers.
And they estimated that uncompensated care, the so-called cost shifting from that, which, you know, where doctors raise their prices to other people and make up for the losses, at most adds one to two percent on to the cost of health insurance.
And also, cost shifting is not so easy, especially when, number one, if you're a Medicare patient, I can't raise my rates to Medicare because I'm under price control since the 1980s.
It doesn't matter.
I can charge a million dollars.
I'm going to get paid whatever Medicare pays me, and that's it.
Same thing with Medicaid.
And most private insurance, I'm bound by a contracted fee schedule that I signed.
So it's not so easy to cost shift anyway.
But it's an overblown It was an overblown straw man used to get people to go along with the idea of the Affordable Care Act.
And I always had a logical problem with this because I would say to myself, okay, so you're telling me that all these people who go to the emergency room who don't have health insurance are costing me money.
So to help me out of that problem, you're going to raise taxes on me and force me to pay for insurance for those people Or indirectly raise my insurance premiums to pay for insurance for those people so that when they go to the emergency room, their costs won't be shifted onto me.
But all you did was make me pay out of another pocket.
So how is that doing me a favor?
I mean, you just made me pay for the guy to have insurance so that I won't pay for his healthcare.
I don't see logically how that's the solution.
And then finally, there was a really great study, a great opportunity, called the Oregon Health Insurance Experiment.
This was about, I think it started in 2006.
Oregon came into an extra grant of money For Medicaid.
But they only had enough money to put 10,000 new people on Medicaid.
So they had a lottery.
And healthcare economists from MIT under the famous Professor Jonathan Gruber asked for permission to follow these people for outcomes.
And so they did.
They followed the 10,000 new Medicaid recipients in comparison to those who didn't get Medicaid.
And they found no different healthcare outcomes whatsoever.
But an increase, of course, in utilization of healthcare services by those on Medicaid, and interestingly, an increase in visits to the emergency room over those who don't have insurance.
And that makes sense as well.
And I can tell, again, from my personal experience as a surgeon, I'll have patients that I've operated on who a day or two later are concerned about the appearance of their incision, and rather than make an appointment Which may not fit into their schedule to see me in the office and maybe wait a couple hours in the waiting room.
They just go to the emergency room.
And the emergency room calls me and tells me about it.
And then over the phone, I'm trying to kind of treat the problem through the emergency physician's eyes.
And the reason he went to the emergency room, which cost a lot more money, was because that was more convenient to him since he's not paying for it.
Why not go to the emergency room?
It worked out better for him.
So in answer to your question, that's completely false information.
Well, I think as far as you being able to shift costs, I can certainly see why there's less flexibility as far as that goes.
But the degree to which the government has to pick up costs from people who don't have insurance, I think that they're probably concerned about those rates again, which is one of the reasons why they're trying to herd more people onto the insurance system to make up for that.
The last thing I wanted to mention, I really appreciate this information.
It's great to get.
The darkest view of things is so important because if you guys aren't happy, we're not happy.
So I think that's really important.
It seems to me that the goal is to keep breaking the system until you have to take it over.
Because there is this perception that there's a free market healthcare system in the United States.
I hear this all the time.
And because the system is so expensive and is considered to be not working and so on, although prior to Obamacare, more than 80% of Americans were actually very satisfied with their health care, so that's a topic for another time, but it seems to me, whether conscious or not, whether sort of planned or not, The goal is keep messing with the system, keep screwing with the incentives until it becomes so unwieldy and so broken that everyone clamors for a full government takeover.
What are your thoughts on that possible endgame?
No, I don't think...
Well, I think some people, that may be the plan.
I mean, we heard some politicians doing a whole debate Like Harry Reid and Nancy Pelosi say, we're going to get to the single-payer system.
Just bear with us.
This is getting us there.
But I don't think politicians are that smart where they all coordinate so well in a conspiracy.
But I do think...
So, I mean, some of them, I think, just don't have an appreciation for economics.
They don't really think things through.
They don't think about any kind of consequences, what is seen and what is not seen.
So I think it's a lot of just, you know...
Power-seeking politicians who don't think things through.
But I think at the end of the day, when the system inevitably collapses, and I think we're witnessing it happening slowly right now, the natural reaction is going to be, okay, we tried it your way.
We tried the private system.
Their definition of private system is they were private intermediaries, but basically they're nothing but sort of utilities regulated by the government.
We tried it your way now.
We're going to have to go to what they like to call Medicare for all, because Medicare is generally popular.
They won't say Medicaid for all, which is what it really would be.
Medicaid is very unpopular, because when you cover 315 million people, it's going to be Medicaid for all, or VA for all, or something like that.
But I think that's what inevitably is going to happen, absolutely.
And unfortunately, the so-called defenders of the free market Most of our political representatives, they're not stating that we don't have private healthcare.
They keep talking about we want to preserve free market medicine.
We don't have free market.
We haven't had free market medicine in decades.
I don't know if we ever really had it, but we were much closer to it 50 or 60 years ago.
Call this what it is.
This is basically, we do have a socialized medicine system.
There are various forms.
In England, the government provides the health care through their own system, very much like the VA. In Canada, there are private owners of hospitals and doctors' offices, but the government runs it and pays it.
In the United States, there are a few, and they're getting smaller and smaller, they're consolidating, but there's basically a handful of privately owned so-called insurance companies.
Right now, they're basically escrow companies.
And they're managed by government regulators.
But they're all different variations on the same theme, which is government-run medicine.
That's what we have.
Right.
Yeah, and of course, it's a lot easier to expand benefits than it is to run up against the special interest groups from the AMA to the hospitals to the insurance companies that have wound themselves so tightly into government controls that it has become their economic advantage.
And when you run up against those special interest groups, you get a lot of pushback, whereas offering people free stuff, sadly, because they don't realize that in the long run, nothing is more expensive than free.
They're just going the great slippery slope towards populist happiness is to offer people more free stuff and thus build more stronger, albeit temporary economic advantages to special interest groups.
So I think politicians are just doing what they do.
But the logic of the system, I think, is going to be that eventually it either has to be liberated or it's going to be fully government controlled.
And that still will take probably half a generation or more to show its full ill effects as it has here in Canada with, you know, a month long or a year long sometimes waits for significant surgeries.
I myself had to flee the Canadian system and go to America and pay cash over the barrel in order to get treatment because, you There is no magic wand in the universe to turn shortages into oversupplies.
And what's going to happen is the government is going to take over more and more, it seems like, unless, you know, the push that you and I are behind to try and liberalize things works.
And what's going to happen is you're going to stimulate more demand, you're going to stimulate worse health habits, and the supply is going to go down.
And what's going to happen is people are going to end up without the health care that they've planned their lives around getting largely for free.
It's one thing to wait for your passport.
It's one thing to wait for your driver's license.
That's an annoyance, but it won't kill you.
But waiting for health care, which is what inevitably happens when you have price gaps and shortages, waiting for health care is literally a life or death situation for lots of people.
And by the time they see it, it's going to be very tough to unravel everything that's happened.
But there'll be a two-tiered system.
There's always going to be more and more doctors will opt out, people will pay cash.
And you'll have, like you do in most of the countries in the West, you have this socialized system where everybody waits, and then you have another kind of off-the-grid system where people pay cash and get good quality health care.
And you see more and more of that, I think.
That's what I'm saying.
Well, thanks very much for your time today.
I know that, of course, a lot of my audience is kind of young.
This stuff might seem more like fuddy-duddy stuff, but there's nothing that gets your attention focused on health care like aging.
So for my older or, you know, just parented listeners, this is all essential stuff to know.
So Please like, share, and subscribe to this video.
Thank you so much, Dr.
Singer, for, of course, all the work you do to bring this awareness to people, because you kind of take healthcare for granted until you really need it, and then all of the weaknesses of the system really show up.
And at that time, you're too busy dealing with healthcare issues to advocate.
So I really appreciate the work that you're doing to get this information out to people.
