Chapter 9.	Health Care
	Drugs, Hospitals, Research

I.  Health Care--Introduction

Some remedies are worse than the diseases.
— Publilius Syrus

"Prohibition... goes beyond the bounds of reason in that it attempts to
control a man's appetite by legislation and makes a crime out of things
that are not crimes... A prohibition law strikes a blow at the very
principles upon which our government was founded." -- Abraham Lincoln

Is there a crisis in health care?  Proponents of the numerous proposed health care packages indicate that 37 million Americans are without health care, that 2 million people monthly lose their insurance, that many Americans are only a pink slip away from losing their insurance.  How accurate these numbers are can be endlessly debated.  For example, of the 37 million (somebody’s magic number pulled out of a hat somewhere), many are the young who have decided consciously that money that could be going towards health care should be better spend on other items, that their positive health conditions need not spend otherwise disposable income on health insurance they do not see the need for.  Many others are small business owners or their employees unable either to afford it or to obtain it easily.  
	The idea of health crisis derives from four sources, the insecurity generated by the latest economic recession when most Americans’ health insurance is linked to their jobs, the concern over rising costs (14 percent of GNP), the notion that everyone should have health insurance as a right (millions do not), and the media hype.  Do we have a health quality crisis when those who can come from all around the globe for American medical knowhow?  Health care in many other countries is cheap but hard to get with unacceptable waits for specialists.  Even those without insurance are not denied health care; nonprofit hospitals (83 percent of all hospitals in the US) cannot legally turn away any patient needing care or unreasonably deny access to modern technology.    Many of those uninsured are between jobs, some of students, some are young adults using dollars which otherwise would be going into health premiums for other items. The core uninsured group is less than 10 million, 3 percent of the population. Should we reform the entire system, do radical surgery on the health care system for only 3 percent?  Or should we merely subsidize insurance for the truly poor with  everyone else to buy or have insurance.
	Certainly costs have been increasing at a staggering rate.  It appears quite clear that action will be taken on health care.  We do not object as the entire area is over due for a reworking.  What we caution is the way it is done will impact tremendously availability of health care, cost, and economic growth.  Many systems proposed are ignoring those ‘ugly little practicalities’ such as health care is not free.  Although some of the plans may make it seem that way to the public at large, it is not free and has to be paid by somebody, somewhere else in the economic system.  If employers are mandated, it will result in lost jobs, jobs not filled, and an overall negative influence on economic growth.  Simply to say you care and it ought to be done without examining the impact of the proposed system is negligence. 


II.  Health--The Problem
	National health insurance is another example of misleading labeling.  In such a system there would be no connection between what you would pay and the actuarial value of what you would be entitled to receive, as there is in private insurance.  It is in fact  socialized medicine, providing medical services to the residents of  America.  Before, the patient was the client and the employer of the physician.  Under any of several proposals, the State, in one form or another, becomes the one to prescribe the conditions under which the physician has to carry out his work.  These conditions may not be restricted to working hours, salaries and certified drugs, they will eventually invade the whole territory of the patient-physician relationship. In fact, even the terms are ambiguous. Health . . . defined as a state of well being with the absence of disease or disorder Health Care . . . prevention, control, and treatment of non-traumatic illnesses.  It may require medical supervision and or assistance.  Medical care is the treatment of those breakdowns of the health state which necessitate the interference and treatment of specialists (doctors) and hospitals. What is advertised as national health care actually is medical care.  In reality, we should be emphasizing health care . . . prevention to medical care . . . proactive not reactive. Many of the plans currently being debated believe the public is not intelligent to understand the plans, not capable of making wise choices and must be adequately supervised from big brother government in Washington.
	Britain shows what can result: no new hospitals were in fact built in Britain during the first thirteen years of the National Health Service; thirty years later there are fewer hospital beds than when the National Health Service took over.  Two-thirds of these beds are in hospitals built before 1900 by private medicine and private funds..  Hospital services in Britain during any particular period had staffs increased, administrative and clerical help increase but output as measured by the average number of hospital beds occupied daily actually decreased substantially.  Physicians flee the British Health Service. 
	The assumption of much current health care is that individuals can’t be trusted to make sensible decisions about health insurance and that a top down, we experts know best, approach is the only feasible realistic one (this is beginning to sound monotonous, but this attitude pervades all throughout government). Mandating that employers buy employees health insurance because most workers are less  sophisticated about these issues than are employers, is poppycock and smacks of utter contempt for the mental capacity of the American worker.  This paternalistic attitude is one that has been the main culprit in America for the last two decades (see earlier chapters). People can make perfectly good choices about how to spend their health care dollars, if given a chance.  If people are given individual oriented plans, as companies are finding out, insurance costs fall every year. A consumer does not have to be an engineer to buy a car nor does he have to be a health care specialist to make prudent decisions about what kind of insurance best meets his needs or to engage in comparison shopping when buying prescriptions or choosing a physician.   Most people won’t scrimp on maintaining their health and certainly won’t on their children’s but they will be careful to get their money’s worth.  The paternalistic supports believe people are too dumb to make the free market work for medical care.   How can we do this?  Equalize the tax treatment of consumers and corporations.  Employers can pay for health insurance or medical care with pretax dollars but an individual pays with after tax dollars, even then limited to if he has sufficient deductions; the self-employed can deduct only 25 cents on the dollar of their health insurance premiums.   Individuals should be able to set up medical equivalent of tax free savings or IRAs and should be able to put money into these accounts for medical expenses.  What is left in the account can be rolled over to the next year for major emergencies or returned to the individual.  If this is done we would see millions of individuals policing the health care market instead of government bureaucrats and insurers.  
	Health care industry doubled the number of its employees during the 80s. It currently consumes approximately  12% of GNP and continues to grow at a rate exceeding that of inflation.  The rise in health care costs actually have risen slower than in other comparative countries. Between 1940 and 1970, total health care spending increased at a compounded rate of 35 percent a year, more than 3 times the rate of increase between 1985 and 1991; the rate of growth has actually been slowing. certainly costs have increased but the net effect of those cost increases have been lives saved and lives changed.
	Yet much of the expenses come from a small proportion of the population:  1 percent of population spends 20 percent of health costs, incurable diseases or those last few days of life.The number of  health problems that exist in this country is phenomenal:  AIDS, crack babies, poverty. The United States occupies last place among industrialized countries in child mortality, life expectancy, and visits to the doctor.  Almost all uninsured adults are either between jobs or working at  low-wage jobs.  Three-quarters are covered again within a year, usually through work.   Half of uninsured adults are under 30.  What they need in the meantime is low-cost protection.
	As an example of what a Clinton-type health plan would work, one only has to examine Minnesota  which has adopted a similar system.   What began seven years ago as a $1.3 million program to provide basic health care for pregnant women and for children under 8 whose families were low-income and uninsured has mushroomed into a system verging on socialized medicine that is costing Minnesota nearly $1 billion a year. Providing health care for the relatively modest 7 percent of its population that was uninsured will cost Minnesota nearly $300 million a year in direct costs by 1997.  Younger and healthier residents will be forced to pay an estimated $600 million or so a year in higher premiums (2% tax on doctor visits and hospital bills) to subsidize insurance for the old and chronically sick; premium rates for some young men under age 25 have risen as much as 93% since 1992, thanks to the new law. Minnesota rejected letting people decide for themselves. “Health Care decisions are complex and a sick consumer might not necessarily make the best decisions;” hence the state will look out for them.  Medical spending is to be ‘capped’, another word for rationed.  Once the HMOs decide what they will pay for and what they won’t, doctors will refuse to do procedures not covered.  Minnesota law forbids rate discrimination based on gender and age or health.  As a result, private insurers are bowing out of Minnesota in droves.  The State Health Czar, that is commissioner, sets maximum doctor fees and hence puts price controls in place.  As a result, even though the number of doctors in the U.S. is on the rise, the number of licensed physicians in Minnesota has decreased. Doctors and hospitals are now required to file periodic reports on all medical spending and administrative expenses.  The estimate for a similar plan for the United States as exist in Minnesota (the US has twice as high a proportion of uninsured as does Minnesota) exceeds $100 billion.  Not to mention the disruption and loss of freedoms (of choice) federalized health care would cause. 
	California had a state referendum on its November 1994 ballot which would produce a Canadian-style single-payer health care system whose costs by 1998 would be nearly $140 billion. The initiative would create a health care commissar and an array of new bureaucracies that would establish what health care procedures are permissible, decree what rates doctors may charge, set budgets for hospitals and HMOs, list permissible pharmaceuticals and the prices at which these medicines could be sold, and determine capital budgets for hospitals  and clinics. The state could even require physicians to obtain bureaucratic permission before they could accept new patients.  To pay for all of this, California businesses would have payroll taxes of nearly 9 percent; individuals would have surcharges on their income taxes and other levies. 
	A major reason for the health care ‘crisis’ and exploding prices comes from the tax code: employers can buy health insurance with pretax dollars but individuals must buy it with aftertax dollars.  Even if you are self-employed, only 25 cents on the dollar is deductible.  It is no surprise that most health care insurance is bought by employers not employees.  This third-party system breeds the illusion that somebody else is paying for health care.  Individuals appear to have little if any control.  There is no reward for being careful, no punishment for being careless.  Responsibility must be brought back into the equation.  Equalize tax treatment between employer and employee; create incentives for the individual.


HMO alert
III.  Health--Recommendations
	Our thoughts are that these key items towards Health Care policy must exist in any final health care package:
	•Universal coverage by affordable no-frills policies for catastrophic illnesses.
	• Providing to the user choices: a high deductible policy encourages people  to avoid needless duplication of tests and other waste.   Paying out of pocket eliminates administrative costs of insurance (30% added to bill).
	•Fair pricing.  The average 25 year old man needs about $560 of health care a year; the average 55-year old man needs $2345.  Premiums should reflect this.   One price for all (community rating) forces the young to subsidize the elderly, makes insurance less affordable for the young, and more inclined to opt out.
	•Portability.insurance reform so people can change insurers without losing protection for their preexisting conditions. Portability and renewal  of coverage would be guaranteed. No preexisting condition exclusions would be allowed during an open enrollment period.
	•Not allow disallowance for prior illnesses.  Insurers must be barred from denying or limiting coverage due to sickness. 
	•Subsidize premiums.  Converting the present tax exclusion for employer provided health benefits into a refundable tax credit targeted to families and individuals. 
	•Tort Reform so that doctors no longer will be forced to practice wasteful defensive medicine.
	• guaranteed issue: insurers must offer their product to any small employer seeking it, even if everyone in the shop is a major health risk.
	•cooperatives or purchasing groups to allow small businesses to get and keep health insurance at affordable levels;   coverage can continue because the size of the pool is significant.
	• automation should be used to the fullest.  If I were to seek a prescription, the pharmacist should be on line with the insurer. Instead of me filling out the forms and paying the postage, instead of  the insurer spending the manpower to review the case, sending the reimbursement check, why not automatically credit the pharmacist account for the insurer portion and have myself pay only my portion or the copayment.  Presto, no paperwork, no delays.  Cost efficient and timely system.  This could be used in all medical offices and affiliated services. 
	• limiting insurers ability to raise a customer’s premiums following a spike in medical expenses. community rating forbids any increases under such occurrences. an insurer can charge whatever it wants but premiums must be uniform for all small companies except for variances based on age, sex or geography that reflect the likelihood or illness.   variations based on occupation are taboo since this can be a method of redlining the sickness prone.  
	• We believe preventive care should be emphasized, proactive rather than reactive.  For example, the cost to provide prenatal care for all teenage mothers has been estimated to be $2 billion; while costs to the system for low weight babies and other infant problems exceed ten to twenty times that.  We believe counseling and treatment for smokers and alcoholics and drug users should be provided at little or no cost; by so doing the payoff will be a hundred times the cost.
	•Some level of co payment for all users should be mandatory, say $10 per visit regardless of physician or emergency ward.  This provides incentives to  users not to go for every little thing as well as providing some stake in their wellbeing.
	• Higher insurance rates should be  established for those with higher risk lifestyles: smokers, alcoholics, drug users, sword swallowers, mountain climbers, etc.  The point here is to adjust rates so as to provide incentives not to engage in unhealthy or potentially hazardous activities and to reward those who do not engage in them.
	• We must consider eliminating treatment for those over 80 with conditions that are not just life threatening but mortal.  Twenty-five percent of all medical cost is spent on treatments on the last 3 months of life; most of it in futile efforts to keep someone alive for a few days who is going to die anyway.  The money can be spent much better on the young, on prenatal care, on preventive medicine.  We must reassess our priorities. 
	•  High levels of taxes should be placed on cigarettes ($1 per pack), tobacco products (same level proportionally), alcohol, and drug use (once legalized).  The proceeds would be used to pay for many of the damages (lung cancer, drunk driving, liver problems, etc.) of these users and also provide a source of revenues for our preventive health programs suggested earlier. 
	• A major problem is that of teen aged mothers. Hundreds of thousands of unwed  uninformed unprepared  poor teens  (1 out of 5 teen girls) (nearly one-quarter of all babies born each year) give birth each year to low weight babies which require a high level of health care, usually at public expense.  For many girls, being a teen mother is the direct line to eternal welfare. Sex education should be made mandatory at the junior high level (12) at the time of physical changes for both boys and girls.  However this education should not be oriented towards ‘safe sex’ but towards anatomical, towards the emotional aspects, towards the potentials of unplanned pregnancy and disease, towards learning how to say ‘no.’  It is not the responsibility of schools to offer condoms or contraceptive advice.  One potential, one we think should be given heavy weight, is to make mandatory (at government expense) NORplant devices to every girl at her tenth, fourteenth, and eighteenth birthdays.  Although the cost will be high ($1-2 billion annually), the benefits from welfare reductions, less infant problems, will show a high payback.  Also, the boy (man) needs to take responsibility.  Any male who has sex with a girl under 16, even if underaged himself, automatically can become eligible for juvenile delinquency status, misdemeanor, penalties.  Fathers should be pursued, after all the girl did not get pregnant on her own, the boy must learn responsibility and pay the price.
	•Along with the above is the problem of sexually transmitted diseases, including AIDS.  Even though many are lifestyle related (such as AIDS from gays or drug users), research into cures or preventive measures must be stepped up.  
	•close many hospitals (50% of beds in Colorado are empty)	and turn them into nursing homes, extensive care facilities.
	•cut down on number of doctors and foreign national graduates
	•train more family doctors and fewer specialists.
	•stop keeping terminal people alive.
	•  We also suggest that for the interim, employers should be required to pay for health care insurance for minimum of three months after employees are laid off or terminated.  Since most unemployment is temporary and this is the most critical period of time for those without health care, this would assist during the interim.  In addition, Congress already has on the books the capability of discharged employees to continue to receive health insurance from their prior company but paying for it themselves for a period of up to eighteen months.  This should be expanded to 24 months with unemployment insurance picking up half the tab.  Once again, since nearly all unemployment is temporary, providing assistance during this timeframe would be the most logical and effective means.
	Reforms should turn health insurance into what it ought to be, a method of spreading risks instead of shedding them.  This also make it possible to offer employees of small firms  a wide selection of health plans.   offer an array of plans run by providers powerfully motivated to compete because employees could switch from one plan to another during an annual sign up period.  should be private. participation is not mandatory, should not be.  multiple cooperatives should be available.negotiations with cooperatives over pricing  helps.  However, community rating tends to make each insurer’s prices uniform.   Trade associations may also provide cooperatives.  
	We must editorialize on another peripheral subject of interest.  Where does one draw the limit with coverage.  Should dental exams and teeth cleaning be considered a right?  What about eye exams?  Psychiatric?  Psychologists?  Chiropractors?  Where does one draw the line.  What about if one’s religious beliefs and traditions require the use of acupuncture? Should coverage be allowed for that? This is a subject that needs to be debated in a rational mode.


Cigarette case

Home Page	
Preface & Introduction	
Chapter 1: Responsibility  
Chapter 2:  Leadership   
Chapter 3: Government  
Chapter 4:  Congress    
Chapter 5: Regulations and Bureaucracy   
Chapter 6: Defense  
Chapter 7: International Affairs 
Chapter 8: Crime and Justice  
Chapter 9:  Civil rights 
Chapter 10: Economic  
Chapter 11:  Education  
Chapter 12:  Health  
Chapter 13:  Planning and National Goals  
Conclusions  

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