Anarchy Without Bombs

Cooperation Without Coercion

Health Care solutions

Like food, health care can be a matter of life or death, but while food is available in abundance and with easy access for all Americans, health care has become unaffordable to many and typically involves extremely long waits.  Moreover, while advances in technology generally both increase quality and decrease costs (think of computers), the health care system has been a major exception.  Why does the market work well for food and computers, but not health care?  The reason is government.

There is no free market in health care: government policies are both restricting supply and stimulating demand, and the miracle is that the market elements that remain are able to function at all.  More than 50% of health care dollars are paid by the government already, and an illogical employer-based insurance system, which results from government taxing cash wages but making insurance benefits tax-free, has resulted in 85% of medical expenses already being paid for by third party payers instead of the consumer-patient.  The idea that socializing the remaining 15% will solve the problem is silly: the main beneficiary of universal health insurance will be insurance companies (wouldn’t YOU like a law passed to force everybody to buy your product?).

What can we do?

  1. Get the FDA out of the way  — In a 34-page paper by research scientist Mary Ruwart issued in 2005, she detailed the horrifying cost of the Food & Drug Administration in money and lives.  In 1962, it was discovered that an estimated 12,000 European babies had been tragically born with birth defects attributed to a German drug, Thalidomide.  That year, the Kefauver-Harris Amendments to the Food & Drug Act gave the FDA the impossible task of determining that a drug was both safe and effective before allowing its sale, and empowered the FDA to prevent even the mere discussion of benefits of various substances by sellers without the same standard being met.  As a result, the cost of drug development today is 7 times higher than it would have been without these rules, development time is up to 14.5 years (and still rising), countless useful drugs have not been developed, and the free flow of information necessary for progress has been stifled.  As a result, virtually every person in this country has lost a loved one due to FDA regulations.  Through 1999, approximately 4.7 million premature deaths occurred to people prevented from taking life-saving drugs while the FDA was deciding whether to approve them, at least 4.1 million deaths resulted from potential drugs made too costly to develop by these rules, and both these losses were dwarfed by the deaths resulting from FDA prohibitions on the discussion of natural remedies, nutritional supplements, and off-label uses of existing drugs.  Against all this, using even the most optimistic assumptions, the FDA may have saved up to 68,000 lives from its extreme cautiousness.  Net result: FDA regulations are the equivalent of a new Thalidomide every week of every month of every year: year after year after year.  It is no surprise that the Life Extension Foundation calls the FDA the leading cause of death in this country.
  2. Replace government licensing with private certification — Early in the 20th century, the American Medical Association was openly discussing another health care crisis.  Their concern?  Medical care was too widely available!  Responding to the demand, many people were choosing to be doctors, others were providing simpler care requiring less training, midwives were common, and competition was keeping AMA member incomes lower than desired.  Well, they managed to solve that health care crisis.  The AMA successfully lobbied to have the exclusive right to decide who should be a doctor, and to require that many types of care be performed by such a licensed doctor.  They also obtained control over the licensing of medical schools and hospitals.  Quickly, many schools were closed (including a disproportionate share of those that accepted women and minorities as students), and nurse and midwife “competitors” put out of business or restricted to limited subservient roles.  “Lodge” doctors, referring to those who made contracts with the enormous number of mutual aid societies that served the needs of poor and middle class working people, were threatened with the loss of their licenses or hospital privileges if they didn’t cease providing low cost care under these contracts.  Today, many procedures are performed by doctors which nurse practitioners, midwives, paramedics, or pharmacists could competently perform.  The AMA is also trying to close down low cost clinics being opened by nurse practitioners in department stores such as Wal-Mart, or at least require that doctors be hired to oversee operations.  Quality certification, relying on reputation, is very helpful to consumers, but the licensing monopolies should be eliminated.  The AMA can continue to certify, but not compel people to use their services: this will ensure that only reasonable requirements are imposed.  Other specialty certifications will also naturally develop, and people will be able to choose the level of expertise and not be compelled to pay a physician for services far below their competence but required by law to be performed by them.   (Note also that private certification will replace FDA licensing of medications: prior to the formation of the FDA, Consumer Reports and Good Housekeeping magazine hired independent researchers to test new medicines and provide the results to their readers.  In today’s Internet world, objective advice will be easily available to all.)
  3. Deregulate insurance — It should be possible to obtain a health insurance policy that covers catastrophic costs, and doesn’t include coverage for ordinary medical needs or for services the insured will never utilize.  It should be, but it isn’t.  Consumers are held hostage to the rules of the state of residence, and most states have loaded up the law with mandates for coverages, often requiring that alcohol treatment programs, routine care, or other services the consumer prefers not to have.  Mandates should all be removed so that consumers can decide for themselves what they’d like to pay for, and prohibitions on the purchase of policies from other states should be removed.
  4. Repeal personal income taxes — One of the early driving forces to increase the cost of medical care was the special tax status of employer-provided coverage.  During World War II, the government imposed wage controls, and employers got around the limits by offering medical insurance benefits, which were not included.  Today, many employees are forced to stay in unsatisfactory jobs because they cannot risk losing health care coverage, and those who have to buy coverage individually compete at a disadvantage.  While making all health care expenses deductible, or expanding medical savings accounts, would be improvements on the present system, a better solution is to repeal personal income taxes, simplifying the system, removing the artificial stimulation of costs resulting from deductibility, and combined with the reduction of government spending and regulation, increase prosperity so that people can afford more of everything, not just quality health care.
  5. Allow liability waivers — Allow patients and medication users to agree to liability wavers in exchange for lower prices.  Also, allow patients and doctors to opt out of the government legal system and agree in advance to private arbitration of disputes that will be limited to restitution for actual harm.
  6. Eliminate paperwork requirements — The Health Insurance Portability & Accountability Act piled extensive requirements for frivolous paperwork and unnecessary documentation.  A 2003 Harvard Medical School study revealed that 31% of the total cost of medical care was the cost of bureaucracy.  Allow doctors to use judgment in deciding what paperwork is needed.
  7. Return Medicare and Medicaid to the private sector — The only way for a permanent, stable solution to health care is to get the government completely out of the health insurance business.  Without the adoption of the other proposals in this essay, Medicare and Medicaid are ticking time bombs anyway, with default only a few years off, and cracks already showing in the reduced reimbursements to doctors and restrictions on covered treatments.  With the adoption of the other proposals, the cost of health care will have been reduced so far that health care will, in fact, start to resemble food, as a necessary good reasonably priced.  Private charity along with free care for those who can’t afford to pay (which was a regular practice of doctors well before any laws were passed requiring it in the case of emergency rooms) will easily handle the rest.

BTW, universal health care insurance does not provide universal health care (as the Canadian Supreme Court said in rebuking Canadian health care authorities, “Access to a waiting list is not access to health care”).  Moreover, universal health care does not provide universal health.  There is plenty of evidence that lifestyle, not health care expenditures, is the key factor in living a long and healthy life, and the correlation between health care expenditures and health outcomes is disturbingly low.  Along with all the other problems caused by having health care become a government program, the worst is that the proper goal, health, has been almost totally forgotten.


Written by Less

October 27, 2008 at 6:29 pm

Posted in Economic freedom

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4 Responses

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  1. Interesting! I was unaware that employer-sponsored coverage was spawned by actions of the state. Unintended consequences resulting from tampering with the market are as certain (and destructive) as those resulting from tampering with the ecosystem.


    November 1, 2008 at 5:39 am

  2. What about abolition of pharmaceutical patents? That would eliminate a state-imposed monopoly and allow anyone to make improvements to existing drugs (e.g. by altering the packaging, dosage, formulation, etc.) Thus, both quality and quantity could rise.

    Nathan Larson

    November 19, 2008 at 1:30 am

  3. @ Nathan

    Absolutely. The practical case against coercively-enforced intellectual property monopolies will get a hearing in due course on this site. The enormous complexity involved in trying to do original research without stepping on someone else’s patent is a major obstacle to progress and competition, and the draconian powers that government must be given to ensure that people don’t make productive use of things they know make it a key target of market anarchism.

    In the meantime, for someone who wants to look through an awesome collection of material on the reasons to oppose monopoly patents and copyrights, see the papers and articles linked by the private property anarchist think tank Molinari Institute at:


    November 19, 2008 at 2:34 am

  4. Hey, cool tips. I’ll buy a glass of beer to the man from that chat who told me to go to your blog 🙂

    Jane Goody

    April 21, 2009 at 11:51 pm

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