In this Fox article, Edward K. Glassman, my long
ago Harvard classmate, author of Dow 36,000 (predicting Dow at that level by
2005), and current director of the George W. Bush Institute, extolls our free
market medical system. The first reader to comment agrees that we have a “ free
market” system, but thinks that “ profit based healthcare” should be
“outlawed.” Another reader thinks that we actually have “socialized medicine.”
So
what do we have? I think the most apt description would be crony capitalist
medicine, one in which powerful special interests conspire with government
officials to create legally mandated monopolies, with the specific goal of
thwarting free market competition.
Here
is how it actually works:
1.
Most people wonder why there are no visible prices in medicine. You only find
out what the charge has been after the service has been delivered. There
actually are prices, controlled prices, but you aren’t supposed to know what
they are. Each year a committee of the American Medical Association recommends
a set of prices to Medicare. The committee is dominated by medical specialists,
so specialists tend to do particularly well. Medicare is actually run, not by
government, but by private insurance companies, and these companies adopt these
prices for private insurance purposes as well.
Congress
further sweetened this price controlled system for hospitals by requiring
Medicare to pay more for the same service if provided by hospital
employees. This has inevitably led to local hospitals buying out most of the
surrounding private medical practices, which has in turn created local medical
service monopolies that feed patients to the hospital for its more costly
services.
2.
These monopolies are further sweetened for doctors by legally barring nurses,
chiropractors, four year trained naturopathic doctors, and other health
professionals from using the full extent of their medical training. In this
way, the supply of medical services is constrained, which further raises
prices.
3.
Notwithstanding all the preceding, it is not the American Medical Association,
which is itself financed by a monopoly in medical coding granted by the US
government department of Health and Human Services, nor the hospitals, nor the
medical doctors as a group that actually run the medical system. The top spot is
reserved for the drug companies, which in turn share their largesse with the
AMA, doctors, medical journals, media companies, and especially with
politicians. In return, drug companies are granted a series of powerful
monopolies, monopolies that are drive up the cost of medicine and, given the
employer role in healthcare, destroy jobs, raises, and economic opportunity as
well.
First,
drug companies claim a legal monopoly when they patent a drug. The drug
research may have been done by the government or by a university using
government money but it doesn’t matter. The grant of monopoly stands.
Then
the drug company takes the patented medication through the FDA approval process
( average cost of $3 billion over what can easily be a decade). Drug companies
do not object to this ordeal, because the stiff price both eliminates any
competition from unpatentable treatments and also flows into the salaries of
FDA employees, who consequently tend to take a friendly view of drug companies
and zealously guard the legal exclusivity of their products.
FDA
enforcement includes armed raids and threats of a lifetime in jail for any
producer who makes medical claims without permission. Even cherry and walnut
growers have been threatened. The agency takes the position that for producers
to make health claims for these heavily researched and very healthy “
superfoods,” they must first turn them into drugs through the drug approval
process.
The
end result is a narrow supply of licensed drug treatments that are often highly
toxic and rarely cure anyone, both because curing the patient would end the
gravy train, and also because drug side effects inevitably lead to the
prescription of more drugs. If a treatment is safe, effective, and cheap, it is
immediately purged from the medical system as “unapproved,” not “ standard of
care,” when in effect its real defect is that drug companies cannot make
billions from it.
For
example, people who have acid reflux are more often than not suffering from a
lack of stomach acid, not too much of it. The resulting incomplete digestion is
the source of the problem. They could cure it with acid supplements
costing pennies, but nobody will ever tell them about this or suggest testing
their acid production. Similarly, patients with frightening heartbeat
irregularities are rarely told that they need more magnesium, a very cheap
mineral, although they may need it in IV or transdermal form for the same
reason ( lack of stomach acid is interfering with absorption of the mineral).
Instead, reflux patients are given expensive prescription acid blocking
drugs that pose a risk to the entire immune system, and have been linked to
pneumonia, other infections, bone loss, and many other medical
calamities, while heart patients are put on prescription blood thinners that
can themselves cause life threatening internal bleeding as well as bone loss
and other problems.
No,
this is not a free market system nor anything remotely close to one. In a
genuine free market system, prices reflect the decisions of consumers. Producers
who solve significant problems are rewarded with high prices and profits. High
prices and profits in turn attract lots of competition. The competition not
only prevents monopoly. It also improves quality and very importantly increases
supply, which is the only sustainable way to reduce prices. Consumers then get
better medicine and ever lower prices. Producers dislike competition, and
therefore try to buy government help in manipulating or fixing prices. This is
more easily accomplished in medicine, because it can all be done under the
guise of government “ protecting” consumers when actually the consumers are
being fleeced and impoverished.
There
are many honest and dedicated medical professionals sincerely devoted to the
healing arts. But they are trapped in a system that can more accurately be
described as a crony capitalist nightmare.
Hunter
Lewis is cofounder of AgainstCronyCapitalism.org. He is co-founder and former
CEO of Cambridge Associates LLC and the author of nine books, including Where
Keynes Went Wrong. He has served on boards and committees of 15 not-for-profit
organizations, including environmental, teaching, research, and cultural
organizations, as well as the World Bank.
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