Health, Drugs

This is the eighth of eight segments to examine major things government does, and show in detail that - because of the fundamental incompatibility between the nature of humans and the nature of government - what results is usually the opposite of what is allegedly intended. These eight also show how a free market would properly furnish the features of those functions actually needed.

It may be useful, now and after completing Segment 13, to see a summary of what the eight show. For that purpose an extra TOLFA page is provided and can be reached via this link.

Everyone gets sick from time to time, and always has; so there has always been a market demand for cures and care. That demand has been met by a remarkable saga of research and development of cures from the earliest times on record; and those trying to meet the demand have been held always in high regard, with compensation to match. Their rewards have come not just in terms of money and respect, but in those of satisfaction derived from helping fellow human beings; a strong motivator that has drawn many into the medical, pharmaceutical and nursing professions.

That saga has seen its setbacks, and plenty of mistakes; a mere three centuries ago physicians were solemnly bleeding patients so as to effect a cure. Perhaps three centuries from now medical scientists will be ridiculing some aspects of current practice.

The main setback to the saga came in the thousand years following the 4th Century AD, when the Christian church was made part of the "Establishment." Research continued in China and other parts of the world unaffected by European progress, or lack of it, but the enormous impetus given to rational enquiry by the ancient Greek thinkers, who had pushed Europe far ahead in the race for knowledge, came to a screeching halt; for that millennium, known as the "Dark Ages", the best and brightest of every generation were funnelled into the Church as monks. No doubt they tried to heal the sick nearby; no doubt there was nothing wrong at all with their motivation; but their methodology was totally flawed. Instead of pursuing the scientific method of observation, deduction, theory formation and testing they were all taught that no useful knowledge existed outside the Church and its scriptures. They were, in other words, hunting in the wrong haystack because there was a central directorate of control.

All that changed with the Renaissance, and science (knowledge) has blossomed ever since - medical science included. Until now.

The 20th Century brought some disquieting developments, as well as many spectacular advances. Treatment of all kinds is vastly improved from a hundred years ago - but (and it's a big "but") there are signs that progress may soon come to another screeching halt; for once again, control is being passed to a single directorate. Government is being placed in charge.

1. Whose life is it, anyway?

Back (as usual, and as necessary!) to first principles: this was answered in Segment 1, and is a vital starting point for this subject. We each own ourselves, period.

Therefore, we each have by right a 100% control over what gets done to our bodies; over what is ingested (taken in) whether as a pill, a drink or an injection, and over what bits get carved open and cut out. The choice is absolutely yours, for you.

Put another way: by right as human beings, we are each entitled to self-medicate. If you see fit to ingest something expected to change a condition you don't like (a headache, a fever, a depression, a feeling of acute boredom with a government school teacher, a pulled muscle, a persistent pain, a rash, a broken leg, cancer...) the right to decide what to do is 100% yours.

But, but... for many of those conditions we don't know what treatment is best! And for that broken leg, we certainly need help from someone else, to set the bone!

So go ahead, and obtain advice and help. Still, the decision what to do is your own, and yours alone; assuming you're conscious. (If not, then emergency physicians will take the risk that you later disagree, but that would be a reasonable risk of which a free-market court would be very tolerant, if satisfied they were acting in your best interests as far as they could tell.)

In those few paragraphs, we've pretty well covered the whole field of health care and drug use, in a free society - one compatible with human nature. They leave one key factor to address: who pays? Let's pose that question to you.

You do
The government should
The tooth fairy will

(In case you like Internet jokes, there's one here about an American, a Scot and a Canadian rushed to hospital after a car accident.)

2. Health Insurance

Free-market health care will be far less expensive than it is today, for reasons we'll come to below - but still, complex surgery might be beyond the means of many. What's to be done?

Enter, your friendly local or national health-insurance salesman. They would be everywhere, because as noted above everyone gets sick sometimes and anyone can have an accident. First, let's carefully note what "insurance" is supposed to be for.

The idea is to compensate the victim in the event of some unpredictable, catastrophic event. It was born in a coffee house in London in the early 1700s, to meet an old and serious need: the loss of ships at sea. All shipowners knew there was a risk, every time one of their vessels set sail - and they could calculate how big was that risk. Perhaps one ship in 100, on average, failed to return from a long voyage. But it was not possible to predict which ships would be sunk by storms, in any one year or month.

Further, if a ship did sink, the owner might be financially devastated; he might own only a few ships, and so be unable to "self-insure" - that is, pay for a replacement ship out of cash, should one be lost. The term "self-insurance" came later, of course.

The ingenious answer was to share the risk, with the help of an "insurance company", an enterprise that was invented for the purpose. Anyone wishing to protect himself would pay a small premium (perhaps 1% annually of the cost of a new ship, plus a little to yield the insurer a profit) and the insurer would buy him a new ship if one sunk.

Thus was born the worldwide insurance industry. The name of the coffee house was "Lloyds."

It's quite easy to see how this idea can be applied to health care. You talk with your salesman, pick the risks that you can't afford to bear yourself, he quotes you a premium price, and you may haggle and shop his competitor to select the most suitable option, and eventually sign up. You pay a little, and normally you see nothing back; but if the unaffordable and unpredictable happens - a broken leg, a case of cancer... - then the insurer picks up the tab. Simple!

That's the kind of thing that will prevail, in the coming free-market society. Notice, you'd be foolish to buy an insurance policy to cover the cost of predictable events like ordinary visits to the doctor's office for minor maladies; for you know that the insurer is going to make a profit and that would mean you will pay the cost of the visits plus a share of those profits! That would be silly, irrational. But for rare and unexpected problems, insurance makes a lot of sense.

3. What Went Wrong

As a veteran of 12 TOLFA segments, you can probably guess: government put in its jackboot!

It did so steadily over a whole century, starting around 1900, and in several ways:-

  1. State governments required physicians to be licensed before practicing as such
  2. The Feds introduced certain "free" medical services in the 1960s, extended since
  3. They regulated drugs; outlawing some, making some others "prescription only"
  4. They established the FDA to approve or reject new drugs
  5. To obtain government reimbursement, providers are loaded with administration

At first sight (which is all that government people hope voters will give them) these seem positive goodies. Who wants to be treated by a quack, for instance? By now, though, we know to give such programs a more careful examination. We know of the "180o phenomenon."

Licensure, first, causes an increase in the cost of consulting a physician. While it's true that travelling "quacks" sometimes misled people in the 19th Century about the efficacy of their potions, there was no need at all for government to intervene; if a patient wants to choose a physician on the basis of his reputation and training, he is well placed to do so on his own. All medical schools issue diplomas and keep records, and those can be examined easily before entering a contractual relationship such as undergoing treatment. Licensure, however, at once enables the licensed physician to charge more, knowing that the patient's choice is limited; he may even be the only choice in town! As of 2006, an office visit even for a sore throat may involve a $75 fee, on top of whatever medication is prescribed.

"Free" Treatment, secondly, arrived in the 60's as part of the fraudulent "War on Poverty" (fraudulent, because the war was lost decades ago but never abandoned; there is as much poverty now as there was then) so naturally, demand for services ballooned and therefore the real price, again, increased. (Click for larger image.)

That's because of the iron economic principle that if supply of some service is limited (physicians cannot be trained and graduated overnight) and the demand increases, so will the price. Here, the apparent price approached zero (the Johnson tooth fairy was let loose) and so the demand for services shot up. Then, so did the real price - for everyone, including the many not covered by the government scheme. The tragedy was that this was entirely foreseeable, even by the economic illiterates in government; the same idea had been tried in Britain 20 years earlier, with identical results; see "Déjà Vu" below.

It must be added that government was not the only party providing "free" medical insurance in the 1960s; it became the fashion, in a time of low unemployment, for businesses to offer it in a "package" of employee benefits, to attract new hires. In their case the cost did at least come out of the labor of the people hired, even though that obvious fact was not drawn to their attention, but it did have the same effect of disguising the true cost of medical care; a doctor's visit would appear to be "free" while its cost was actually being borne by the employer first, and then by the employee in the form of lower salary raises next year. As we saw above, health insurance makes good sense for unexpected disaster, but none at all for everyday, predictable events - no matter who apparently pays the premium.

Forty years later, the whirlwind is being reaped; America's one-time biggest company, General Motors, is in 2006 on the brink of bankruptcy primarily because its generous employee healthcare package is adding $1,500 to the price of every car it sells. At least a for-profit company has that option; government never declares bankruptcy, it merely ratchets up taxes.

(If you really like Internet jokes, there's a terrible one here about a dead duck; it illustrates why costs escalate when the customer doesn't pay directly.)

Drug Regulation, thirdly, added another boost to the price of health care, and as above it had two aspects: prohibition and prescription.

Prohibition targets drugs that may not have to do with health care, as such, though marijuana certainly has been found effective in relieving chronic pain and laudanum (opium) was a commonly available painkiller right through the 1800's; you may recall John Wayne's last movie, "The Shootist", in which his character's landlady's young son was sent to buy a bottle at the pharmacy for some trivial price. Nonetheless, as we saw above, humans have an absolute right to control what enters our bodies and if we want to enhance our sense of wellbeing, whether with Bourbon or Ecstasy, it's nobody else's business at all. It may be unwise and damaging and in a rare case even fatal, but whose life is it, anyway?

The real aim of prohibition is shown by What The Drug War's For (below) and it is highly disruptive. The street price of illegal drugs is greatly magnified, generating real crime (the sort with victims) as addicts rob to get money to pay the illegal dealers; dealers settle disputes with guns, killing innocents in the crossfire, because civilized resolution services are closed to them by government edict, and on and on. What a tragedy; government could have learned it all from its disastrous experiment with alcohol in the 1920s; but government is, as always, irrational.

Prescription control on the other hand does pretend to enhance health care, but its primary effect is to magnify its cost. The idea is that before you are allowed to take certain medications into your own body, you must get permission from one of the government's licensed physicians.

Now, most of us might want to get expert advice anyway, especially for a drug new to the market; but government takes the decision out of our hands. That violates our fundamental right. It also means that time must be taken out of the schedule of a highly trained physician, whose time is naturally expensive - whether we want to ask his advice or not. Hence the higher cost; perhaps $75 for an office visit, to add to the price of the drug itself. Then we have to show ID to the dispensing pharmacist, as well as the prescription form itself; totally needless and intrusive, except that government has decreed that the pharmacy must collect and verify that information. Another cost item, that someone - you, eventually - must pay.

Result: by the late 20th Century, many medications were being priced in terms of dollars per pill and ordinary people could simply not afford them; having broken our legs Congress then handed us a crutch in the form of limited subsidies for medication purchases, and so the ridiculous cycle took another vicious turn; the apparent price of drugs, though far too high, is lower than the actual cost - so the demand will rise again, and...

There is (did we mention this before?) no rational alternative to a free market.

FDA Approval, fourthly, greatly magnifies the price of prescription drugs. The Food and Drug Administration acts as a hoop, through which drug companies must jump before they are allowed to place a new medication on the market. This was sold to voters as a "safety" measure to ensure that Big Pharma didn't profit from unsafe drugs.

In the coming free market society Big Pharma won't do that for long anyway, because if any were unwise enough to poison its customers by neglecting a thorough pre-release testing program, they would pretty soon be bankrupt on account of the lawsuits they would lose. Nonetheless, the hoop is there; and it adds several years to the development cycle - something that by its nature is bound to be a slow search anyway.

During those extra years, patients awaiting the new drug will die. Those deaths are not counted when the FDA does its calculation of relative safety. And since its employees presumably like their salaries, we can be sure that they would rather err on the side of caution than approve a drug from whose use one in a million might die. It might better be called the Federal Delay Agency for that reason, and this government generated delay costs money as well as lives.

That's because there is a "window" of patent-protected life for any new drug. The manufacturer must recover all his substantial development costs, plus profits, within that window - for when the patent expires, rivals can copy his formula and make the pills for a cost like aspirin's.

The FDA multi-year delay eats in to that window and multiplies the price two to four times.

Health Hobgoblins are - alas - only too common. The perceptive humorist H L Mencken observed that "The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary" and this is true for health as for other subjects.

The ruse succeeds because epidemics do occasionally happen: the worldwide influenza in 1919 was real and dreadfully lethal. But government people trot out crisis after crisis, almost all of them false (and probably deliberate) alarms; in 2006 it was the "bird flu." In 1984 their most successful hobgoblin ever was the AIDS scare; supposedly, it was to sweep the world and fatally infect all who didn't practice safe and monogamous sex. It never happened. Billions of stolen dollars have been spent to find its cause, but the best research has been done outside the government monopoly and has concluded (examples: Prof Duisberg, Dr Al-Bayati) that AIDS does not even exist as a communicable disease, and certainly is not caused by HIV except that circular government orthodoxy defines AIDS as "that which is caused by HIV"!

Lastly let's notice the administrative burden that government places on all participants in health care. Here's a quote for TOLFA by Dr Glenn Winstead, a former physician who is, like those referenced in "Doctors Shrug" below, now too discouraged to re-enter the profession:-

Hospitals were once the tools of physicians; now physicians are the tools of hospital administrators. The transfer of power began with the advent of medicare and medicaid. Physicians were bribed with stolen tax money to cooperate. Incomes shot out the roof, but at a price of integrity and control. Competition was obliterated in favor of a generous, guaranteed income from the state.

Eventually, however, this benevolent creature turned on those it had enticed into its den. No longer are the best and the brightest attracted to medicine, and with good reason. Intuitively, they see that physicians have become whores of the state. Drug companies used to persuade physicians to use their drugs. Now they market the drugs directly to the public with slick TV ads, that are very powerful in inducing the public to demand certain drugs from their physicians, who are all too easily cowed into compliance, lest the patient complain to the hospital administrator, who holds the keys to the physician's career. Monstrously inappropriate prescription of powerful antibiotics for the common cold is one obvious result, cost be damned.

Any attempt to step outside the box results in armed goons busting down doors, be they those of physicians or other people who do not seek approval from the state to use unapproved medications. Look at whatever surgical procedure is paid for well by the state, and there will be, of course, lots of those procedures done. First, it was hysterectomies. If you had a uterus, it needed to be removed. Then orthopedic procedures, such as back surgery covered by government insurance programs, became the vogue. Then heart procedures became the money-pit for hospitals and physicians. The FDA stifled anything that was new or cheap from coming on the market. The entire game is rigged against the patients' welfare, which is the last consideration.

When the free-market was mostly operational, medical care was cheap and readily available. Now, medicine, like law and education, has become an obscene beast. Everyone with integrity loses.  Physicians know there is something very wrong, but few of them can put a finger on it. Most of us are the product of many years of indoctrination, the  blinders which keep the horse on the state track. There are so many interwoven channels of corruption and control that it is nearly impossible to sort it out.

Good, honest medical care has become an item for the history books alone.

- and, let's add, for the coming free market society in the 2020s.

4. Segment Review

It's very widely known that US health care is horribly expensive, and the older among us may notice its quality has fallen over the years - though not nearly as far as in countries like the UK and Canada, whose single-payer systems mean that the patient is altogether at the mercy of the bureaucrats and may wait months or years for elective and sometimes badly-needed surgery, sometimes dying while waiting. But generally, the reasons for this steep decline in quality per dollar are not understood.

In this Segment we have seen their cause: once again, it has been that government has prevented a free market operating. Before proceeding, see how you go on with these questions and then, if you didn't do so earlier, take five to review where we've come from so far.

Q1    Q2    Q3    Q4    Q5    Q6    Q7    Q8   

Review So Far as mentioned at top of page

Study Plan

For further reading:
Déjà Vu
Doctors Shrug
The Wrong Haystack?
The War on... Vitamins?
What The Drug War's For
Health Care Is Not A Right
Medicare's Long Term Impact
Why Health Care Costs Too Much
"Mortal Peril" by Richard Epstein