Zeese Response to Libertarians on Healthcare Issues

The other day, I posted that Kevin Zeese had won the somewhat unorthodox (but worthy of experimentation) Libertarian Party nomination/endorsement for his race for U.S. Senate in Maryland. As I sort of expected, the comments turned into a debate over his campaign position on healthcare. While I disagree with Zeese’s position (we are rationally discussing our differences by e-mail), he’s a duly nominated LP candidate and should be given a chance to explain why he has chosen his particular position on the issue. Here’s what Zeese adds to the debate:

I don’t see national health care as socialized medicine. In fact, I do not favor doctors and hospitals being made government doctors and government hospitals — that would be socialized medicine. One of the advantages of a single payer system is that it will actually increase competition among doctors and other health care providers. Right now competition is stilted by private health insurance carriers who tell patients which doctor or provider they can go to. Any system based on private insurance will undermine competition.

I am open to a ‘free market’ solution but to compete with single payer it must provide: health care for all that is affordable, comprehensive and transportable for every Americans lifetime. The problem with relying on the private insurance approach — called “all-payer” — is that insurance providers will fragment the market. Healthy, young people (not children but young adults) will probably have affordable insurance, but anyone who is too young, too old or has a chronic illness will be priced out of the market. Private insurance will just be too expensive for them.

Regarding health care here are some issues to consider:

— the U.S. spends more per capita than any other country in the world yet tens of millions go without insurance,
— employers get massive corporate welfare through tax breaks when they provide health insurance,
— the health insurance and the pharmaceutical industries get massive corporate welfare,
— politicians of both parties are corrupted as they take money from these sources (as does Ben Cardin, so don’t expect him to advocate single payer),
— we spend nearly $200 billion — 25% of the cost of health care — on insurance industry bureaucracy (compared to 3% overhead of Medicare),
— 42% of the typical doctors office overhead is spent trying to collect payment from health insurance compared to Canada where a 1/2 page electronic form is used,
— employers struggle to compete with foreign competition that does not pay for health care,
— employers fear bankruptcy and are afraid to hire employees because of the uncontrollable cost of health care,
— workers are unable to change jobs or stop working for fear of losing health insurance,
— medical malpractice will be brought under control by single payer because if there is a bad medical outcome the patient will have health care, combine that with no fault insurance and the malpractice problem is basically resolved,
–patients do not have free choice of health care provider because insurance decides which doctor or provider patients can go to, this undermines competition and reduces quality.

For these reasons (and others, that I am sure I’m forgetting) single payer is supported across the board politically — progressives, liberals, conservatives, businessmen, consumers — by wide margins according to a Pew Poll — even among libertarian-leaning voters there is a large minority that supports it.

I’m open to other solutions, but don’t see any on the horizon. (The Massachusetts approach — mandating everyone get health insurance — gives more power to the corrupt health insurance industry so that is not an approach I favor.)

Kevin

39 Comments
  1. Posted by Norman Singleton at 09:30 PM Apr 4
    LRC blog

    Donald Devine exposes how the federal government discourages doctors from providing charity care. If a doctor bills a patient less than the doctor would bill Medicare/Medicaid for the same treatment, the government will accuse the doctor of fraud. Thus, doctors are
    understandably reluctant to reduce their fees for lower-income patients.

    Rubbing salt in the wound, doctors are forced to hire additional staff (and thus increase the amount they charge patients) solely to ensure they are in compliance with federal rules and regulations.

  2. Kevin,

    The price of healthcare is a symptom of efficiency. Your proposed Single-Payer adds costs, unnecessary costs.

    Private or All-Payer means I keep my money, spend it as I choose, without a bureaucracy of Kevins telling me what is good for me, and charging me for their good work. There is no such thing as a free lunch, nor are there any free social workers or health care watchdogs.

    Government intrusion into both healthcare and insurance has driven the costs of these to obscene levels. We don’t need more meddling. We need people to keep their noses out of our lives.

  3. – the U.S. spends more per capita than any other country in the world yet tens of millions go without insurance

    And yet we have the best medicine in the world. Eighty percent of the Nobel Prize winners in medicine studied and practiced here. America is where you want to be to get quality care, and why SHOULDN’T that cost more? Quality is usually more expensive.

    – employers struggle to compete with foreign competition that does not pay for health care

    Also not true, and Toyota is a good example. They’ve figured out it’s more cost effective to build their plants here rather than Japan, even though Japan subsizides insurance.

    – patients do not have free choice of health care provider because insurance decides which doctor or provider patients can go to, this undermines competition and reduces quality

    Clearly not – see quality addressed above. If the current system was reducing quality, we’d be seeing many more Americans heading overseas for treatment.

  4. Erin, studies have indicated that there is not any significant difference in quality in health care in America. Innovation is not the same as quality. I think the important distinction that is being ignored is that any innovation that occurs in America is easily adopted by Europe. If anything, we have adopted a system that has higher costs but encourages innovation, while the European system has lower costs but is able to borrow from our innovation. The health care system in America is clearly broken, although I am not sold on Kevin’s solution. I would like to see a greater attempt to reduce prescription drug prices through clearing the way for more generics and reducing the costs associated with doctor visits by going after our medical liscensing laws which create a scarcity of doctors in the market. This can be done without adopting statism.

  5. Innovation has no quantitative limits – through manufacturing, it can be everywhere at once. A quality specialist cannot and the majority choose to practice here in the states, probably because their knowledge and skills are more justly compensated here.

    Additionally, it should be noted that because of price-fixing and other methods employed by European nations, Americans often bear the brunt of R&D costs for new technology – particularly with those related to new pharmaceutical pursuits. Companies can’t distribute R&D costs to everyone who buys their products because many nations have made it against the law to do so. So if we’re going to address why Americans pay so much, it would be more appropriate to question why other nations pay so little in the global market.

  6. I know Vermont facts better than national facts, so you’ll have to extrapolate my answers for Vermont to the other states.

    – the U.S. spends more per capita than any other country in the world yet tens of millions go without insurance,

    We have 61,000 uninsured in Vermont. The State just released a study that showed that half of these people qualify for Medicaid and quarter of them make more than 300% of the poverty level (so they probably can afford to buy private insurance if they wish). So there are many going without insurance, but most of them are going without by personal choice.

    – employers get massive corporate welfare through tax breaks when they provide health insurance,

    Self-employed don’t get the same breaks. If I could, then I’d be able to afford health insurance even here in Vermont which is one of the most expensive states in the nation for health insurance.

    (to be continued)

  7. – the health insurance and the pharmaceutical industries get massive corporate welfare,

    Yep. Which is why libertarians oppose corporate welfare. Don’t forget the Kelo decision taking homes for Pfizer.

    – politicians of both parties are corrupted as they take money from these sources (as does Ben Cardin, so don’t expect him to advocate single payer),

    In Vermont Blue Cross and Blue Shield is in a position to manage the single payer system, so I wouldn’t say that there isn’t big money pushing the single payer system.

    (continued)

  8. – we spend nearly $200 billion — 25% of the cost of health care — on insurance industry bureaucracy (compared to 3% overhead of Medicare),

    “The FBI conservatively estimates that 10 cents of each dollar spent on Medicaid each year is lost to fraud and abuse. In fiscal year 1994, the U.S. spent $107 billion on Medicaid, so that means more than $10 billion was lost to fraud and deceit.” (source)

    I can’t find stats for fraud in the private health insurance industry, but I expect a lot of the 25% of overhead is to reduce fraud.

    Medicaid just pays out everything. In Vermont the average cost of a Medicaid enrollee is $5770. The average cost of a privately insured person is $2500. So while Medicaid might not have 25% of overhead, it does have 130% more waste.

    (continued)

  9. Another problem is the Medicaid cost shift. Medicaid doesn’t fully reimburse hospitals/doctors. Last year in Vermont there was a $59 million cost shift onto privately insured patients. If Medicaid fully reimbursed doctors, then the cost of private plans would drop by about 20 percent. (source)

    – 42% of the typical doctors office overhead is spent trying to collect payment from health insurance compared to Canada where a 1/2 page electronic form is used,

    This included Medicaid and Medicare. The forms should be simpler. If insurance companies didn’t have to deal with 50 different states worth of regulations, then the forms could be simplified. We should support the US House bill allowing for interstate purchase of health insurance.

    (continued)

  10. According to a September 2004 Zogby Poll 72 percent of Americans support allowing someone living in one state to purchase health insurance from another state. More Republicans (20%) than Democrats (12%) or independent voters (13%) are opposed to allowing the free market to work to allow free flow of services between states.

    – employers fear bankruptcy and are afraid to hire employees because of the uncontrollable cost of health care,

    Employers can hire employees and not offer health insurance.

    – workers are unable to change jobs or stop working for fear of losing health insurance,

    This is a problem with the federal law and it must be changed. Health care should be connected to the individual just like auto insurance. You don’t lose your auto insurance when you change change jobs.
    (continued)

  11. – 42% of the typical doctors office overhead is spent trying to collect payment from health insurance compared to Canada where a 1/2 page electronic form is used,

    One more thought on this issue. Doctors in the north west started a program called SimpleCare

    Doctors were faced with spending most of their time filling out paper work and dealing with Medicaid, Medicare, and insurance companies to be reimbursed instead of seeing patients. These doctors stopped taking insurance and only take cash/credit card payments. This allowed doctors to drop their rates by 30-50%, become profitable, and do what they trained to do – see patients.

    (continued)

  12. Erin,

    While I’m not supportive of Zeese’s plan, I think it fair to point out that the American system is no longer the best in the world. True, we have some Canadians coming here for healthcare (which exposes a flaw in their system). We also have Americans who travel abroad for treatments and medications banned here (a flaw in our system). We also have a lot of people who have no coverage. One reason is the tie of insurance to employment.

  13. – medical malpractice will be brought under control by single payer because if there is a bad medical outcome the patient will have health care, combine that with no fault insurance and the malpractice problem is basically resolved,

    It would fix it because people rarely sue the government and win. I think this will be bad for the patients as doctors become part of the government system to avoid lawsuits.

    –patients do not have free choice of health care provider because insurance decides which doctor or provider patients can go to, this undermines competition and reduces quality.

    Switch insurance companies or pay out of pocket. I pick which doctor I see, and I can get a catastrophic policy for major medical problems.

    (one more…)

  14. Hardy, to be fair to Pfizer, their land was adjacent to, but not effected by Kelo. It was a good sound byte, tho.

    Unless you know something different…

  15. From my perspective (having managed a large local medical practice) the direct regulatory burden (i.e. cost to the doctor’s office for billing, filing claims, insurance and government reporting functions) is around 15%.

    A cash based free market system would easily eliminate around 12.5% (it doesn’t cost that much to bill and collect from cash pay patients — especially upfront fees) of the total cost.

  16. I’m not sure of the total cost of the FDA burden on pharmaceutical companies, but eliminating most of that would easily save hundreds of millions per year while encouraging more R&D for new medications.

  17. Solutions:

    1. Give Medicaid enrollees more responsibility by putting them in control of their medical costs. Instead of paying $5770 per enrollee, give them $2500 to buy their own insurance plan (*2000 VT numbers). This is what Switzerland does and the spend about a third less on health care in their country than we do here.

    2. The 72% of Americans support buying health insurance from other states, so let them.

    3. Support free trade by allow importation of prescription drugs from other countries.

    (done)

  18. Hardy, to be fair to Pfizer, their land was adjacent to, but not effected by Kelo. It was a good sound byte, tho.

    You are probably right that the land in the Kelo case wasn’t part of Pfizer. I think Pfizer did gain land from other land owners through eminent domain, just not the seven plaintiffs in Kelo.

    Hardy

  19. In some states and some specialities, malpractice is indeed a significant problem — epsecially to those in the business of delivering babies. To some degree, there has been a free(er) market solution — with more nurses, nurse midwives, nurse practicioners and PAs actually being the ones to play baby catcher.

    However, I don’t see that economic burden as being one of the more significant ones within the healthcare industry as a whole.

  20. Stephen, while I’m sure that the FDA produces some burden on pharmaceutical companies, there is also the problem that pharmaceuticals do everything possible to drag out the duration of their patents and keep generics off the market. I’d suspect that if we got rid of much of the FDA burden on the drug companies it would spike R&D, but it would be R&D into ‘copy-cat’ drugs and not actual innovation.

    And as for malpractice, on the whole studies have indicated that while lawsuits has imposed a cost, the cost is actually less than what you’d expect from actual occurrences of malpractice. Antidotal evidence aside, Americans do not sue as much as they could given how often doctors screw up.

  21. Logan, I’m clearly no apologist for corporatism, especially for big pharma. However, in this particular case, the cost of FDA regs (and neccessary bribes for approval) are egregious. Aside from that, I believe the other approach which needs to be taken in this front is a thorough review of our intellectual property laws.

  22. Logan, as my wife is a doc, she might disagree re: malpractice. But I agree with you — there are a lot of really scary anecdotal stories out there, but (for the most part — some locations and specialties excluded) the overall cost burden is less than many people indicate. It is a problem which needs to be addressed, but I don’t see a significant impact with respect to overall healthcare spending dollars.

  23. Stephen,

    You mentioned that a flaw in our system is that we ban certain medications and treatments. Zeese’s plan will not change this, in fact it might make it worse as gov’t starts controlling even more of the healthcare system.

    One other note we need to make is that much of the overhead costs are caused by gov’t regulations. Get rid of most of the regulations and you can substantially reduce costs. Again Zeese’s plan does nothing to reduce regulations. My guess it will actually increase them as the gov’t will start dictating what medications and treatments will be covered. If your’s is not on the list to bad, and it will likely be against the law to pay for it by yourself. It will zap innovation as it will be hard to recoup costs. The lobbyists will have a hey-day with this type of program. You think we have a problem with the FDA, just wait until the gov’t has a monopoly on the payment side of health care. A gov’t monopoly always has bad unforseen consequences

  24. Another aspect of our medical system — perhaps already addressed here (I just now came into this convo) — which is horribly flawed and would work heavily to reduce the costs of pharmaceutical research in this nation:

    The AMA & FDA does not recognize medical research performed outside of this country.

    Any procedure, drug, machine, or vaccine which is developed in a foreign nation and has a case history or is already approved in that nation must be effectively “made from scratch” here and then be put through the approval process for the FDA stamp.

    I can site two very laudable — and verifiable — examples off-hand. 1) The use of accupuncture techniques as local anaesthetic in surgery. 2) The use of photosensitive electronics as a partial remedy for cataract-induced total blindness.

    The latter is currently undergoing an FDA approval for a technique which was developed something like ten years ago in Britain. The former has yet to be recognized at all.

  25. Stephen, have you ever considered that the costs the FDA places on companies trying to get drugs to markets is a way to discourage new drugs from entering the market and creating competition? Hence the older drugs on the market, with their ever extended patents, are free to charge higher prices.

    Terry, I want to know why, if government regulation is what is causing the overhead, do programs like Medicare not have such large overhead costs.

  26. I want to know why, if government regulation is what is causing the overhead, do programs like Medicare not have such large overhead costs.

    Their overhead is buried. Part of their overhead is raising the prices for everyone, since the providers can charge astronomical prices to a “buyer” with very deep pockets (stolen dough) and little oversight capacity, but can’t charge anyone else a lower price. This causes a price spiral and pushes people into the gangster-corporate insurance racket and away from fee for service.

    Since both government and corporations benefit from this arrangement, it’s quite unlikely that much organized pressure for a return to fee for service is likely to emerge, even though it is a superior solution. Instead we will hear a debate between single payer and mandatory insurance fascism.

    And where is alternative medicine in all this?

    http://ruwart.com/Healing/chap5.html

  27. Logan, that’s clearly a valid concern and is one (of many) reasons I suggest we perform a thorough review of intellectual property (patent protection, in this case) laws.

  28. I work in medical equipment and my husband is a doc so I tend to be quite passionate about this subject.

    I want to speak to the reg factor though. My company, which held FDA approval for a spine BGS unit, had to go through years of study and red tape costs to have the FDA recognize a cervical spine application of the very (reshaped)unit already in use. We are enjoying nice numbers right now. We are the only cervical (FDA approved) unit in the market. But if there were no FDA, based on the research already done, the unit could have been used off label, and the money and effort could have been spent in R&D. Going to go organize my thoughts now- I will get some numbers for you later.

  29. Stephen — Forgive the intrusion here, but I feel a need to have something clarified.

    By “review of intellectual property laws” are you indicating that you are non-supportive of the concept of intellectual property?

  30. Ian, I’ve working on a paper for a couple of years on the topic of revising many of our thought processes on IP. While this isn’t the forum (nor am I prepared for the debate, yet), my general beliefs, which I hope to be able to soundly defend, are that IP laws are merely artificial constructs which do considerably more harm than good.

  31. Logan,

    Back to the FDA/BigPharm debate, I find plenty of fault on both sides. I’m no defender of major corporations (sometimes I feel like I’m the only one within the libertarian movement with the balls to take on Wal-Mart). This said, I know plenty of people within the medical research community who would prefer to trade less government intervention for a freer marketplace.

  32. Michelle,

    I’m curious about your perspective on insurance (and medicare/medicaid/champus) billing, too.

    BTW, I remember a line from one of the office girls at a practice I once ran: A HCFA (billing) form will make a libertarian out of anyone.

  33. Stephen — you have my e-mail I’m certain. :)

    I’d be interested in hearing what you have to say on the matter — right now you and I are somewhat oppositional on the matter and I’ve never heard what I would consider a “rational” reasoning for why; but I’m willing to hear it out.

    If you can convince *me* then you’ve got some compelling evidence. ROFL.

  34. sometimes I feel like I’m the only one within the libertarian movement with the balls to take on Wal-Mart

    Andy and I have been pretty outspoken about MallWart. So has Kevin Carson.

  35. some uncovered issues here guys.
    1. Let’s give more power to the nurses. 80% of what doctors do can be done by nurses.
    2.I do believe that the AMA has a big say in what kind of courses a medical school offers and who can run a medical school, so let’s get the AMA out of it and increase the number of medical schools and thus doctors.
    3.How about the medical boards start going after docs who do unnecessary surgery the same way others go after auto mechanics who do unnecessary repair work. There are huge numbers of unnecessary surgery in America.
    4.In some cities doc in the box center have effectively been outlawed, thus costing patients more money.
    5.Any one compare the cost of Prilosec OTC (over the counter) and Prilosec before it was offered OTC?
    Just a few of the many issues in healthcare, if you can call it that.
    M.H.W.

  36. A single-payer system would surely be a highly regulated inefficient low-choice type of system similar to the HMO – which is a single-payer system for those enrolled.

    In the past, there were non-profit community hospitals financed by low interest tax free bonds. There were also mutual insurance societies (non-profit insurance companies).
    Charity hospitals also seem to have gone by the wayside.

    Groups could also form health co-ops and contract with local doctors for routine care. A system I have been thinking about might require the purchase of a share of stock, an annual membership fee, and a small fee for office visits. Basically a privately owned “Doc-in-the-Box” for basic care with prescription drugs sold at cost.

    The answer to a broken medical system is not one solution, but many. Less regulation would allow different market driven solutions that bypass the health care corporations and insurance corporations. It is time to get the government out of health care!