Dr. Dean’s Health-Care Reform Plan

Solving the Medical Care Crisis
in the United States
with a Free Market Approach

Introduction

There is little argument that the problem with medical care in the U.S. today is that it is too expensive! Few people in the U.S. do not agree that our medical care system drastically needs to be changed. The disagreement, however, lies in how to change it, how to reduce costs, and how to increase access to care. So far, the only recommendations that have been proposed are from those who advocate greater government intervention to varying degrees. I believe just the opposite. I believe the system can be “fixed” by getting the government out of the health care business.

The first thing to do is define the problem. In a nutshell, medical care in the U.S. is obscenely expensive. Instead of convening a committee of representatives from the hospital industry, the pharmaceutical industry, the government, and the legal profession to come up with a solution (remember, these are the guys who caused the crisis in the first place), let’s analyze the problem at its roots, and figure out why medical care is so expensive, and what we can do about it. For example, the CEO of the Hospital Corporation of America made over one hundred thirty two million dollars in 1992! He, and his colleagues in the hospital, HMO, insurance and pharmaceutical industries are paying the lobbyists who are advising Hillary Clinton how to fix the system. They certainly are not going to advise her how to reduce their salaries.

Here, in a nutshell, is my proposal to restore compassion, sanity and fiscal responsibility to our health care system, yet retain or increase the high quality, and freedom of choice that Americans now enjoy.

Step 1

With an increased number of physicians and nurses, competition will increase, and salaries will certainly go down (law of supply and demand). Assuming that our educational system is sound, and our testing and licensing systems are reliable and valid, the quality of the graduates will not be reduced. In fact, the quality will probably actually increase, since the motivation to become a physician or nurse will be an interest in the field, and desire to help others, rather than just a way to get a high-paying job.

A good example of a profession that accepts all (or nearly all) qualified applicants, is the chiropractic profession. Chiropractic colleges accept virtually all qualified applicants. The system weeds out those who can’t complete the curriculum or pass the licensing exams. The number of chiropractors is controlled by the market. If the number became too large, and chiropractors were unable to earn a satisfactory living, fewer people would enter the profession. The same rationale would certainly prevail if enrollments were opened up in medical and nursing schools.

An additional benefit derived from the increased number of medical and nursing students, would be a stimulus for the construction industry, and all related industries affected by construction, because of the requirement to build additional schools. This would provide a powerful stimulus to our sagging economy, and would create a large number of additional non-health-care-related jobs nationwide.

Another benefit of the increased competition for medical and nursing students is that the price of a medical and nursing education will probably decrease. Currently, with a large surfeit of students, the schools can “charge what the traffic will bear.” However, under this plan, the competition for students will increase, and the cost to the students will be reduced to more realistically reflect the true cost of the education.

Step 2

A little-known fact is that it is currently legal for individuals to import reasonable amounts (usually defined as a three-month supply) of foreign drugs for their personal use (either by mail or by personally bringing the medications into the country). However, it is incongruously illegal to promote or profit from such importation. Consequently, very few Americans are aware of their drug importation rights, and even those who are aware of this right, don’t know where to buy foreign drugs, despite the existence of many foreign pharmacies and mail order firms which currently are sending drugs to patients in the U.S. Furthermore, despite the legal right of such importation, patients are often illegally harassed by various governmental agencies (Postal Service, Drug Enforcement Agency, FDA, and Customs) whenever such legal shipments are discovered. The solution is simply to allow the promotion of foreign-manufactured drugs in the U.S.

If U.S. pharmaceutical companies were required to compete on the open-market with foreign-manufactured drugs (especially since most drugs in the U.S. are now manufactured in Puerto Rico by employees paid third-World salaries), the exorbitant cost of drugs in the U.S. would be dramatically reduced.

Step 3

Step 4

Durk Pearson and Sandy Shaw proposed the use of a “split label” on nutritional/herbal/biological products. Their proposal would allow manufacturers to make truthful health claims on half of the product label. Such claims would have to be substantiated by significant clinical data, but would not be required to meet the overly rigorous and excessively expensive (in excess of 200 million dollars) requirements that the FDA requires for prescription drugs. The other half of the label would be used by the FDA to provide the “official” government opinion of the claim. The FDA would thus be forced to fulfill its functions of being an educational arm of the government (instead of being just another enforcer, kicking in the doors of health food stores and physicians who violate the law by making truthful health claims about nutritional supplements). The consumer could then make a choice of “who do you trust,” a reputable nutrient manufacturer, making truthful claims, or the U.S. Government? The FDA would, of course, still assure the safety of the product, and the veracity of the contents (i.e., to make sure that a product claimed to have 500 mg of vitamin C did, in fact, contain that amount of unadulterated product). If the FDA believes the claims to be false, the claim would be submitted to a jury trial (as opposed to the current administrative procedures), to determine if the supporting evidence were truthful and adequate.

The power of the FDA to capriciously and arbitrarily seize nutritional products and prohibit their sale without demonstrating that they are, in fact, harmful, or that claims made are not truthful, should be dramatically curtailed. Such actions by the FDA should be exercised only when a serious threat to public safety can be clearly demonstrated, or when the jury finds that the manufacturer’s claims are invalid.

Step 5

Also, since physician salaries will probably be decreased by the increased competition that would result from this plan, physicians will no longer be seen as “fat cats” with “deep pockets.” Thus, there would be less incentive for unscrupulous attorneys to specialize in malpractice law.

Another recommendation is for physicians to simply stop buying malpractice insurance, again reducing the deep pockets. Ultimately, most malpractice claims are due to poor or adversarial physician-patient relationships, or to patient dissatisfaction with results received compared to the exorbitant fees that they have been charged. With lower fees, expectations would be proportionally reduced, and the level of dissatisfaction with less-than-optimum results would also be greatly decreased.

Consideration should also be given to instituting legally-binding agreements between physicians and their patients not to sue for malpractice, prior to receiving care. An alternative to this, would be for a patient to purchase his own malpractice insurance prior to receiving care (just as an airline passenger often purchases “flight insurance”). Thus, if the physician performed malpractice, the patient’s own insurance policy would pay him. Any one or combination of these plans would eliminate the “malpractice crisis.”

Step 6

For example, a routine appendectomy usually costs in the range of from $12,000 to $15,000 in most hospitals in the U.S. Where did this money go? The surgeon probably made $500 to $600; the anesthesiologist probably earned $500; and the hospital probably charged $500 to $600 for the surgical suite, techs, and equipment used. So we’re up to about $1,700. Let’s assume that recovery in the hospital will be about five days. A nightly stay in the Waldorf-Astoria would probably cost about $200 per night. That’s another $1,000. Add another $200 per day for nursing services (that’s another $1,000), and perhaps $50 per day for food (another $250). That gives us a grand total of about $4,000. Where did the rest of the $8,000 to $11,000 go? Up in administrative smoke!

The fees that most hospitals charge are absolutely immoral and unjustifiable. Hospitals attempt to justify their exorbitant charges by claiming that they must overcharge paying patients to make up for those who don’t (can’t) pay. If their fees were reasonable, most patients could probably pay them.

One of the reasons for these costs is the administrative requirements placed on hospitals by the Joint Commission on Accreditation of Health Care Organizations (JCOAHCO), a morass of regulations that have been established by an amorphous group of bureaucratic health-care organizations and governmental regulators. Instead of having the welfare of their patients as their primary concern, the major effort of most hospital administrators is “compliance” with the requirements of JCOAHCO! Elimination of this organization would go a long way in reducing costs of hospitalization.

If JCOAHCO were eliminated, it would be possible to establish a new type of hospitals for short-term stays or “low-tech” treatments (sort of the hospital-equivalent of a small nursing home or hospice). Everyone does not need to stay in a tertiary-care level of hospital, complete with MRI and CT scanners, with a capability for coronary bypass and heart transplant surgery. Some people merely need a few days of IV antibiotics, rehydration, or observation with a little nurse-supplied TLC (tender loving care). Such small, low-tech “hospitals” or over-night clinics would be an affordable option. The problem is, the JCOAHCO requirements, which set standards for hospitals, do not differentiate between large and small hospitals. They all must meet the same ridiculous standards, requiring an excessive administrative overhead, and making the low-tech hospital an economic impossibility.

Step 7

Physicians are taught, in medical school and during their training, to greet the patients with a friendly “How can I help you?” or “What can I do for you?” However, nowadays, the first thing a person hears upon entering a physician’s office or hospital is, “Do you have any insurance?” or “How are you going to pay for this?”

Getting the insurance companies out of medicine will have a number of beneficial effects. First, is that the insurance department in every physician’s office and hospital can be dispensed with, reducing office overhead and the cost of care.

Second, it is very easy for physicians to jack up the price of medical services when the patient doesn’t care how much he is charged, and the doctor knows the patient doesn’t care. “Just put it on my insurance,” or “Your insurance will cover all of this. You won’t be charged a thing.” This is the real reason for unnecessary lab tests and procedures.

The tragedy in medicine is not, as Hillary Clinton says, that there are 37 million medically uninsured Americans. The real tragedy is that medical care is largely unaffordable for those without medical insurance. We don’t have grocery insurance or clothing insurance, and we don’t buy gas or pay our mortgages with our car insurance or home owner’s insurance. Why do we have to pay our medical bills with medical insurance? Again, insurance companies don’t cure anybody!

Some critics complain that the people who work for the insurance industry have to have jobs, too. I say, let them go to medical school or nursing school, and really perform a service in the health-care field, instead of just sucking money out of it.

Step 8

Conclusion

Implementation of the above steps should dramatically reduce the cost of medical care, maintain (or increase) the high quality our system now provides, and increase access to health care, yet at the same time get the government completely out of the “health care business.” This is done, in most cases, by removing the governmental control which has caused the problem in the first place. On the other hand, the Clinton health-care plan (Fig. 1) provides (1) vast new layers of bureaucracy, (2) increases regulation, (3) causes higher costs to the taxpayers, and (4) will certainly result in poorer service, longer waits, and greater patient dissatisfaction.

If you think medical care in this country is expensive now,...

...wait until it’s free!