I began to write about the State destruction of the American health-care system in 1993, when Hillary Clinton’s plan to nationalize the industry was getting front-page propaganda, but I had been living inside this fascist nightmare for twenty-eight years already, since Medicare went into effect.
The first bloom on the latter nightshade looked lovely to many people, including the doctors and the hospitals who would get paid something for the first time for treating the homeless and the poor, who were formerly written off as bad debts and charity cases. Who realized, or admitted, that making the supply of medical care "free" would push the demand to infinity? Hospitals were overwhelmed with demand, so Congress gave them the Hill-Burton Act to expand their facilities — infinitely.
But how did the State get into medicine in the first place? For the answer to that, we have to go back to the 19th century licensure laws, which artificially limited the supply of physicians, and then move forward to the mercantilist collusion between the State, the unions, and the rust-belt industries, which produced tax-deductible employee heath insurance. After years of opposition to "socialized medicine," Medicare finally flew under the banner of health "insurance."
Medicare started out paying "fee for service," which is the way we pay auto mechanics, with a significant difference: if the charge is 100, Medicare approves 80, then pays 64, leaving an unpaid balance of 36. People took this State gift without question, unfortunately, accepting the idea that the State may set the price wherever it wishes, and then pay what it wishes. The so-called "private" insurance companies who were (are) the actual Medicare contractors paying the bills adopted this policy themselves, immediately.
Even with price-fixing and refusal to pay, Medicare faced real bankruptcy inside two-decades, and the Reagan administration got stuck with fixing it. Their best and brightest dreamed up Diagnostic Related Groups, DRGs, as the new standard for payment; the State would pay a fixed amount per diagnosis, period, regardless of the time or treatment required. This meant that a person who normally required ten days in the hospital got three, and went home sick. And DRGs did not end State price-fixing, and refusal to pay; the new system only made things more complex, and easier for the State to refuse payment.
That didn’t work either, for we still had an infinite demand for limited resources, so what’s going to give? Resources. Three hundred hospitals closed during the first year after the Reagan Medicare Reform Act went into effect, and the rest were cutting back staff, and beds. Doctors who could, retired; doctors who couldn’t retire formed groups to pool the expense and the risk of the new regulations. Emergency rooms suddenly blossomed under the new State payment schemes, and became a growth industry as the clinic of first resort to the public. Home-health also seemed promising during the late eighties and early nineties for dealing with the sick people discharged from hospitals, but expenses again grew too fast, and State payments were again restricted.
Ten more years of bureaucratic fiddling with Medicare accomplished zero savings and another huge cost inflation, and finally Congress woke up to their personal peril: what if they got caught with this stinking mess on their hands? So they immediately created a scapegoat, the now venerable fraud called the HMO, baited with short-term incentives to attract the finest skilled con-artists in the country, who had lately vanished from the S&L industry, to run them. So they came and went, leaving the public to hold the empty bag, as usual, while Congress muddied the waters further by creating PPOs, POSs, PSOs, and MSAs, as a potpourri of scapegoats for our senior population to ponder.
In parallel with State financing in medicine goes State policing of medicine, naturally. Everybody and everything must be licensed, inspected, and approved, repeatedly, by official agents; you can’t leave these critical matters to the people who do the job, and who must work with each other to get the job done. By federal mandate, for example, a twenty-five—bed hospital that I worked in had to have twenty-nine managers to make certain that everybody was following the rules. This is expensive nonsense.
Doctors either have to contract with a professional billing service, or employ their own regiment of bureaucrats to keep track of the constantly shifting criteria, and code numbers, demanded by the State for payment. And then there is malpractice insurance.
Some doctors leave home without it, while most have too much to lose to depend on a disclosure contract with the patient. Malpractice insurance is mighty attractive to unscrupulous doctors and lawyers too, who can extort money from insurance carriers and honest doctors with relative ease once they get their hands on a willing patient and the medical records. The latest wrinkle in that scam that I know about is the murder charge, instead of the wrongful-death suit. The vermin come out of the woodwork for this kind of cake.
Can our system of health-care delivery be saved? Yes. If the State would absolutely, unconditionally, 100% get out of medicine, and stay out, then the business might be saved by the people who work in it. Otherwise, no. An infinite demand for limited resources cannot be satisfied in this universe. Socialism doesn’t work.