Comment Of The Day: “Comment Of The Day: ‘No, Insurance Companies Treating People With Pre-Existing Conditions Differently From Other Customers Is Not Discrimination.’”

The health care/ACA/AHCA commentary from readers continues to be uniformly excellent. (It was originally spurred by the post, No, Insurance Companies Treating People With Pre-Existing Conditions Differently From Other Customers Is Not “Discrimination.”Spartan’s Comment of the Day on the topic has itself sparked its own Comment Of The Day, this one authored by Charles Green.

By fortune’s smiles, I was able to finally meet Charlie last week face to face, as he kindly alerted me that he would be passing through my neighborhood. Finally having personal contact with an Ethics Alarms reader is always a revealing and enjoyable experience, and this time especially so. I think you would all enjoy Charlie; I certainly did. Maybe I need to hold an Ethics Alarms convention.

Here is his Comment of the Day on the post, Comment Of The Day: “No, Insurance Companies Treating People With Pre-Existing Conditions Differently From Other Customers Is Not ‘Discrimination’.”

…The claim that “a free market system” and “freedom of choice” is the solution to all that ails us is a mindless mantra that is only occasionally true, but not always.

It’s important to be clear about when free market solutions are good, and when they are not. It’s not all that hard to sort out. Basically:

Free market solutions ought to be the presumptive default. Unless there is good reason to the contrary, they ought to be the rule.

1. Exception Number 1: Natural monopolies. It makes no sense to have competition for municipal water supplies; airports; multiple-gauge railroads; fishing grounds; groundwater; or police departments. The basic reason is the putative economic benefit is either simply not there, or is absurdly overwhelmed by the social confusion engendered by multiple suppliers.
In these cases, a form of regulated monopoly is desirable. (By the way, the airline industry at a national level is precisely this kind of market; we do not have too little competition there, but too little regulation).

2. Exception Number 2a: Wallet-driven market power monopolies. It’s strategy 101 in business schools that the way to be successful is to be #1 or #2, and the best way to do that is to get more market share than your competition, so you can drive them out of business. The one guaranteed way to do that is to cut prices so low that no one else can compete. Think Walmart. Think Amazon. Think Japanese in the 60s and 70s in any industry.
The reason we have anti-monopoly laws is to reset the playing field when a competitor dominates the market too strongly.

3. Exception Number 2b: Product-driven market power monopolies. Where the product is so obscure, expensive, infinitely variable, and difficult to understand that the producers are de facto in control, because it is too confusing and too dangerous to challenge them.
Drug prescriptions are an interesting example. The ‘free market solution’ to high drug prices was (partly) to let drug companies advertise, and to loosen up the definition of what constituted a ‘new’ drug. What did we get? New diseases like RLS, new definitions of ‘new’ (moving ‘off label’ to ‘on label’) and even higher drug company profits. Because who’s still going to argue with your doc? Especially when he or she gets side benefits from giving in to the latest DTC ads on network news programs?

Healthcare falls a bit into all three categories. You really only need so many hospitals in a given area. The AMA limits the number of doctors. The only reason for having a middleman in the business (aka insurance companies) is because people like you insist that a “free market solution” is better. We are the only developed country that believes this, and it’s an incontrovertible fact that we are the highest cost. DOH!

Single payer is a significant step toward a rational model of an industry that is subject to some natural monopoly limits, and is beyond the reach of the average consumer to be self-educated (those med students aren’t just beer-ponging, medicine is complicated).

We already regulate the following:

– drug patent time
– medical licensing
– drug efficacy
– health provider procedures
– insurance provisions at state and national level

A single payer system wouldn’t solve all our healthcare problems, but it would be a significant start. A base program of Medicare for all, with an option for concierge level care for those who can afford it, would simplify loads of stuff.

Both parties don’t like to admit it, but there has to be what the GOP used to derisively call “death panels.” The only question is how to do it, because there’s no way we’re going to pay for everyone to get the most expensive treatment. Every other country has figured this out, we can too.

The other thing both parties don’t like to admit is that we won’t stand as a society for dumping ill people on the side of the road. We will reimburse emergency rooms for serving everyone. The thing is (and this the GOP should be faulted for not acknowledging) that health-care-by-ER is absurdly expensive, and inefficient.

Single payer offers solutions to both those issues – “free markets” do no such thing. And those are major issues.

The medical writer Atul Gawande explored the highest-medical-cost county in the US, and the lowest-medical-cost county in the US. They turned out to be Hidalgo County TX (highest cost), and Grand Junction CO (lowest cost).

After exploring all other options (demographics, hospitals, income) he figured out the difference.

–Hidalgo County had doubled down on free markets; every doctor had an ownership stake in a diagnostics lab; they ordered boatloads of studies and tests, because in an unregulated natural monopoly there’s nothing to prevent over-capacity of diagnostic clinics.

–Grand Junction had agreed to collaborate. They co-located in the same buildings, and used pooled resources for diagnostics (“go upstairs to CatScanCo and get a CatScan, I’ll call them and tell them you’re coming”).

Basically the high cost solution is your “free markets” idea run wild, without regulation. If you want to call Grand Junction the socialist solution, but if you’ve ever been to Grand Junction you might want to think twice before using those words: they’re a lot more likely to cotton to “sticking together as a community” than “socialism.”

Free markets are not the automatic knee-jerk solution to everything, and I wish everyone who trots out that old hackneyed phrase without thinking, believing that it actually means something, would give it a rest.

 

33 Comments

Filed under Around the World, Bioethics, Business & Commercial, Comment of the Day, Ethics Alarms Award Nominee, Finance, Government & Politics, Health and Medicine, Research and Scholarship

33 responses to “Comment Of The Day: “Comment Of The Day: ‘No, Insurance Companies Treating People With Pre-Existing Conditions Differently From Other Customers Is Not Discrimination.’”

  1. charlesgreen

    Very kind of you, Jack. And may I add to your comments: It is a wonderful experience to meet someone with whom I’ve had so much online contact. Very humanizing. Great to meet.

    An Ethics Alarm convention? I think it’s a fabulous idea. Imagine what it’d do to relationships? There’s a high risk that people might actually get along…

  2. Wayne

    I bet you would like to give (the free market systems arguments) a rest. You can’t seriously argue that Walmart is a monopoly and like the robber barons of the late 19th century have driven all the brick and motor stores out of operation. Sure, they have a large market share and are very efficient at what they do but I can go to another store like Smart and Final and get a better selection of my groceries at as low a price. As far as healthcare, the USA has produced more life saving pharmaceutical drugs than any country on this planet. This is because there is competition in the pharmaceutical industry. How many of these drugs has Canada produced in comparison? A tiny fraction.

    • charlesgreen

      “You can’t seriously argue that Walmart is a monopoly…”
      Try telling that to thousands of small town retailers, and many smaller manufacturers, who were put out of business by their relentless focus on lower prices and market power. Walmart is a bigger driver of our trade deficit with China than any trade policy of the Chinese.

      “…I can go to another store like Smart and Final and get a better selection of my groceries at as low a price.”
      Smart and Final operate 246 stores: Walmart has 4177 in the US alone, not counting Sam’s Club. Walmart has 100X the market power; so what was your point?

      “…because there is competition in the pharmaceutical industry.”
      You’re joking, right? It’s the most anti-competitive industry around. It gets granted massive benefits from patent and exclusivity. Why do you think drugs are more expensive here than outside the US?

      You ever hear of Martin Shkreli? You can thank our system of protected non-competition for the ability of Shkreli to hold up consumers.

      You ever wonder why the pharmaceutical industry has been given spcial dispensation by congress to deduct 100% of their R&D expenses in one year, as opposed to multi-year depreciation in all other industries? That is text book anti-competitive practice, thanks to one of the most powerful lobbies on Capitol Hill.

      How powerful? From 1998 to 2014, Big Pharma spent nearly $2.9 billion on lobbying expenses — more than any other industry. The industry also doled out more than $15 million in campaign contributions from 2013-14.

      Guess what industry has had the highest return on investment in the decade of the 1960s? The 1970s? The 1980s? I’m not sure so about more recent years, but take a drive sometime to Central New Jersey and Eastern Pennsylvania – make sure to stop in at the acres of manicured lawn that surround the oh-so-poor pharma companies. They’re doing just fine, thank you very much.

      And I haven’t even touched on the FDA’s willingness to re-extend non-compete status for 7 years when a pharma company makes some absurdly tiny tweak to its formulation.

      There are plenty of examples of highly competitive industries out there – the pharmaceutical industry is not one of them.

      • Inquiring Mind

        Walmart benefits from something called an “economy of scale.”

        Something that affects everything from cars to the cans of Coke in a vending machine you walk by. And yes, even health care can be affected by economies of scale.

        The question, Charles, is not how we punish the current pharmacy companies. The question is, how do we create the Uber/Lyft equivalent that enables new companies to arise and challenge the current titans?

        Don’t give me this nonsense of how single-payer or government involvement will fix health care. It’s putting a Band-Aid on malignant melanoma and telling the patient he’s cured and can go back to tanning on the beach.

        Why not see if we can’t get more systems like direct primary care to help reduce medical costs? Between that and a pre-Obamacare catastrophic policy, I bet people would only be paying half as much for health care per month as they would for a Bronze-level plan under the ACA.

        Do you really feel that comfortable with “VA for all” health care? Do you want someone like Lois Lerner deciding who gets treatments and who doesn’t?

      • Wayne

        Smart and Final is not the only option. In my state there are several large grocery chains where I can get a much larger selection of whatever at a slightly higher price. One thing you neglect to mention is the time required to develop life saving drugs as well as the cost of development. Only one of 1000 drugs developed eventually gets approved by the FDA due to the lengthy process required for animal studies, and repeated clinical trials. So these pharmaceutical corporations get no profit during the many years that are needed to prove drugs as safe and efficacious. Certainly there have been cases of price gouging but all and all, the pharmaceutical industry is not a great sector to buy stocks or mutual funds in.

    • E2 (nee Elizabeth I)

      Although it was Pfizer (the best Wall Street investment for decades) that had a stand-alone antibiotics lab, and was the only major pharmaceutical to commit resources to the need for new antibiotics. At the height of the scare about C-diff and other hospital-borne infections, Pfizer closed its antibiotic lab, basing that decision on the bottom line and the return for its investors. Now, no one is really dealing with what remains a huge issue (my mother-in-law died from a hospital-borne infection), because all pharmaceuticals want to develop drugs that people use every day, and for years (thyroid, cholesterall, etc. drugs, e.g.),not for once- or twice-in-a-lifetime real life-saving drugs. The excuse that the pharmaceutical owes its operation and decision-making to its investors is a great big rationalization, and proves that profit and service do not always intersect.

      • Spartan

        My father-in-law died from a hospital infection as well. He went for fluids (he had the flu) and came out in a casket.

  3. Inquiring Mind

    The problem is you still have to deal with scarcity. You cannot repeal the laws of economics. The big problem with the debate is that those who either do not understand that or who ignore it because it is politically inconvenient have decided that those who do somehow lack compassion.

    It’s nonsense, it’s defamation, but they really have no rational basis to rebut the dirty little secret: The only things single-payer changes are who gets denied care, who decides who gets denied care, and how that unlucky person is told, “No, you don’t get the care you need.”

    Quite frankly, the people behind Theranos did far more practical good for improving access to health care with their failed experiment with blood testing procedures than the politicians trying to enact single-payer or to increase government involvement in providing health care.

    The real answer to scarcity is to come up with new technology that can help prevent the major hospitalizations, whether pharmaceutical, whether it involves finding ways to detect diseases earlier when the treatment is easier, or whether it’s finding an outpatient treatment as opposed to one that requires a hospital stay.

    When Uber and Lyft came out, the taxi companies were the big losers. In fact, it changed the way people get rides. They even tried to get the taxi commissions and politicians to protect them from the new approach, which was better for consumers (because it was cheaper and a better experience).

    Today, the FDA is a far more powerful version of those taxi commissions. It is one of three big reasons health care is so expensive. The other two are a lack of medical malpractice reform and the fact that health insurance makes routine checkups free. Tell me, how much do you think your car insurance would cost if oil changes and other routine maintenance was covered by GEICO, Allstate, or USAA?

    Don’t treat profit as an obscenity in the health care industry. Instead, see that as the route by which we can make the costs go down in the long run AND improve the health care available to all.

  4. Wayne

    If you want to invest in the pharmaceutical sector, you should read this: http://www.investopedia.com/articles/stocks/08/investing-in-healthcare.asp

  5. Paul Compton

    Wayne,
    The fact that the US population is almost ten times bigger than the population of Canada, and that Canadians spend nine months of the year buried under snow and fending off Polar Bears may be considerations also.

    • Wayne

      This is funny. However, I don’t think Canadians are any dumber than Americans. Surely, even with a smaller population their pharmaceutical industry could have came up with some life saving drugs. They are saddled by single payer healthcare and largely they depend on drugs manufactured in the USA. They do make good whiskey though.

      • charlesgreen

        “Surely, even with a smaller population their pharmaceutical industry could have came up with some life saving drugs.”

        I figured you had to be wrong about this, so I did some simple research.

        Fact: Patents covering new drugs, provided period of market exclusivity, in the US: 20 years
        Fact: Patents covering new drugs, provided period of market exclusivity, in Canada: 7-10 years.

        Conclusion: the reason we have more “innovation” in the US is because of regulation: the US government prevents competition for twice as long as the Canadian government.

        In other words, what you mistake for competition is actually regulation.

        • Note to be fair: The longer period for approval largely saved the US from the thalidomide catastrophe.

        • Uh… that’s not regulation in the sense that Wayne is complaining about regulation. Patent Laws protect intellectual property *rights*. Government actions to protect rights are quite different from simple regulations.

          The reason we have more “innovation” is because people here are more secure that they can *profit* off of their innovation to a degree they can fund further innovation.

          In other words what you mistake for regulation is actually competition.

  6. Alex

    All your arguments fly on the face of what we know about economics:

    Re: Natural Monopolies

    There is no such thing as a “natural monopoly”. Even municipal water systems face competition from alternative distribution channels (i.e. bottled water) because the service they provide can be given by a competitor at higher quality for a lower price. There may be markets where the cost of entry is so high that you will only have one provider in an area unless it is so bad that competitors decide they can recover their initial investment by coming in. In the suburbs of Seattle there is a medium-sized city that has three hospitals (not owned by the same party) pretty much next door to each other.

    Re: Wallet Driven Market Monopolies

    Again, if there is only one provider that dominates because of low price, a higher end competitor with lower sales but higher margins will take over that section of the market. Think Android versus iPhone. And as far as I know Whole Foods and its clones are not doing too badly for a retailer. Now, on the healthcare provider side I’d love to know who’s playing the role of Walmart so I can take my healthcare business to them.

    Re: Product Driven Market Monopolies

    This one is there (see my previous comment about my friend who got cancer), but I would not worry about this one until we’ve solved, say, the stupidly high costs of living with diabetes or a life-threatening allergy. Funny enough for this last one, the Epipen debacle was due to a monopoly that did not actually exist (there were competing products) but was enforced because pharmacists were not allowed to offer the generic version until it was explicitly requested in the prescription. Again, this is not a market failure, but one of not allowing the market to work.

    When you say healthcare falls in these categories, other than specialized care falling on the last one, you are wrong.

    You mention that you only need X hospitals in an area. Well, you also need only Y grocery stores and Z gas stations. You let them build and the unprofitable ones will disappear. Under this argument everything is a natural monopoly (or oligopoly) and the solution is central planning. I think we all know how well that worked.

    You also mention all the areas in which healthcare is regulated. These regulations usually work against each other and do the exact opposite of creating a free market. If you want to point to a free market failure you’ll need to show me a case where all those regulations were being ignored.

    Finally, if Hidalgo country is so bad we would ideally have a place to go that competes with those doctors. If only we had more doctors, oh wait, the AMA limits the number of residents each year, so we cannot have more doctors unless we bring them from somewhere else. And they can’t practice unless they pass a test administered by… I’ll let you guess.

    At this point I’ll propose the exact opposite of what you’re doing. No medical regulation, no licensing requirements for doctors (you can pay for board certified if you want, but maybe you’ll be ok with a grad from the University of Shanghai), no restrictions nor obligations for insurance coverage offers, no special protections for drug companies. I can assure this will be better than our current system, and in the long run better than single-payer.

    I’m also sure there is a better solution in the slightly less radical side, but I’ll stick to this one because everybody is pushing hard on the other direction… which will only lead to a growing medical tourism industry in a lightly regulated country.

    • charlesgreen

      Alex,

      “There is no such thing as a “natural monopoly?” Please. Just crack any Econ 101 book. Or just Google it.

      “…if Hidalgo country is so bad we would ideally have a place to go that competes with those doctors.” Are you suggesting the doctors in Hidalgo county AREN’T competing? The whole point of Gawande’s piece is that’s precisely what they’re doing.

      You profess to know something about economics. Let me suggest to you Rule #1 of applied economics: Kill Your Competitor. This is Strategy 101 as taught in every business school. And the more money you have, the faster you can execute this strategy (cut prices, gain volume, gain share; rinse and repeat until competitors die or go to a niche).

      For some reason, free market ideologues assume that competitors like competition. They don’t. They hate competition. Their natural desire is to evolve toward monopoly, to get rid of competition, and to raise prices.

      The natural tendency of markets is to evolve to non-markets – to monopolies. There are no competitors who willingly contribute to the ongoing welfare of their competitors. This is why we have anti-trust laws, else we’d have company towns.

      There are only two counters to this natural economic tendency – technology and regulation. And frankly, if you don’t have regulation, you won’t get much in the way of technology either; take a look at how Microsoft won the browser wars (by incorporating them into the OS); look at how Google buys up new technologies to keep them becoming competitors.

      There are occasional shots from the blue, like Uber (a good example, I agree). But there are at least as many cases where an unregulated monopolist will buy up and starve out the up and coming competitors. In such cases, the job of regulators is the same as it is in sports: to call fouls, time-outs, and set the rules under which the game is played. It’s a valid role, and knee-jerk insistence that all regulations are bad and that all markets benefit from pure free markets is just that – knee-jerk ideology.

      • You really need to stop your incessant smearing that a desire for free market solutions is a “knee-jerk” ideology. Given that for the past century, your people HAVE NEVER ONCE come up with a solution that isn’t “more government”. So until your people stop with the “knee jerk” ideology of “more regulation” and “more control”, you can cool it on the opposite smear that “more free market” is “knee jerk”.

        It makes you look smug.

        You also know better than to make an arrogant appeal to authority like “open a text book”. Congratulations Charles, we know you are a Keynesian through and through, and we also know that the Leftwing Ideology of Keynesianism is the economic religion of the Leftwing dominated academia. Congratulations, they preach from Leftwing textbooks.

        “Just open a text book”. How close minded of you. Bother doing some research of your own on other Schools of Economic thought that don’t benefit from the endorsement of the monolithic close-minded Left-wing academics. They actually do a solid a job dissecting the *theory* that natural monopolies occur (they haven’t). Or that temporary monopolies are necessarily bad things. (they aren’t…though they can be, especially when they start courting political parties to arrange competition squashing regulation via government force).

        You know, Walmart *is* a monopoly. And before you yell “But, there’s Target!”. No, Target provides a service level one tier above Walmart, and essentially has a monopoly of it’s own at that tier.

        Remarkably, their prices are phenomenally LOW for monopolies (at least the monopoly shibboleth that’s always trotted out in the movies)…

        In my own industry, my boss in the 1980s carved out a new methodology for the landscape industry in our city. This allowed him to beat out the competition at the highest tier of high end residential landscapes. He enjoyed a “monopoly” for at least a decade and a half. Sure, competition came…even undercut HIM on pricing. But he. still. won (without undercutting their prices). And competition went. Why? Because it isn’t just about *money* (which I think Keynesians will never figure out). It’s about value provided.

        A few other comers finally adopted his methodology in the market and have been eking out their own market share. Believe it or not, he is FRIENDS with almost all of his competition and he regularly discusses ways for the industry to provide better service with them. So, your Hollywood version of “Kill the Competition” style capitalism isn’t exactly true in the real economy.

        We are also in a perpetual competition with about 2 dozen “trying to get into the industry” companies every year. It’s never the same companies for more than 2 or 3 years because most don’t provide the quality necessary to compete. But that there is an ever present mass of “lower price” options out there, no “monopoly” ever can jack up prices above a market acceptable amount.

        And no, those guys who can’t hack it don’t move on to starve to death because our evil capitalist company “won”…no, those guys either learn and try again and make it, they move industries and try out an entirely different skill set, or, believe or not, they work for the big names at a salary they feel is commensurate with the value they provide.

        Now, though my boss is on friendly terms with most of his competition, that doesn’t mean we are lax in our need to provide the greatest quality we can, with the objective being the best value given to the community…not the objective being to destroy the competition. I find it somewhat alarming that your economic worldview is couched in such vicious and spiteful terminology.

        “look at how Google buys up new technologies to keep them becoming competitors.”

        You know, those potential competitors don’t have to sell that technology, but that they make a free choice to sell it. Is that bad in your opinion?

        • Chris

          It makes you look smug

          You have never worried about looking smug, so why do you expect others to?

          • Nothing to contribute but snark?

            Take it elsewhere.

            My comment to charles was substantive, contribute or move on.

            • Chris

              It took you three paragraphs to get to something substantive–everything up to that point was partisan insults–and then you used Mises as your source; congratulations, you rebutted charles’ point about knee-jerk free market ideology by linking to the poster boys for knee-jerk free market ideology. After that you included nothing but anecdotal evidence. Very substance. Much contribution. Wow.

    • John Billingsley

      “If only we had more doctors, oh wait, the AMA limits the number of residents each year, so we cannot have more doctors unless we bring them from somewhere else.”

      People seem to view the AMA as some overwhelmingly powerful organization that absolutely controls medicine. It is not. You don’t have to be a member of the AMA to practice medicine. It is a professional organization probably much like the American Bar Association. It does a lot of education, produces a number of journals, and lobbies in support of physicians (although there are large numbers of physicians who are opposed to many of the positions the AMA takes). It does have a great deal of influence on health policy through lobbying but it does not write the laws or regulations. Almost all of the control of medical practice is done by state licensing boards and federal regulations.

      The AMA does not control the number of residency programs. Dr. Bruce Koeppen explains, “Medicare covers the majority of the cost teaching hospitals spend on training medical residents, but the Balanced Budget Act of 1997 capped the number of residency slots the federal government would fund. The shortfall-what is not covered by the Federal government-is paid for by the hospitals where residents train. While it is possible to increase the number of residents they train, to do so, hospitals must fund the entire cost of those training positions.” Medical residency training is extremely expensive and the cost of providing care to a patient in a teaching hospital exceeds the cost of care in other hospitals.

      “And they can’t practice unless they pass a test administered by… I’ll let you guess.” I am assuming I am supposed to guess “AMA” here. In actuality that is not the case. After a doctor completes medical school, before they are allowed to practice in the United States they must pass the United States Medical Licensing Examination. It is sponsored by the Federation of State Medical Boards and the National Board of Medical Examiners, not the AMA. The fact is that a doctor can go through their entire career and never have any direct contact with the AMA if they so choose.

      The debate over healthcare spending often comes back to doctors. Doctors do make a good income, as do attorneys, dentists and other highly educated professionals. But the people in healthcare who are really making the money are not doctors. There are hospital and insurance company executives who make much, much more than anyone practicing medicine. There are a lot of factors in the cost of healthcare. Making one group the scapegoat, no matter which group it is, is not going to fix the problem.

  7. Natural monopolies. It makes no sense to have competition for municipal water supplies; airports; multiple-gauge railroads; fishing grounds; groundwater; or police departments. The basic reason is the putative economic benefit is either simply not there, or is absurdly overwhelmed by the social confusion engendered by multiple suppliers.
    In these cases, a form of regulated monopoly is desirable. (By the way, the airline industry at a national level is precisely this kind of market; we do not have too little competition there, but too little regulation).

    That one has a natural monopoly on a particular good or service dioes not mean there is no competition.

    Let us take the fishing ground example. One business may have a monopoly fishing rights over a particular section of river or creek. But there is plenty of competition for the end product, which is food. Consumers may buy fish from elsewhere, or they may choose to eat chicken or pork or vegetables in lieu of fish.

    Wallet-driven market power monopolies. It’s strategy 101 in business schools that the way to be successful is to be #1 or #2, and the best way to do that is to get more market share than your competition, so you can drive them out of business. The one guaranteed way to do that is to cut prices so low that no one else can compete. Think Walmart. Think Amazon. Think Japanese in the 60s and 70s in any industry.
    The reason we have anti-monopoly laws is to reset the playing field when a competitor dominates the market too strongly.

    Wal-Mart certainly did not drive Target or K-Mart out of business.

    But even if Wal-Mart were the only big box, one-stop retailer, it still has to compete with dedicated clothing stores and dedicated grocery stores, not to mention boutique stores. Wal-Mart can only have so many items.

    The AMA limits the number of doctors

    We now identified the problem.

    The AMA should be dissolved. it no longer serves a useful function, similar to the Imperial Senate in Star Wars.

  8. John Billingsley

    Charles, I feel this is a well earned COTD. I find pretty much all of your comments thought provoking though I don’t necessarily agree with them. I have a few comments on specific points.

    “New diseases like RLS” RLS was first described in 1685 and the first detailed clinical description was in 1944 and it was shown in test recordings in 1962. Not really a new disease but a newly publicized disease. Once a medication was developed that was effective at relieving the symptoms, it became profitable for a pharmaceutical company to target it and raise awareness. The company was not being altruistic, but is it wrong to make money by informing someone that there is a way to relieve the distress they are experiencing? If you have ever talked to someone who really has this disorder, you know how much it disrupts their lives. Is it over diagnosed? Possibly, but polysomnography to make a firm diagnosis is expensive and it is a condition where the clinical symptoms are pretty reliable. Probably cheaper to just treat it.

    “Because who’s still going to argue with your doc? Especially when he or she gets side benefits from giving in to the latest DTC ads on network news programs?” I hate DTC ads. I would be good with a spot that just said, do you experience these symptoms (of RLS perhaps)? If you do, tell your doctor. I actually spent quite a bit of time telling patients why they did not need the newest, expensive drug they heard about on TV or in a magazine either because they didn’t meet the criteria for it or because I felt that the cheaper alternatives were just as effective and needed to be tried first. It was a hard sell, particularly when the patient would say, “but my insurance will cover it.” I, and I think most doctors, take being a good steward of the healthcare dollar seriously. In the past there were sometimes substantial “side benefits” from drug companies especially if you used really expensive things like artificial joints or pacemakers. The most I ever received was dinner in a restaurant and things like cheap pens and sticky note pads. These days there are no more cheap ballpoint pens and meals typically are take out from Newks or equivalent in the office during a presentation. Not something I am likely to sell my soul for although I understand the implications.

    What about when a patient really needed the expensive spread but their insurance didn’t cover it? I was almost always able to ensure they received the medication. Sometimes it was by doing the work to get an authorization from their insurance, sometimes it was by getting vouchers from the drug company, and in some cases where there was no insurance coverage at all, the company just provided the medication free. I had patients who received thousands of dollars worth of medication a month totally without charge to them. I know the drug companies were not doing that purely out of the goodness of their heart but for that patient it made a huge difference in the quality of their life.

    “The AMA limits the number of doctors.” I would like your citation for this frequently bandied about statement. I replied to Alex’s comments about this but I think it is important enough to cover in more detail. Basically the AMA is the professional organization for doctors the same way the ABA is the professional organization for attorneys. They represent people who are doctors and medical students but they do not decide who becomes a doctor, license doctors, discipline doctors, test doctors, or decide how many doctors there are. Through lobbying they have influence on health care legislation but they do not make the laws or the regulations. By the way, there is also an American Osteopathic Association (AOA) that fulfills the same function for osteopathic physicians (DO) that the AMA fulfills for allopathic physicians (MD).

    In the early 2000s, it was projected that there was going to be a doctor surplus. At that time efforts were made to decrease the number of doctors being trained. It later became apparent that there was going to be a deficit and the American Association of Medical Colleges set the goal of increasing the number of doctors. New schools were opened and the total number of graduates rose from 16.140 in 2007 to 18,938 in 2016. Don’t forget that there are also International Medical Graduates (IMG) who come to the US for residency training. I am not familiar with the rules that govern how many IMG are admitted and what the criteria are. In 2015 there were 12,397 IMG participating in the match for residency positions and 6,302 obtained a position.

    The limiting factor in how many doctors can be produced is the number of residency positions available. A graduate of medical school can fulfill every other requirement but if they don’t get a residency they cannot complete training to practice medicine. The AMA does not control how many residencies there are. I think it is an important enough point that I will repeat what I said above; Dr. Bruce Koeppen explains, “Medicare covers the majority of the cost teaching hospitals spend on training medical residents, but the Balanced Budget Act of 1997 capped the number of residency slots the federal government would fund. The shortfall-what is not covered by the Federal government-is paid for by the hospitals where residents train. While it is possible to increase the number of residents they train, to do so, hospitals must fund the entire cost of those training positions.” That represents a lot of money that has to come from somewhere.

    “Both parties don’t like to admit it, but there has to be what the GOP used to derisively call “death panels.”” Agree, but I think of them more as “who is gonna die sooner rather than later panels” since we all got to go some day. Health dollars can be spent various ways. A whole lot for a few, a lot for a moderate number, enough for the basics for everybody, or some combination of the above. Except for the basics for everybody the decision has to be made who gets what and who gets to decide who gets what. Clearly, decisions should be made on the basis of a cost benefit analysis but evaluating the benefit is going to be the sticky part. Just one example, a million dollar heart transplant for a young parent who may be able to return to work to support his or her family or a million dollars worth of care to a premature infant with Trisomy 21 and multiple congenital heart defects. Somebody is going to have to be willing to be seen as a really heartless bastard. Ethecists are going to earn their money.

    Again, thank you for your insightful and thought provoking comments.

    • charlesgreen

      John,

      THAT deserves a COTD, IMHO.

      Awesome commentary – fact-based, educational, and even-toned. I stand gratefully and completely corrected both with respect to RLS (that was a surprise to me), and to the AMA (I should have known better, I was sloppy in tossing out an ill-thought-out impression).

      Thank you for massively raising the quality of discussion in these areas.

      You remind me my family practitioner doc of many years – an excellent doctor in so many ways. I’m sure he’d agree with everything you said.

      Thank you.

  9. OK, which of the two did actually end up buying the drinks!?! I will hear nothing of ‘Dutch Treat’. This question has been burning in me for some days now …

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