Postgraduate Medicine
ISSN: 0032-5481 (Print) 1941-9260 (Online) Journal homepage: http://www.tandfonline.com/loi/ipgm20
Hats and Beds Glen C. Griffin MD To cite this article: Glen C. Griffin MD (1992) Hats and Beds, Postgraduate Medicine, 92:6, 15-27, DOI: 10.1080/00325481.1992.11701507 To link to this article: http://dx.doi.org/10.1080/00325481.1992.11701507
Published online: 17 May 2016.
Submit your article to this journal
View related articles
Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=ipgm20 Download by: [RMIT University Library]
Date: 16 June 2016, At: 03:49
EDITORIAL
HATS AND BEDS Ralph Nader thinks 'it's already working'
Downloaded by [RMIT University Library] at 03:49 16 June 2016
Glen C. Griffin, MD I recently received a letter from Ralph Nader asking me to jump on his campaign bandwagon for national health insurance. Along with the letter was an attentiongetting red brochure that looked something like a small greeting card. The large white type on the front boldly said, "It's Already Working ... " This line baited me into opening the card. The big red letters on the top inside panel simply said" ... in Canada." Well, I have a big pile of material on my desk that says something else. Letters and notes from Canadian doctors and clippings from Canadian newspapers have some very disturbing things to say about the system that Nader and others are clamoring to get us into. The lower panel of Nader's brochure reads, "Just across the border every citizen, young or old, working, unemployed, or retired, is covered cradle to nursing home fur all of their health care needs." This sounds terrific! Who wouldn't want this? Nader's promotional piece goes on. It sounds like a commercial for healthcare in heaven: Canadians can choose their own doctor or hospital. All health care and prescription drugs are covered, and they
don't have to worry about deductibles, copayments or medical bills of any type. Canada spends less on health care per person than America, yet aD Canadians receive adequate health care. And surveys show Canadians love their system. The same polls also show that Americans dislike theirs. We need your support to change this. The four-page letter goes on and on. One of Nader's big points (and we've heard it before) is that "health care is a right." Another
VOL 92/NO 6/NOVEMBER 1, 1992/POSTGRADUATE MEDICINE
major part of the promotional literature is the plea for money-$20, $35, $50, or even $100 to support his campaign to get a national healthcare plan that "includes longterm ,care under a single public 1 pan. Well, I'm certainly not going to be sending Ralph Nader any money, although I think I will send him a letter. But for several reasons, not the least of which is that he has such a glittering fund-raiser going here, I know my letter won't make any difference in the way he
thinks. I can see that Nader is going continued
15
Downloaded by [RMIT University Library] at 03:49 16 June 2016
EDITORIAL CONTINUED
to raise a lot of money with this campaign-money from folks who want to believe this little red brochure. After all, who wouldn't want all the free healthcare ever needed from cradle to nursing home-"all health care and prescription drugs" without having to "worry about deductibles, copayments or medical bills of any type." It sounds too good to be true. And that's just it. Most of us have learned, some through experiences that hurt, that when something looks too good to be true, it probably is. The promise of all this wonderful healthcare for free is very appealing-just as the promise of free food, free cars, or free hats would be (see box on pages 000 and 000). And besides, it wiU cost less than the healthcare we now have. At least that's what Ralph Nader wants us to believe. But as much as I would like to believe all of this, it just will not happen. It can't. And things are not going so well right now in Canada either. I've had some good things to say about the Canadian healthcare system. I've seen it firsthand. I've written about how simple it is for doctors to submit their bills for services-electronically. There are no long forms to fill out by hand or on a typewriter or even on a word processor. A few key punches and codes and it's done.
16
That's great. a government healthcare system. Yes, we must adopt simplified In spite of all of the sound-bites that make these pie-in-the-sky standardized electronic billing. It will save a lot of money. plans sound so good, I think we And yes, there are some other les- have to give hundreds of millions sons we can learn from Canadaof Americans credit for figuring out that you don't get something for such as how to change the incentives here so more young doctors nothing. go into primary care instead of surSomeone has to pay for it all. gical and other referral specialties. And that is what's being discovIn Canada, 61% of doctors are ered in Canada now. Apparendy Ralph Nader hasn't heard about in primary care-mostly family practice. In the United States, only that yet. 17% of doctors are family physiThe healthcare costs in all the cians. Of course, this isn't an exact Canadian provinces are over budcomparison, because we also have get. In Ontario, 1 of every 3 tax many other primary care physidollars goes to healthcare! And they cians who are in internal medicine still can't make it. and pediatrics. The problems are complexBut still, the United States is and multiple. far behind Canada in having the Even though the respective proper balance of primary care numbers from a couple of years physicians to surgeons and other ago make Canadian healthcare, as a referral specialists. And this isn't percentage of the gross national something that can be changed product, look inexpensive comovernight by an act of Congress. pared with healthcare in this counSo even ifAmericans really want try, these numbers are not comparthe government running our health- ing the same things at all. care system, which they don't, we There are major differences in could not all of a sudden have a healthcare in the United States and healthcare system like Canada's. Canada. We probably have too Even though pollsters have exmany frills. And Canada probably tracted yes responses from a major- doesn't have enough. For example, ity of Americans about features of a there are as many MRI scanners in dream healthcare system like the the state of Minnesota as there are one Ralph Nader talks about in his in all of Canada. red brochure and four-page letter, Yes, too many MRis are ordered most people when asked are quick in this country. But almost everyto respond that no, they don't want one agrees that many patients in continued on page 21
VOL 92/NO 6/NOVEMBER 1, 1992/POSTGRADUATE MEDICINE
Downloaded by [RMIT University Library] at 03:49 16 June 2016
EDITORIAL CONTINUED
Canada who could benefit from this marvelous technology just don't have access to it. This brings up a point about a very real difference between healthcare in the two countries. In a broad sense, expectations about healthcare are different in the United States and in Canada. In the United States, sophisticated care and procedures are expected-and expected rather quickly-and are usually provided, more or less. In Canada, for the most part, people are quite content with less sophisticated care and accept waiting for consultations and procedures from referral doctors. That's just the way it is and always has been. Of course, some Canadians who have seen our system at work or have learned about it come south to the United States for care. And although there are some superb doctors in all specialties in Canada-a few are some of the best I know-I don't think many would disagree that the United States has more knowledgeable physicians and surgeons per capita. This country has the very best healthcare system in the world. That's why kings and potentates and others who are not limited by cost come from all over the world to have difficult medical problems taken care of in the United States. But what about primary care in Canada compared with the United
States? Yes, patients in Canada can choose their own personal physician, and the primary care I've seen firsthand there has been very good. Patients seldom have to wait to get in to see their own family doctor, but they do have to wait for specialty care and diagnostic and surgical procedures, particularly those that are not emergencies. And a real bottleneck happens when someone needs to be admitted to the hospital. In a major hospital in Toronto earlier this year, I saw 10 patients on stretcher carts in the hall near the emergency department. Many had Ns going. They looked sick. I thought that a natural disaster might have occurred in the area. But this was just an ordinary day. "Why are these patients in the hallway?" I asked. "Because there are no empty rooms" was the answer. Well, this happens all the time in big hospitals in our country, too, you might be thinking. And it is true in some big-city institutions that there are no rooms. But the beds in those hospitals are filled with sick patients. This was not the case in Toronto. The former deputy minister of health, who had previously been the CEO and administrator of the hospital I'm talking about, pointed out that while those acutely ill patients were getting Ns on stretchers in the
VOL 92/NO 6/NOVEMBER 1, 1992/POSTGRADUATE MEDICINE
hall and waiting to be admitted, many healthy patients were playing cards and socializing in the halls of the medical and surgical wards upstairs. I saw some of the well-recovered patients he described. It didn't make sense-acutely ill patients waiting for admission while recovered patients held on to their rooms upstairs. "Why?" I asked the present hospital CEO and administrator. "Because they don't want to go home," he explained. "This is nuts," I said. "Why don't the doctors just pick up the charts and write 'Discharge' on the order sheets of their recovered patients?" "You don't understand," he said. "People here have the right to healthcare." I really didn't understand. It was completely illogical to me, even if people do have the right to healthcare. Why should they have the right to stay in the hospital when they are medically ready to go home? I pursued this at some length, asking why someone would feel justified in taking up a needed bed, eating free government food, and just hanging around a hospital several days a&er a good recovery from hernia surgery--or whatever. The answer for one man who was recovering from a hernia that continued
21
EDITORIAL CONTINUED
Hats: A 'right' for every American!* Downloaded by [RMIT University Library] at 03:49 16 June 2016
Dianne L. Durante and Salvator J. Durante Let's say we all agree that hats are worth having, or even a necessity, and that all Americans have a right to them. We pass a law stating that the government will pay for everyone's hats, through taxpayer dollars. What happens? First of all, hat sales skyrocket. I'm not particularly fond of hats, but if I can get them for free or below cost, why not? Lesson One: there is no limit to demand, if those who get the product or use it are not paying, directly or in some way they can see. This is unavoidable. The freeloaders will try to get all they can, and most of the rest of us will want something to show for our tax dollars. If such a law passed, most hatmakers would be delirious with joy. Everyone wants hats! They expand their shops and produce as many hats as they can. What happens next? The average price of hats shoots through the roo£ Why? There are two reasons. First, of the hats now being sold, the more expensive ones-the ones only a few people could afford before--will now be in much greater demand, since the individual hat-buyer no longer has to pay from his own, limited resources. If the latest style is a platinum-plated beret, anyone who wants one will now get it. The other reason for the rising prices is competition: specifically, lack of it. New products, such as the first camcorders or the first compact disc players, are usually expensive. Prices drop because more people want to make money from a product: they try to come up with cheaper and more efficient ways of producing it, so they can sell the product more cheaply and grab some of the market. Our unlimited government funding of hats has completely cut out the need for competition. Any hat*Originally titled "National health care: prescription for a fool's paradise."
22
maker can stay in the business, no matter how high his pnces. Lesson Two: prices will skyrocket if there's no limit to how much people can spend on a product. If anyone who wants the product can buy it, price no object, there is absolutely no reason for the manufacturer to try to cut his prices, and no reason for the buyer to control how much he spends. The government, and only the government, can give people virtually unlimited amounts to spend on a product. In short, it is not the greed of the manufacturer or the consumer, but the mere fact of the government funding of hats that is making hat prices exorbitant. Next step: the government, and hence the taxpayers, are faced with enormous hat bills. Mrs. Smith may have confined herself to one hat, but Mr. Jones wanted five, and Mrs. Imelda wanted 52 Paris originals. The government knows it can't continually raise taxes to pay for hats. Assuming it wants to keep the hat program intact, it has two choices: restrict the number of hats any one person can buy, or restrict the price of hats. In political jargon, that means rationing or price controls. From a politician's point of view, setting limits on the price of hats is the obvious way to go. There are fewer hatmakers who vote than there are hat wearers, and it's easy enough to paint the hatrnakers as greedy exploiters of the hatless. So a new law is passed: no hats may be sold for more than $15, even if the buyer is willing to use his own money. The immediate result will be that the best quality, most expensive hats become unavailable. No more Paris originals. Lesson Three: you can't make a silk purse out of a sow's ear. Good materials and good workmanship cost money. Yes, competition among manufacturers in a free market will cut prices in the long run. However, legislating a lower price for a product is not a shortcut to cheapness. It merely makes those who were selling more expensive goods go bankrupt, before anyone has
VOL 92/NO 6/NOVEMBER 1, 1992/POSTGRADUATE MEDICINE
Downloaded by [RMIT University Library] at 03:49 16 June 2016
time to work on price reduction. We could try some complicated and devious maneuvers to lessen the effect of price controls. For instance, we could slap a $5 tax on shoes and use the money for the hat program. Then we could have a maximum hat price of $15, but still pay the hatrnakers $20 per hat. That would mean, of course, that some poorer people wouldn't be able to afford shoes, and the government would end up subsidizing shoes, too. Even so, price controls on hats will have to be instituted in some form, because demand is so high. Remember that it is government spending for hats that made the demand and the prices so high in the first place: nothing except removal of the government's money will get the situation back under control. But let's keep trying. We've now legislated a maximum price for hats. Nevertheless, Mrs. Imelda has bought another 35 hats, and the rest of us are still trying to get our taxes' worth of hats. Not surprisingly, the amount that taxpayers are shelling out for hats hasn't significantly decreased, despite our price controls. The next step? Well, of course, restrict the number of hats each person can buy: ration them. Now what happens? A lot ofhatrnakers go out of business. They can't sell hats fur more than the maximum price, and they can't make up for the loss in income through selling more hats. Bureaucrats demand forms in triplicate and slap fines on them at every turn. The best hatrnakers soon leave the field in disgust. We are now facing a decreasing supply of hats, if not an actual shortage, because there are far fewer manufacturers. But hats are a necessity, aren't they? So we will have to pass a law forcing hatrnakers to remain in business, whether they can make a profit or not. However, even a
government order can't make a business run for long at a deficit, whether it's a hatrnaker or a child's lemonade stand or a bank The hatrnakers will go out of business, one by one. The government will have to step in and make hats. Given the quality of most government products, you can imagine what kind of hats we'll get. And given the efficiency of most government manufacturing operations, we won't be surprised if we're told we can each have one hat, in our choice of four styles, every other year. What began as a seemingly praiseworthy law-to provide all Americans with hats-has ended up driving the hatrnakers we know and trust out of business, and given us government-produced hats of considerably inferior quality and very limited numbers. This result is absolute, inevitable, and non-negotiable: none of the economic rules above can be avoided, and they can only be temporarily circumvented by allowing the government to interfere in yet more private business. Lesson Four: what the government pays for, the government has to control. Government funding of hats led to government control of hat prices, hatrnakers, and finally everyone who is even remotely connected to hats. The only cure would be to end government funding of hats. Comparing hats to medicine may seem even less appropriate than comparing apples to oranges, but the same economic principles apply. For more information about government intervention in medicine, write to Objectivist Health Care Professional's Network, 500 Metropolitan Ave, Suite 453, Brooklyn, NY 11211.
Excerpted, with permission, from Durante DL, Durante Sf National Health Care: Prescription for a Fool's Paradise. The Freeman. New York: Foundation for Economic Education Inc, 1991.
continued on page 27
VOL 92/NO 6/NOVEMBER 1, 1992/POSTGRADUATE MEDICINE
23
Downloaded by [RMIT University Library] at 03:49 16 June 2016
EDITORIAL CONTINUED
had been repaired several days earlier was "It wasn't convenient for the family to come pick him up." "Well, that shouldn't be the hospital's (or government's) problem," I protested, suggesting that he go home in a cah---r with friends. "That's not the way the system works here," I was told. I was beginning to get the picture. Patients stay in the hospital as long as they want-a few days or even a week extra. Maybe a couple of weeks or even more. But that isn't the biggest problem! An even bigger one is that older patients who are ready to be discharged to nursing homes just stay in the hospital waiting for a bed to open up in the nursing homenot just for a few days, but often for weeks or months or maybe a year or so! After seeing and hearing all of this, I went to see two senior officials at the Ontario Ministry of Health. Knowing they were having a terrible problem because they were over budget, I was eager to share what I had learned about recovered patients staying in the hospital at great expense to the province and taking up hospital beds needed by acutely ill patients. They were not interested. Abuses like this wouldn't happen here in the United States-even ifhealthcare were legislated to be a right-you may say. Maybe
not, at least not exactly these same abuses. But wait and see. If healthcare becomes a nationally legislated right in the United States, there will be abuses like we have never seen before. And the costs will grow and grow and grow. Yes, it might be nice if we didn't have to worry about house payments or rent, paying for food, or paying for healthcare. And yes, healthcare is too expensive. Beginning with stopping the need for defensive medicine because of the worry about being sued, we must make some changes. But please don't let Congress turn healthcare over to the government.
Dear Ralph, I'm sorry. You just don't get it. Ifhealthcare is a right, so should be rice, beans, tomatoes, salmon, and other nutritious foods. After all, food is an even more basic need than healthcare for most folks. And Ralph, please read the enclosed story about hats. Sincerely, Glen C. Griffin, MD
Your comments on the subject of this editorial are welcome and may be published in Readers' Forum. Please write to Glen C. Griffin, MD, Editor-inChief, POSfGRADUATE MEDICINE, 4530 W 77th St, Minneapolis, MN 55435.
VOL 92/NO 6/NOVEMBER 1, 1992/POSTGRADUATE MEDICINE
27
ISSN: 0032-5481 (Print) 1941-9260 (Online) Journal homepage: http://www.tandfonline.com/loi/ipgm20
Hats and Beds Glen C. Griffin MD To cite this article: Glen C. Griffin MD (1992) Hats and Beds, Postgraduate Medicine, 92:6, 15-27, DOI: 10.1080/00325481.1992.11701507 To link to this article: http://dx.doi.org/10.1080/00325481.1992.11701507
Published online: 17 May 2016.
Submit your article to this journal
View related articles
Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=ipgm20 Download by: [RMIT University Library]
Date: 16 June 2016, At: 03:49
EDITORIAL
HATS AND BEDS Ralph Nader thinks 'it's already working'
Downloaded by [RMIT University Library] at 03:49 16 June 2016
Glen C. Griffin, MD I recently received a letter from Ralph Nader asking me to jump on his campaign bandwagon for national health insurance. Along with the letter was an attentiongetting red brochure that looked something like a small greeting card. The large white type on the front boldly said, "It's Already Working ... " This line baited me into opening the card. The big red letters on the top inside panel simply said" ... in Canada." Well, I have a big pile of material on my desk that says something else. Letters and notes from Canadian doctors and clippings from Canadian newspapers have some very disturbing things to say about the system that Nader and others are clamoring to get us into. The lower panel of Nader's brochure reads, "Just across the border every citizen, young or old, working, unemployed, or retired, is covered cradle to nursing home fur all of their health care needs." This sounds terrific! Who wouldn't want this? Nader's promotional piece goes on. It sounds like a commercial for healthcare in heaven: Canadians can choose their own doctor or hospital. All health care and prescription drugs are covered, and they
don't have to worry about deductibles, copayments or medical bills of any type. Canada spends less on health care per person than America, yet aD Canadians receive adequate health care. And surveys show Canadians love their system. The same polls also show that Americans dislike theirs. We need your support to change this. The four-page letter goes on and on. One of Nader's big points (and we've heard it before) is that "health care is a right." Another
VOL 92/NO 6/NOVEMBER 1, 1992/POSTGRADUATE MEDICINE
major part of the promotional literature is the plea for money-$20, $35, $50, or even $100 to support his campaign to get a national healthcare plan that "includes longterm ,care under a single public 1 pan. Well, I'm certainly not going to be sending Ralph Nader any money, although I think I will send him a letter. But for several reasons, not the least of which is that he has such a glittering fund-raiser going here, I know my letter won't make any difference in the way he
thinks. I can see that Nader is going continued
15
Downloaded by [RMIT University Library] at 03:49 16 June 2016
EDITORIAL CONTINUED
to raise a lot of money with this campaign-money from folks who want to believe this little red brochure. After all, who wouldn't want all the free healthcare ever needed from cradle to nursing home-"all health care and prescription drugs" without having to "worry about deductibles, copayments or medical bills of any type." It sounds too good to be true. And that's just it. Most of us have learned, some through experiences that hurt, that when something looks too good to be true, it probably is. The promise of all this wonderful healthcare for free is very appealing-just as the promise of free food, free cars, or free hats would be (see box on pages 000 and 000). And besides, it wiU cost less than the healthcare we now have. At least that's what Ralph Nader wants us to believe. But as much as I would like to believe all of this, it just will not happen. It can't. And things are not going so well right now in Canada either. I've had some good things to say about the Canadian healthcare system. I've seen it firsthand. I've written about how simple it is for doctors to submit their bills for services-electronically. There are no long forms to fill out by hand or on a typewriter or even on a word processor. A few key punches and codes and it's done.
16
That's great. a government healthcare system. Yes, we must adopt simplified In spite of all of the sound-bites that make these pie-in-the-sky standardized electronic billing. It will save a lot of money. plans sound so good, I think we And yes, there are some other les- have to give hundreds of millions sons we can learn from Canadaof Americans credit for figuring out that you don't get something for such as how to change the incentives here so more young doctors nothing. go into primary care instead of surSomeone has to pay for it all. gical and other referral specialties. And that is what's being discovIn Canada, 61% of doctors are ered in Canada now. Apparendy Ralph Nader hasn't heard about in primary care-mostly family practice. In the United States, only that yet. 17% of doctors are family physiThe healthcare costs in all the cians. Of course, this isn't an exact Canadian provinces are over budcomparison, because we also have get. In Ontario, 1 of every 3 tax many other primary care physidollars goes to healthcare! And they cians who are in internal medicine still can't make it. and pediatrics. The problems are complexBut still, the United States is and multiple. far behind Canada in having the Even though the respective proper balance of primary care numbers from a couple of years physicians to surgeons and other ago make Canadian healthcare, as a referral specialists. And this isn't percentage of the gross national something that can be changed product, look inexpensive comovernight by an act of Congress. pared with healthcare in this counSo even ifAmericans really want try, these numbers are not comparthe government running our health- ing the same things at all. care system, which they don't, we There are major differences in could not all of a sudden have a healthcare in the United States and healthcare system like Canada's. Canada. We probably have too Even though pollsters have exmany frills. And Canada probably tracted yes responses from a major- doesn't have enough. For example, ity of Americans about features of a there are as many MRI scanners in dream healthcare system like the the state of Minnesota as there are one Ralph Nader talks about in his in all of Canada. red brochure and four-page letter, Yes, too many MRis are ordered most people when asked are quick in this country. But almost everyto respond that no, they don't want one agrees that many patients in continued on page 21
VOL 92/NO 6/NOVEMBER 1, 1992/POSTGRADUATE MEDICINE
Downloaded by [RMIT University Library] at 03:49 16 June 2016
EDITORIAL CONTINUED
Canada who could benefit from this marvelous technology just don't have access to it. This brings up a point about a very real difference between healthcare in the two countries. In a broad sense, expectations about healthcare are different in the United States and in Canada. In the United States, sophisticated care and procedures are expected-and expected rather quickly-and are usually provided, more or less. In Canada, for the most part, people are quite content with less sophisticated care and accept waiting for consultations and procedures from referral doctors. That's just the way it is and always has been. Of course, some Canadians who have seen our system at work or have learned about it come south to the United States for care. And although there are some superb doctors in all specialties in Canada-a few are some of the best I know-I don't think many would disagree that the United States has more knowledgeable physicians and surgeons per capita. This country has the very best healthcare system in the world. That's why kings and potentates and others who are not limited by cost come from all over the world to have difficult medical problems taken care of in the United States. But what about primary care in Canada compared with the United
States? Yes, patients in Canada can choose their own personal physician, and the primary care I've seen firsthand there has been very good. Patients seldom have to wait to get in to see their own family doctor, but they do have to wait for specialty care and diagnostic and surgical procedures, particularly those that are not emergencies. And a real bottleneck happens when someone needs to be admitted to the hospital. In a major hospital in Toronto earlier this year, I saw 10 patients on stretcher carts in the hall near the emergency department. Many had Ns going. They looked sick. I thought that a natural disaster might have occurred in the area. But this was just an ordinary day. "Why are these patients in the hallway?" I asked. "Because there are no empty rooms" was the answer. Well, this happens all the time in big hospitals in our country, too, you might be thinking. And it is true in some big-city institutions that there are no rooms. But the beds in those hospitals are filled with sick patients. This was not the case in Toronto. The former deputy minister of health, who had previously been the CEO and administrator of the hospital I'm talking about, pointed out that while those acutely ill patients were getting Ns on stretchers in the
VOL 92/NO 6/NOVEMBER 1, 1992/POSTGRADUATE MEDICINE
hall and waiting to be admitted, many healthy patients were playing cards and socializing in the halls of the medical and surgical wards upstairs. I saw some of the well-recovered patients he described. It didn't make sense-acutely ill patients waiting for admission while recovered patients held on to their rooms upstairs. "Why?" I asked the present hospital CEO and administrator. "Because they don't want to go home," he explained. "This is nuts," I said. "Why don't the doctors just pick up the charts and write 'Discharge' on the order sheets of their recovered patients?" "You don't understand," he said. "People here have the right to healthcare." I really didn't understand. It was completely illogical to me, even if people do have the right to healthcare. Why should they have the right to stay in the hospital when they are medically ready to go home? I pursued this at some length, asking why someone would feel justified in taking up a needed bed, eating free government food, and just hanging around a hospital several days a&er a good recovery from hernia surgery--or whatever. The answer for one man who was recovering from a hernia that continued
21
EDITORIAL CONTINUED
Hats: A 'right' for every American!* Downloaded by [RMIT University Library] at 03:49 16 June 2016
Dianne L. Durante and Salvator J. Durante Let's say we all agree that hats are worth having, or even a necessity, and that all Americans have a right to them. We pass a law stating that the government will pay for everyone's hats, through taxpayer dollars. What happens? First of all, hat sales skyrocket. I'm not particularly fond of hats, but if I can get them for free or below cost, why not? Lesson One: there is no limit to demand, if those who get the product or use it are not paying, directly or in some way they can see. This is unavoidable. The freeloaders will try to get all they can, and most of the rest of us will want something to show for our tax dollars. If such a law passed, most hatmakers would be delirious with joy. Everyone wants hats! They expand their shops and produce as many hats as they can. What happens next? The average price of hats shoots through the roo£ Why? There are two reasons. First, of the hats now being sold, the more expensive ones-the ones only a few people could afford before--will now be in much greater demand, since the individual hat-buyer no longer has to pay from his own, limited resources. If the latest style is a platinum-plated beret, anyone who wants one will now get it. The other reason for the rising prices is competition: specifically, lack of it. New products, such as the first camcorders or the first compact disc players, are usually expensive. Prices drop because more people want to make money from a product: they try to come up with cheaper and more efficient ways of producing it, so they can sell the product more cheaply and grab some of the market. Our unlimited government funding of hats has completely cut out the need for competition. Any hat*Originally titled "National health care: prescription for a fool's paradise."
22
maker can stay in the business, no matter how high his pnces. Lesson Two: prices will skyrocket if there's no limit to how much people can spend on a product. If anyone who wants the product can buy it, price no object, there is absolutely no reason for the manufacturer to try to cut his prices, and no reason for the buyer to control how much he spends. The government, and only the government, can give people virtually unlimited amounts to spend on a product. In short, it is not the greed of the manufacturer or the consumer, but the mere fact of the government funding of hats that is making hat prices exorbitant. Next step: the government, and hence the taxpayers, are faced with enormous hat bills. Mrs. Smith may have confined herself to one hat, but Mr. Jones wanted five, and Mrs. Imelda wanted 52 Paris originals. The government knows it can't continually raise taxes to pay for hats. Assuming it wants to keep the hat program intact, it has two choices: restrict the number of hats any one person can buy, or restrict the price of hats. In political jargon, that means rationing or price controls. From a politician's point of view, setting limits on the price of hats is the obvious way to go. There are fewer hatmakers who vote than there are hat wearers, and it's easy enough to paint the hatrnakers as greedy exploiters of the hatless. So a new law is passed: no hats may be sold for more than $15, even if the buyer is willing to use his own money. The immediate result will be that the best quality, most expensive hats become unavailable. No more Paris originals. Lesson Three: you can't make a silk purse out of a sow's ear. Good materials and good workmanship cost money. Yes, competition among manufacturers in a free market will cut prices in the long run. However, legislating a lower price for a product is not a shortcut to cheapness. It merely makes those who were selling more expensive goods go bankrupt, before anyone has
VOL 92/NO 6/NOVEMBER 1, 1992/POSTGRADUATE MEDICINE
Downloaded by [RMIT University Library] at 03:49 16 June 2016
time to work on price reduction. We could try some complicated and devious maneuvers to lessen the effect of price controls. For instance, we could slap a $5 tax on shoes and use the money for the hat program. Then we could have a maximum hat price of $15, but still pay the hatrnakers $20 per hat. That would mean, of course, that some poorer people wouldn't be able to afford shoes, and the government would end up subsidizing shoes, too. Even so, price controls on hats will have to be instituted in some form, because demand is so high. Remember that it is government spending for hats that made the demand and the prices so high in the first place: nothing except removal of the government's money will get the situation back under control. But let's keep trying. We've now legislated a maximum price for hats. Nevertheless, Mrs. Imelda has bought another 35 hats, and the rest of us are still trying to get our taxes' worth of hats. Not surprisingly, the amount that taxpayers are shelling out for hats hasn't significantly decreased, despite our price controls. The next step? Well, of course, restrict the number of hats each person can buy: ration them. Now what happens? A lot ofhatrnakers go out of business. They can't sell hats fur more than the maximum price, and they can't make up for the loss in income through selling more hats. Bureaucrats demand forms in triplicate and slap fines on them at every turn. The best hatrnakers soon leave the field in disgust. We are now facing a decreasing supply of hats, if not an actual shortage, because there are far fewer manufacturers. But hats are a necessity, aren't they? So we will have to pass a law forcing hatrnakers to remain in business, whether they can make a profit or not. However, even a
government order can't make a business run for long at a deficit, whether it's a hatrnaker or a child's lemonade stand or a bank The hatrnakers will go out of business, one by one. The government will have to step in and make hats. Given the quality of most government products, you can imagine what kind of hats we'll get. And given the efficiency of most government manufacturing operations, we won't be surprised if we're told we can each have one hat, in our choice of four styles, every other year. What began as a seemingly praiseworthy law-to provide all Americans with hats-has ended up driving the hatrnakers we know and trust out of business, and given us government-produced hats of considerably inferior quality and very limited numbers. This result is absolute, inevitable, and non-negotiable: none of the economic rules above can be avoided, and they can only be temporarily circumvented by allowing the government to interfere in yet more private business. Lesson Four: what the government pays for, the government has to control. Government funding of hats led to government control of hat prices, hatrnakers, and finally everyone who is even remotely connected to hats. The only cure would be to end government funding of hats. Comparing hats to medicine may seem even less appropriate than comparing apples to oranges, but the same economic principles apply. For more information about government intervention in medicine, write to Objectivist Health Care Professional's Network, 500 Metropolitan Ave, Suite 453, Brooklyn, NY 11211.
Excerpted, with permission, from Durante DL, Durante Sf National Health Care: Prescription for a Fool's Paradise. The Freeman. New York: Foundation for Economic Education Inc, 1991.
continued on page 27
VOL 92/NO 6/NOVEMBER 1, 1992/POSTGRADUATE MEDICINE
23
Downloaded by [RMIT University Library] at 03:49 16 June 2016
EDITORIAL CONTINUED
had been repaired several days earlier was "It wasn't convenient for the family to come pick him up." "Well, that shouldn't be the hospital's (or government's) problem," I protested, suggesting that he go home in a cah---r with friends. "That's not the way the system works here," I was told. I was beginning to get the picture. Patients stay in the hospital as long as they want-a few days or even a week extra. Maybe a couple of weeks or even more. But that isn't the biggest problem! An even bigger one is that older patients who are ready to be discharged to nursing homes just stay in the hospital waiting for a bed to open up in the nursing homenot just for a few days, but often for weeks or months or maybe a year or so! After seeing and hearing all of this, I went to see two senior officials at the Ontario Ministry of Health. Knowing they were having a terrible problem because they were over budget, I was eager to share what I had learned about recovered patients staying in the hospital at great expense to the province and taking up hospital beds needed by acutely ill patients. They were not interested. Abuses like this wouldn't happen here in the United States-even ifhealthcare were legislated to be a right-you may say. Maybe
not, at least not exactly these same abuses. But wait and see. If healthcare becomes a nationally legislated right in the United States, there will be abuses like we have never seen before. And the costs will grow and grow and grow. Yes, it might be nice if we didn't have to worry about house payments or rent, paying for food, or paying for healthcare. And yes, healthcare is too expensive. Beginning with stopping the need for defensive medicine because of the worry about being sued, we must make some changes. But please don't let Congress turn healthcare over to the government.
Dear Ralph, I'm sorry. You just don't get it. Ifhealthcare is a right, so should be rice, beans, tomatoes, salmon, and other nutritious foods. After all, food is an even more basic need than healthcare for most folks. And Ralph, please read the enclosed story about hats. Sincerely, Glen C. Griffin, MD
Your comments on the subject of this editorial are welcome and may be published in Readers' Forum. Please write to Glen C. Griffin, MD, Editor-inChief, POSfGRADUATE MEDICINE, 4530 W 77th St, Minneapolis, MN 55435.
VOL 92/NO 6/NOVEMBER 1, 1992/POSTGRADUATE MEDICINE
27
