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Wednesday, May 14th 2008

Sorry Milton, Two Wrongs Make A Right


Come Down To My Basement…I’ve Got Candy Down There…

Organized medicine is certainly facing a little bit of a faith crisis. From those they’re supposed to represent come cries that the AMA, specialty and state societies do not do enough for [put individual specialty here]. From the interested public and other interest groups comes cries that the AMA, specialty and state societies move to benefit the physician over the patient.

Throw amongst those pragmatic concerns the intellectual and long held criticism that organized medicine suppresses the supply of physicians and the scope of non-physician practice and is thus inherently anti-free market.

I’ve ignored this topic for long enough considering my considerable involvement in leadership roles within organized medicine and my libertarian leanings.

The clamoring from far right wing free market speakers like the late Noble Laureate above (who I respect considerably, despite the little joke above) and crazy think tanks like the Ludwig von Mises Institute is that the AMA is essentially a guild whose will the government has succumbed to. In a publication titled “100 Years of Medical Robbery” the think tank has this to say about the history of the American Medical Association and its goals:

In the days of its founding AMA was much more open–at its conferences and in its publications–about its real goal: building a government-enforced monopoly for the purpose of dramatically increasing physician incomes. It eventually succeeded, becoming the most formidable labor union on the face of the earth.

To accomplish the twin goals of artificially elevated incomes and worship by patients, AMA formulated a two-pronged strategy for the labor market for physicians. First, use the coercive power of the state to limit the practices of physician competitors such as homeopaths, pharmacists, midwives, nurses, and later, chiropractors. Second, significantly restrict entrance to the profession by restricting the number of approved medical schools in operation and thus the number of students admitted to those approved schools yearly.

The emphasis is my own.

I’ll offer a candid response to this. Through it’s history the AMA appears to have focused largely on improving physician income. Perhaps not as single minded or nefariously as the Ludwig von Mises Institute would have you believe but it remains. And the AMA has had considerable success doing such. The allowance of self governance that medicine enjoys and the sway it holds over the scope of practice for other providers is incredible. I think there are some real issues of ‘patient safety’ buried in these efforts. Even so it is clear that the AMA has a vested interest in restricting what nurse practitioners or chiropractors or optometrists are allowed to do under the law thus maintaining the physician monopoly over some income streams.

Organized medicine was responsible for the Flexner Report and continues to hold the greatest sway over the number of physicians this country will (or will not) have by controlling the LCME and ACGME. To argue some conspiracy to suppress the number of medical students (and thus number of future physicians) through these entities is baseless. But the fact such control exists shows organized medicine’s influence. Combine such with the AMA’s success in limiting the practice of other health care providers and you can see why it draws the ire of some libertarians.

As another Ludwig von Mises paper, “Bring Back The Guild System?” says,

Government regulations on the chiropractic profession, lay midwifery, and on the freedom of nurse practitioners to offer services within their competence, all of which make perfect sense from the point of view of the medical guild that lobbied for them, make no sense at all from the point of view of consumer wishes (as repeatedly expressed in polling data) or from economic considerations. In many cases, such people can provide health services far more cheaply than can licensed physicians (or, in the case of chiropractors, can provide services that licensed physicians do not provide at all), but consumers are prevented from making their own decisions regarding their medical care. Given the logic of the guild structure, no one has the right to be surprised to find that the AMA has put so much effort into undermining its professional opposition.

There is nothing wholly unique about physicians’ efforts towards this. Other professions do the same and also limit their membership through limiting education spots (see: lawyers). It is just that medicine has been so successful at it.

I will accept the blows Milton Friedman lands against the American Medical Association but let me make an argument on why organized medicine’s actions are reasonable despite violating the libertarian ideal.

Let us call what the AMA and the rest of organized medicine does a necessary evil. It might not have been through all of its existence granted but today it is. It is because physicians are not playing on a level, free market playing field.

The conclusion so many come to is that more physicians or broader scope of practices for non-physician practitioners would lead to lower health care costs. The results might be less than impressive, but I think over the whole they would certainly exist. But there are places of care where such would not be the case.

The fact is that physician income is countered by a cabal of payers, led by the government (Medicare), who artificially set prices for services based on the lobbying efforts of various groups. They also artificially limit what physicians can charge from the patient (blocking balanced billing, protecting assets such as homes). The limited players in the insurance market and their collusion amongst each other is a clear violation of the same free market ideals that the AMA’s actions are measured against. If the cabal wasn’t led the government itself it would be difficult to imagine some form of anti-monopoly legislation or beaurecratic action against the major players in the current health insurance market.

The existence of such a system was arguably partially contributed to by organized medicine itself, and it’s efforts to artificially inflate physician reimbursement. But the fact that the two opposing ‘wrongs’ are in part responsible for each other is beside the point. Nor do they ‘cancel’ each other out and allow the current reimbursement structure to relatively approximate physician worth.

Let us imagine a world in which there are no restrictions on the practice of medicine and in which practitioners can charge whatever they want.

Over the whole you might save some money and you certainly would drive down physician reimbursement, especially for the primary care physician. I think American society has clearly not demonstrated the fore thought to value what PCPs do. But it would be a boon for procedures, especially acute ones.

Seriously would there ever be a market to allow some homeopath to try to emergently fix your traumatic epidural hematoma? How could you walk out of a life saving trauma surgery or an emergency cath with the title to your home still in your hand and your future wages not garnished?

See the thing is that in the acute setting medical care becomes something unique. It doesn’t matter how many physicians or chiropractors or nurse practitioners are out there, you can’t shop amongst them when you’re having an MI. You go to the closest, qualified entity. That “certification” as qualified in the public’s mind will never be usurped by non-physician practitioners in an emergency setting. I would argue that the public will never be comfortable, in my lifetime, of having their brain surgery done by a non-physician no matter the cost.

The point is that there are no forces driving down the cost of semi-emergent-to-emergent medical care.

I’m not trying to be heartless or ruthless, I’m just trying to demonstrate (with hyperbole and to the extreme) the consequences of the anti-market forces which currently oppose organized medicine.

Don’t ask the American Medical Association to stop its efforts unless you’re willing to kill the current health care funding system and do away with third party payers altogether or at least limit their conspiratorial, provider income limiting practice. Is the above really the type of world people, who constitute the market, are willing to live in and deal with? Tough to answer that in the affirmative.

Two wrongs do make a right in this particular case. Excuse me while I cheer on the American Medical Association.

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