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January 2, 2019 by Dr. Kyle Varner in Policy
In true festive spirit, in the run-up to Christmas I wrote an article for the Daily Caller on the ‘Four Reasons Why Congress Should Let Obamacare Die, after U.S. District Court Judge Reed O’Connor of Texas recently ruled Obamacare as unconstitutional.
As a medical professional, I believe this is one of the most important political issues of our time.
Everybody knows American healthcare is broken and it can’t continue in its current form. And things can go one of two ways: more state involvement or more of a free market.
I passionately believe that the free market is the only means of truly fixing the American healthcare system. I was recently interviewed on the subject on Talk Radio 790 KABC to discuss this further, read on for the full transcript of my interview:
Host: Thank you for joining us on Talk Radio 790 KBC. How about telling us a little bit about your background?
Kyle: Well I’m an internal medicine specialist and and I work as a hospitalist in the various hospitals across the western United States, in Washington, Alaska and sometimes Maine, and I am a passionate advocate of free market healthcare.
Host: That sounds great! So you came up with four reasons as to why congress should let Obamacare die. Can you tell the KBC listeners the four reasons?
Kyle: Sure, so the first reasons is that Obamacare outlaws insurance. People think of the health plans that are sold on the Obamacare exchanges as insurance, but they are not. What they are is what I like to call “prepaid moral hazard induction plans”.
What it means is that these plans don’t help you to mitigate the risk of a large financial loss which is what an insurance product is. These plans are where you give your money to a third party and they dole it back out to you in the form of medical care that they decide on.
So this is unfavorable to patients, and the worst part of it is that the third party payers get to make decisions about formularies, about their provider networks, and you don’t get to choose your own doctor. So it’s a really bad deal. And those of us who want to live a healthy lifestyle and keep our expenses down have no option to do that under this kind of a system.
Host: Well let me ask you this question. You believe in the free market, so what do you suggest as the alternative? I think you would agree that more people are currently insured under Obamacare, and that the Democrats took over the house because many people like it, specifically the insurance against pre-existing conditions and allowing adult children to remain on the plan. This wasn’t provided beforehand.
Kyle: You’re absolutely right that people are in pain, but it’s not because of pre-existing conditions or children not having plans. They’re in pain because healthcare services are extraordinarily expensive, moreso in the US than anywhere else in the world.
What I’d say to you is that we need to look at why this is, so we can start to craft wise reforms that bring these costs down. Once this happens then those issues like children staying on their parent’s plans and pre-existing conditions go away.
What I’d argue is that Obamacare is actually inflationary and it’s making the problem worse. Is it popular to put a band-aid on the problem? Absolutely. But it’s just a band-aid, and it’s not going to fix the underlying problem with is the out of control cost.
Host: But the issue of affordable healthcare for American citizens has come up over and over again. The first attempt at a federal health insurance plan was started by Harry Truman, and it failed. It’s been a debate for at least 70 years; you might recall Ted Kennedy in the 80s trying to push for it too. I’ll concede that Obamacare isn’t the best plan, but the debate has been going on forever.
Kyle: You’re right, and what’s been going on is that my profession has been exploiting patients. It’s an unpopular thing to say but doctors in the US are organized like a cartel. We limit the number of doctors; in fact in 1997 Congress effectively capped the number of doctors by using funding mechanisms, under the pretense of there being too many doctors.
Through this we’ve created conditions where my wages are probably double what they’d be in a free market. And so you’ve had organized medicine lobbying and lobbying for regulations and tax money that has contributed to this inflationary system. It’s disgusting to me, and I think my profession is playing a central role in it.
Host: I’m confused and frustrated by it too. I remember my brother was in the hospital when he was younger and my parents were very confused by the whole system. All the codes, the costs, you couldn’t read it. Nobody wanted to tell you how much the doctor or hospital bills were, and even things like band-aids cost $10 each! In the store you could get 10 boxes of band-aids for the same price! Why is it so much?
Kyle: The reason is that hospitals in the US have a system by which they are extremely scarce. We know this because ER boarding (when patients in ER are left in the hallways because there aren’t enough beds) is very common. It increases patient mortality because often times they’re there for up to 48 hours before a room is available.
So why aren’t there enough beds? The first reason is that in 35 states it’s basically illegal to build new hospitals owing to certificate of need laws. The second is that Medicare, Medicaid and insurance programs effectively operate as price controls. When there’s a shortage of something, prices temporarily rise and it draws new suppliers to the market.
But with price controls, that doesn’t happen, there’s no signal. It’s very similar to what’s happening in Venezuela right now with toilet paper. We’ve effectively applied Venezuelan economics to hospitals which gives them the opportunity to exploit patients and consumers. We need to eliminate these controls so consumers can actually become customers instead of captive victims.
Host: What do you mean it’s illegal to build more hospitals?
Kyle: Certificate of need laws were began around the 1940s; they’re laws that say you must go to the State Government and prove to them that there is a need in the community for the healthcare facility that you’re opening.
These laws were advanced by the federal government and were actually incentivized. At one point every state had them, but now only 35 do because there’s been a concerted effort to repeal them.
As I said, Medicare has had an inflationary effect, because when you don’t bear the financial consequences of your actions you tend to spend a lot more money than when you do. Because of this inflation they decided they were going to cap the supply of hospitals to try to prevent Medicare spending from increasing.
So that was the genesis of the certificate of need laws. Nowadays hospitals have become big fans of them because they didn’t want competition, and so they started lobbying to keep them to stop competitors coming in and building new hospitals.
Host: President Trump has been a strong critic of Obama care, and has proposed several other plans. I specifically recall one which was to allow insurance companies from outside your home state to pull together resources and offer cheaper program rates that are affordable. Do you think this is a good idea or is it still too much government involvement?
Kyle: Well i absolutely agree with the idea of being able to purchase insurance plans from anywhere. What we’re basically doing is allowing insurance companies to shop for jurisdictions that are more favourable and allowing patients to do the same.
So if they can buy an insurance plan out of South Carolina maybe that’s going to be a better deal and they can save money. So any time there’s more freedom it’s going to be better.
Host: But if the government tries to mandate certain conditions regardless of where you buy it, like pre-existing conditions or allowing children to remain on their parents plans, you’d still dislike it right?
Kyle: I would. I’d say you’re making it significantly less beneficial and you’re still not addressing the underlying cause of high healthcare prices. So we have to address the underlying cause if we’re ever going to get to a point where healthcare is not painful for the American people.
Host: Thank you Dr. Varner, I hope you have a very Merry Christmas!
Kyle: Merry Christmas to you too, thank you for having me.
This information is intended to help readers be more informed about their health options when speaking with a professional, but it should not be used alone to diagnose, treat, prevent or cure any disease or condition. Be sure to speak to a qualified doctor before taking any action to make sure that your choices reflect your actual health situation.