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June 7, 2019 by Dr. Kyle Varner in Policy

How do we take a disease that is currently incurable and make it curable?

Investment.

You gain new scientific knowledge and translate it into bedside cures. That requires time, money, blood sweat and tears.

It’s a concept that runs through all forms of wealth creation, prosperity and mutual respect. You deal with each other and you both profit. Everybody wins.

Luckily, over time we have developed an entire industry in the US just for the purpose of curing disease.

Theoretically, they should be good at it, what with their robust research and development budgets and all…

But there’s a problem. As it developed, the healthcare industry faced a fork in the road:

The left path was the harder, but more productive option, where you operated by creating something new and valuable, and reaped the rewards.

The right path, by contrast, was easy. You diverted your resources to garner special favors from the authorities. Under their wing, you could fly high off of taxpayers’ money and institutional privilege.

In the first case, everyone in the world benefits from your investment because it moves things forward. In the second case, you cozy up to the government, and together you screw over the rest of the world.

What kind of perks do you get from the second path?

  • You can sue your competition for frivolous reasons, or simply because you get a kick out of it. Over in London, the Taxi Drivers’ Association tried to sue Uber over lost earnings.
  • You can lobby for special legislative protections. Big Pharma has repeatedly lobbied Congress to keep imported drugs OUT of the country and prices UP.
  • You can create a useless and unnecessary product like Epidiolex or repackage a drug like esketamine, and then charge a fortune for something you didn’t really invent.
  • You can restrict the supply of key components of your industry to bump up your prices. High licensing requirements for doctors mean they are few in number and earn way too much.
  • You can manipulate people by claiming your industry is essential to national survival, so they need government money. (I’m looking at you, farmers!)

It’s pretty clear what I’m getting at here. The healthcare industry took the second path.

The American Medical Association conspired with the government to restrict the number of doctors…

Drug companies enjoy regulation which destroys competition and keeps their drugs expensive…

Hospital chains use Certificate of Need laws to solidify barriers to entry for smaller, more efficient hospitals…

The list goes on. The healthcare industry has chosen the second path, instead of what medicine should be about –health. Why?

State power is too tempting to resist

It’s because the government has grown so big. Even Thomas Hobbes, who termed the state “Leviathan,” would be horrified at just how much the government is in important industries.

People realize that when the state is a big economic player, the most profitable investments lie in getting a special favor from them.

This would be fine, but government programs are riddled with bad incentives and are often incredibly wasteful. Add onto that the fact you have to pay for them and you have a zero-sum game: they win, but everyone else loses.

Real investment is a positive-sum game: it creates a win-win situation for both producers and consumers alike.

I want to live in a world where all industries are positive-sum games, where people strive to get rich by creating value for others.  

In order for that to happen, we must drastically reduce the role of the government in the economy.

Let people deal with each other only when both of them benefit, don’t enforce a wasteful program that creates winners only through virtue of political clout.

Conclusion

The overarching reason why health care is so dysfunctional in the US is the same as any failing industry: It is more profitable to invest in government favors so you can screw over your customers than it is to invest in delivering value to them.

But there are other reasons. There are examples of bad policies and bad relationships, all of which are examples of that overarching reason.

In fact, there are so many I’ve decided to document all of them in my upcoming book. It’s called The White Coat Cartels, and I’ll tell you as soon as it’s out. Given how much debate there is about health care in Washington, it’s essential the real reasons are out there.

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.

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