Monopoly Capitalism
in Healthcare
By
JC Smith, MA, DC
Critics of universal healthcare are quick to note that socialized medicine in Canada and the UK are plagued by delayed surgery, “health tourists” fleeing to other countries for care, and assume that America has the best healthcare system on Earth. While some of these observations may be true, what they fail to mention is the 800-pound gorilla that all ignore. In effect, America’s healthcare dilemma is due to a medical monopoly where the lack of free enterprise on an open and level playing field does not allow the cheaper mousetrap to prevail. Indeed, to say healthcare in America is rigged is an understatement.
The problem is that there is never has been nor ever will be free enterprise in American healthcare. Unlike the free market where meritocracy prevails, in the medical cartel where profiteers control the AMA, HMO boards, hospitals, drug companies, and every aspect of the healthcare industry, the best or cheaper mousetrap often fails to emerge in the marketplace.
The AMA emerged as a monopoly under the past leadership of Morris Fishbein, MD, who was the executive secretary of the American Medical Association and editor of the Journal of the AMA for 25 years until 1949. Known as the Medical Mussolini by his rivals, his goal was to eliminate all health competitors such as homeopaths, naturopaths, alternative cancer treatments, chiropractors and anyone who didn’t follow the allopathic (drug, surgery) model of healthcare by brandishing them as “quacks” by his Department of Investigation that formed a Committee on Quackery. His second goal was to immerse the drug industry into medicine to sponsor his Journal, which explains the heavy emphasis today on drugs.
In 1962 the Osteopaths in California, originally non-drug, non-surgical practitioners, to avoid the wrath of the AMA’s goon squad, capitulated to the AMA by assimilating into the allopathic profession which is why most DOs today are identical to MDs in education and practice. They didn’t do this in order to advance, they did it in order to survive. Many people to this day are confused between an Osteopath and an MD since they do the same work under different titles.
In 1963, the only holdout from complete medical supremacy was the chiropractic profession and in November of 1963 the AMA declared war on chiropractors in its mandate to “contain and eliminate the chiropractic profession.” While this illegal boycott did not eliminate these pesky foes, it did marginalize them in the healthcare insurance programs and ruined their collective image with dirty tricks that still linger on today.
The net effect today is America has a single trade association, the AMA, which is in virtual control of the entire healthcare system. Even government agencies designed to regulate the healthcare industry are manned primarily by MDs. This was the fatal error as Sen. Ted Kennedy said back in the 1970s when he saw the damage of allowing MDs to control the entire healthcare system to create a virtual monopoly. Imagine the problems from a single religion or a massive single car manufacturer, and that’s what we have in American healthcare—one school of thought with total control to drive up costs, no options for consumers, and no competition to keep the cutting edge sharp and vibrant with continual evolution of technology.
Is there any wonder why hospitals still boycott chiropractors—the obvious cheaper mousetrap compared to back surgery? Hospitals have no interest in lowering costs, nor do insurance companies that work by a perverse motivation to keep costs high so they can charge more in premiums. Compound the perverse economic motivation with intransigent MDs who ignore innovative mainstream medical or CAM methods, and we have what we have—an expensive medical system that few can afford and rated poorly by statisticians in the WHO study that rated the USA as #1 in cost, #37th in health care delivery, and 72nd in population health.[1]
The monopoly structure of healthcare is the glaring gorilla the government that has turned a blind eye to this obvious problem. The idea of many who ignore the lack of competition seems to center on the image that the medical profession is a public utility similar to the fire or police departments, so why is there a need to duplicate services? They also mistakenly believe the medical profession offers state-of-the-art technology and every possible option. While high-tech imaging, potent narcotics, and aggressive surgery may appear as advancements, nothing could be further from the truth since the other side of the coin is that much of medicine is stuck.
Experts agree that medicine is wrought with too many surgeries, too many expensive MRI scans, too costly, ineffective, addictive, and dangerous medications, and an emphasis on disease care rather than preventative health care.
“More people are interested in getting on the gravy train than on stopping the gravy train,”[2] says Richard Deyo, MD, MPH, who calls for reform in medical care: ”People say, ‘I’m not going to put up with it,’ and we in the medical profession have turned to ever more aggressive narcotic medication and more invasive surgery.” [3]
We have an industry stuck in time, bias, tradition, and tons of money that has no interest to change unless there is more money in it—the gravy train that Dr. Deyo mentioned. The inability to stop using outdated methods and to incorporate new innovation or alternative treatments illustrates the mindset of medicine.
Dr. Scott Haldeman suggests there was a longer time lag for treatments that were ultimately refuted as ineffective. “For these unsuccessful treatments, there was a median time lag of 44 years from initial discovery to being disproved. For treatments that ultimately proved to be valuable, there was a time lag of ‘only’ 17 years between discovery and scientific validation.”[4]
Indeed, if the electronics industry had such resistance to change, we’d still be in the vacuum tube era. Only in the medical cartel do we see such intransigence to change for no other reason than to suppress competition and maintain profits.
The Institute of Medicine courageously concluded that “the American health care system is in need of a fundamental change,” especially because “what is perhaps most disturbing is the absence of real progress toward restructuring health care systems to address both quality and cost concerns.” Indeed, cartels are not interested in lowering costs, whether its oil or healthcare costs.
We now know that superficial makeovers will not suffice. Until this medical monopoly and its cartel of drugs, insurance, and hospital associates are dismantled, real healthcare reform will not happen. Just as the US Government had to break up other monopolies for the betterment of citizens, such as Standard Oil, AT&T, now is the time to do the same in healthcare.
The system is obviously broken, but the fat cats have no interest in changing this profitable albeit ineffective healthcare system since they’re making too much money.
Profiteering in American Healthcare
Not only has Wall Street revealed how shysters with golden parachutes operate in a deregulated opaque environment, the healthcare industry has the same shysters in the HMO businesses. The public remains unaware of these shysters since the health care insurance industry hasn’t collapsed, yet. Instead of a $700 billion loan from Congress, the HMO industry has been propped up by double-digit increases in healthcare premiums for the past 8 years as it “squeezes care to expand profits.”
Shortly after George Dubya Bush was elected, the White House told all the healthcare lobbyists not to come around speaking about Health Care Reform or the proposed Patients’ Bill of Rights—issues begun during the Clinton administration. Instead, Bush decided to let the health care industry manage this huge issue of healthcare reform. In other words, the Republican wanted to “privatize” these services to let the “market” decide by eliminating governmental oversights or regulations. The rest is history, not unlike the present oil and banking scandals with the consumer paying more for less service.
After 8 years of this medical/HMO/pharmaceutical plutocracy—this wealthy class that controls or greatly influences the government of our society—we see the horrible results with over 47 million Americans without any coverage, decreasing patient services as premiums escalate and, most of all, HMO executive salaries escalating beyond imagination
According to Richard Coniff, the problem is the vast difference between for-profit and non-profit healthcare systems in terms of administrative costs. Medicare now covers about 40 million seniors, gets high marks for customer satisfaction and whips the private sector on efficiency by allocating approximately 5% toward administrative costs. On the for-profit side, private insurers spend six times as much on administration, proportionally—mostly to weed out costly customers or fight payment. This is a cash cow for HMO executives too.[5]
Indeed, the policy holders have been bailing out the healthcare insurance industry for years now, while CEOs have their golden, if not platinum, salaries and parachutes, most notable the former CEO of United Healthcare, Dr. William McGuire, who in 2004 was paid $158 million along with 5-year bonuses totally $1.6 billion.
This egregious compensation didn’t escape the comments of columnist Steven Pearlstein of The Washington Post: “Isn’t it odd that a company could be so persnickety when it comes to pinching pennies from doctors and patients, and so cavalier when it comes to lavishing executives with hundreds of millions of dollars of shareholders’ money? Or maybe it’s not. Maybe what we have here is the most outrageous corporate scandal since Enron and WorldCom.”[6]
Fat Cats
While healthcare insurance costs have risen dramatically with double-digit inflation since 2000, we’ve seen patient services drop substantially. Why are Americans paying more for health insurance, but getting less coverage and poor service? The problem with American health care is not the doctors or patients, but the real culprits are the greedy executives in the Health Maintenance Companies (HMOs), hospitals, and drug companies.
Indeed, health care in America is a function of plutocrats and bureaucrats who are living high on the hog, to say the least, at the expense of patient and providers. Take a look at these numbers of the HMO kingpins and ask yourself why the USA doesn’t implement nationalize healthcare for all as we do for our seniors with Medicare.
Top 6 Health Plans Annual Totals compared to US Government salaries:
- Grand Total for 6 HMOs in 2007 was $277,998,393
- U.S. Government Leaders Salaries $95,974,600
- Executive Branch $3,517,600
- President $400,000
- Vice President $221,100
- Cabinet Secretaries (15) $2,896,500
- Judicial Branch
- Justices (9) $1,881,000
- Congressional Salaries $90,576,000
- U.S. Senate – (100 members) $16,930,000
- House of Representatives – (435 members) $73,646,000
Taken together, these six health plans paid 37 executives three times (average salary of $7,513,470) what the top 562 leaders received in the federal government (executive, judicial, and legislative; average salary of $170,773).
Not only is this incomprehensible for working class people, it’s a rip-off for their own stockholders and clients who are bilked by these insolated executives with platinum parachutes.
Perverse Motivations
If these egregious salaries aren’t enough to make you scream out for a total change to a nationalized healthcare system, what would? Sadly, these medical plutocrats control the system with the blessings of the Bush White House and defended by the largest medical/drug lobby in Washington. Until this tragic market failure is known by every American, we’ll continue to see such inequities in USA healthcare.
Mr. Robert Kuttner is co-editor of the American Prospect and a senior fellow at a New York–based public policy research and advocacy organization. In The New England Journal of Medicine, he wrote an eye-opening article about this HMO mess, Market-Based Failure — A Second Opinion on U.S. Health Care Costs @ http://content.nejm.org/cgi/content/full/358/6/549
“The extreme failure of the United States to contain medical costs results primarily from our unique, pervasive commercialization. The dominance of for-profit insurance and pharmaceutical companies…raise costs and distort resource allocation. Profits, billing, marketing, and the gratuitous costs of private bureaucracies siphon off $400 billion to $500 billion of the $2.1 trillion spent, but the more serious and less appreciated syndrome is the set of perverse incentives produced by commercial dominance of the system…
“Comprehensive, government-organized, universal health insurance systems are far better equipped to realize these efficiencies because everyone is covered and there are no incentives to pursue the most profitable treatments rather than those dictated by medical need.”[7]
Obviously the present American HMO system of healthcare is not working for citizens, especially the 47 million uncovered. While some criticize universal systems in Canada and the UK, the fact is they do get more bang for their buck—less costly and better overall results. Just as Wall Street proved unregulated capitalism is corrupt, so too have the HMOs proven that their brand of healthcare is expensive and ineffective. Until we overhaul the best of universal healthcare with a dash of American ingenuity, we’ll continue to see more dollars spent on less effective treatments, allthewhile the HMO fat cats laugh all the way to the bank.
[1] World Health Organization, The World Health Report 2000: Health Systems—Improving Performance, 2000.
[2] Reed Abelson, Financial Ties Are Cited as Issue in Spine Study, NY Times, January 30, 2008 .
[3] “With Costs Rising, Treating Back Pain Often Seems Futile” by Gina Kolata, NY Times, February 9, 2004.
[4] Refuting Ineffective Treatments Takes Years The BackLetter® 101 Volume 23, Number 9, 2008.
[5] Conniff, Richard; How to fix: Health care; MSN Money Feb. 19, 2008.
[6] Pearlstein, Steven, UnitedHealth’s Options Scandal Shows Familiar Symptoms, Washington Post, October 18, 2006.
[7] Kuttner, R., Market-Based Failure — A Second Opinion on U.S. Health Care Costs, NEJM, Vol 358:549-551 Feb. 7, 2008, Number 6.