government, and instead offered cut-rate or free services to those who could not afford care. Before those programs came into existence, every physician understood that he or she had a responsibility toward the less fortunate, and free medical care for the poor was the norm. Hardly anyone is aware of this today, since it doesn’t fit into the typical, by-the-script story of government rescuing us from a predatory private sector. Laws and regulations that inflated the cost of medical services and imposed unreasonable liability standards on medical professionals even when they were acting in a volunteer capacity later made offering free care cost prohibitive, but free care for the poor was common at a time when America wasn’t so “governmentish” (to borrow a word from William Penn). We have lost our belief that freedom works, because we no longer have the imagination to conceive of how a free people might solve its problems without introducing threats of violence—which is what government solutions ultimately amount to.
In
From Mutual Aid to Welfare State: Fraternal Societies and Social Sercices, 1890–1967
, historian David Beito uncovered some of the story of how people once cared for their needs in the absence of massive bureaucracies and the financial chaos and moral hazard they inevitably cause. Beito focuses particular attention on fraternal organizations, which in decades past provided all kinds of services for their members that we now assume must be handled by government. With strength in numbers, such organizations were able to negotiate with doctors and get very inexpensive health care as well.
On the other hand, just about everyone is unhappy with the health care system we have now, a system some people wrongly blame on the free market. To the contrary, our system is shot through with government intervention, regulation, mandates, and other distortions that have put us in this unenviable situation.
It is easy to forget that for decades the United States had a health care system that was the envy of the world. We had the finest doctors and hospitals, patients received high-quality, affordable medical care, and thousands of privately funded charities provided health services for the poor. I worked in an emergency room where nobody was turned away for lack of funds. People had insurance policies for serious health problems but paid cash for routine doctor visits. That makes sense: insurance is intended to protect against unforeseen and catastrophic events like fire, floods, or grave illness. Insurance, in short, is supposed to measure risk. It has nothing to do with that now. Something has obviously gone wrong with the system when we need insurance for routine visits and checkups, which are entirely predictable parts of our lives.
Today most Americans obtain health care either through a Health Maintenance Organization (HMO) or similar managed-care organization, or through Medicare or Medicaid. Since it is very hard to make actuarial estimates for routine health care, HMOs charge most members a similar monthly premium. Because HMOs always want to minimize their costs, they often deny payment for various drugs, treatments, and procedures. Similarly, Medicare does not have unlimited funds, so it generally covers only a portion of any costs. The result of all this is that doctors and patients cannot simply decide what treatment is appropriate. Instead, they constantly find themselves being second-guessed by HMO accountants and government bureaucrats.
When a third party is paying the bills and malpractice lawsuits loom, doctors have every incentive to maximize costs and order all possible tests and treatments. The incentive to cut costs is lost, as physicians (now working essentially as low-level employees) seek to make as much as they can in the new corporate environment and charge the maximum the HMOs allow. Before 1965, physicians and hospitals (like all other private entities competing for your dollar)
In
From Mutual Aid to Welfare State: Fraternal Societies and Social Sercices, 1890–1967
, historian David Beito uncovered some of the story of how people once cared for their needs in the absence of massive bureaucracies and the financial chaos and moral hazard they inevitably cause. Beito focuses particular attention on fraternal organizations, which in decades past provided all kinds of services for their members that we now assume must be handled by government. With strength in numbers, such organizations were able to negotiate with doctors and get very inexpensive health care as well.
On the other hand, just about everyone is unhappy with the health care system we have now, a system some people wrongly blame on the free market. To the contrary, our system is shot through with government intervention, regulation, mandates, and other distortions that have put us in this unenviable situation.
It is easy to forget that for decades the United States had a health care system that was the envy of the world. We had the finest doctors and hospitals, patients received high-quality, affordable medical care, and thousands of privately funded charities provided health services for the poor. I worked in an emergency room where nobody was turned away for lack of funds. People had insurance policies for serious health problems but paid cash for routine doctor visits. That makes sense: insurance is intended to protect against unforeseen and catastrophic events like fire, floods, or grave illness. Insurance, in short, is supposed to measure risk. It has nothing to do with that now. Something has obviously gone wrong with the system when we need insurance for routine visits and checkups, which are entirely predictable parts of our lives.
Today most Americans obtain health care either through a Health Maintenance Organization (HMO) or similar managed-care organization, or through Medicare or Medicaid. Since it is very hard to make actuarial estimates for routine health care, HMOs charge most members a similar monthly premium. Because HMOs always want to minimize their costs, they often deny payment for various drugs, treatments, and procedures. Similarly, Medicare does not have unlimited funds, so it generally covers only a portion of any costs. The result of all this is that doctors and patients cannot simply decide what treatment is appropriate. Instead, they constantly find themselves being second-guessed by HMO accountants and government bureaucrats.
When a third party is paying the bills and malpractice lawsuits loom, doctors have every incentive to maximize costs and order all possible tests and treatments. The incentive to cut costs is lost, as physicians (now working essentially as low-level employees) seek to make as much as they can in the new corporate environment and charge the maximum the HMOs allow. Before 1965, physicians and hospitals (like all other private entities competing for your dollar)
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