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Fixing Healthcare From A-Z

Posted 01/31/2017 4:15 pm by

Healthcare can arguably be considered the greatest divider among Americans, and not just simply Democrats and Republicans, which at the policy level its reach extends beyond immigration, terrorism, trade policy, taxation, as well as the federal deficit. Seldom have we heard from the political class (excluding Rand and Ron Paul as well as John Kasich,) radical free-market solutions that would not only place patients as the middleman and the industry more transparent but also how to fix the severe shortage of skilled healthcare workers.


Eliminate Government Subsidies of ALL Kinds


First, eradicating subsidies would be a great start, and at all levels, not just limited to Obamacare. In fact, there is an elephant in the room, a much larger elephant than Obamacare, which most opponents of Obamacare are either turning a blind eye to or simply are unaware of. The government has been subsidizing individual’s costs of employer-based health care to the tune of almost $250 billion a year. According to law professor Edward Kleinbard, the 2016 federal subsidies amounted to $266 billion for employees at big companies that were paid via payroll tax deductions. This sum is far greater than the annual costs of the subsidized provisions of Obamacare. Therefore, eliminating subsidies in all forms, shapes, and sizes would be an excellent start to make healthcare more market-friendly and affordable to all.


To Fix Healthcare, Fix the FDA


Secondly, tamper down the power of FDA’s stronghold on regulating drugs. This is vital. The FDA gained such power due to the 1962 thalidomide crisis, an over-the-counter sedative used for pregnant women to treat morning sickness. The medicine caused birth defects such as shortened and missing limbs in babies, and since then the FDA has gained uninhibited power in keeping competitors out of the market and creating pharmaceutical cartels (due in large part also to patent laws) that inflate medicines to extraordinary levels that the laymen simply cannot afford. Dr. Sam Peltzman, the former professor at the University of Chicago, conducted a study comparing death rates prior and post-1962. The results showed that the most deaths that occurred prior to 1962 was The Elixir Sulfanilamide tragedy, in which 107 people died, what’s considered the worst of those decades. Prior to 1962, the average time for FDA approval was just seven months. However, after the passing of the Kefauver-Harris Amendment, the approval times for drugs spiked in parallel to death rates.


A good example of the FDA’s deathly long approval process was that of the drug pirfenidone. It’s used as a cure for idiopathic pulmonary fibrosis, a disease in which tissue deep in the lungs becomes thick and stiff, or scarred, making breathing difficult. It was already approved and marketed in Europe, Japan, Canada, and China. But here in the U.S., the FDA lagged on it for 4 years, and according to Dr. Henry I. Miller, founding director of the FDA’s Office of Biotechnology, it caused 150,000 American’s to die due to the FDA’s obsession with ‘effectiveness’. As Reason magazines science correspondent Ronald Bailey states, “The FDA’s increased obsession with safety may be killing more people than it saves. …After all, if it takes the FDA ten years to approve a drug that saves 20,000 lives per year that means that 200,000 people died in the meantime.” That’s more Americans than were killed in any American war except the Civil War and World War II.


Legalizing Medical Marijuana: A big break to the consumer, but not Big Pharma


The good news is that the current potential nominee for the head of the FDA, Jim O’Neill , is a pro-marijuana advocate and longtime friend of PayPal founder Peter Thiel, also a strong liberalization advocate-  an excellent choice by President Trump if chosen. Much study has gone into medical marijuana research and some impressive conclusions have been drawn out. A study done by a father and daughter team at the University of Georgia has found that painkiller abuse and overdose are lower in states with lenient medical marijuana laws, however this has always been the assumption, the most impactful part is in the 17 states with a medical-marijuana law in place by 2013, prescriptions for painkillers and other classes of drugs fell sharply compared with states that did not have a medical-marijuana law. Also, In medical-marijuana states, the average doctor prescribed 265 fewer doses of antidepressants each year, 486 fewer doses of seizure medication, 541 fewer anti-nausea doses and 562 fewer doses of anti-anxiety medication. Also found in the study was the cost savings to Medicare from the decreased prescribing in the 17 states where marijuana is legalized- the figure stood at $165 million. And they estimated that annual Medicare prescription savings would be over half a billion dollars if all 50 states were to establish similar programs.


Occupational Licensing: A Way to Destroy the Labor Market 


Third, the U.S. is suffering a severe shortage of nurses, while at the same time attempting to balance the aging Baby Boomer population. One would believe that occupational licensing requirements for nurses would be less burdensome now; however, licensing requirements are still an obstacle we Americans need to deal with.                    


Occupational licensing also has other severe limitations, about 27,000 of them to be exact; they’re referred to as ‘collateral consequences’. Essentially, they are bi-laws which disallow you to receive a license of any sort if you have a criminal record, of any kind. It could be anything from a petty misdemeanor (most are victimless), to a decade-old felony where you’ve learned and reaped the consequences of your actions. Now although there is no data indicating the number of people who’ve been denied a job based on a criminal record due to O.L.S, , the number is likely very high considering 1 out of 4 jobs in the U.S. require licensing, and 1 in 3 American’s have a criminal record of some sort. These restrictions have significant impact on labor supply, especially among people of color.


A Successful Look at Private Sector Healthcare


In America, the average cost of a heart transplant can cost, depending on the complexity of the surgery, anywhere from $70,000-$800,000. Some other estimates show upwards of $1 million when you take into account other factors. In India, a miracle worker by the name of Dr.Devi Shetty of Bangalore, also known as the Henry Ford of Cardiac Surgery, has created a system through his Narayana Hrudayalaya Hospital that has introduced economies of scale in his operations, focusing on volume of heart surgeries. His system works as a factory styled mass production environment that reports a 1.4% mortality rate within 30 days of coronary artery bypass graft surgery, one of the most common procedures, compared with an average of 1.9% in the U.S. in 2008. And of course, India being a developing country, most of his patients have much more severe conditions due to them having little to no access to healthcare of any kind in the rural decrepit villages of India. The total cost of a heart surgery at his hospitals? $2000! No overreaching government agency or authority dishing out mandates a wonderful example of free-market miracle (and cure).


The thousand bed medical center encourages and practices treating patients in volumes as it allows Dr.Shetty and his team of 42 surgeons the ability to experiment various surgical techniques on patients and thus inducing further specialization. These high volumes drive both the higher quality and lower costs.  Studies have long shown that quality rises at hospitals that perform more surgeries for the simple reason that doctors are getting more experience. Dr.Shetty and his team have performed 3,174 cardiac bypass surgeries in 2008, more than double the 1,367 the Cleveland Clinic, a U.S. leader, did in the same year. His surgeons operated on 2,777 pediatric patients, more than double the 1,026 surgeries performed at Children’s Hospital Boston. In terms of market share, Dr.Shetty’s hospitals now perform 12% of India’s cardiac surgeries, and he plans on opening a hospital in the Cayman Islands for Americans to have access to.


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