How Capitalism Will Save Us (60 page)

E
ven the most ardent supporters of free markets may feel squeamish about allowing people to buy and sell transplant organs. Won’t this lead to unethical practices and exploitation?

Dr. Sally Satel says that we can’t afford to be queasy. She believes that today’s “altruistic” organ donation policy, which forbids the acquisition of organs in exchange for money, is killing people.

Satel speaks from experience as a physician, and a transplant recipient. She experienced the harsh reality of “altruism” firsthand in 2004 when she learned she had end-stage kidney disease.

Satel writes that there was slim chance of getting a kidney from the United Network for Organ Sharing, which has a monopoly contract with the federal government. She found “60,000 other people ahead of me.” After searching online, she finally found one prospective donor. But he soon changed his mind. Eventually she received a kidney from a friend. Had she not been so lucky, “I could have languished on dialysis for years.”
³⁴

Satel is not alone in advocating a market for transplant organs. Other experts have proposed market-based approaches that incorporate financial incentives, while being designed to minimize potential abuses. Among the ideas: government paying potential donors to join a registry, with the promise of a larger payment to their estates if organs are used upon their death. Such a plan spares the family the discomfort of making a financial transaction when a loved one dies. Other proposals include having states waive driver’s license fees if a person agrees to be an organ donor.

Allowing private contracts between individuals has also been proposed, though some fear this would end up creating a market where the poor sell organs to the sick people with the most money. Wouldn’t this
encourage abuse of poor people? Advocates answer that there would be rules and regulations in these market-based programs to protect donors, ensuring safety procedures, consent, and fair value. Organ donation could only take place in an accredited hospital, so that donors would be protected with top-notch care.

Satel and others believe that private, market-based exchanges would also help kill today’s black-market demand for transplant organs from countries like India, where impoverished people sell their organs—or from China, which takes them from prisoners who have been executed.

One thing is certain, Satel says. Today’s system doesn’t work.

L
ow-income and elderly people need health care. But the answer is not Medicare and Medicaid. Most of today’s problems with health care are in fact market imbalances created by these two mammoth government insurers. As we’ve mentioned, they are the Fannie and Freddie of the healthcare economy.

The problem was not the intent of these programs, but their fundamental structure. Take Medicare. Years ago, a person’s so-called golden years could be a time of intense anxiety because of the difficulty of getting health insurance. Retirees didn’t have employer-paid health care. Trying to get insurance in your sixties could be prohibitively expensive.
In the 1950s and ’60s, millions of Americans who were self-employed or worked for small and medium-sized companies did not have corporate pension plans. And Social Security payments were proportionately lower than they are today.

Medicare was supposed to do for health insurance what Social Security had done for retirement income—provide a backstop. The problem, however, is that this government system is also third-party pay. The patient does not directly control health-care dollars. You go to a doctor or hospital and the bill is sent to the federal government.

With government footing the bills, not only did usage soar but so did fraud. Doctors, clinics, home-health-care companies, and medical equipment makers have all been known to rip off the system—billing for services not performed, overcharging for treatment and medical equipment. One notable example: motorized wheelchairs. A recent study by the Department of Health and Human Services found that Medicare paid $5,297 for power wheelchairs that cost non-Medicare patients about $1,500 to $3,800.
³⁵

Instead, the government responded by imposing draconian Medicare reimbursement rates. One specialist with a New York City practice recently complained he gets only $18 from Medicare for a patient visit that costs $112. One would be hard put to find any place in America where a doctor can make ends meet with those kinds of fees.

A 2007 AMA survey of nearly nine thousand U.S. physicians found that 60 percent of doctors intended to limit the number of new Medicare patients and 40 percent of doctors said they’d cut down on treating even established Medicare patients if already-low reimbursement rates were reduced. An earlier study by the Association of American Physicians and Surgeons found that 66 percent of physicians said that they were considering retiring at an earlier age than expected because of increased bureaucratic hassle from government insurers.
³⁶

The problem is especially severe with Medicaid. Almost a third of U.S. doctors refuse to treat Medicaid patients because of inadequate reimbursements. With access to practitioners limited, studies have shown “health outcomes” for Medicaid patients to be far worse than for patients with private insurance and even Medicare.

Not only are many physicians refusing to see government-insured patients, but an increasing number are folding up shop because they
can’t make ends meet. A study in the
Journal of General Internal Medicine
concluded that the inadequacy of government reimbursements has helped produce a shortage of primary-care physicians and “unbalances the health care system and ultimately puts patients at risk.”
³⁷

Doctors in the U.S. may not be government employees, as they are in Britain’s government-administered National Health Service. But they have lost control of their self-determination. In the magazine
New American
, writer-physician Jane Orient describes the widespread demoralization within the profession:

“I felt like I was becoming a guideline-following automaton and a documentation
drone,”
said general internist Christine Sinsky, quoted in a November 27, 2008, article in the
New England Journal of Medicine.
³⁹
Medicare and Medicaid’s paltry reimbursements are also a primary reason for the wild prices and shortfalls of today’s health-care crisis. That’s because, as we’ve mentioned, the privately insured end up footing the bill when doctors and hospitals are underpaid by government insurance—to the tune of $90 billion a year.

Like all underfunded government bureaucracies, Medicare and Medicaid have an institutional bias against innovation. Coverage decisions are made based on budgets and political pressures—not the needs of patients. Both programs take decades to cover newer procedures and medicines. In an article for the National Center for Public Policy Research, Edmund F. Haislmaier reports that Medicare did not cover sophisticated pacemakers known as implantable cardioverter defibrillators (ICDs) until nearly twenty years after they first became available. The reason, he says, goes beyond the usual foot-dragging to something more ominous: