[Congressional Record (Bound Edition), Volume 145 (1999), Part 17]
[Extensions of Remarks]
[Pages 24561-24563]
[From the U.S. Government Publishing Office, www.gpo.gov]



               QUALITY CARE FOR THE UNINSURED ACT OF 1999

                                 ______
                                 

                               speech of

                             HON. RON PAUL

                                of texas

                    in the house of representatives

                       Wednesday, October 6, 1999

  Mr. PAUL. Mr. Speaker, as an MD, I know that when I advise on medical 
legislation I may be tempted to allow my emotional experience as a 
physician to influence my views, but nevertheless I am acting the role 
of legislator and politician. The MD degree grants no wisdom as to the 
correct solution to our managed care mess. The most efficient manner to 
deliver medical services, as it is with all goods and other services, 
is determined by the degree the market is allowed to operate. Economic 
principles determine efficiency of markets, even the medical care 
market; not our emotional experiences dealing with managed care.
  Contrary to the claims of many advocates of increased government 
regulation of health care, the problems with the health care system do 
not represent market failure, rather they represent the failure of 
government policies which have destroyed the health care market. In 
today's system, it appears on the surface that the interest of the 
patient is in conflict with rights of the insurance companies and the 
Health Maintenance Organizations (HMOs). In a free market this cannot 
happen. Everyone's rights are equal and agreements on delivering 
services of any kind are entered into voluntarily, thus satisfying both 
sides. Only true competition assures that the consumer gets the best 
deal at the best price possible, by putting pressure on the providers. 
Once one side is given a legislative advantage, in an artificial 
system, as it is in managed care, trying to balance government dictated 
advantages between patient and HMOs is impossible. The differences 
cannot be reconciled by more government mandates which will only makes 
the problem worse. Because we are trying to patch up an unworkable 
system, the impasse in Congress should not be a surprise.
  No one can take a back seat to me regarding the disdain I hold for 
the HMOs' role in managed care. This entire unnecessary level of 
corporatism that rakes off profits and undermines care is a creature of 
government interference in health care. These non-market institutions 
and government could have only gained control over medical care through 
a collusion among organized medicine, politicians, and the HMO 
profiteers, in an effort to provide universal health care. No one 
suggests that we should have ``universal'' food, housing, TV, computer 
and automobile programs and yet many of the ``poor'' do much better 
getting these services through the marketplace as prices are driven 
down through competition.
  We all should become suspicious when it is declared we need a new 
``Bill of Rights'' such as a Taxpayer's Bill of Rights, or now a 
Patient's Bill of Rights. Why don't more Members ask why the original 
Bill of Rights is not adequate in protecting all rights and enabling 
the market to provide all services. If over the last fifty years we had 
a lot more respect for property rights, voluntary contracts, state 
jurisdiction and respect for free markets, we would not have the mess 
we're facing today in providing medical care.
  The power of special interests influencing government policy has 
brought us this managed care monster. If we pursue the course of more 
government management--in an effort to balance things--we're destined 
to make the problem much worse. If government mismanagement, in an area 
that the government should not be managing at all, is the problem, 
another level of bureaucracy--no matter how well intended--cannot be 
helpful. The law of unintended consequences will prevail and the

[[Page 24562]]

principle of government control over providing a service will be 
further entrenched in the nation's psyche. The choice in actuality is 
government provided medical care and it's inevitable mismanagement or 
medical care provided by a market economy.

  Partial government involvement is not possible. It inevitably leads 
to total government control. Plans for all the so-called Patient's Bill 
of Rights are a 100% endorsement of the principle of government 
management and will greatly expand government involvement, even if the 
intention is to limit government management of the health care system 
to the extent ``necessary'' to curtail the abuses of the HMOs. The 
Patients' Bill of Rights concept is based on the same principles that 
have given us the mess we have today. Doctors are unhappy, HMOs are 
being attacked for the wrong reasons, and the patients have become a 
political football over which all sides demagogue.
  The problems started early on when the medical profession, combined 
with tax code provisions making it more advantageous for individuals to 
obtain first-dollar health care coverage from third-parties rather than 
pay for health care services out of their own pockets, influenced the 
insurance industry into paying for medical services instead of sticking 
with the insurance principle of paying for major illnesses and 
accidents for which actuarial estimates could be made. A younger, 
healthier and growing population was easily able to afford the fees 
required to generously care for the sick. Doctors, patients and 
insurance companies all loved the benefits until the generous third-
party payment system was discovered to be closer to a Ponzi scheme than 
true insurance. The elderly started living longer, and medical care 
became more sophisticated, demands because benefits were generous and 
insurance costs were moderate until the demographics changed with fewer 
young people working to accommodate a growing elderly population--just 
as we see the problem developing with Social Security. At the same time 
governments at all levels become much more involved in mandating health 
care for more and more groups.
  Even with the distortions introduced by the tax code, the markets 
could have still sorted this all out, but in the 1960s government 
entered the process and applied post office principles to the delivery 
of medical care with predictable results. The more the government got 
involved the greater the distortion. Initially there was little 
resistance since payments were generous and services were rarely 
restricted. Doctors liked being paid adequately for services that in 
the past were done at discount or for free. Medical centers, always 
willing to receive charity patients for teaching purposes in the past 
liked this newfound largesse by being paid by the government for their 
services. This in itself added huge costs to the nation's medical bill 
and the incentive for patients to economize was eroded. Stories of 
emergency room abuse are notorious since ``no one can be turned away.''
  Artificial and generous payments of any service, especially medical, 
produces a well-known cycle. The increase benefits at little or no cost 
to the patient leads to an increase in demand and removes the incentive 
to economize. Higher demands raises prices for doctor fees, labs, and 
hospitals; and as long as the payments are high the patients and 
doctors don't complain. Then it is discovered the insurance companies, 
HMOs, and government can't afford to pay the bills and demand price 
controls. Thus, third-party payments leads to rationing of care, 
limiting choice of doctors, deciding on lab tests, length of stay in 
the hospital, and choosing the particular disease and conditions that 
can be treated as HMOs and the government, who are the payers, start 
making key medical decisions. Because HMOs make mistakes and their 
budgets are limited however, doesn't justify introducing the notion 
that politicians are better able to make these decisions than the HMOs. 
Forcing HMOs and insurance companies to do as the policitians say 
regardless of the insurance policy agreed upon will lead to higher 
costs, less availability of services and calls for another round of 
government intervention.

  For anyone understanding economics, the results are predictable: 
Quality of medical care will decline, services will be hard to find, 
and the three groups, patients, doctors and HMOs will blame each other 
for the problems, pitting patients against HMOs and government, doctors 
against the HMOs, the HMOs against the patient, the HMOs against the 
doctor and the result will be the destruction of the cherished doctor-
patient relationship. That's where we are today and unless we recognize 
the nature of the problem Congress will make things worse. More 
government meddling surely will not help.
  Of course, in a truly free market, HMOs and pre-paid care could and 
would exist--there would be no prohibition against it. The Kaiser 
system was not exactly a creature of the government as is the current 
unnatural HMO-government-created chaos we have today. The current HMO 
mess is a result of our government interference through the ERISA laws, 
tax laws, labor laws, and the incentive by many in this country to 
socialize medicine ``American style,'' that is the inclusion of a 
corporate level of management to rake off profits while draining care 
from the patients. The more government assumed the role of paying for 
services the more pressure there has been to managed care.
  The contest now, unfortunately, is not between free market health 
care and nationalized health care but rather between those who believe 
they speak for the patient and those believing they must protect the 
rights of corporations to manage their affairs as prudently as 
possible. Since the system is artificial there is no right side of this 
argument and only political forces between the special interests are at 
work. This is the fundamental reason why a resolution that is fair to 
both sides has been so difficult. Only the free market protects the 
rights of all persons involved and it is only this system that can 
provide the best care for the greatest number. Equality in medical care 
services can be achieved only by lowering standards for everyone. 
Veterans hospital and Medicaid patients have notoriously suffered from 
poor care compared to private patients, yet, rather than debating 
introducing consumer control and competition into those programs, we're 
debating how fast to move toward a system where the quality of medicine 
for everyone will be achieved at the lowest standards.
  Since the problem with our medical system has not been correctly 
identified in Washington the odds of any benefits coming from the 
current debates are remote. It looks like we will make things worse by 
politicians believing they can manage care better than the HMO's when 
both sides are incapable of such a feat.
  Excessive litigation has significantly contributed to the ongoing 
medical care crisis. Greedy trial lawyers are certainly part of the 
problem but there is more to it than that. Our legislative bodies 
throughout the country are greatly influenced by trial lawyers and this 
has been significant. But nevertheless people do sue, and juries make 
awards that qualify as ``cruel and unusual punishment'' for some who 
were barely involved in the care of the patient now suing. The welfare 
ethic of ``something for nothing'' developed over the past 30 to 40 
years has played a role in this serious problem. This has allowed 
judges and juries to sympathize with unfortunate outcomes not related 
to malpractice and to place the responsibility on those most able to 
pay rather than on the ones most responsible. This distorted view of 
dispensing justice must someday be addressed or it will continue to 
contribute to the deterioration of medical care. Difficult medical 
cases will not be undertaken if outcome is the only determining factor 
in deciding lawsuits. Federal legislation prohibiting state tort law 
reform cannot be the answer. Certainly contractual arrangements between 
patients and doctors allowing specified damage clauses and agreeing on 
arbitration panels would be a big help. State-level ``loser pays'' 
laws, which discourage frivolous and nuisance lawsuits, would also be a 
help.

  In addition to a welfare mentality many have developed a lottery 
jackpot mentality and hope for a big win through a ``lucky'' lawsuit. 
Fraudulent lawsuits against insurance companies now are an epidemic, 
with individuals feigning injuries in order to receive compensation. To 
find moral solutions to our problems in a nation devoid of moral 
standards is difficult. But the litigation epidemic could be ended if 
we accepted the principle of the right of contract. Doctors and 
hospitals could sign agreements with patients to settle complaints 
before they happen. Limits could be set and arbitration boards could be 
agreed upon prior to the fact. Limiting liability to actual negligence 
was once automatically accepted by our society and only recently has 
this changed to receiving huge awards for pain and suffering, emotional 
distress and huge punitive damages unrelated to actual malpractice or 
negligence. Legalizing contracts between patients and doctors and 
hospitals would be a big help in keeping down the defensive medical 
costs that fuel the legal cost of medical care.
  Because the market in medicine has been grossly distorted by 
government and artificially managed care, it is the only industry where 
computer technology adds to the cost of the service instead of lowering 
it as it does in every other industry. Managed care cannot work. 
Government management of the computer industry was not required to 
produce great services at great prices for the masses of people. 
Whether it is services in the computer industry or health care all 
services are best delivered in the economy ruled by market

[[Page 24563]]

forces, voluntary contracts and the absence of government interference.
  Mixing the concept of rights with the delivery of services is 
dangerous. The whole notion that patient's ``rights'' can be enhanced 
by more edicts by the federal government is preposterous. Providing 
free medication to one segment of the population for political gain 
without mentioning the cost is passed on to another segment is 
dishonest. Besides, it only compounds the problem, further separating 
medical services from any market force and yielding to the force of the 
tax man and the bureaucrat. No place in history have we seen medical 
care standards improve with nationalizing its delivery system. Yet, the 
only debate here in Washington is how fast should we proceed with the 
government takeover. People have no more right to medical care than 
they have a right to steal your car because they are in need of it. 
If there was no evidence that freedom did not enhance everyone's well 
being I could understand the desire to help others through coercive 
means. But delivering medical care through government coercion means 
not only diminishing the quality of care, it undermines the principles 
of liberty. Fortunately, a system that strives to provide maximum 
freedom for its citizens, also supports the highest achievable standard 
of living for the greatest number, and that includes the best medical 
care.

  Instead of the continual demagoguery of the issue for political 
benefits on both sides of the debate, we ought to consider getting rid 
of the laws that created this medical management crisis.
  The ERISA laws requiring businesses to provide particular programs 
for their employees should be repealed. The tax codes should give equal 
tax treatment to everyone whether working for a large corporation, 
small business, or is self employed. Standards should be set by 
insurance companies, doctors, patients, and HMOs working out 
differences through voluntary contracts. For years it was known that 
some insurance policies excluded certain care and this was known up 
front and was considered an acceptable provision since it allowed 
certain patients to receive discounts. The federal government should 
defer to state governments to deal with the litigation crisis and the 
need for contract legislation between patients and medical providers. 
Health care providers should be free to combine their efforts to 
negotiate effectively with HMOs and insurance companies without running 
afoul of federal anti-trust laws--or being subject to regulation by the 
National Labor Relations Board (NLRB). Congress should also remove all 
federally-imposed roadblocks to making pharmaceuticals available to 
physicians and patients. Government regulations are a major reason why 
many Americans find it difficult to afford prescription medicines. It 
is time to end the days when Americans suffer because the Food and Drug 
Administration (FDA) prevented them from getting access to medicines 
that were available and affordable in other parts of the world!
  The most important thing Congress can do is to get market forces 
operating immediately by making Medical Savings Accounts (MSAs) 
generously available to everyone desiring one. Patient motivation to 
save and shop would be a major force to reduce cost, as physicians 
would once again negotiate fees downward with patients--unlike today 
where the government reimbursement is never too high and hospital and 
MD bills are always at maximum levels allowed. MSAs would help satisfy 
the American's people's desire to control their own health care and 
provide incentives for consumers to take more responsibility for their 
care.
  There is nothing wrong with charity hospitals and possibly the 
churches once again providing care for the needy rather than through 
government paid programs which only maximizes costs. States can 
continue to introduce competition by allowing various trained 
individuals to provide the services that once were only provided by 
licensed MDs. We don't have to continue down the path of socialized 
medical care, especially in America where free markets have provided so 
much for so many. We should have more faith in freedom and more fear of 
the politician and bureaucrat who think all can be made well by simply 
passing a Patient's Bill of Rights.

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