I have always dreamt of becoming a physician. I feel grateful to have fulfilled that vision, but at the same time disappointed by how different the reality of the job is from my expectations. I imagined my career would involve healing people, seeing their illnesses go away and their lives transformed. Instead I work in a system that aspires to only ‘manage’ disease, hide symptoms with toxic medications and invasive surgery, as patients continue their overall downward health spiral.
I work as a Hospitalist, which is an Internal Medicine physician for hospitalized patients. While my viewpoint is biased in that I deal with the sickest people in the community. Americans are remarkably unhealthy. Despite the US spending nearly twice on healthcare as other high income countries, it still ranks among the lowest on various health measures (1).
The decline in healthcare quality despite rising costs is often blamed on free market economics. There is a general belief that selling healthcare for profit is only good at making greedy pockets bigger. But people have always been greedy. Why are we only now feeling its effects on healthcare? Having spent more than a decade in the healthcare system, I have concluded that the problem is not in people’s love of money, but rather in the money itself. This paper will attempt to elucidate that connection. We start off by showing how the US healthcare system is not a free market enterprise, we will then discuss how this separation from the market is maintained by our current fiat dollar backed monetary system. Finally, we conclude by explaining how Bitcoin, an alternative to fiat money and modern central banking, can fix many of the problems of modern healthcare.
The US is often touted as an exemplification of free market failure in healthcare. This could not be further from the truth. Due to restrictions on the supply and demand of services, US healthcare has turned into a public/private hybrid benefiting a few but not its patients. It combines state mandates of seemingly private insurance companies, as well as restrictions on the licensing and number of providers in a system highly susceptible to regulatory capture by pharmaceutical companies.
On the supply side, in 1903 the American Medical Association (AMA) was formed. Its main objective was to regulate medical licensing, but it also sought to reduce the number of practicing physicians in the hope of increasing its members’ salaries. Many of its policies were based on the 1910 “Flexner Report”, a landmark assessment of medical education in the US. The gist of the report was that there were too many medical schools in the country, and that the entire educational system needed revamping and centralization. Specifically, medical schools with curricula not adhering to the “scientific method” were deemed inadequate for medical education. Important to point out that Flexner had serious ties with the then blossoming petroleum based pharmaceutical industry. His report was used to reduce the number of medical schools by more than half, especially the ones teaching what are now considered “alternative” methods of healing, such as homeopathy and osteopathy (2,3,4).
On the demand side, wage and price controls during World War II prevented large employers from competing for labor based on wage rates. Instead they competed using benefit plans, the most lucrative of which was health insurance. The Federal Stabilization Act of 1942 made these benefits exempt from payroll tax, and ushered a large expansion in the number of insured employees (from 10 million in the beginning of 1940 to more than 80 million in 1950). Medical insurance coverage further increased by the enactment of Medicare and Medicaid in 1965. This is relevant because of a phenomenon called Moral Hazard, the tendency of insured people to utilize healthcare resources more than if they were uninsured (if it’s free I want more of it). I see this often in my practice, when patients are given a choice between a cheaper test (e.g X-ray) or a much more expensive and only slightly more sensitive one (e.g MRI), they tend to choose the expensive one, as it costs them nothing anyways (5).
The astronomical increase in demand due to mandated insurance coverage combined with a restriction in the supply of providers has played a large role in our current healthcare crisis. Patients are always seeking more healthcare services, but there aren’t enough doctors to provide them. The AMA policies have succeeded in increasing physicians’ salaries, but they did so at the expense of their wellbeing, as they are overworked and stressed about never satisfying their patients.
The most devastating effect of the AMA policies (in my opinion) is its suppression of alternative methods of healing such as homeopathy, osteopathy, naturopathy and chiropractic adjustment. These had their role in treating people before most of their medical schools were shut down by the AMA. In a free market model, the effectiveness of these methods should be judged by the consumer, not a central authority. If they are “pseudoscience” (as Flexner claimed) and less effective than pharmaceutical medicine, then the market will confirm that, as people would not visit these providers and they go out of business. The real purpose of the Flexner report was not the advancement of medical education, but rather the creation of a pharmaceutical monopoly on medical education (Flexner’s ties with pharma are well documented). The end result: Even if ineffective, pills are now seen as the answer to all medical ailments with no alternative.
In his seminal work of the same name, economist Murray Rothbard describes “The Progressive Era” in the early 1900s, which marked an expansion of the role of government in various fields of life. The state changed from an entity concerned with the protection of people’s rights to one aiming to insure its citizens’ economic well being. That was the stated goal, but what actually followed was the formation of an unholy alliance between state intellectuals, big businesses and politicians to cartelize various fields of industry. Large business owners wanted to remain in power, and did so by employing “experts” such as Flexner to recommend government mandates. The fact that this expansion in government occurred around the same time the Federal Reserve was created in 1913 is no coincidence. A central bank allows the government to print unlimited amounts of money to finance its operation. In order for the AMA to have the ability to physically close down “unscientific” medical schools, prosecute unlicensed providers and maintain a propaganda so that the public remains oblivious they need large amounts of money, which the central banks will happily create out of thin air. Same applies for government mandates of health insurance and the financing of Medicare and Medicaid (6).
Enter Bitcoin, a decentralized global monetary network that offers to revolutionize our economic and healthcare systems. Bitcoin allows direct peer to peer transactions without the need for a trusted third party. Therefore large sums of money can be transferred digitally anywhere very quickly. Moreover, Bitcoin’s finite supply of 21 million coins promises to make it the ultimate store of value for the future. A store of value is a currency that is expected to hold its value over time. The US dollar is a poor store of value because of continued government money printing devaluing it. While the physicality of gold makes it difficult to store and susceptible to government control.
Bitcoin is the best store of value to ever exist. More importantly it promises its users complete liberation from central banks and their money printing agenda. If Bitcoin were to become the global reserve currency, governments no longer have access to free money to finance their authoritarian centrally planned projects. Impositions that are not economically productive are unlikely to survive for long, as people (Bitcoin owners) are unlikely to fund them. In the case of medicine, licensing and medical education regulations would no longer be state mandated, but governed by market forces and what consumers find useful. A free market in healthcare could lead to the reemergence of more traditional methods of healing, and an era of unprecedented innovation in patient-directed care.
To conclude, this paper attempted to shed some light on the economic forces shaping our current healthcare crisis. The 20th century witnessed a massive growth in government jurisdiction backed by unlimited Federal Reserve money printing. In the field of medicine, this translated into licensing restrictions and insurance mandates leading to an unbalanced market. A transition to Bitcoin, a decentralized monetary system, promises to cut off the government’s infinite money supply, limiting its intervention in the healthcare industry and allowing a return to a free market system. Bitcoin could be a revolution in modern healthcare. Whenever I have a stressful day at the hospital, I remember that we now have the technology to do better. It is only a matter of time before we transition to the monetary system of the future, and it starts with you learning and adopting Bitcoin in your life.
References:
1) U.S. Health Care from a Global Perspective, 2022: Accelerating Spending, Worsening Outcomes
3) The Flexner Report ― 100 Years Later
4) The Flexner Report and Our Modern Medical Cartel
5) Why Health Care Costs Exploded After World War II
6) Rothbard, Murray Newton. The Progressive Era. Ludwig von Mises Institute, 2017.