John Stossel is using his announcement that he has lung cancer to get into some of the problems of the U.S. health care system. Some of his customer service complaints (i.e. letting patients know when the doctor is running late) depend on the doctor’s office and hospital, but overall he raises good points about how government involvement in health care has made things problematic. Via Fox News (emphasis mine):

Customer service is sclerotic because hospitals are largely socialist bureaucracies. Instead of answering to consumers, which forces businesses to be nimble, hospitals report to government, lawyers and insurance companies.

Whenever there’s a mistake, politicians impose new rules: the Health Insurance Portability and Accountability Act paperwork, patient rights regulations, new layers of bureaucracy…

Nurses must follow state regulations that stipulate things like, “Notwithstanding subparagraph (i) of paragraph (a) of this subdivision, a nurse practitioner, certified under section sixty-nine hundred ten of this article and practicing for more than three thousand six hundred hours may comply with this paragraph in lieu of complying with the requirements of paragraph (a)”…

Some of my nurses were great — concerned about my comfort and stress — but other hospital workers were indifferent. When the customer doesn’t pay, customer service rarely matters.

A friend of mine suggested Stossel was ignorant of the history of the health care “market” and how “the market” wasn’t ever perfectly functional. His comments have a grain of truth, but ignore how the federal government’s decision to get heavily involved in price controls and labor disputes caused a lot of issues too. The best examples of Wage and Price Controls happened during World War II with the Stabilization Act of 1942 and FDR’s Executive Order 9328 declaring it necessary to “hold the line” on the economy (via The American Presidency Project).

No further price increases are to be sanctioned unless imperatively required by law. Adjustments in the price relationships between different commodities will be permitted if such adjustments can be made without increasing the general cost of living. But any further inducements to maintain or increase production must not be allowed to disturb the present price levels; such further inducements, whether they take the form of support prices or subsidies, must not be allowed to increase prices to consumers…There are to be no further increases in wage rates or salary scales beyond the Little Steel formula, except where clearly necessary to correct substandards of living. Reclassifications and promotions must not be permitted to affect the general level of production costs or to justify price increases or to forestall price reductions.

The National Bureau of Economic Research noted in 2009 how these actions then caused employers to start offering more insurance benefits, instead of higher wages. The cause of this? A 1943 ruling by the War Labor Board calling health insurance a “fringe benefit”:

In response to this ruling, many employers used insurance benefits to attract and retain scarce labor. In 1948 and 1949, the National Labor Relations Board provided further impetus to workplace coverage by ruling that health insurance and other employee welfare plans were subject to collective bargaining. Finally, in a landmark 1954 ruling, the Internal Revenue Service clarified an earlier administrative court ruling regarding the income tax status of ESI by exempting such benefits from income taxation and adding this provision to the tax code.

It isn’t just the New Deal which is to blame for government involvement in health care. The 5th Congress even decided to enact a 20-cent tax on every American seaman coming from a foreign port for a hospital system:

That it shall be the duty of the several collectors to make a quarterly return of the sums collected by them, respectively, by virtue of this act, to the Secretary of the Treasury and the President of the United States is hereby authorized, out of the same, to provide for the temporary relief and maintenance of sick or disabled seamen, in the hospitals or other proper institutions now established in the several ports of the United States…

The move to create the Marine-Hospital Service appears to be constitutional because Congress does have the power to levy taxes, but isn’t necessarily wise. An 1876 report found some seaman had been using the hospital service as a boarding home because a previous policy required all seamen to go to the hospital if they were feeling ill. So sailors who were dealing with a mild fever or a bruise or some other immediately treatable condition were hospitalized for the sake of hospitalization. It’s possible they were told to spend days in the hospital when they could have been with their families or spending money in town to help the economy. To bring it back to Stossel, “when the customer doesn’t pay, customer service rarely matters.”

I’m really thankful Stossel’s lung cancer was caught early, and hope it doesn’t spread. I’m also thankful he brought up the idea of a more competitive medical field, where doctors can offer lower prices to patients and more services can be offered too. It’s probably one reason why cash-only doctors are becoming more of a thing too because people know what they’re paying for. It’s even possible some of his complaints like how long it took for hospitals to start barcode tracking of medications would have happened much sooner if the government bureaucracy didn’t exist. The problem is there are people who believe the only way to increase health care access is to increase the government money thrown at it. But they’re forgetting about how long it takes for doctors to get Medicaid reimbursement (one reason why doctors groups have probably lobbied for expansion of Medicaid is under the hope reimbursements will happen quicker). The only question is will the “underground economy” of cash-only doctors keep expanding as a result of the insane and inane bureaucracy, or will the government try to step in more by enacting single payer. My hope is for the former, but it may take years before cash-only completely takes over market. It’s not like the government is going to try to solve the Obamacare premium issue by dismantling the thing.