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Crisis in Health Care Delivery

In the late 1980s with the end of the Golden Age of Ronald Reagan and the early 1990s with the ascendancy of George H.W. Bush to the presidency, calls began to be heard about a looming “crisis” in health care delivery and solutions were proposed to reform the system. Three issues were widely identified by the mainstream media and the medical literature as being responsible for the crisis: (1) soaring medical costs, (2) perceived high U.S. perinatal mortality statistics, and (3) the “growing” number of the uninsured needing universal coverage. I set out to discuss these issues in juxtaposition with the fully socialized health care systems that we find today in Great Britain and Canada—health care systems which are beginning to unravel under the pressure of increasing costs and government inefficiency, infinite demand, limited resources, and unbearable taxation.

Moreover, I brought to the forefront two other issues I posited (and still believe) to be the true culprits behind the real “crisis”—(4) the medical liability crisis, and (5) growing government intrusion into the medical arena which increasingly foments mutual mistrust in the patient-doctor relationship and has led to the development of a siege mentality among practitioners, a mentality which, by the early 1990s, had culminated in countless physicians leaving the profession, and for the first time ever, advising their children not to follow in their footsteps into the medical field.

Rescuing Medicine From The Clutches of Government

A recent AAPS bulletin brings to light the government assault on the medical profession with the use of administrative (unconstitutional) law applied against physicians charged (not convicted) with medical fraud, so that their assets (i.e., home, cars, offices) could be confiscated during investigative proceedings (e.g., Medicare reimbursement disputes or sanctions).(1)

It is time for physicians to counterattack in the battle for the best health care for our citizens and to rescue our profession from the clutches of government intervention. Otherwise, our adversaries and detractors will use real and/or perceived weaknesses in our health care system as an excuse to push us further into socialized medicine.

We have become overly dependent on government while making an infinite demand for medical services and technology.  We have paid for our false expectations by allowing government to intrude in all aspects of our lives, including American medicine.  Now government intrusion with interference in the patient-doctor relationship continues relentlessly in our bumpy ride toward full-scale socialized medicine.

With this background in mind, I will now briefly address those critical issues and discuss a promising set of solutions that are derived in part by proposals from at least two respected conservative think tanks, proposals which have been made public yet have not been adequately or sufficiently explored by the policymakers, especially those who have the unqualified attention of the mass media.

We should militate for discussion of these health care issues because they are important. We as physicians have a singular responsibility in rescuing medicine, because if we don’t, then others, who do not have the best interest of our profession at heart, will try to do it for us, not only to our detriment, but to that of our patients.

Soaring Medical Costs

Perhaps, the first issue of contention in the health care debate is spiraling health care costs, not quality as one would expect given the paradoxical medical liability crisis that engulfs practicing physicians, particularly those in high-risk specialties (e.g., obstetrics, orthopedics, neurosurgery, etc.). By 1996, we will be spending nearly one trillion dollars (compared to $750 billion in 1992) on health care, including both private and public spending.

There are several reasons for high medical costs, and foremost among these are the recent proliferation of expensive medical technology, the expense of research and development of drugs, utilization and overutilization of medical services by health-minded citizens as well as an increasing aging population, and defensive medicine as a direct consequence of the medical liability crisis. For one thing, it is no providential revelation Americans have become dependent on government for security in various aspects of their lives and thus have come to expect infinite access to services. This includes medical services as well as highly expensive technology. The tendency toward socialization of American medicine that began in 1965 with the Medicare Act has not only led to false security, but has resulted in growing inefficiency, entangling red tape, burgeoning bureaucracy, and interference in the sacrosanct patient-doctor relationship. The more money thrown upon the flames, the more blazing and glaring burn the consuming fire of government profligacy—and paradoxically, the more calls for socialization, i.e., Medicare, Medicaid, managed care, Diagnostic Related Groups (DRGs), Resource-Based Relative Value Scales (RBRVS), and most recently, managed competition.

Total health care costs are increasing at a rate of 10% per year that, not surprisingly, parallels government domestic spending and contributes to the mindboggling U.S. record deficits unsurpassed in history, now nearing $5 trillion. Not surprisingly (at least to those familiar with the free-market), in the last two years government-run medical care (i.e., Medicare and Medicaid) has outpaced spending in the private sector.  Be that as it may, by the year 2000, the projected cost of health care will more than top $1 trillion!

A crucial issue contributing to skyrocketing health care costs and needing open discussion is the problem of unhealthy lifestyles and the living-on-the-edge self-destructive behaviors that are the norm for many Americans. In a pungent editorial, Timothy Norbeck, Executive Director of the Connecticut Medical Association, opined that self-destructive and abusive American lifestyles promote poor health and disease. He wrote, “It seems the wise old adage ‘an ounce of prevention is worth a pound of cure’ has gone down the drain.”(2) Despite the paradox of the punishment we inflict upon ourselves by these self-indulgent lifestyles, when the time of serious disease, age-related infirmity, or even terminal conditions arrive, we cling tenaciously to life at any price. And yes, an astounding 80% of illnesses can be linked to smoking, alcohol consumption, illicit drugs, poor diet, obesity, or sexual promiscuity.  And it’s not just the old that account for the fact that 4% of the people in the U.S. consume 55% of all hospital costs.

Near the end of life: 25-35% of Medicare funds are spent on 5-6% of enrollees who die within a year, and 85% of an individual’s health care expenses occur in the last two years of life.

At the other end of the spectrum, American children are becoming more sedentary, and as a result, there is evidence 40% of children ages 5-8 are at risk of developing heart disease prematurely. Despite all the media hype about fitness and health fads, yuppies and other adults who have been advised to participate in cardiovascular fitness, vigorous 20-minute exercises three times a week, respond with a paltry 8%, far below the expected 60% compliance rate.  Americans continue to consume too much fat and cholesterol, too much sugar and salt, and not enough fruits, vegetables, fiber, and grain products. Moreover, 1100 people die daily as a result of chronic tobacco use, despite the various warnings of the Surgeon General and the take-no-prisoners war against the tobacco industry.

“These same Americans,” says Norbeck, “have a fierce desire to live as long as possible—the cost be damned”; meanwhile, the doctor, hospital, and health care system are blamed for high health care costs! In fact, a whopping 1/3 of all health care costs is directly attributed to self-abusive and destructive lifestyles beyond the purview of medicine. Increased longevity and improved quality of life could therefore be accomplished by paying attention to dieting, exercising, and ceasing smoking while at the same time cutting down health care costs.

Finally, despite media hype, physicians’ fees as a proportion of total health care expenditures have remained frozen at 19% since 1950. Moreover, for 7 of the last 10 years, physicians’ fees have not even kept pace with inflation. Physician fees only make up a small portion of soaring medical costs.

High Perinatal Mortality

Another perceived and frequently cited problem in the American health care system is high perinatal mortality in the U.S. as compared to other industrialized countries. The truth of the matter is that when compared to other industrialized nations, at any given high-risk birth weight, perinatal survival in the United States is substantially higher than that in any other industrialized country, including Japan and Norway, which tout the lowest overall infant mortality rates in the world.(3)

The problem in the United States is that we have a high percentage of low-birth weight and premature babies. Many of these unfortunate babies are born in a milieu of teenage sex, drug addiction, illiteracy, alcoholism, sexually transmitted diseases, insufficient or total lack of prenatal care (even when widely available via Medicaid), unhealthy lifestyles (i.e., there is evidence the majority of teenage women who smoke continue to do so during pregnancy).

Single parenthood, teenage pregnancy, and smoking have all been definitely linked to increased risk of prematurity and low birth weight babies, conditions that are more prevalent in the U.S. than in other industrialized countries such as Canada, Japan, and Norway. Yet, these socioeconomic problems are only marginally related to medical practice and even less to quality medical care. It is with good reason Dr. Henry Lerner argues that “sick and premature babies receive better care in the United States than in any other place in the world.”(4)

The Uninsured

The third and perhaps most pressing problem is that of the plight of the much talked about 34-37 million Americans who are uninsured and underinsured. This is the number of people who are actually uninsured for any given one-month period either because of lack of affordability or portability of health insurance. Sixty percent of them are working adults and their families.(5)

Yet, the fact is that only 4% of the population lacks health insurance for 2 years of longer.(6) There is a national consensus these people should not be forgotten and should be taken care of by society. So here I would like to discuss the basis for extending coverage and providing the means of access to everyone. Probing deeply, one finds in the last decade, paradoxically, while the majority of the American public is willing to extend coverage to all in our society, when questioned further, less than a third are willing to foot the bill. It’s also noteworthy that the public (70%) believes that any health care initiative must be associated with incentives for people to work.(7) Seventeen percent of the uninsured and underinsured are unemployed, the other 57% are self-employed or employed in small businesses that do not provide insurance coverage.* The rest are dependent children or those who are self-employed.(5) Our long-term goals should not only be to preserve, and to improve quality, and make health care more cost effective, but also to improve access for all Americans.

One final point that should be mentioned here is that while one hears and reads much about physicians’ income in the media, little attention is given to the charity or uncompensated care provided by American physicians. For instance, a recent AMA survey showed American physicians provide $11 billion of uncompensated care (or an average of 150 hours of care annually free of charge).(8) Specifically, data from California shows that $50,000 of uncompensated care is provided per physician either pro bono publico or governmentally mandated.

The Medical Liability Crisis

The unrealistically high (and sometimes false) expectations of the American public as to the degree of care physicians and modern medicine can provide is intricately related to the climate that has fostered the defensive medicine practiced by a large segment of American physicians, and to the medical liability crisis that threatens our nation. It’s no secret as a result of the adversarial, litigious climate in which medicine is practiced today, $60 billion is spent annually in defensive medicine unnecessarily. Moreover, our society spends $300 billion annually in litigation of all types, at least one-third of which, is deemed frivolous.(9)

Furthermore, a myth that needs debunking is that litigation weeds out the “bad doctors.”  The fact is that it’s not the bad doctors who most frequently get sued but the physicians who treat the sickest patients and who require the use of high-risk procedures and advanced technology that accrue to the various specialties. Unfortunately, since medicine is still an inexact science and sometimes things don’t quite go as planned, a lawsuit is the result.  Today, 20% of a physician’s overhead is consumed in medical liability premiums. Moreover, litigation per se is a major cause of increasing health care costs. For example, automobile accident victims who hire a lawyer “run up three times the medical expenses of people who don’t.”(9)

Much has been said about the Canadian health care system. The fact is Canadian patients sue their doctors much less than Americans sue theirs—even though Canadian physicians do not practice better medicine than their American counterparts.

Moreover, their legal system has disincentives for medical litigation (i.e., plaintiff attorneys pay court costs when they lose in court; contingency fees are prohibited in some provinces such as Ontario; punitive damages are rare; and there is a cap on non- economic damages). The result is that Canadian physicians get sued only 20% as much as U.S. physicians, and they pay only one-tenth of U.S. malpractice premiums.(10) To their credit, the AMA’s “Health Access America” and President Bush’s “Health Care Plan” include malpractice tort reform in their respective packages.

Yet, given this destructive litigation climate, I seriously believe that no plan, no matter how elegant and comprehensive, will solve the health care crisis unless medical liability tort reform is instituted as part of its overall package. The fact is the litigation explosion has unleashed a destructive juggernaut that is unraveling the very fabric of our society and is now threatening to undermine our health care delivery system.

Socialized vs. “Private” Medicine

In contrast to what we may have been led to believe, our medical care system is already socialized. For instance, in Canada, 74% of all health care expenditures are in the government sector. In the United States, it is already 42%. The debate, therefore, has implicitly centered on the degree of government intrusion and control of American medicine using the expedient excuse of bringing down health care costs. Nevertheless, when adjustments are made for inflation and the fact the Canadian economy has grown faster than the American economy in the last 20 years, as well as the fact that the Canadian population is younger and has different demographics, and one further considers the fact that long-term health care is not included in Canadian statistics, Canadian health care expenditures equal U.S. expenditures.(10) Canadian health care, on a per capita basis and adjusted for inflation, rose at an average annual rate of 4.58% compared to 4.38% in the United States. If anything, it is slightly higher than in the U.S.  This is true even when Canada lags behind the U.S. in research, development, and medical technology.(10)

We must not lose sight of the fact that we have the best health care and the best medical technology in the world and should learn from studying its strengths as well as its weaknesses. The truth of this statement is self-evident, especially when the inescapable comparison is made with the socialized systems of health care elsewhere. It then quickly becomes obvious that while we continue to improve quality, socialized countries are stalled or pulling back from research and development, while simultaneously reducing access via waiting lists, reduction of services, and overt rationing.

If a Canadian styled public health insurance program were to be implemented in the United States, it would cost conservatively anywhere between $250-$500 billion annually in added health care expenditures. According to the Dallas-based National Center for Policy Analysis,(11) whether this gargantuan expenditure is funded by a payroll tax or through income taxing, the tax rate increase will be on the average 14%.  If one opted for a consumption tax, the price of every food and commodity will be expected to rise 10% relative to income (as it did in Canada).  If funded by the payroll tax, the tax rate will rise from its current level of 15% to a rate of 29%.

Interestingly, National Public Radio (NPR) on April 9, 1992 reported that record numbers of Canadians were crossing the border to buy goods and commodities such as milk, bread, and gasoline in the United States, because they are 25-50% cheaper here. Why? Several reasons, but most prominently, the media pundits admitted, was the high sales tax Canadians pay to support the much-touted Canadian health care system. Canadians pay 55% in federal and provincial income taxes and an additional 15% sales tax on all items for a total taxation of 70%.  In other words, Canadians work for the government through mid-August each year before it’s time for take-home pay.

One should not lose sight of the fact that social democracies have lower health care costs by limiting available services, including spending limits and curtailing access to specialists. They also reduce utilization of available services by horrendous waiting lists, queues, and outright health care rationing. For example, in Britain during 1978, “33% of the dialysis centers refused to treat patients over the age of 55.” Today, there are 800,000 patients waiting for surgery in Great Britain.(10) In Canada, “the risk of waiting for heart surgery now exceeds the danger of dying on the operating table.”(12) In Toronto alone, there are an estimated 1,000 people waiting longer than a year for coronary bypass surgery. Many are coming across the border to the United States to get their bypass surgery performed sooner. In Sweden, citizens pay 60% of their wages in taxes and wait in long lines for “free” medical care such as cataract operations, hip replacements, and heart bypass surgery.(10)

To be fair to the Canadian situation, one should concede two advantages they have over us. The first I have previously mentioned, and that is the much lower rate of medical (malpractice) litigation. The other is that 70% of Canadian physicians are in primary care and individuals in general tend to form a more trusting and lasting patient-doctor relationship with physicians whom they see repeatedly. In the United States, our more technologically prone society is the reverse: 70% specialists versus 30% primary care physicians.

As alluded to earlier, American medicine by many parameters today could be considered already socialized, i.e., government control via the RBRVS, DRGs, Medicare and Medicaid, extrapolation of data and statistics to intimidate physicians accepting government payments in Medicare disputes, together with the frequent use of threats in the sanctioning process of quality and utilization reviews—all of which have made medicine lose its luster. I don’t have to remind the reader by whatever parameter we use—except for our calling, our inherent need to treat the ill and afflicted— dissatisfaction is rampant in the medical profession today.(1,3,13)

What separates us from total socialization and total control is the fact we have multiple third-party payers. Socialized medicine has come to mean a single-payer system—the government—and it goes by the innocuous name of National Health Insurance. But multiple third-party payers will not prevent the further socialization of American medicine. Thus, I agree with the AMA pronunciamiento that government does have a role in health care: To provide a formula utilizing the private sector to promote universal access at competitive affordable costs while preserving quality health care.(8) It is obvious this formula is the promotion of individually-owned, tax-free MSAs coupled with high-deductible, catastrophic insurance coverage as advanced by the Association of American Physicians and Surgeons (AAPS).

The Solution

It is ironic that while other countries are moving away from Marxist ideology, we in the United States continue to march, in evolutionary fashion, to the drumbeat of socialist policies in health care, despite the obvious failure of government interference in medicine. It should be noted that despite a steady barrage of unfavorable publicity, our health care takes care of 87% of all Americans (who are fully insured) and two-thirds of these, are satisfied with their health care.(8) We must also remember that over 50% of the Nobel Peace prizes awarded in Medicine and Physiology have been won by Americans.

Yet, calls for the dismantling of our system are being heard from all quarters. The battering rams are pounding at the gates with the result that the status quo will not be allowed to stand. We can make a good situation out of a potentially catastrophic one. We should revamp the U.S. health care system by removing outright the omnipresent government regulations, thereby freeing physicians to do what they do best, take care of their individual patients, and rescuing medicine from the clutches of government.

Toward this goal, Dr. Robert Moffit, of The Heritage Foundation, and Dr. John C. Goodman, of the National Center for Policy Analysis have proposed consumer-oriented free-market approaches to health care which deserve serious consideration.(11,14,15)

I have borrowed from these innovative proposals that encourage individual choice and responsibility in my discussion of  “the solution.”  A voucher system may be used for patients who cannot afford health insurance and refundable tax credits for those who can. Medical Savings Accounts (“Medisave”), should be created in which money can be put aside for routine medical care costs, tax free, and out of the reach of government. The Medisave coupled with high-deductible insurance, which can be used for truly catastrophic illnesses, major surgery, or when the deductible has been satisfied would be the backbone of the program. High-deductible insurance for catastrophic coverage will be available to individuals at competitive and affordable rates with premiums paid from savings in the Medisave account or from the tax credits or vouchers.

Americans would then have the incentive to conserve because they would be allowed to keep the money they do not spend in the Medisave account (it can only be used for medical reasons, or alternatively, it can be rolled into a pension fund). Thus patients would use truly free-market techniques to control costs (as they do with everything else when they act as consumers) while at the same time being in charge of their own health care. Everyone would have the incentive and the means to provide for their health care, free of governmental interference.

The bedrock of the system is that it preserves patient choice of physicians and the trust inherent in the individually-based, patient-doctor relationship, while restoring patient and physician autonomy.

I will add that insurance and medical liability tort reform will be imperative if this plan is to succeed.  Likewise, medical ethics and true compassionate care will also be given a new impetus to maintain the high standards of the profession.

Therefore, I propose we refer to this system as the patient-oriented, free-market approach to medical care when it is coupled with a reinvigoration of medical (Hippocratic) ethics and the virtues of the compassionate, honorable physicians, as well as meaningful medical liability tort reform. Historic precedent establishes no inconsistency in a marriage between free-market principles and ethical compassionate care.(16)

I urge all physicians to be well informed and involved in organized medicine.  The health care of our patients now, and that of our children in the future, is at stake. Let us stand up and be counted for the restoration of the principles of our noble profession that can only be accomplished by stemming the red tidal wave of government control and over-regulation in medicine. Let us be aggressive in striving for the patient-oriented, free-market approach to health care before it’s too late.


* These individuals would be given a great incentive for obtaining their own insurance coverage if they were allowed to establish their own tax-free, medical savings accounts.


1. AAPS News Bulletin, May 1992. AAPS, 1601 N. Tucson, Blvd., Suite 9, Tucson, Arizona 85716. 800-635-1196.

2. Norbeck TB. Telling the truth about rising health care costs. Private Practice, February 1990.

3. AAPS News Bulletin (Supplement), March and April 1992. AAPS, 1601 N. Tucson Blvd., Suite 9, Tucson, Arizona 85716.

4. Lerner H. Private Practice, August 1990.

5. American Medical Association. Advocacy Briefs. October 1991.

6. Swartz and McBride. Spells without health insurance: distributions or durations and their link to the point-in time estimates of the uninsured. Blue Cross Blue Shield, Fall 1990. Cited by MD Tanner in, Individual medical accounts, a consumer oriented health proposal. Georgia Public Policy Foundation, May 1992.

7.Blendon RJ. What should be done about the universal poor? JAMA 1988;260:3176-3177.

8. American Medical Association.Health Access America. November 1991, p. 1-15.

9. Olson W. The Litigation Explosion: What Happened When America Unleashed the Lawsuit. Truman-Talley Books, Dutton, New York, 1991.

10. Lee RW. Free Medicine. The New American, 1991. The New American, P.O. Box 8040, Appleton, WI. 54913.

11. Goodman JC. An Agenda for Solving America’s Health Care Crisis, 1991. National Center for Policy Analysis, 12655 North Central Expressway, Suite 720, Dallas, Tx. 75243.(214) 386-6276.

12. Tanner MD. Commentary. Georgia Public Policy Foundation. February 10, 1992.

13. Faria MA Jr. Enemies of private practice bide their time. Private Practice 1992;24:33-34.

14. Moffit R. Comparable Worth for Doctors: A Severe Case of Government Malpractice. 1991. The Heritage Foundation, 214 Massachusetts Ave. N.E., Washington, D.C. 20002.(202) 546-4400.

15. Moffit R. Consumer Choice in Health: Learning From The Federal Employee Health Benefits Program, 1992. The Heritage Foundation, 214 Massachusetts Ave., N.E.,Washington, D.C. 20002. (202) 546-4400.

16. Faria MA Jr. The Forging of the Renaissance Physician (Parts I-IV) J Med Assoc Ga, March and April, 1992.

Written by Dr. Miguel Faria

This article, which originally appeared in the November 1992 issue of the Journal of the Medical Association of Georgia as Dr. Faria’s “Editor’s Corner,” was subsequently updated and re-published as Chapter 4 in Medical Warrior: Fighting Corporate Socialized Medicine (1997). It has been posted here and is now accessible on this website for the benefit of our readers.

Copyright ©1992-2021 Miguel A. Faria, Jr., MD

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