Lowering healthcare costs: government action--and inaction--in diverse areas of public policy is having a predictable negative effect on the costs (and quality) of American healthcare.

Healthcare costs are skyrocketing. Most people are frustrated and angry about the state of affairs, and they want something done to rectify the problem. Added to the cacophony of complaints are claims by medical "experts" that the United States' healthcare is sub-par and controlled by greedy doctors and pharmaceutical companies and that Americans definitely don't get the healthcare that they pay for. If one asks most people what should be done about the problem, the answer usually involves government intervention as a solution--something along the lines of "the government ought to put a stop to runaway costs."

Even many people who are knowledgeable about government's disastrous interventions into healthcare nonetheless still push for more government control. They defend their viewpoint by saying that the past failures of government-controlled healthcare happened merely because the government programs were not implemented properly, but that they could be if "partisan politics" were set aside--not true.

In countries with strict government controls such as Cuba and Russia, medicine is not only substandard; it is horrifically dangerous. When Russia's economy collapsed in the early 1990s and foreign observers gained access to Russian hospitals, they learned that most Soviet medical personnel and scientists followed the teachings of a man named Trofim Lysenko, who taught that chromosomes and DNA were unimportant and that bacteria and viruses spontaneously formed out of organic matter--meaning that doctors and nurses were usually at a loss to explain concepts such as molecular biology, cell function, antibiotic resistance of bacteria, and hormone interaction with cells. One day-to-day result of this lack of knowledge was that massive numbers of diseases were transmitted from sick to healthy people through the reuse of unsterilized syringes. The axiom holds true that says, "The more government exerts control over something, the less efficient it is."

Americans need to come to grips with the fact that government intervention into healthcare is not the answer and is, in fact, responsible for causing much of the sharp rise in healthcare costs in the United States, which has the highest healthcare costs per capita in the world. Because many of the mechanisms causing healthcare costs to rise are fairly straightforward and within the abilities of Congress to remedy, this revelation could actually be considered good news.

The following three sections of this article show the cause and effect relationship between government and healthcare costs.

Federal Government's Toothsome Bite Into Healthcare

Past federal involvement in healthcare has resulted in increased numbers of uninsured citizens, national debt, and poorer care.

Many of the problems with today's healthcare system, including high costs and large numbers of uninsured Americans, stem from government involvement in healthcare, dating from World War II to the present. In his book What Has Government Done to Our Healthcare?, Terree P. Wasley notes that during WWII, the federal government instituted price and wage fixing, while raising income taxes to pay for the war. At the same time, the IRS "ruled that the purchase of health insurance for workers was a legitimate cost of doing business and could be deducted from taxable business income. The IRS also ruled that workers did not have to include the value of health insurance benefits in calculating their taxable income. These IRS rulings were a giant tax incentive for both employers and taxpayers, and they did much to institutionalize employer-provided healthcare as part of the system." After the war, price and wage freezes were removed, but employers kept the tax deductions. These tax breaks for the purchase of insurance were not applied to individuals who bought their own health insurance, thereby solidifying employer-provided insurance.

This system gives tax breaks to companies that offer healthcare coverage, while not giving similar breaks to people who buy individual health insurance. This has resulted in a system wherein when someone is unemployed, they often lose health insurance coverage until they get another job that offers insurance. It also contributes to making healthcare for individuals very expensive because insurance companies cater to large groups, and the insurance companies have largely not sought to devise ways to pass group savings onto individuals, meaning that many people who aren't employed by large companies and who must buy their own insurance find coverage to be prohibitively expensive.

Many Americans face the problem of high-cost insurance for individuals, especially those who work in small businesses (small businesses are among the largest drivers of economic growth in our country). The Century Foundation report America's Achilles' Heel: Job-Based Health Coverage and the Uninsured states: "More than a quarter of all working-age Americans in companies with fewer than twenty-five employees are uninsured. These workers account for almost half the total number of uninsured Americans who are employed." To make health insurance equitably affordable to everyone, the federal government should end tax breaks for companies that offer healthcare. Pending the abolition of the income tax as it is currently structured, the money saved by this measure should be used to lower taxes for individuals and corporations. By ending federal incentives for employer-based healthcare, employer-based insurance would end, and insurance companies would be forced to devise ways to offer inexpensive insurance to individuals to be able to compete in the marketplace.

Many people will argue that insurance will then cost more because the federal government will no longer be paying for a percentage of the costs, but in actuality, the government merely increases individual taxes to pay for these incentives anyway, and so people are already paying for the insurance, except that the payment is reflected on their tax bills.

"Don't Worry, Doc, It's Covered."

The institutionalizing of employer-provided insurance was also detrimental in that it helped lead to the rise in healthcare costs that we see today. This happened, in part, because people started to perceive healthcare as being "free." With third parties paying the bulk of (or in some cases all of) healthcare costs, people had no need to monitor their own healthcare costs to make sure that they were getting the best value.

Dr. John Abramson, M.D., a member of the clinical faculty at Harvard Medical School, notes in his book Overdosed America that his patients often demand the most expensive drugs available because they operate under the perception that more expensive means better and insurance is covering their bills. As an example, he mentioned the experiences he had with patients demanding Celebrex and Vioxx, saying, "Even after I carefully explained the details of the best available scientific evidence about these drugs, not all of my patients could be convinced otherwise." Dr. Abramson told his patients about the dangers of the new expensive drugs and about the efficacy and relative safety of the older cheaper drugs, yet the people still chose the high-cost alternatives. Through using a conversation with one specific patient, a Mr. Black, Abramson made clear that demand for the expensive drugs was directly tied to the fact that insurance was paying for them: Mr. Black "replied that the additional cost was not a problem, 'because my insurance covers it.'" "And [Mr. Black] made it very clear that if I would not prescribe Celebrex, he would find a doctor who would."

Aggravating the problem of increased demand by consumers of "free healthcare" is the fact that many high cost, largely unbeneficial, and dangerous drugs and medical devices are being misrepresented to the public as effective because of influence-peddling at the Food and Drug Administration (FDA)--drugs and devices that consumers soon heavily demand because they perceive the items as being both free and effective.

The FDA does a bad job of scrutinizing drugs because, as in most government institutions, influence-peddling is rampant. Dr. Abramson related that an anonymous survey done by the liberal political action group Public Citizen in 1998 found that "FDA medical officers who responded to the survey identified 27 new drugs that had been approved within the previous three years that they felt should not have been." 5.3 percent of the drugs approved between 1997 and 2000 were later recalled for safety reasons. "All told, 22 million Americans, one out of every 10 adults, had taken a drug that was later withdrawn from the market between 1997 and 2000." Abramson further related that when FDA drug screeners recommend that certain drugs not be approved for safety reasons, the screeners face reprisals from higher-ups at the FDA. What the situation comes down to is that high-ranking FDA officials feel monetary and political pressures compelling them to make decisions that are not good for consumers--and as long as this job of testing is done by a government entity, these pressures will never abate.

Private industry should take over the job from the FDA of testing new drugs and medical devices, preferably an industry that has a financial incentive to examine the drugs and devices thoroughly and honestly. As one possibility, an industry that would have a financial incentive to compel it to adequately test drugs is the health insurance industry. Delegating drug and medical device testing to the health insurance industry could produce multiple benefits. First, the scrutinizing of drugs and medical devices for safety concerns would likely be done more quickly by the insurance industry than by the FDA. This is true, not only because it is in the financial best interests of the health insurance industry to keep people healthy, but also because the insurance industry has the financial resources needed to perform the tests quickly. The FDA's financial difficulties are widely touted and are even addressed on the FDA's home page. As it stands now, drug companies finance much of the FDA's drug testing--laying the groundwork for conflicts of interest.

Privatizing the testing of drugs and medical devices could put an end to the current common pharmaceutical company practice of manipulating drug studies to get biased information, by making the drug companies get their drug studies' design characteristics approved by the insurance industry prior to the studies beginning. As an enforcement tool to encourage drug company participation, the industry could refuse to recognize the results of any studies not pre-approved by them and refuse to pay for insurees' future use of those drugs and devices not deemed safe by the insurance companies.

The government's role in this would be very limited. The federal government would pass laws to prevent conflict of interest and collusion, and state governments would levy strict criminal penalties on those pharmaceutical company executives who cause people to be harmed by falsifying research data. (For more on the manipulation of drug studies, see article on page 27.) Also, by making pharmaceutical companies get pre-approval for their studies, the design of the drug studies could be adjusted so that new drugs are not just compared to placebos, but to existing drugs and non-drug therapies so that consumers know which treatments are better than others. When Dr. Abramson compared the effectiveness of drug therapies to non-drug therapies for several medical problems, he discovered that many of the non-drug therapies offered superior results.

For instance, in comparing the use of statin drugs to exercise, he found that "even light to moderate physical activity reduced the risk of stroke by 77 percent," as compared to the almost negligible benefits of statin drugs. And "people on the Mediterranean diet experienced 70 percent less heart disease than people in the control group ... about three times the reduction in risk of further heart disease achieved with statin drugs."

If the insurance industry were in charge of drug testing, it would also have a financial incentive to test existing, inexpensive drugs as remedies for diseases, other than just testing drugs proposed by drug companies. In the book The Big Fix, by Katharine Greider, it was reported that funding for efficacy and safety testing for a possible treatment for sepsis--poisoning caused by the absorption of pathogenic microorganisms and their products into the bloodstream, which kills about 215,000 Americans a year--could not be found, though a "study in France showed that patients given low-dose steroids for septic shock were 29 percent less likely to die from the episode." The drugs cost $50 a dose. Yet an Eli Lilly drug called Xigris, which reduced deaths of sepsis by 6.1 percent, was being heavily promoted as a cost-effective drug--at $6,800 a dose. Notably, some common vitamins show promise as remedies for various ailments.

Also, if honest and comprehensive testing of available treatments were done, the information about the relative effectiveness and cost of cures could be made public. This would improve public health and help lower healthcare costs. If consumers could quickly and easily find out about the relative value and effectiveness of various treatments, it would likely discourage much of the present direct-to-consumer advertising of drugs--and its associated costs, $3.2 billion, which get passed on to the consumers.

Snowball Effect 

Government intrusions into healthcare cause an insidious snowball effect, further raising the cost of healthcare. As the cost of health insurance rises to offset government-induced costs, a greater number of people can no longer afford health insurance and rely on Medicare and Medicaid to pay for their healthcare. Medicare and Medicaid, in an effort to keep down the amount of government expenditures, only pay approximately 35 to 50 percent of the real costs of providing medical services for individuals, thereby forcing hospitals to increase rates for paying patients. Hence, the increased expense of medical services leads to further increases in the cost of health insurance, making it unaffordable for more people. It's a vicious circle.

In this country, being able to afford health insurance is increasingly becoming a struggle, and many people don't have health insurance. Though the "uninsured problem" is not as much of a problem as it is made out to be, the issue needs to be addressed.

More people could afford health insurance if the federal government would play only its constitutionally proper role in the scheme of things and completely withdraw from involvement in Medicaid, which pays much of the medical bill for people who have low incomes, and turn all Medicaid functions over to states to control.

Medicaid, at the present time, is paid partially with federal funds and partially with state funds (all taxpayer money), and is controlled partly at the federal level and partly at the state level. For instance, federal laws mandate that states provide drug benefits for Medicaid recipients and that the upper limit of a recipient's co-payment is $3, regardless of family income; and states must provide these benefits. These federal mandates are hurting states. States will now spend more, collectively, on Medicaid than they do for primary education. In December 2004, the New York Times reported that Medicaid is now bigger than Medicare, "with more than 50 million beneficiaries and more than $300 billion a year in combined federal and state outlays.... For prescription drugs alone, Medicaid spending soared to $34 billion in 2003." The financial problem this is causing states has prompted numerous letters from governors to federal lawmakers, seeking relief.

If the federal government ended its taxation to support Medicaid and turned all Medicaid functions over to the states for their control, the redundant administrative functions of the federal and state governments could immediately be ended, saving money. Additionally, without federal involvement in Medicaid, states could choose the types (and costs) of public care that they wish to support. After exiting Medicaid, the federal government should begin to get out of Medicare (while making good on past retirement promises to people nearing or in retirement who paid into the Medicare system for years).

Perhaps the greatest benefit to letting states control any public healthcare would be in the way of national economic stability. Because it is not realistic to expect that state governments will abruptly stop providing for the healthcare of those people it considers "needy," the states will take the healthcare balancing act upon themselves. Some states will devise "golden parachute" Medicaid plans, causing financial troubles for themselves, and others will devise more frugal plans, but at any one time, the nation as a whole will not be headed toward economic catastrophe because of over-exorbitant aid payments--a situation that our country now faces. According to Medicare's trustees, Medicare alone is projected to have a shortfall of $29.7 trillion over the next 75 years.

Federal and State Fumbling of Responsibilities

State and federal governments are neglecting policy areas outside of healthcare that they should scrutinize--indirectly hurting healthcare

Ironically, the failure of state and federal governments to fulfill their duties in areas outside of healthcare is also leading to high healthcare costs and lowering the quality of healthcare.

The federal government's failure to secure our borders--from human invaders and from disease-carrying agricultural produce--and state governments' failure or inability to quickly act upon public health concerns are leading to many unnecessary hospitalizations and deaths--and vastly increased healthcare costs.

In this age of global imports of food, the United States is leaving itself vulnerable to many food-borne, disease-causing organisms. In her book Betrayal of Trust: The Collapse of Global Public Health, Laurie Garrett reports that the federal government is failing to scrutinize imported food to reduce the amounts of disease-producing organisms that get into this country. She tells of an outbreak of Listeria food poisoning incidents in Los Angeles County, California. Listeria can cause nausea, induce stillbirths and miscarriages, and cause serious infections in people with weak immune systems, such as infants and the elderly. In 1985, Garrett reports, the LA County health department "was overwhelmed by Lister& food poisoning incidents." The outbreak was traced to Mexican cheeses that were sold to the local Latino population.

Throughout the United States, there were also outbreaks of Salmonella, Shigella sonnei infections, the Cyclospora cayentanensis parasite, hepatitis A, and others. In 1997, the Minnesota Department of Public Health studied four species of E. coli and Salmonella bacteria and found 206 completely different strains of the bacteria, strains from all over the world.

Garrett states, "In late 1999 the CDC confirmed that ... in the United States ... seventy-six million residents suffered from food poisoning annually. For 325,000 of them, the infection was serious enough to require hospitalization; 5,000 Americans each year would find ingesting contaminated foods to be fatal." Granted, many of the outbreaks were homegrown in the United States, but a large percentage was imported.

Food-borne diseases cause healthcare costs to rise significantly. "In 1997, when the CDC estimated that there were just thirty-three million food poisoning incidents in the United States, the agency estimated that combined costs ... totaled $34.9 billion," writes Garrett. (This figure includes healthcare costs and social costs, such as missed work.) By 1999, the food poisoning incidents had more than doubled to 76 million a year.

During the 1990s--as the food import flood widened--the number of food items inspected by the FDA "dropped from about forty thousand in 1990 to about fifteen thousand in 1997."

Disease-bearing foodstuffs are not the only things the federal government is failing to monitor and control. The uncontrolled flood of illegal immigrants is also causing healthcare costs to rise.

Estimates of the number of illegal aliens in this country range from 10 to 20 million. They represent up to 25 percent of the uninsured in this country. In 2001, according to the Institute of Medicine of the National Academies, the total uncompensated care for uninsured people was $35 billion. If 25 percent of that amount was generated by treating illegal aliens, it would equal some $8.75 billion. The $8.75 billion does not include the many billions of dollars in healthcare costs paid for care of illegals through government programs such as various Medicaid programs, through federally funded health centers (some specifically targeting migrant workers), and state-funded mandates and programs.

Another related problem was illuminated by a 1998 study done by the Center for Immigration Studies. At that time, illegal aliens comprised "only an estimated 26.8 percent of the uninsured living in immigrant households"--the rest were legal immigrants. Immigrants tend not to get insurance even after they've been in this country for a long period of time: "In 1998, 37 percent of immigrants who entered in the 1980s still had not acquired health insurance," and 27.2 percent of immigrants who entered in the 1970s were still uninsured, meaning that most of the $35 billion in uncompensated care in 2001 likely went to legal immigrants--along with many billions in increased Medicaid payments.

Estimates of the numbers of uninsured legal and illegal immigrants in this country who rely largely on the government dole for healthcare range from 32 percent and up. The illegals alone are putting a strain on our healthcare system. A March 17 Fox News report indicated that Los Angeles County alone has about two million illegal aliens, and 60 percent are uninsured. LA County Supervisor Mike Antonovich said the system has been "basically bankrupted. The Department of Health has a $1.2 billion deficit. Caring for illegals is siphoning money for other services and forcing clinics, trauma centers and emergency rooms to close."

Notes Madeleine Pelner Cosman, a lawyer who specializes in medical law, "medical insurance does not equal medical care. Uninsured people receive medical care in hospital emergency departments under the coercive Emergency Medical Treatment and Active Labor Act of 1985 (EMTALA), which obligates hospitals to treat the uninsured but does not pay for that care." As a result, "84 California hospitals are closing their doors forever." To stave off hospital closings in the southwest United States, the federal government recently approved giving hard-hit hospitals $1 billion between now and September 2008.

The damage being done to hospitals in the Southwest is just a reflection of the completely unreimbursed care that is given to illegals. Many billions of dollars are also spent in Medicaid and Medicare payments for legal and illegal immigrants each year. The Center for Immigration Studies states that in 1998, Medicaid accounted for 13.8 percent of immigrants' total healthcare costs. Medicaid payments have been rising dramatically because of the increasing number of children born in this country to illegal immigrants. These children are considered U.S. citizens and are eligible for Medicaid. Between 1997 and 2001, "immigration ... increased the number of uninsured children in the United States by 700,000." These 700,000 children alone cost the U.S. about $4 billion a year in Medicaid payments.

In addition to this economic burden, illegal immigrants pose a major health risk for Americans. The illegal immigrants obviously do not get any type of health screening when they come into the country, and they are bringing in highly contagious and dangerous diseases. These diseases are often caused by drug resistant strains of bacteria that are very costly and time-consuming to treat--and often fatal.

A report created by the Division of Communicable Disease Control in California, which tracked the incidence of communicable diseases in that state between 1980 and 1999, reported that more than two-thirds of the tuberculosis cases in the state were in persons born outside the United States. Ten percent of Californians (3.4 million) are infected with the tuberculosis bacteria; five percent of these people each year would become "active" cases of TB; 15 percent of TB carriers have a strain resistant to at least one type of commonly prescribed TB drug. The report also noted that California had tested thousands of people who entered California as "refugees" and found that 53.9 percent of those tested had TB, 40 percent had parasites, and 80 percent had one or more health conditions, somewhat indicating the burden that illegal immigrants are placing on healthcare systems.

Illegal aliens have been found to be the confirmed source of outbreaks of drug resistant strains of TB, malaria (once effectively wiped out in the U.S.), leprosy, plague, polio, Dengue Fever, and Chagas Disease.

America needs to make sure that legal immigration is our only source of immigration and to implement wise immigration controls, such as screening immigrants for illness and requiring that they stay off welfare and purchase health insurance before becoming citizens.

States' Role on the Healthcare Stage

Despite federal interference in healthcare, states can take major steps to improve healthcare within their borders.

The failure of state governments to take a strong stand in the area of public health (public health is not the same as healthcare) is leading to the spread of preventable diseases and unnecessary deaths--and higher healthcare costs. Because state governments are finding themselves in tight financial straits--usually largely owing to apathy, other priorities for the money (often federally and state-mandated Medicaid spending), and spending on lobbying groups' pet concerns--they have not been taking a strong stand about public health issues. They have not invested much money in public health programs to stop disease outbreaks once they've started, or disease prevention programs (preventing disease and waylaying disease are "public health").

According to the report Essential Functions of Chronic Disease Epidemiology

in State Health Departments, by the Council of State and Territorial Epidemiologists, published in September 2004, "more than 15% of the adult population suffers from a chronic disabling condition, such as arthritis, heart disease, hypertension, or diabetes." Moreover, "direct health costs for people with chronic conditions account for 75% of the total national expenditure for health care," which now stands at over $1.4 trillion per year. Yet "43% of responding states did not appear to have a State Chronic Disease Epidemiologist" to help lower the incidence of chronic disease. (Note: Disabilities related to old age are considered chronic diseases.)

Public health could be used to great effect to lower healthcare costs if public health were funded and controlled at the state level. Many people advocate having the federal government fulfill this role, but that would be a mistake for many reasons. The most important of these reasons is that such federal control in this area is unconstitutional. Another reason not to go this route is to prevent countrywide healthcare catastrophes. If states exercised total control over public health, the condition of public health in our country would not fluctuate up and down based upon the financial health of the federal government; it would remain relatively stable, fluctuating only in individual states.

Under our federal system, states actually enjoy a great deal of leeway in dealing with vexing questions like public health. As Madison explained in The Federalist, No. 45, while the powers delegated to the central government are "few and defined," those retained by the individual states are "numerous and indefinite" State powers, he continued, "extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State." This would obviously include public health and healthcare.

State governments therefore have the proper authority to take a strong stand on public health. Were they freed from the onerous burdens of federal mandates, they would have the means to fund public health policies properly, and they are immediately accountable to the public for the policies they implement. Thus they can--and should--devote money and energy to detection and prevention of disease, including measures intended to stamp out transmission of diseases in hospitals and preventing the mutation of bacteria into drug-resistant strains.

Looking at a couple of these areas in more depth, it is easy to understand how a little effort could save a lot of money. In 2004, the federal government spent $16.3 billion domestically on HIV/AIDS; only four percent of this went to prevention. Yet for the first time, credible estimates show that over a million people in the United States now have HIV/AIDS. The number of HIV/AIDS cases goes up by an estimated 40,000 to 60,000 each year. Of the 43,171 cases diagnosed in 2003, 49 percent were black, even though blacks constitute about 13 percent of the U.S. population. This spread could be nipped off in several ways: drug use prevention programs, HIV education initiatives, and new prison procedures--yes, new prison procedures.

Many young black men are incarcerated. In jail, they are often initiated into the homosexual lifestyle whether they want to be or not; and when they are released, they rejoin the heterosexual population and transmit the diseases they caught while in prison. Public health departments could advocate new prison arrangements to separate the sick prisoners from the healthy ones or advocate non-jail punishments for nonviolent offenders. (These actions could also be used to curb other diseases like TB.)

Public health officials could also slow the increase of drug-resistant bacteria, thereby lowering healthcare costs. Many bacterial diseases are becoming drug-resistant because of the misuse, mainly overuse, of antibiotics. According to Laurie Garrett's book Betrayal of Public Trust, by the late 1990s, over "20 percent of all TB would have some degree of drug resistance and more people would die of the disease in 1999 than did in 1899." Treating someone with a drug-resistant form of bacteria (if they can be treated at all) often takes long-term multi-drug therapy (in the case of TB, up to 18 months) and costs many thousands of dollars. Treating drug resistant staph infections, which make up 20 percent of all staph infections, costs between $27,700 and $31,400 per case.

To slow the mutation of bacteria into drug-resistant strains, health departments could limit the use of some high-end antibiotics, and only allow their use if a patient's specimen sample shows that the antibiotic will cure what ails them. Also, health departments can call for the halt of feeding antibiotics to livestock. (The antibiotics make the animals grow larger, they're not given for health reasons.) Resistant microbes surface in animals soon after they are fed the drugs, and the microbes spread to people.

Despite the benefits of having strong public health departments, in 2001, the combined states of the United States reported spending about $17.7 billion on public health. (This number is grossly exaggerated because much of this spending was designated for homeland security, and it includes much spending that would be better termed state-funded medical care or healthcare rather than public health.)

Additionally, state governments have intruded into many areas of healthcare where they should not have gone and further exacerbated the problem of the high costs of healthcare. Many states compel consumers to pay too much for health insurance by mandating that certain services must be covered by personal health insurance, pricing many consumers out of the market. Fertility enhancement, sperm bank deposits, mental health counseling, and even hairpieces are just some of the mandated benefits that must be covered by insurance in many states. Of course, large businesses and labor unions are exempt from such mandates because they self-insure and they fall under a law called the Employee Retirement Income Security Act of 1974 (ERISA), leaving individuals and small businesses to pick up the costs of those services.

According to Karen Kerrigan, the chairman of the Small Business and Entrepreneurship Council, families "who buy their own health insurance in New Jersey are forced to pay from $3,000 to $17,000 per month--that's right per month--for a health insurance policy with a $500 deductible." Laws need to be changed to allow people to buy insurance in any state, using that state's insurance requirements. This would allow people to buy insurance based upon their needs and ability to pay, not upon state mandates.

Litigation Lottery

For a variety of reasons--a lack of data sources, multiple causative factors, and low response rates to surveys--it impossible to calculate precisely the healthcare costs associated with frivolous medical litigation, but William R. Brody, president of Johns Hopkins University, says that the direct cost of malpractice lawsuits is between $16 and $32 billion a year and that the indirect cost of malpractice lawsuits--such as defensive medicine whereby doctors order unneeded tests to avoid lawsuits--is in the range of $50 to $100 billion a year.

Many thousands of malpractice claims are made each year, and payments for these claims add up quickly. In 2001, one large malpractice insurer reported that "payments made on behalf of physicians and other licensed healthcare practitioners ... was about $300,000 for all settlements and about $500,000 for trial verdicts." Another malpractice insurer reported in 2004 that "it faces about $10,423 in expenses even in those cases in which a doctor is not found at fault." These lawsuits cause healthcare costs to rise, and the costs are passed on to consumers, meaning more people cannot afford health insurance.

Besides the additional costs imposed by lawsuits, the present system of litigation has other serious flaws: most lawsuits are frivolous (80 percent of claims are made against doctors who made no medical errors at all); often the guilty doctors get off and the innocent pay (one out of four losses of malpractice lawsuits goes against a doctor who experts believe did nothing wrong); doctors in high-risk specialties often limit the scope of their practices or quit; bad doctors get to keep practicing medicine; and hospitals don't try to fix problems (they hide them) because admitting problems opens them up to litigation.

One reason that the current system of litigation is so fouled up is that there is no telling which lawsuits will win and which will lose. So doctors must be afraid of all actions and all patients. In his book The Collapse of the Common Good, Philip K. Howard, a managing partner of an international law firm and chairman of Common Good, a group dedicated to fixing the ills of our legal system, stated that the fear of lawsuits often paralyzes doctors and stops them from making medical decisions that are in their patients' best interests. For instance, he noted that in Phoenix "three doctors resigned from a case because they believed another doctor was putting the patient's life in jeopardy with too high a medicine dosage. But, fearing a lawsuit, they did not tell the patient or his family of their judgment. The patient went into shock and lapsed into a coma. As one of the doctors put it: 'It is very difficult to intervene ... because doctors are afraid other doctors will sue them. And supervising physicians and hospital administrators are also afraid to intervene because they might be sued later for letting the doctor have privileges in the first place.'"

To fix the out-of-control medical litigation, Howard proposes the creation of special medical courts, or "health courts." The courts would be run by judges with medical training, and the judges, not juries, would make decisions about proper standards of medical care, thereby discouraging frivolous lawsuits. Juries would still play a major role in this system; their role would merely be somewhat reduced.

Howard sees this as a win-win situation. People who are really hurt owing to negligence will get fair compensation; hospitals will become safer because health court judges will yank the licenses of bad doctors, and hospitals will no longer cower behind and cover poor practices; doctors will know exactly what standards of conduct they must adhere to; and the price of healthcare will go down. The only losers will be the lawyers and those people who were hoping to cash in on the litigation lottery.

Whether or not Howard's specific approach is tried, some type of litigation reform is imperative.

Hard Decisions

Attempts at "universal" healthcare have led to poor, government-rationed healthcare, owing to exorbitant costs brought on by the human weaknesses of greed, jealousy, spite, fear, and laziness. By getting the federal government out of healthcare and letting free market controls work, we would enjoy even better and cheaper healthcare than we have experienced in the past.