“Supply-and-demand doesn’t apply in medicine” declared a headline in the Honolulu-Advertiser. And the soaring cost of medical care in the United States has moved pundits to call for some kind of government health insurance. In typical fashion, politicians have joined the crowd by offering solutions that increase their power rather than to examine ways that government created the problem in the first place.

The government has already demonstrated gross incompetence in the management of insurance. Mandatory government retirement insurance, the Social Security System, has never been operated as real insurance. Instead, today’s workers are taxed to pay for today’s retirees. Social Security now has $13 trillion in unfunded liabilities that cannot be paid off without massive future tax increases. And Medicare has a $30 trillion shortfall in projected benefits¹.

Similarly, government insurance for the thrift industry in the 1980’s left taxpayers holding the bag for a $300 billion financial disaster, one of the largest disasters so far in U.S. history. The government tried to salvage some of the taxpayers’ money by selling off the assets of bankrupt companies. But this, too, led to scandal when it was discovered that the so-called “rescue” agency, the Resolution Trust Corporation, was selling assets to many of the original culprits, at a fraction of the market value, and losing all record of a billion dollars in the process.

One would think that government should have to prove competence in one arena before moving along to another. But no such accountability is required when rulers are dealing with the money and lives of subjects. Having proven the government’s incompetence in managing existing insurance schemes is no deterent to grand visions of government insurance for health.

Special interest groups know exactly what politicians are good for and they pay handsomely for their services. The American Medical Association (AMA) is one of these special interest groups, one of the biggest in the U.S., making millions of dollars in campaign contributions with each election cycle.

The AMA hasn’t spent that kind of money trying to get politicians to leave them alone in a free market of supply-and-demand. Indeed, the AMA has been busy, since well before the turn of the century, in building a government enforced cartel. Cartels seek to eliminate competitors in order to raise prices. And government force has been the legal tool for achieving this.

Orthodox vs. Heterodox Medicine

Historian Ronald Hamowy has illuminated the origins of government services in shaping the medical profession. According to Hamowy, medical practices that were officially endorsed prior to 1850 were known as the “heroic therapies.” These therapies relied heavily on the symptomatic treatment of bloodletting, blistering, and the administration of massive doses of compounds of mercury, antimony, arsenic, other poisons. Critics of the profession accused them of killing more people than they cured².

Medical licensing laws were established during America’s colonial era in order to eliminate rivals to these orthodox, “heroic” practitioners. But most of these laws were repealed in response to competition from two new forms of medicine: eclecticism and homeopathy. By 1870, these heterodox philosophies accounted for one out of every eight physicians in America³.

Eclecticism was developed by Samuel Thompson in 1813 as a system of medicine which relied on botanical remedies, steam baths, and rest. Thompson sharply criticized the heroic therapies as “instruments of death.” His approach was to introduce a measure of common sense to health care that could be easily understood and broadly applied by the public⁴.

In 1825 Samuel Hahnemann founded homeopathic therapy which also stressed the natural healing powers of the body, advocating fresh air, sunshine, bed rest, proper diet, and personal hygiene, advice that orthodox practitioners, then as now, considered of little or no importance. Hahnemann also stressed the importance of extremely small doses of herbal and drug remedies at a time when orthodox physicians were administering increasingly massive doses of medicines⁵.

Entry into the market during this time, 1870-80, was open and there was an abundance of private medical schools. Students could easily gain admission even to the best of these schools because of the low costs. Consequently, the number of medical graduates in the U.S. in 1880 equalled the combined output of medical schools in Britain, France, Austria, and Germany.

There was one physician for every 755 people in the U.S., while there was only one physician for 1666 people in England, for 3225 people in Germany, and 7909 in Sweden. Of 100 medical schools at the time, 14 were homeopathic with 12% of the total graduates and 9 were eclectic with 6% of the graduates⁶.

Rapid growth in the number of physicians, especially from competing philosophies of medicine, was clearly a threat to mainstream physicians. Increasingly frustrated with proving the worth of their services to consumers in the marketplace, a new organization, the AMA, was formed to muster powers of the state against rivals.

Under the guise of “protecting ill-informed patients,” the clear intention of the AMA was to raise the income of their own members. A report by the educational committee at the founding convention of the AMA in 1847 stated, “No wonder, then, that the profession of medicine has measurably ceased to occupy the elevated position which once it did; no wonder that the merest pittance in the way of remuneration is scantily doled out even to the most industrious in our ranks…”⁷

Economist John Goodman observed that the targeted rivals of the AMA were probably of less harm to their patients than the orthodox practitioners of the day⁸. Furthermore, standards that were recommended by the AMA were so stringent that few of their own convention delegates could have met the requirements and, if mandated to do so, nearly every medical school in the country would have been forced to close it’s doors⁹.

3-Pronged Attack

According to Hamowy, the AMA conducted a three-pronged attack to solidify it’s control over the practice of medicine in the U.S.: 1) to establish medical licensing laws in order to restrict the number of new physicians and thereby secure higher incomes for their members; 2) to destroy the proprietary (profit) medical schools and replace them with fewer non-profit institutions requiring much more extensive training over a longer, more costly period of time to fewer students; 3) to eliminate competing philosophies of medicine¹⁰.

Under intense pressure from the AMA, and not in response to public demand, four hundred state statutes were passed in the latter half of the 1800’s which placed the AMA in control of the regulation of medical practice. Hamowy’s exhaustive research found that these laws always included “grandfather clauses” that exempted older AMA physicians from meeting the requirements. Indeed, in 42 states the refusal or revocation of a license was based, not on incompetence, but on violations of the AMA code.

This code forbade such things as advertising or cooperating with heterodox practitioners. The ban on advertising made it impossible for consumers to make informed judgements about physician records of performance, success, or even prices. Indeed, one could get more information about a can of peas than he or she could get concerning the variety of medical practitioners who might be asked to save a life. And the ban on working with irregular practitioners froze eclectics and homeopaths out of “approved” hospitals.

Soon, all other forms of healing for compensation were outlawed. According to Hamowy, among those forbidden to heal for pay were not only the eclectics and homeopaths but also numerous Christian Scientists and healers by prayer, mental healers, osteopaths, chiropractors, vitapathic healers, neuropaths, naturopaths, and those who heal by the laying on of hands. The courts ruled that such treatments were forbidden even if the patients knowingly accepted the mode of treatment or even if they benefitted by the treatment¹¹.

From 1881-83 the availability of physicians was cut by 40% in Minnesota. Commenting on these measures, the vice-president of the AMA said, “The people have awakened to the fact that there are twice as many practitioners of medicine in this country as are commensurate with its legitimate wants.” And in 1891 the Journal of the American Medical Association boasted that, in Illinois, “The total number of physicians in the State is less now than it was twelve years ago.”¹²

Stranglehold on Schools

A cornerstone of the AMA strategy was to require graduation from AMA approved schools. AMA examinations, regardless of their relevance to healing, were required by states in order to be allowed to practice medicine. Qualifying standards were often changed from year to year in order to control the number of applicants who would be admitted into the profession. Then came a ploy to eliminate half of the medical schools¹³.

Abraham Flexner was appointed by the AMA’s Council on Medical Education to inspect all medical schools for certification. Goodman reports that Flexner was not an expert in medicine nor in medical education. He had earned an undergraduate degree in the arts from Johns Hopkins University and he operated a private preparatory school in Kentucky. But his brother was the medical dean of the Johns Hopkins medical school, which was to be his model of comparison for all other schools¹⁴.

Flexner made a grand inspection tour of all medical schools, sometimes evaluating an entire school in an afternoon. There was no attempt to measure the calibre of the graduates, only the equipment and teaching techniques, which, according to economist Roger Leroy Miller, “is like assigning grades on the basis of how many hours a student spends studying for an exam rather than on the basis of his actual performance on the exam.”¹⁵

Once the AMA evaluated all the schools on its own criteria, it obtained legislation from all state legislatures which denied the licensing examination to people not graduating from approved schools. The result was disastrous to many schools. The number of medical schools plummeted from 192 in 1910 to 69 in 1944. Even Flexner’s own brother was a graduate of one of the medical schools that was closed as a result of Flexner’s recommendations¹⁶.

In 1928 the former head of the AMA’s Council on Medical Education said, “the reduction of the number of medical schools from 160 to 80 (resulted in) a marked reduction in number of medical students and medical graduates. We had anticipated this and felt that this was a desirable thing.”¹⁷

The number of physicians dropped during this time from 157 per 100,000 population to 132. But ethnic minorities and women were particularly affected by these policies. The number of Black medical schools dropped from seven to two. And the number of women physicians actually declined over that 30-year period¹⁸.

The overall reduction in student admissions was 17%, but the number of Blacks and Jews declined by 30%. It was so difficult for Jews to get into an American medical school that many of them had to study abroad. Indeed, 90% of Americans studying abroad were Jews. Even in recent years, approximately 27,000 applicants to medical schools in the U.S. have been turned away annually¹⁹.

Using similar methods of control, says Goodman, private proprietary (profit) hospitals declined in number from an estimated 2441 in 1910 to 1076 in 1946. And though there had been a rapid growth in the overall number of hospitals in earlier years, this trend came to a sudden standstill. The total number of hospitals in the country hovered at just under 6900 for the next forty years²⁰.

Soon the power of the AMA reached into every niche of the medical care industry, from pharmaceuticals to insurance. Although doctors only keep a fraction of every dollar spent on health care, they are likely to control how the vast bulk of every dollar is allocated. Caring for the health of the nation has been undertaken with as much sensitivity as a surgeon with a chainsaw.

Learning Responsibility

But what about protecting consumers? Doesn’t something have to be done? Of course something has to be done, but it is absurd to expect that politicians are the ones to do it. Responsible behavior is needed and it cannot come from politicians.

Responsible, mature behavior is something that each individual learns by considering choices and by experiencing the resultant rewards and penalties. That is the way that human beings grow. It is illogical to expect that politicians can make wise choices for other people. While politicians reap only the rewards, the taxpayers and consumers are the ones who suffer the penalties of politically imposed mistakes. And so, maturity is stiffled.

For several generations now, the populace has only been allowed to seek advice from physicians who are philosophical devotees of surgical and chemical treatments. Is it any wonder, then, that the bulk of the population has become dependent on injections and drugs, both legal and illegal, to treat every ailment or mood?

The AMA could have certified it’s own physicians and left the consumers free to decide for themselves what price, quality, and philosophy of service to hire. But it was clear that the powerful AMA was losing this battle with the public and concluded that it had to eliminate options rather than to trust freedom of choice. The use of force to eliminate rivals is a clear sign of insecurity, not confidence.

Therefore, by raising the price of physicians, low income patients were unable to afford professional care of any kind and had to resort to self-treatment. For middle and upper income patients it was also the beginning of bad times. Though these patients might be able to afford the higher prices, they had to accept the legal fiction that there was only one correct way to be cured.

Only now is the medical establishment grudgingly accepting the idea that the paths to recovery and good health are as numerous as there are human beings. Some of the simple natural cures that were once dismissed as quackery are now embraced with enthusiasm. How many people had to die in this century, waiting for the medical elite to accept successful alternatives that common folk had tried to choose a hundred years before?

Unfortunately, medical professionals have used politics to turn the marketplace on it’s head, so that the servant, rather than consumer, is king. Instead of doctors seeking to persuade and to please their customers with housecalls, caring attention, helpful education, and a proven record of success, physicians hide their record and make customers wait, plead, and pay through the nose for a few minutes of their time.

The Broader Issue

Greater personal responsibility is the key to increased maturity and a healthier population. Politics can never protect us from that fact.

The Castle Medical Center in Hawaii asserts that 80% of its patients are in the hospital for “lifestyle” related diseases, meaning that people could have prevented these diseases by making different choices in their manner of living²¹. These choices involve such activities as smoking, drinking alcohol, stress, not wearing seatbelts, lack of exercise, poor nutrition, etc. Victims of this kind of self-abuse are also responsible for the rising cost of services to those who are hospital victims by chance.

AMA physicians do not prevent “lifestyle” diseases, they usually only deal with the consequences of such unhealthy behavior. And requiring health-wise people to pay the medical bills of health-risktakers will do nothing to change that behavior. People have to learn that they are responsible for their own lives, that they will not live longer simply by turning decisions over to politicians or god-pretending physicians.

Government protection is destroying the ability of people to think for themselves. People frequently assume that anything on the grocery or pharmacy shelf is okay to consume, because if there was any potential harm it would surely have been banned by the Food and Drug Administration (FDA). Indeed, the opposite conclusion is just as valid.

Speaking of the consequences of FDA actions since 1962, Dr. Mary Ruwart says the regulations “have proven to be more deadly than all of the drug toxicity that occurred before their passage.” Dr. Ruwart estimates that between 1963 and 1999, nearly 5 million people died prematurely while the medicine which could have saved them was kept off the market for testing. "The amendments saved a few thousand lives, but the cost was letting millions die waiting for treatment.”²²

Who Cares?

So who gets to decide? That depends on who you think owns your life. If you own it, then you should decide. But if you just rent your life from the government, then you should obey the rules and take care of the body as your owner sees fit.

If the politicians really cared about your health as much as they claim to, they could immediately cut a great percentage of the costs of health care by simply eliminating all the taxes on health care providers. They could allow you to deduct all your health care expenses from income taxes. Politicians could even allow you to set up medical savings accounts that would be tax-free savings like IRA’s. They could allow you tax credits for contributing to the medical savings accounts of others as charitable contributions.

The problem with all of these ideas is that they reduce the power of politicians over your life. And the one thing that is constant in politics is that mainstream politicians always offer solutions that increase, rather than diminish, their own power.

---

*This article is almost entirely based on the excellent treatment of the subject in Ronald Hamowy, “The Early Development of Medical Licensing Laws in the United States, 1875-1900,” Journal of Libertarian Studies 3, no. 1 (1979): 73-119; John C. Goodman, The Regulation of Medical Care: Is The Price Too High?” CATO Institute, (1980); Roger LeRoy Miller, The Economics of Public Issues,” 8th ed., Harper & Row (1990); and Dallas Cooley, M.D., “How Do You Know Your Doctor Is Not a Quack?,” Reason, August 1980, 30-31. For a treatment of current practices in medicine: Mary Ruwart, Healing Our World: In an Age of Aggression, Sunset Press and John C. Goodman and Gerald Musgrave, Patient Power: Solving America’s Health Care Crisis, the CATO Institute.

1. “Dangerous debt dodge,” USA Today, 10-11-04
2. “The Early Development of Medical Licensing Laws in the United States, 1875-1900,” The Journal of Libertarian Studies, Vol. III, No. 1, Center for Libertarian Studies, New York, NY, 1979, p. 73.
3. Ibid., p. 74.
4. Ibid.
5. Ibid.
6. Ibid.
7. Ibid., p. 76.
8. Goodman, John C., The Regulation of Medical Care: Is The Price Too High?, CATO Institute, San Francisco, CA, 1980, p. 5.
9. Miller, Roger LeRoy, The Economics of Public Issues, 8th ed., Harper & Row Publishers, 1990, p. 78.
10. Hamowy, op. cit., p. 75.
11. Ibid., p. 98.
12. Ibid., p. 82.
13. Goodman, op. cit., p17
14. Ibid., pp. 10-11.
15. Miller, op. cit., p. 77.
16. Goodman, op. cit., p. 13.
17. Miller, op. cit., pp. 77-78.
18. Ibid., p. 77.
19. Goodman, op. cit., pp. 30-31.
20. Ibid., p. 53.
21. Lodge, Henry S., M.D., Younger Next Year, Workman Publishing Co., N.Y., N.Y., 2004, p. 29. Lodge dcclares the figure to be 70% nationwide.
22. Harris, James W., “Good News, Bad News, Unbelievable News,” Hawaii Reporter, Dec. 13, 2004

Ken Schoolland is a member of the Board of Directors of the International Society for Individual Liberty (ISIL).
He can be reached at: schoollak001@hawaii.rr.com