Collectivism in Medicine: An Exception or a Hook?

JUNE 01, 1982 by JANE M. ORIENT M.D.

Jane M. Orient is in the private practice of medicine in Tucson, Arizona. She also is adjunct assistant professor of internal medicine at the University of Arizona College of Medicine.

Since the time of Bismarck, most schemes for collectivism have started with health care. Far more support can be garnered for national health insurance than for nationalizing steel factories. Many claim that medical care is not, or should not be, a kind of industry, governed by the same laws of economics as manufacturing, trade, and other service enterprises. The thought of doctors profiting from human suffering, or of a patient being turned away because of a “negative wallet biopsy,” predictably arouses indignation.

Any discussion of economics in medical care is emotionally charged, because people naturally fear sickness, dependency, and death. Their fear may be exploited to cloud their powers of reasoning, making health care an excellent hook for introducing socialist ideas. Though the term “hook” (as a verb) may have entered common parlance via popular books on transactional analysis, the term (as a noun) derives from Lenin’s Thesis on Tactics. The Communist International advises searching for and taking advantage of all sources of discontent among the masses.[1]

Is Medicine a Unique Endeavor?

Essential to the tactic of using medicine as a hook is to emphasize ways in which it appears to differ from other activities. One inherent difference is asserted to be the influence of physicians on the use of services. Though physicians’ fees in 1973 constituted only 19% of total health expenditures,[2] it is believed that “physicians are in the unique position of being able to regulate the demand for their services.”[3] They order admission to the hospital, laboratory tests, drugs, and surgical procedures.

Although people can live without dishwashers and automobiles, or without hairdressers and teachers, medical care is felt to be a matter of life and death. In some cases, denying medical care may indeed be the equivalent of a death sentence. Therefore, health care has been declared a “right,” presumably as a corollary of the right to life. A “two class system of care” (such as one which provides public hospitals for those unable to pay for private care) is considered an infringement of “equal” rights. Because of its necessity, health care must not be treated as a commodity.

The doctor-patient relationship has been invested with an aura of the sacred. The physician must always act in the best interest of the patient, maintain his confidences, behave honorably, and take all care that is humanly possible in his treatment. Grubby business considerations seem sacrilegious when the physician “holds your life in his hands.” The idea of profits in proportion to misery seems obnoxious.

Let us compare other human endeavors with medicine. The idea that physicians alone create demand for their services, though repeatedly proclaimed with great authority, is patently implausible. Physicians do not appear on television, advertising for patients. They employ secre taries to say: “I’m sorry, but the doctor can’t see you for three weeks.” In contrast, many products would be without a market if advertising were not allowed. Automobile mechanics, insurance salesmen, and stockbrokers all may take advantage of our fear and ignorance to sell us more of their services than we really need. The most notorious group for creating a need for their own talents must be lawyers in legislatures and regulatory bodies, who invent laws no layman could possibly interpret.

Limited Powers

While doctors do sometimes save lives, their power over life and death is often exaggerated in the public mind. They neither give life, nor vanquish death. Their occasional triumph in the struggle with the Angel of Death is only temporary. A substantial part of the doctor’s time is spent treating colds and backache, which are hardly life-threatening, or diseases like terminal cancer or cirrhosis of the liver, in which he may offer comfort but not cure. The need for a given medical service is seldom absolute. Many illnesses can be treated just as well at home as in the hospital; many diagnostic tests are of marginal value; and many treatments improve somewhat the probability of a good outcome, at the price of introducing new risks of harm from the treatment itself.

Not only do doctors have limited weapons against premature death; they are by no means the only providers of the necessities of life. If their services are conscripted with the justification of the right to life, then what about those who produce food and shelter, which are continua], not merely episodic needs? And while the physician has the responsibility of trying to save the sick and injured, how much heavier are the responsibilities of those who can kill people in the best of health, such as engineers who design bridges or power plants, airplane pilots, and mechanics who repair brakes.

Marketable Qualities

Health itself is not a commodity; it cannot be purchased for any amount of money. Things which can be purchased include drugs, diagnostic tests (and the equipment which makes them possible), and the time of people with expertise. Medical devices do not undergo spontaneous generation. Since somebody must invest money in creating them, to say that one person has a right to their use is incompatible with another’s right to his property. Medicine is labor intensive. The nurse, the x-ray technician, the electrician, the cook, and the janitor must be paid, or they stop coming to work. Even the doctor must earn a living, and to take in laundry would inter-fete with the ability to see patients.

Because the doctor intervenes in areas related to the patient’s physical and spiritual integrity, and because the patient is often impaired by sickness or anxiety, a violation of trust in the doctor- patient relationship is particularly reprehensible. Nevertheless, the fundamental demands made on the doctor are not unique. Bankers and lawyers must maintain confidences and put the interest of their clients ahead of their own. Professors must refrain from seducing students. Plumbing contractors must give honest estimates and do careful work. Honor is required of men of every calling in their relationships with others.

Medicine is a quasi-priesthood only to the extent that magic is involved. In fact, magic and art remain important ingredients in healing. However, patients rightfully demand science and technical skill in addition, and for these payment has traditionally been expected. (If technology becomes the only aspect of medical care that is well compensated, the science fiction writers may be prophets: in The Empire Strikes Back, all the doctors appear to be robots.)

Do doctors really profit from patients’ misery? If the doctor deliberately made the patient sick, then the accusation would be just. Bakers don’t profit from causing human hunger, but from relieving it. Plumbers don’t profit from the existence of human needs for drinking water and waste disposal, but for providing sanitary means for meeting them.

The Profit Motive in Various Practice Arrangements

To condemn the profit motive in medicine is a hook. By logical extension, one must condemn it everywhere. Yet the question .is not whether the profit motive will operate in medicine, as in any field of human action, but how, and to whose advantage, it will work. Profits are incentives, and may consist of money, power, prestige, or leisure time. Are incentives in a market economy more likely to benefit the patient than those in a socialized one?

Aren’t most hospitals and clinics nonprofit? Or weren’t they before the intrusion of big health care corporations? Although many excellent voluntary hospitals exist, their nonprofit status does not exclude big returns to some people affiliated with them. Returns may not be forthrightly called profits. For example, a dapper young man with a degree in social science is planning a health awareness program intended to prevent illness by counseling people about their lifestyle. “It will be nonprofit,” he emphasized.

“Oh, how will you make a living?”

“I’ll get a salary, of course.”

“What’s the difference between your salary, and my taking home the profits of my business?”

A benign smile was the only answer. One difference, of course, is that the salary is paid regardless of whether or not there are profits. If income does not exceed expenditures, then let the equipment suppliers, the landlord, and the bank take the loss. Another difference is that he’ll be charging more to tell people they are fat and flabby than I ask for a complete history and physical examination. Furthermore, he will not be paying personal property or business license taxes.

Given that doctors must earn a living (albeit not so much money that they must flaunt their conspicuous consumption), why should the patient want to pay him directly for each service, instead of by salary? The fee for service may encourage the doctor to prescribe unnecessary treatments. Unquestionably, some unscrupulous doctors make a lot of money from useless injections.

One reason for payment for extra services is that people are sometimes willing to do for money things they wouldn’t do for love. Examples include driving to the emergency room at midnight, listening to patients with endless vague complaints, or looking up a bleeding rectum on Christmas Eve. The tendency to “buff and turf” when confronted with an unpleasant and perhaps futile task is only human nature, especially when shirking is rewarded as well as volunteering.

The importance of the fee as part of the treatment was first recognized by psychiatrists. If the patient hasn’t sufficient investment in getting better, he may be evasive about cooperating with treatments such as psychoanalysis, which is demanding and painful. Perhaps the unshakable faith patients have in the encapsulated lake scum found in health food stores or in the bizarre prescriptions of the quack is related to the outrageous price they pay. Free medicines often accumulate, untried, in the cupboard.

The Patient as Employer

The most important advantage to the patient in being responsible for his own bill is that he thereby becomes a customer, the physician’s employer. While the physician is assumed to have greater knowledge, the customer ultimately makes the decisions. If not satisfied, he may freely seek advice elsewhere. Although the physician at times may be tempted to accede to harmful re quests, to avoid losing business, the challenge to his integrity is no greater than in a different system, where the threat may be a letter to a congressman. Just as an honest contractor may have to say “I won’t put the roof on that way because it will leak; either do it my way or find another contractor,” the physician can suggest finding another doctor. Both physician and patient are pro tected when they have freedom of association.

The beneficiaries of public medicine are no longer customers, but consumers. Unable to exert their influence directly with their dollars, they must be represented by a patient advocate. The relationship between patient and physician may in fact be involuntary for one or both parties. The agency dispensing the paycheck intrudes, dividing the physician’s loyalty. The consumer may be considered an adversary of the agency, if he demands more than his “fair share” of services, while the physician is held responsible for preventing “overutilization.” The doctor is the “gatekeeper” to expensive consultations and diagnostic tests. The patient has an investment in assuming a sick role, since more services and attention become available to him without additional charge. In a prepaid arrangement, that’s the only way to get his money’s worth. If the consumer is displeased, he cannot fire the physician as the customer would, but can complain to the ombudsman, the chief of staff, or his senator. His influence may be negligible, or magnified out of all proportion.

Although many wish that medical care were aloof from the marketplace, market phenomena invariably occur even as efforts are made to insulate health services from market pressures. As the price barrier is removed, demand skyrockets. Sitting in the waiting room at the local Veterans Administration hospital reminds one of the gasoline lines, and many people withdraw from prepaid health plans because of the lengthy waits. Waiting time seems inversely proportional to the price of goods or services offered. People in queues have a natural angry reaction: they demand some authority who will see that the greedy providers allocate resources more equitably. Somebody must set up a priority system, or print ration tickets.

Subsidized Demand

While complaints arise that medical care is still not adequately available to some, others cry that already we spend too much on it. Few recognize the explanation: people are always less thrifty when spending other people’s money than when spending their own. In collectivized payment plans (whether government or insurance plans), some way of controlling expenditures is clearly imperative. Insurance companies have discovered the price of socializing risks while individualizing ‘benefits. Though providing for catastrophes by means of insurance is responsible and rational, even this approach entails moral hazard, in that beneficiaries may try to extract more from the insurance than is justified.

Fire insurance may reward arson, and health insurance may reward disability.[4] To attempt to insure routine expenses compounds the problem. A patient who really doesn’t need an x-ray may want one anyway, “just to be sure,” because the insurance will pay for it. The patient who says “spare no expense” is seldom planning to pay the bill himself. While our society encourages people to become risk-averse and demand a Cadillac insurance policy, the Chevrolet makes equally good sense in insurance and in transportation. The insurance premiums are a given. If one chooses a minimum policy for disasters, and invests the difference in premiums, with luck one may have a profitable investment. If not so lucky, routine out of pocket expenses may still cost less than a deluxe policy.

Cost-Control Mechanisms

Having the customer pay a greater part of the bill is generally not the favored proposal for controlling costs or stimulating competition. Usually some type of prepaid plan is envisioned. Not only are the risks to be socialized, but also the benefits. The availability of services is to be based on cost benefit analysis. Since society pays, society must benefit. Are pneumococcal vaccines to be covered? Let us calculate the cost incurred by society from x preventable cases of pneumonia. Lowered productivity, expenses for x-rays and antibiotics, and even some deaths will occur. Is this price greater than that of y immunizations? The analysis is much more complicated than the process of saying: “This vaccine reduces your chance of getting pneumococcal pneumonia. Is it worth $15 to you?” The former also multiplies many times the impact of an error in calculation, which must be based on uncertain data.

Some of the cost control (rationing) mechanisms in prepaid or public health plans are administrative. An algorithm may be devised, directing that a chest x-ray shall be ordered if (and only if) certain indications are present. The physician or other provider, such as a nurse practitioner, may deviate from the recommendations, but will have to justify his action if audited. A “hassle factor” may be introduced. At a Veterans Administration hospital, the signature of the chief of service was required on all requisitions for brain scans, when it was felt that that service was being ordered too often.

If the consumer’s incentive to save money has been eliminated, why not invent one for the providers? Many health maintenance organizations have done just that. Instead of paying people for doing tests and performing services, they are paid for not doing them. Money that is budgeted but not spent may be divided up among the physicians as a bonus. The profit motive is neatly turned around. Unless we assume that prepaid plans attract only physicians of sterling character, surgeons who previously were tempted to do unnecessary surgery may now be reluctant to do operations from which the patient would benefit.

When entrusting planning and decision-making to a central agency, one assumes that the planners are smarter than individual practitioners and, most importantly, have the right values. Naturally, they may not correspond to the values of certain patients. As one Veterans Administration physician said about “too many” hernia operations: “Let them wear a truss.” I have yet to find a patient who preferred that alternative.

All rules and regulations can be circumvented by ingenious people. If Medicare doesn’t cover custodial care, the doctor can order an intravenous feeding, and change the category to skilled nursing. Since Medicare doesn’t cover housecalls to give enemas or transportation for outpatient diagnostic tests, the patient may elect to be admitted to the hospital for some x-rays. Cost control devices may ultimately increase costs, as people respond to incentives the planners hadn’t recognized.

Should the Doctor Be a Slave, a Keeper, or a Servant?

Collectivism in medicine will undoubtedly change the doctor-patient relationship as well as altering the distribution of services. Such proposals are based on the idea that medical care is a right. The strategy of this hook is to divert attention from the question of the impact on personal liberty, by not mentioning the duty corresponding to the right. Physicians potentially become slaves, with the amorphous public (represented, of course, by an authority) as the slaveholder. Rather more likely is that they will become the keepers, depending upon how much influence they exert on the central planners. An ominous development in the medical literature is the frequent use of the term “noncompliant.” More familiar in its use by bureaucrats regarding adherence to regulations, it now refers to patients who don’t take their medicine or follow their diet.

The emphasis placed on the importance of lifestyle for health has disturbing implications. Normally, I am not inclined to care about how much my neighbor drinks, smokes, or exercises. But if I’m paying the intensive care bills resulting from his gastrointestinal bleeding, emphysema, or heart attack, my interest in his private life mounts. In Communist China, living a healthful life is considered a patriotic duty. Everyone becomes his brother’s jailer, as he is taught to be responsible for the behavior of family and neighbors.

The physician will be the servant of whomever pays him (or risk his livelihood). All contracts are validated by “consideration,” which is usually money. The same writers who condemn the avarice of physicians under fee for service ask us to rely on the altruism of physicians under other economic arrangements. As patients decline to provide the consideration, they relinquish their decision-making role, which many agencies are all too ready to take over.


A hook is a condemnation of the status quo, without critical examination of the alternatives. Before dismantling our fee for service economy, we should outline our goals and see whether other systems can meet them better.

Is the goal to reduce unnecessary surgery? The rate of tonsillectomies in China is very high, without the incentive of Blue Shield.[5] Do we want to reduce hospital stays? The Mayo Clinic, a totally fee for service organization, has succeeded as well as prepaid plans.[6] The average length of stay is 15 days in the Soviet Union, compared with five in the United States.[7] Do we wish to distribute expensive equipment fairly? The regional planners put the CT scanner, the cause célèbre for cost containment, at St. Luke’s Hospital rather than at Harlem, where head trauma victims are more commonly seen. As a result, in a single year only 14% of the 1870 patients in whom the test was recommended actually received it under a “sharing” arrangement.[8] Are we concerned about reducing fear? Patients in the Soviet Union do not have to fear the cost of a serious illness—they have prepaid in stifling if unacknowledged taxes. Instead, they fear the indifference of the doctor, the filth in the operating room, and shortages of the most basic drugs and supplies.[9] Are we interested in making medicine responsive to consumer demand? In the Soviet Union, the logical endpoint of the total institutionalization of medicine has been reached: the Hippocratic Oath is forbidden, because it might interfere with the physician’s loyalty to the employer, the state.[10]

“What about the poor?” is the most pervasive, recurrent question of the supporters of socialism. While medicine has a long history of helping the unfortunate, the results are called “inequitable,” and the method “patching” or “reformist.”[11] Marxists use our duty to help the poor as a hook for undermining the entire economic structure, with no concern for the observable consequences of worsening the plight of the poor and multiplying their number.

Once health benefits are socialized, on the basis that medical care is different from other economic activities, the fundamental similarities will become apparent. To be logically consistent, collectivization must be extended to other enterprises, or undone in medicine. The former course is more probable; turning away from collectivist morality is a phenomenon rarely observed to date. The hook is indeed a fearful weapon. []

1.   James L. Tyson, Target America (Chicago: Regnery Gateway, 1981), p. 19.

2.   Cotton M. Lindsay, ed., New Directions in Public Health Care: A Prescription for the 1980s (San Francisco: Institute for Contemporary Studies, 1980), p. 194.

3.   D. S. Brody, “The Patient’s Role in Clinical Decision-Making,” Annals of Internal Medicine, vol. 93, 1980, pp. 718-722.

4.   George Gilder, Wealth and Poverty (New York: Basic Books, 1981), p. 108.

5.   William V. McDermott, “The China Syndrome,’Archives of Surgery, vol. 116, 1981, pp. 245- 246.

6.   Fred T. Nobrega, Iqbal Krishan, Robert K. Smoldt, et al., “Hospital Use in a Fee-for-Ser-vice System,” Journal of the American Medical Association, vol. 247, 1982, pp. 805-809.

7.   William A. Knaus, Inside Russian Medicine (New York: Everest House, 1981), p. 123.

8.   John C. M. Brust, P. C. Taylor Dickinson, Edward B. Healton, “Failure of CT Sharing in a Large Municipal Hospital,” New England Journal of Medicine, vol. 304, 1981, pp. 13881393.

9.   Knaus, op. cit.

10.   M. G. Field, Doctor and Patient in Soviet Russia (Cambridge, Mass.: Harvard University Press, 1957), p. 174.

11.   Howard Waitzkin, “A Marxist View of Medical Care,” Annals of Internal Medicine, vol. 89, 1978, pp. 264-278.


June 1982

comments powered by Disqus


* indicates required
Sign me up for...


July/August 2014

The United States' corporate tax burden is the highest in the world, but innovators will always find a way to duck away from Uncle Sam's reach. Doug Bandow explains how those with the means are renouncing their citizenship in increasing numbers, while J. Dayne Girard describes the innovative use of freeports to shield wealth from the myriad taxes and duties imposed on it as it moves around the world. Of course the politicians brand all of these people unpatriotic, hoping you won't think too hard about the difference between the usual crony-capitalist suspects and the global creative elite that have done so much to improve our lives. In a special tech section, Joseph Diedrich, Thomas Bogle, and Matthew McCaffrey look at various ways these innovators add value to our lives--even in ways they probably never expected.
Download Free PDF