The Medical Monopoly: Protecting Consumers or Limiting Competition?

“The Medical Monopoly: Protecting Consumers or Limiting Competition?” is the title of a CATO Institute policy analysis paper issued on December 15, 2014. As the title suggests, the paper reports on how healthcare has been governed by a monopoly which has caused an increase in cost and a drop in quality.

The paper, by Sue A. Blevins, a writer and health policy consultant based in Boston, explains why healthcare is so expensive. “Licensure laws appear to be designed to limit the supply of health care providers and restrict competition to physicians from non-physician practitioners. The primary result is an increase in physician fees and income that drives up healthcare costs.”

The monopoly in healthcare begins right at the beginning in the educational level explain Blevins. “It should be noted, however, that medical schools rely heavily on federal subsidies, while training for non-physician providers is predominantly funded with private money. For example, all of the 17 chiropractic schools in the United States are privately funded; none are state owned.” She continues, “By contrast, 76 of the 126 medical schools are state owned.”

Reviewing the monopoly against chiropractic, the paper points out that between 1963 and 1974, the AMA operated a Committee on Quackery, whose main purpose was the elimination of the chiropractic profession. The AMA also lobbied the government to restrict chiropractic licensing and reimbursement for healthcare services such as Medicare.

In the paper Blevins reports: “In addition, the AMA recommended that Congress exclude payment for chiropractic services from federally supported health programs. As a result, Medicare recipients are restricted from using the full range of chiropractic services. Medicare policy limits patient access to chiropractors this way: Medicare reimburses chiropractors for performing “spinal manipulation” but requires that a diagnostic spinal x-ray be taken before chiropractic treatment. The catch is that Medicare does not reimburse chiropractors for performing x-rays, even though they have the training and are licensed to perform x-rays in all 50 states. That policy gives the medical profession control over managing back problems among elderly Americans.”

The paper also reports that in 1976, four chiropractors filed an antitrust lawsuit against the AMA and 10 other medical organizations. The suit charged that there was a criminal conspiracy to destroy chiropractic. It took over a decade to resolve, but in 1987 the chiropractors prevailed. The AMA was found guilty of an illegal conspiracy and in violation of U.S. antitrust laws. In spite of this victory for the chiropractors, the damage was already done as the restrictions on chiropractic reimbursement remain in place today.

In her conclusion, Blevins puts forth a first step toward leveling the playing field and reducing the healthcare monopoly. She explains: “What should government do if it is serious about cutting health spending and improving access to affordable healthcare? The first step should be to eliminate the anti-competitive barriers that restrict access to low-cost providers, namely licensure laws and federal reimbursement regulations. Americans should not be forced to substitute providers against their will; rather, they should be free to choose among all types of health care providers.”

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