The Big (State) Government Conspiracy to Protect Rich Guys

Devon Herrick
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Posted: Nov 04, 2016 12:01 AM
The Big (State) Government Conspiracy to Protect Rich Guys

I am not a proponent of conspiracy theories. I do not suspect black helicopters flying overhead are spying on me. I do not believe airlines release chemtrails designed to keep us plebeians chronically ill and too weak to revolt, nor am I concerned about the Illuminati. That said, some conspiracies are real -- and are designed to protect the wealthy at everyone else’s expense.

One of the biggest conspiracies is so well disguised you probably do not even think it’s a conspiracy. You probably do not realize your doctor is part of the conspiracy. Federal and state politicians are also part of the conspiracy -- as are the bureaucrats and licensure boards who regulate medicine. The pharmacy where you obtain drugs is in on it, as are the makers of the prescription drugs you buy.

I’m referring, of course, to the conspiracy by the medical industrial complex to keep medicine costly. The conspiracy insulates the industry and its practitioners from competition using regulatory barriers and exclusive licensure cartels. At first glance these may all seem reasonable, but they extort one-fifth of our national income.  

One of the biggest threats is information technology, which is shaking up numerous industries in our economy. Local newspapers have taken a huge financial hit as more people began obtaining their news from online sources. ITunes and Amazon have decimated retail stores as fewer consumers want to buy from brick & mortar storefronts. Netflix is putting pressure on traditional cable provider monopolies. Increasingly, consumers want access to low-cost, convenient medical care over the phone or the Internet without an inconvenient office visit. Yet, the medical conspiracy is trying to block anything that negatively impacts practitioners’ incomes.

Consider the example of Opternative, a startup that offers web-based refractive eye tests for free. The tests are offered in 39 states and available to 18 to 45 year olds.  Rather than an office visit where an optometrist flips through lenses of various strengths, individuals take exams using their computer and phone. The way the test works involves viewing letters on a desktop computer screen from 10 feet away while answering questions on a smart phone. An optometrist in the state where each patient resides will review the exam for a $40 fee and write an optical prescription if needed.

It’s easy to understand why optometrists oppose inexpensive online exams. At my optometrist, comprehensive exams cost anywhere from $90 to $120, depending on the range of services performed. Healthy adults ages 18 to 39 are encouraged to have a comprehensive eye exam only once every five to ten years. From age 40 to 54 comprehensive exams are recommended every two to four years. Online eye exams are a low-cost, convenient way to check vision between comprehensive exams. Opternative’s studies have found its tests are comparable in quality to in-person refractive eye exams. But as one might expect, local optometrists disagree. The American Optometric Association also opposes the use of web-based eye tests. Any time competition rears its ugly head, the legacy stakeholders cry foul. After all, “patient safety” (a euphemism for threatening local providers’ incomes) cannot be compromised.  

Members of professional guilds like optometry can afford to make campaign contributions to state office holders, who run a protection racket in exchange for contributions (economists call this rent seeking). Earlier this year, lawmakers in South Carolina voted to outlaw eye exams that are not conducted in person. After the governor vetoed the bill, lawmakers voted overwhelmingly to override the governor’s veto (Senate 39-3; and House 98-1). The public interest law firm, Institute for Justice, recently took the case and filed a lawsuit on behalf of Opternative.

Other forms of telemedicine face similar threats. The Texas Medical Board recently tried to prevent physicians from treating patients using telemedicine (over the phone) who they had not previously seen in person. Of course the proposed rule was all in the name of safety, but it was a way to prevent local providers’ patients from seeking lower-cost care from a competing doctor by phone. The Texas Medical Board appears to have backed down after being sued.

Other battles are also being won in the courts. The North Carolina State Board of Dental Examiners was recently sued by the Federal Trade Commission for anti-competitive behavior. The dental board is responsible for licensure and acts against people who practice dentistry without a license. At least seventy-five percent of its members are practicing dentists, who are elected by fellow dentists.

When it came to the dental board’s attention that some non-dentists were whitening teeth at mall kiosks and store fronts, it sent cease & desist letters threatening legal action. Thus the board was quick to guard dentists’ turf, arguing that applying hydrogen peroxide teeth whiteners by non-dentists was practicing dentistry without a license. It was legal for consumers to whiten their own teeth at home; but not for someone to assist them for a fee.

The case went to the U.S. Supreme Court, who ruled against the dental board. The high court’s reasoning was the dental board lacked sufficient state supervision and was essentially conspiring to prohibit competition from individuals who were not members of its licensure cartel.

There is big money in medical care. As a health economist I can assure you that the entrenched interests will do anything to keep that from changing. Services as simple as eye exams on computers, phone calls to physicians who only have virtual offices, and MinuteClinics staffed by nurse practitioners all have the potential to keep a lot of dollars from flowing into traditional medical practices.

Regulatory capture theory posits that regulated industries soon become captured by the industries they regulate. Imagine the temptation when the regulatory boards are composed of practicing members of the guild they regulate. This is especially true when membership in the cartel is exclusive and highly lucrative.

You see, some conspiracies really are real.