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The Education of Richard Kossmann

The Education of Richard Kossmann

November 1, 1999

Navigator: The story is that you came to Objectivism later in life than most people do and that you came to it more through a process of thought than through the emotional impact of reading one of Rand's novels.

Kossmann: The answer is yes to both of those.

Navigator: To put your journey to Objectivism in perspective, then, perhaps we could proceed chronologically with your upbringing, education, and early career.

Kossmann: My undergraduate education was in engineering. I decided to switch into medicine during my senior year in college, because medicine seemed a lot more specific, and as far as I was concerned they were both applied sciences. With a lot of luck, I was able to make the transition.

Medical school, of course, meant four more years of intense study with little time for other things. After medical school I had a decade-long period of specialty training, first in internal medicine, followed by neurology, and finally neuro-ophthalmology. My intention was a career in academic medicine, but this plan needed radical modification when, somehow, four children were born in less than three years. Accordingly, I opted to practice medicine privately full-time, and pursued this over three decades.

Navigator: Where was this?

Kossmann: Mostly in the New York metropolitan area. My undergraduate medical training was at Cornell Medical College in New York City; residency training in internal medicine was taken at the New York Hospital (Cornell's university hospital). The National Institutes of Health in Bethesda was our home for training in clinical neurology and medical research. We returned to Cornell / New York Hospital for additional neurology, and then it was on to Columbia Presbyterian Hospital in New York, for neuro-ophthalmology. That was a long but productive and very happy fifteen years.

Navigator: How old were you at this point?

Kossmann: Well into my thirties. But more important than chronological age is where it puts us in our society. We are now in the mid-sixties. So I entered full-time practice at the time when Medicare and Medicaid were initiated. By and by, it became clear that the medical profession was undergoing sea changes, the causes for which were not apparent. I did not perceive a national medical crisis. Poor, as well as elderly, were receiving access to and quality of care comparable to the middle class. I knew this because I was part of the community who was delivering this care across the economic spectrum.

Navigator: Was your outlook true of most doctors at that time? I believe the AMA fought Medicare and Medicaid.

Kossmann: The AMA fought those federal programs publicly. I subsequently learned that they may not have been fighting them behind closed doors.

Navigator: What about doctors you associated with? Did they feel the same way you did? Or was there a wide variety?

Kossmann: The best label would probably have been "conservative"—but not because I had given rigorous thought to or been active in politics. I grew up in an area in northern New Jersey well within the New York sphere of influence. Politics was largely the Democratic Party, governed by the unions that were powerfully influenced by organized crime. My father read widely and shared his thoughts with me. To the extent that I gave politics any thought, it was accompanied by the idea that government was dysfunctional.

Navigator: Anyway, in the mid-sixties, you saw these policies affecting your field.

Kossmann: Yes. And I began to devote some time and thought as to why these changes were occurring and what might be done to mitigate them, because these political trends were not good for medicine: not good for patients, not food for the doctors, not good for society at large. So I got involved in the county medical society issues. Although I was active for about ten years, I basically ran up against a brick wall. There was no real interest then in doing anything other than influencing marginal issues. So I became disillusioned about the prospect of doing anything substantive at the organized medical level, and I began to open my intellectual aperture by reading outside medicine. That led me to pick up economics where I left off in college. Soon the Austrian school was introduced, along with Murray Rothbard and the libertarian pantheon.

Navigator: Do you remember some of the other authors or ideas you picked up?

Kossmann: Rothbard introduced me to Mises, Hayek, Hazlitt, and Kirzner, as well as the Public Choice theorists—Buchanan and Tullock—and the supply-side school. And then to Bastiat's The Law. From there, I went to a review of our Declaration of Independence and Constitution.

[Leonard] Peikoff wrote a prescient critique of Medicare, pointing out that the program would affect not only doctors but also patients. The apprehensions expressed by Peikoff have come to pass.

Navigator: How did you come to this article?

Kossmann: A colleague suggested that I read it. The article was part of the intellectual quest to divine why an important institution in our society was undergoing such a distortion.

Navigator: Eventually, you began to explore additional things Objectivism had to say about socialized medicine. Tell us more.

Kossmann: Ayn Rand was reintroduced incrementally. I had read The Fountainhead early on and was excited by it, but not in such a way that it was an epiphany. Later on, after all of the above happened, I had a much greater appreciation for the power of her ideas and of those who followed her.

A socialized medical scheme is inherently irrational as is a socialized economy in general. Mises described the fatal flaw in socialist economics as the calculation problem: Because in socialism there is no true market wherein uncoerced buyers and sellers can establish prices for scarce resources. Therefore in a socialist economy, resources can be allocated only by subjective whim implemented through force by those with political power. Moreover, this deeply irrational process creates such untoward consequences that new interventions are required in an attempt to lessen the damage wrought by the previous interference in the market process. And so on, and so on, until chaos. Thus, medicine was not only increasingly politicized but, in the last two or three years, out-and-out criminalized. People who have attended Objectivist Center [now the Atlas Society] conferences regularly have heard Madeline Cosman speak to the pernicious effects of federal law on physicians.

These initial political misadventures then affect the behavior of nominally private participants in the market, as our medical-cost crisis so amply illustrates. As medical cost increased through the years, following Medicare, private insurance companies adopted cost controls similar to government.

Navigator: Can you be specific about the criminalization of medicine?

Kossmann: One example of what has now been defined as a potential healthcare crime is something as little as two or three coding "errors" on insurance-claim forms that are required by law to be filed. They could be construed, at the discretion of a prosecutor, as a "pattern of abuse." The penalties are draconian—thousands of dollars a day in fines and/or jail. Such a Kafkaesque circumstance is illustrative of where medicine is today.

Navigator: How are other doctors feeling about the political situation today? Are they looking for answers or are they deep into submission?

Kossmann: I think doctors are generally depressed about this, and justifiably so. However, a good deal of responsibility for the doctors' plight is their own, owing to apathy.

Doctors differ in what they are doing about it, and that depends largely on their age. There is a significant subgroup who are early retirees. This is a loss to both the doctors and their patients because a reservoir of experience goes with them.

At the other end of the spectrum are the recent graduates who have grown up with the idea that they are going to be defacto employees, and, for better or worse, that is their mindset. Then there is that group in the middle (say, 40–65), the group who are too old to change careers but too young to get out. That's the group with young children and big mortgages. Their mindset is to bury their heads in the sand and say, "Look, I am going to continue this as long as I can, but then I am going to get out as soon as I can."

But it gets worse. There is a deeper and far more significant consequence to this socialized control. And that is the ethical compromises and moral debasement that participation in such a system engenders. One illustration of this moral issue was made by a Swiss internist. He drew a distinction between the medical ethic and the veterinary ethic. The medical ethic, as codified by Hippocrates, requires a fiduciary relationship between doctor and patient: The doctor is entrusted to give the patient his best advice and skills. There is a one-on-one relationship. In the veterinary context, the doctor owes his trust not to the animal but to the owner of the animal. Accordingly, what we are seeing, increasingly in our current medical context, is a fundamental change in the contract between physician and patient, who now are forced to accept a third or fourth party into this relationship: an insurance company, an HMO, a government agency, the "community."

We are witnessing just the beginning of the mischief that this ethical perversion is causing. Government insinuation has given us a cost crisis. The HMOs have given us a care crisis: delays, denials, and increasing costs. These are going to get worse and worse, because essentially we have a socialized system masquerading as a free market.

Navigator: It sounds like the medical profession would not be a particularly fruitful field to cultivate if we've got older people who are getting out, saying, "I'm not going to worry about it anymore. I am going to take care of myself, forget about the profession." And younger people who know no better. It doesn't sound as though either of those groups would be likely to rise up in rebellion.

Kossmann: I would not commit scarce resources in cultivating physicians as a likely source of new Objectivists.

Navigator: There is a fierce argument in libertarian circles between those who say, "Without government policies and without government intervention in the free market, HMOs would never have arisen," and those who say, "No. even in a perfectly free market, you might well have gotten HMOs." Do you have anything to say to that?

Kossmann: Sure, I have an opinion on that. A free market is by definition one in which there ought to be no barriers to entry. It should be open to a group of people who propose this: "You give us your money in premiums and we'll deliver the following services: a panel of doctors from which you may choose, a limited number of specialists from which you may choose, a group of hospitals which you have access to, and a list of tests and treatments from which you may choose but we must approve, etc. These are the ground rules. This is what we offer. We are up-front about it. Take it or leave it." That is all consistent with a free market assuming that there is no hidden government subsidy. And therein lies the problem. There has not been a free medical market in this country since before World War II.

As I understand the history of medical economics in our lifetime, medical care was carried out pretty much the way it had been for two hundred years until World War II.

The way I got the story is this. Henry Kaiser visited his friend Franklin Roosevelt in the White House and said, "Franklin, we are in the midst of war—you want these Liberty ships built, but I don't have enough employees. You put these wage and price controls around my neck: I can't get any new workers. Now here is an idea that my staff has come up with. You let us induce employees by giving them free medical care. You let us charge the costs off as a business expense, and you tell your IRS not to tax it to the employee as income." That was the beginning of our problem.

Then as the years went on, offering "free" medical "insurance" became a great union bargaining ploy: to offer the union members lower deductibles or no deductibles, and increased coverage. That went on in the fifties and sixties. Then politicians realized that they could buy more votes by bringing retirees and poor people into this game. Medicare and Medicaid were created in the mid-sixties, after a few false starts. That caused an explosion in demand on the part of the senior citizens and the poor. State governments aggravated the problems by mandating coverage requirements in "private" insurance contracts. Through the seventies and eighties, with the market thus distorted and extraordinary advances being made in medical technology, costs predictably went through the roof. Schemes were devised to shift costs to the private sector. Business looked for relief. Then came the HMO idea.

There would be no medical cost crisis had there been no government intervention in the first place. The whole problem comes labeled "Made in Washington," and the solution comes labeled "Fixable in Washington." But there is no political will to do so because of the awesome constituencies benefiting from continuing central control.

Navigator: Are some of the solutions you're thinking of products of Cato Institute studies?

Kossmann: Yes, Cato scholars have contributed greatly, as have those at the National Center for Policy Analysis, John Goodman's organization. NCPA first introduced the Medical Savings Account idea and they continue to refine and polish that idea. High marks also go to Patrick Rooney, president of Golden Rule Insurance Company. He created MSA insurance products and implemented them in his own company. He was a powerful force in proving the workability of MSAs.

So the medical care crisis is a problem with a proven solution.

Navigator: Why don't we finish by asking what is ahead for Richard Kossmann?

Kossmann: To continue my education.

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