 Our great friend Bob Murphy returns to the show this weekend as we wrap up a three-part series on the lousy, anti-market health care system in the U.S. Bob is co-authored a terrific new book called The Primal Prescription, which may well be the first thoroughly Austrian treatment of the subject by any economist. And Bob really eviscerates the arguments for Obamacare and debunks all of the many myths that progressives use to claim the so-called right to health care and to justify interfering with the very market forces that could make medical treatments cheaper and better. His co-author, who is a libertarian ER doctor, provides some great practical advice about navigating your own health care, your own doctors, and the absurd insurance networks so that you can protect your health and your pocketbook. So I really recommend Bob's new book The Primal Prescription and stay tuned for a great interview. Good morning Bob Murphy, good to talk to you and welcome back to Mises weekends. Congratulations on your new book. Thanks for having me, Jeff. Always a pleasure to be here talking to you. Well, we are talking about The Primal Prescription. I guess first of all, tell us how you hooked up with Mark Sisson. He's a libertarian folk hero of sorts these days. So I'm curious how you happened to know him. Well, sure. So Mark's organization reached out to me and he got on the phone with me and he said, Hey, look at, and of course I knew who he was. You know, I had heard of him and then certainly heard him on the Lou Rockwell show and so forth. And Mark said that he wanted to sort of take the same mentality of what he had brought to the areas of, let's say, diet and nutrition in terms of people just taking charge individual responsibility of their own health and then just show that that same problem was playing the country as a whole. And we've talked about it back and forth, but then he came to me a little while later and he said, You know what? I have this ER doctor who's my buddy and he also wants to write on this project. And so Mark realized, you know, why don't we just put the two of you together? And so that'll be a powerful one to punch of you as the PhD economist explaining what went wrong with US health care and just to show the interaction of economics and health care and health insurance and why does the market not seem to work in this area, the way it works with computers and cars and everywhere else. And then this other guy, Doug McGuff, who's an ER doctor, right, with decades of experience working in the emergency room, and he can sort of just flush it out and give details and give his own frontline experience as to how the government has really screwed up health care and health insurance. And what finally do Americans do? How do they fix it? You know, given that, okay, you can say the government screwed everything up. But how does that help me? What do I do about it right now? And that's what we do in the second half of the book is give people very detailed instructions about how do you pick a doctor? What kind of health insurance plan should you do? What happens if you do go to the hospital? Should you get an elective, elective procedure? You know, what methods do you use to make those really important decisions? And obviously that part, it's Doug, my co-author, who is providing most of the details there since that's his specialty. It's a bit of a departure for you from your normal econ writing. Let me ask you this. You dedicate the book as follows. I dedicate this book to those Americans struggling to maintain liberty in their lives in all of its dimensions. So tell us what you were thinking with the dedication. Well, I had been over the years doing more and more on health insurance and the healthcare sector, because you're right. I had been specializing in energy economics. And of course, in terms of my straight Austrian stuff, I do a lot of money in banking in the business cycle. But I knew that in terms of where do people really need to understand free market principles? And where can they really see how government intervention has done what Mies has always talked about producing unintended consequences? Then that just sows the seeds for the next layer of intervention. I had known for a while that it was really in the healthcare market or sector. And I just didn't really have an opportunity to go too much into it, because I knew it would you always have to really immerse yourself in that area. And so that's what this book allowed me to do is to really dive into these things look through the CBO reports and all that stuff, and just see how the way that cheerleaders for the Affordable Care Act, for example, were pushing it. I mean, it was just they weren't even lining up with the CBO reports set. So as far as that dedication, what I meant by that was the theme of our book is that, you know, don't let these experts bamboozle you don't let the government intimidate you and the system is not on your side and you do need to secede from it, if you will, and just take take individual responsibility. So a lot of sort of the advice that I and other people who think like me have been giving to people in terms of the financial sector, like to say, you don't want to just trust these experts who set up your 401ks and this and that and go ahead and put your money in with Wall Street, it'll be safe. No, we were saying there that, oh, hey, the whole system is screwy. It's it's designed for the fat cats and not for the little guy. And you really need to sort of isolate yourself because this whole thing is really built on a house of cards. That's exactly the mentality that we were giving when it came to the health care and health insurance sector. So on the one hand, it was very dismal in the beginning, a very bleak prognosis. But then there was hope that we said, look at there's ways that you can you and your family can shield yourselves from the brunt of this thing as it falls apart. Well, but what I love about the book and what I love about what you're doing, what Mark says is doing is that there's so much crossover appeal here, right? With the left progressives who often times, if you think back to the 1970s stereotype, it was some sort of hippiest guy with a health food or supplement store. If you fast forward a few decades, now we have the paleo primal crowd. And I think they're a lot more libertarian ish. Obviously, John Mackey is head of Whole Foods, who's someone who's very much in our corner. So it seems like when you get to something so fundamental as someone's health or their body or their diet or their physician, that it lends itself to libertarian crossover thinking. Yeah, and that's a very astute observation you made there, Jeff. And it's and that's what I tried to do, especially like, for example, I was doing the primal blueprint podcast with Brad Kerns the other day. And I knew that some of his listeners were going to be very reluctant to trust me, you know, that I was a kind of guy like, wait a minute, is this some guy that like defends big companies? And so I was trying to really make sure they understood that, look at we, we are not on the side of big business. On the contrary, we go through the book and explain how, for example, with the Vioxx drug scandal and how the FDA was looking the other way. And that there was, you know, these major pharmaceutical companies were sort of sweeping things under the rug. And we're not doing what was in the best interest of their customers. And so what the, you might say, like the granola eating hippie or what have you, ha, ha, that stereotype, those people, they need to realize that free market economic principles explain the world they see, right? That it's not the case that someone who's genuinely for the free market and believes in capitalism and is against, you know, government handouts and favoritism and cartels, that person knows full well that the current system is screwed up and that the people running big businesses are not necessarily angels. And in fact, if they thrive in the current system, that's good evidence that, in fact, they're the ones cutting deals behind closed doors and stamping out competition. Speaking about big business, you tackle Obamacare and the history of that here from from your perspective, you know, Obamacare is so complex, you have the exchanges, you have insurance companies forced to cover all kinds of things, whether they want to or not. You have all these things interfering with pricing and risk allocation. Do you almost suspect that Obamacare is so needlessly complex that it's paving the way or it was even intended to pave the way for a single payer system? I definitely think that some of the architects and some of the main cheerleaders, ideological supporters of the Affordable Care Act knew that it was a stepping stone, that they knew this is not going to solve everything that Americans 20 years from now are still going to be dissatisfied with the delivery of health care. They're going to hate dealing with bureaucratic health insurance companies and there's going to be a public outcry. And at that point, you know, the time wasn't ready. This this past, we tried to push it through. It didn't work that the American public was not yet ready for the future, but they will be once we soften them up a little bit with the Affordable Care Act. So and that's not just, you know, a conspiracy theory. We have Harry Reid, for example, we quote from a transcript where he was talking on some public outlet station with somebody who was very sympathetic saying, you know, is this, as I said, is the Affordable Care Act the end? And he said, no, of course not. And they both were openly talking about how having private health insurance companies in the mix was just a hindrance. You know, let's just sweep them out of the way and we'll get rid of the middle man. So there are plenty of people like now, again, with stuff like this, I'm not trying to say that every single person involved in crafting this legislation had some secret plan that they were all keeping from the public. Something like this, once the wheels get in motion, obviously lobbyists come in, lawyers come in and start writing bits and pieces of the legislation to benefit their clients. So no one person was in charge of this whole enterprise obviously, but certainly I think most people know full well who looked at its provisions. They know that this is not going to fix things. This is just going to best be a band-aid, if you will, on some of the major problems that were causing such unhappiness and that these problems are just going to fester as time continues. And we already see signs of that. Like people are already, you can see, for example, on outlets like Slate, which are very pro-affordable care act, they're already warming their readers up to the idea that maybe rationed managed care in limited doctor choice, maybe that's actually a good thing because it holds down costs, and keeps health insurance from getting too expensive. So they're warming people up to the idea that the inevitable trade-offs that they're going to experience because of this new approach of not getting access to the doctor you want and things like that, they're trying to be sold that, oh this is a good thing, you know, you should want to take one for the team. Well Bob, the last couple weeks we've been talking to some medical doctors who are really on the front lines of practicing in the age of Obamacare, and they're really trying to get us back or at least get their patients back to a system where they pay cash, at least for basic services. But on the insurance side, in a more libertarian world, talk a little bit about the function, the role of insurance, and how it would play out in a system that was more rational and more libertarian. Well, sure thing, that's a great question. So I want to stress that insurance is a good thing per se, right? It's a great innovation and great institution in the market economy because there are many areas of life where there are rare but catastrophic events that happened to people, like someone could just drop that of a heart attack, you know, a young bread winner has got a family to support and he just drops that of a heart attack, that's what life insurance is for. Or you're driving along, maybe you're following all the rules of the road and you get into a major car accident and your car's totaled and, you know, that was $30,000 you weren't planning on having to spend there. Well, that's what car insurance is for and so on, right? So the same token, you could have major illnesses that strike your injuries that have huge medical expenses associated with them that you just weren't prepared for and that's what health insurance in the normal market would be for. But yet things have gotten flipped where now you have your health insurance covering, depending on the plan, but covering things like some of your routine office visits, whereas your actual total out-of-pocket or total coverage for your expenses can be capped. And so if you think about that, that's the exact opposite of how auto insurance works. It's not that you get your oil changes covered by your car insurance company, but then if you get into an accident that totals your car, they pay 80% of the replacement cost. No, normally it's the other way around. You pay for the routine predictable expenses, but you're covered in case there really is a catastrophe, in which case, you know, you don't have to worry about that. That's the function of insurance in any other sector. So it's, that's the way insurance should work. Also, it should be portable. It's crazy that your health insurance is very often tied to your employer. That's, you know, if you, if you quit your job, it's not like all of a sudden you say, well, honey, let's be careful because now we don't have car insurance, whereas it really was the case, and that was one of the major reasons that so many people wanted something like the Affordable Care Act, is that if people change jobs or lost jobs beforehand, they might be out of health insurance. And so that's also a crazy system, especially because you could develop a condition in the meantime, and then all of a sudden become uninsurable. Right? So imagine of life insurance act of the day. You're a young guy, you take out a life insurance policy for, you know, 30 years or something, and then because you change jobs, now all of a sudden you lose that life insurance policy, and you have to reapply. Well, what if you develop a condition in the interim, now all of a sudden you're ineligible for life insurance? Right? So that would, it wouldn't be very, wouldn't give very much peace of mind if that's how insurance worked in these other sectors. And so that's one of the examples I like to use to show people that the way health insurance it currently operates, it's not like insurance anywhere else, and it's not because there's something intrinsic to medical care per se that makes it inapplicable for insurance. It's because of government intervention that has led to this perverse outcome. To be fair, let's not give our left progressive friends a total pass here, though. If there's one thing people on the left hate, it's the idea of allowing insurance companies to price premiums based on the actual risk profile of the individual buying insurance. Right? I mean, wouldn't a libertarian world necessitate that insurance company charge you differently if you choose to smoke five packs of cigarettes a day, or ride a motorcycle, or engage in skydiving, or whatever it might be, or even, I dare say, be a female because the cost of childbirth are exclusively borne by females. This is something I think the left has a real problem with. Yeah, that's a great point, and definitely there are, I mean, on the one hand, it's, it cuts both ways. The part of what the function of insurance is, is that you don't know exactly who is going to require high expenses, right? Because if people knew the future with certainty, there would be no room for insurance, right? The insurance company would just say, well, wait a minute, we know that you're going to end up paying less in premiums than we pay to cover your claim, so we're not going to give it to you. So there's this intermediate mix where they can put you in different risk pools and then charge an amount such that if everybody in that particular pool pays that premium, then yes, they expect that actually they're covering themselves. And that's, you're right, that's what happens in any other area, and that's what makes the insurance viable and affordable. And instead, you get into this perverse outcome where if they come in and say, oh, no, that's not fair. Well, for one thing, it leads to absurdities. So for right now, my health insurance policy, because it's mandated by law, now if I happen to get pregnant, well, then I'm covered. I have my maternity care covered, but I'm probably not going to need to use that particular feature of my health insurance. And so you have these absurdities, and also it's arguably unfair that what's happening now is young, healthy people are paying much higher premiums to subsidize older people who have medical conditions that are now the, you know, that there's it's built into the law that the difference in premiums they can charge. There's a there's a cap on that. There's like a three times ratio that's enforced, whereas in the market, it would have been more like five times as much where older people can't be charged such and such above how much the premium they're charging for a comparable younger person. So you do have all these things that look in general, prices mean something. And that gives firms the incentive to provide products and services to who wants them the most and who can benefit the most from them. And you start going in and setting up arbitrary caps on what people can do with prices that leads to shortages or surpluses, depending on the situation. And you don't get around that just because it happens to be health insurance that you're talking about. Bob, talk a little bit about the portion of the book written by the ER doctor, Doug McGuff. It looks like he's giving, well, first of all, he calls it the U.S. sick care system in the book, but he's really providing sort of a tactical approach to navigating the current world, your insurance company, dealing with your doctor, avoiding unnecessary prescriptions, avoiding unnecessary treatments. Mark Sisson in the intro really praises it as kind of a practical hands-on approach to dealing with things as they stand today as opposed to waiting for some better system to come down the road. Right. And that's really why I was so excited about this book, this project, is we weren't simply complaining about the affordable care. We weren't just throwing up our hands and saying, well, it's a big government. What do you expect? And that people would have had to, what, march on Washington or just, you know, if we write enough letters to the editor, maybe for our kids, things will be different. No, we were telling them, this is what you do right now to help yourself and your family. So yeah, he has several chapters devoted to this just to give some of the highlights. He's got a whole chapter on called Getting Off Your Meds. And so in here, again, this is from firsthand experience is dealing with people who because what happens is it's very analogous to what happens with government intervention in the economy, that someone will have something that's not right. They'll get prescribed some pharmaceutical and then that will have side effects and then they'll get something else to deal with the side effects. And then before you know it, they're taking 15 different medications. And so he just gives a step by step guide as to how do you wean yourself and start scaling back. And by the way, it's not a real simplistic just, oh, yeah, you don't need that stuff. Just go cold turkey and you'll be fine. No, he gives he cites the research and he shows you these are the things this is the order you would do it in and this is the procedure and consultation with your doctor and so on. So it's a very fact based approach that Doug is, I say an ER doctor, he knows the literature. Another example is we give a framework for should you receive screening like a mammogram and so on. And there it's not that we say yes or no, it depends on the individual, but we give a framework for evaluating it because contrary to the public campaigns, I say, oh, yeah, everybody should go get a breast exam or everybody should go get prostate and so on, not necessarily, right? That there's there's trade offs, there's pros and cons. And so yes, if you have a family history of that and you reach a certain age, yeah, maybe you should go for checkups every so often. But the point is the this one size fits all approach that these public campaigns give they actually cause more harm than good. And we cite the literature on this. So just things like that is that how people can take charge are our main emphasis in terms of just dealing with the system is where possible, try to deal with people who treat health insurance and health care is a market transaction that where they view themselves as a business and you are their customer that that's the mentality you want. You want to get away from the conventional approach where the hospital looks at you as a nuisance, right? Because you're not paying the hospital, it's either your insurance company or the government. And you're this pest and they're trying to get you out of their hair because you're a walking time bomb in terms of liability. If something goes wrong, they want to get you out of there because they know they're probably not even going to make money off of you depending on what your condition is. So you don't at all want to be in that kind of environment if at all possible. Well, it's so true and it's infuriating to think about speaking of infuriating Bob, I want to get one last question in here and get your reaction to this. The now infamous USDA food pyramid, which the USDA finally dropped quietly a couple years ago. But if people recall at the bottom of the pyramid, the base of the pyramid is bread and cereal and rice and pasta and way up at the top it says, you know, fats and you should eat those very sparingly. So if it turns out and increasingly looks like it will turn out that that pyramid was astonishingly wrong. That's actually the opposite. And as a result, the USDA is directly responsible for adding to the epidemic of cancer, heart disease, obesity, stroke, diabetes in this country. Why is that not a scandal? Why is that not an outrage? I mean, talk about unaccountable. I find the USDA food pyramid to be an outrage and I don't hear anybody talking about it. This sort ties into your earlier observation about how there's a natural alliance or sympathy between the people who have been drawn to the primal lifestyle just on its own merits and then they wouldn't have called themselves libertarians and then they get exposed to the broader libertarian perspective. For example, my childhood friend, his sister, was a nutritionist and she started investigating you know, the paleo diet and so on just because some of her clients were into that stuff and she went in initially skeptically and then was convinced and realized, oh wait a minute and so she began to distrust the government experts in the area of diet and nutrition and things like that and in terms of exercise regimes and things and so then I had more credibility when I was telling her look it, I went and got a PhD in economics and I'm telling you when they talk about what causes booms and busts and when they talk about how we're going to fix the banking system it's not just that they're a little bit off they're the ones causing the problem well now she's much more receptive to hearing that because she's seen firsthand in her own area that that's what happens so I think you're right Jeff that the more people study this and unfortunately there's this knee jerk reaction that people just assume if there's something that's really important like the economy or health insurance or health care that well somebody has to be in charge of that and yes they might screw up they might make mistakes but the solution is to get better people in charge because clearly we can't just leave it up you know we can't just have anarchy we just can't have no system we gotta have somebody in charge to tell people what to eat because otherwise people will be doing all kinds of and that's really I think an unfortunate habit that people have an intellectual mistake and so one of the things we say in the book is look if you really don't think we can get along without having an FDA saying what is and what is not acceptably safe levels or you know safe products and so on well you can still have that the government can still hire its own experts to evaluate stuff but don't make it mandatory just have the FDA there issuing its proclamation and you can go to their website and see what they think is safe and what's not but if you decide you know what after talking with my doctor doing my own research I think I want to try this new experimental procedure because I have a certain condition and they're using this pill over in Europe or what have you then you should have the freedom to do that it's it's crazy to me that we're giving so much power to a few people that are selected by Washington politicians who as you say are completely unaccountable when when think when the FDA screws up and they approve a drug and then change their mind later and people can point to it and say look at how many fatalities result from that screw up the FDA if anything is going to get more funding they're going to go to Congress you know in the wake of the scandal and say well we're understaffed what do you expect us to do we need more manpower so we don't screw up like that again so it's perverse you know it's not that they intentionally do something to kill somebody but the incentives for huge organizations like that are exactly the opposite in Washington the way they are anywhere else Bob tell us where we can find the book it's titled The Primal Prescription written by Bob Murphy and Doug McGuff is it available on Amazon is it out already in in paper form it's definitely available on Amazon I believe the plan was for it to be in bookstores but I have not been to one to confirm it with my own eyes yet so for sure if people want to get it I would just go to Amazon right now we've got an advanced copy headed to the Mises Institute and I will say this I will read it immediately upon getting it and we got a lot of books here we don't have time to read them all but it's one that'll be at the top of my list ladies and gentlemen be sure to check out Bob Murphy now a research professor at Texas Tech and his new podcast which I have to plug Contra Krugman which he does every week is it every week with Tom Woods that you're doing the podcast right every week we take what Krugman's op-ed column was that week and we go through it line by line Bob congratulations on the book thanks so much for your time today and ladies and gentlemen have a great and healthy weekend