Fixing Healthcare
12 August 2009If it were not such a tragic struggle, watching the entrenched interests fighting any change in the U.S. healthcare system would be vaguely amusing, like watching elephant races.
Unfortunately, these aren’t cute elephants, but a cancer on our society: the growth in their wastefulness, and in the value they subtract from the healthcare process every year, is bankrupting good companies, destroying the business foundations of the country, and enriching a few at overwhelming cost to the many.
While the American healthcare system has many problems and parts, it does not defy analysis. And while it will take many different reforms to perfect it, just a single change would bring it back from the dead. The problem is simple: private insurance companies. These groups do not have patient care in mind; they are only focused on extracting money from the system. They do not even operate as part of a healthcare system: with the same basic structure, they could extract money from any supply chain.
The worst part of this scheme is that the real customer, the patient, is essentially prevented from being the customer. She does not know the cost of her care, she has little or no control over those costs, and the result is the vendor is free to drive them to the sky, with everyone getting a cut – except the patient. Why not charge $100 for aspirin? Who cares? Why not charge 2x for a broken leg? Why not run 4x too many MRIs? Who cares? The MRI vendor is happy, the hospital with the new machine needing to be paid off is happy, the doctor getting paid per use, and reviewed for quotas, is happy, and the patient – Who cares?
Most insurance companies learned long ago that their real business is in investment: life insurance companies are the obvious early case. Collecting and paying out premiums and claims is just a sideline, a way to get the cash needed for the investment business. You knew this, right?
So it is with American healthcare. These companies are not in the business of healthcare: they are in the business of extracting as much cash as possible from the system, on a compound annual growth basis which is 3-4x the cost of living. How much would they spend to keep this bloodletting from being interrupted? Well, the bank lobby spent $1B to remove the Glass Steagall protections, just before the banks helped blow up the US economy. I would guess that what we are seeing right now, in Washington, DC, is the largest amount of money ever spent on lobbying a single cause – all in the name of retaining a broken system, one which costs more than twice the next one down, one often classified as something like 37th in the world, just behind Slovenia.
What is it worth to the healthcare insurers of America to continue to provide sub-Slovenian healthcare to US citizens? I will bet that, all said and done, when this lobbying effort is over, they will have spent at least $3-5B. Now, imagine that: how would you spend that much? Sure, you’d run TV ads, radio ads, print ads, and hire LOTS of K-street lobbyists.
But even so, that still would leave an amazing amount of pure cash, blood money, given directly to members of Congress and the Senate, to assure that no one messes with the current system.
That makes it easy for you, the voter, after this battle is all done: you can just check the records for each of the 435 representatives, and see how many dollars they took in insurance lobby money. Unfortunately, the battle will be over by then, and what you discover, while scandalous beyond belief, will not matter. Either the system will have been fixed, or left the same.
Who do you think will win?
Why do you think people like Sarah Palin lie about government panels deciding if her babies can live? Who makes up this crap? Why do so many party hacks pick it up and repeat it, knowing it to not be true? Money. Where is that money coming from? Insurance companies. Why? Because they have it. Why do they have so much of it to spend on this issue? Because you don’t. It was, once, your money.
I think the best way to fix the US healthcare system would be to simply start from scratch, whatever that entails: either a clean slate, allowing private insurance, or just get rid of the cancer altogether, and forget private insurance. It would be nice if the private companies competed with each other, and kept prices down – this is the fraud that they would like to have us believe. Instead, in my state (Washington) and, I think, in most states, the number of firms is small, they continue to consolidate (we now have only one or two, it is literally hard to tell), and they just raised rates 18% this year.
This isn’t about Americanism, or free enterprise, or Adam Smith. It’s about deceit, unrestrained monopolistic and oligopolistic adventurism, and a brazen, completely soulless drive to continue taking more and more and more, even as the healthcare system falters, even as it brings down the larger economic system of the country. Like drug addicts, they just can’t slow it down, just can’t settle for enough, just can’t say no.
Someone needs to say no for them and to them, and that’s the job of the citizens of the country, and then of their representatives. Are we smart enough, and angry enough, to do it?
I hope so, because, like Obama, I do not see the alternative. There is no time left, and there is no money left, and even General Motors has been bankrupted by (among other things) their obscene costs.
Obama wants to insert realistic pricing, using the tool of a government insurance agency to compete with the entrenched insurers. That’s clever, but even that is too much for them: no change is good change.
It is really quite simple, as far as I can tell: there is no other choice than to get rid of them. We can do it the fast way: just outlaw them. Or we can do it the slow way: make them charge real , customer-driven prices, prices based not on how much money they want, but on their costs. That will also get rid of them, or change them so much they won’t recognize themselves a few years later. There is no third way.
How do things like this happen? Lobbyists. No one should be allowed to give money to elected representatives, but the individual citizens of that country.
10 Responses to “Fixing Healthcare”
August 12th, 2009 at 4:48 am
Well said. Time someone told it as it is.
August 15th, 2009 at 2:46 am
Why the American right make me sick | Simon Hoggart
http://www.guardian.co.uk/theguardian/2009/aug/15/simon-hoggarts-week#
August 15th, 2009 at 12:36 pm
Very true.
I moved from Western Europe to the US in Nov 2007 and since then, healthcare system has been my biggest surprise (bad one). How can a country with this level of development, innovation not realize this system needs to be turned upside down.
The current campaign against the reform is just unbelievable. I hope Obama will be able to move ahead.
August 19th, 2009 at 10:40 am
Right on, Mark. If you haven’t already sent this to those 435 reps, please do so!
August 25th, 2009 at 10:31 pm
Nothing good happens when the customer and the payee are disconnected. add a few decades, a little greed and sophistication and you have a table titled beyond repair.
August 26th, 2009 at 5:31 pm
I’m more than ready to take the profit out, whether there is a public option or not. Here are some really good thoughts:
http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/
August 27th, 2009 at 9:48 pm
[...] Another excellent blog by one of the best predictive futurists working today, Mark Anderson. [...]
August 28th, 2009 at 6:51 pm
Mark, you mention WA as a state with few carriers. You are correct but why is that? I think we all agree that real competition is necessary in any industry. Part of the reason is massive regulation, 40 mandates (many of which were put into law by lobbyists for practitioners–not insurance) and “defensive” medicine by doctors afraid of getting sued. Tort reform anyone?
If you eliminate insurers, how do costs go down? If the payor is the gov’t (us), money will still get extracted from us to pay providers. Sure the profit part comes out so there may be some reduction in costs but look at Medicare. It is going broke much faster than Soc. Sec. and there is no profit motive there.
Doctors and hospitals already shift their unrecoverable costs from Medicare to the private market now.
If we require coverage of pre-existing conditions, that will drive up costs as well. The problem in health care, as it is with most other issues is…US. We as a society spend too much on health care because we don’t eat right, we don’t exercise enough and yes, we don’t “ration” health care. 85 year olds that need hip replacements should pay for it themselves.
The “young immortals” have no incentive to participate because regulations do not allow for plans tailored to them to be sold.
Eliminating insurance companies only solves one piece. Until we slow down the “demand” side of the equation, health care “reform” still results in higher costs.
August 29th, 2009 at 12:43 pm
I’m a conservative and naturally I disagree with a lot of what you wrote here. But here is a proposal I think you might like and one I sent to my (Republican) senators this week:
I haven’t been too happy with the Republican proposals I’ve seen, especially when it comes to pre-existing conditions, but here is a possible solution. Why not give Democrats single-payer universal coverage – but only for catastrophic care, while basic care would be covered exclusively by health savings accounts that could be rolled over?
The universal catastrophic insurance could be paid for with a new payroll tax, that employers pay half of, while requiring the dollars employers currently spend on health insurance to be transferred to people’s salaries. The health savings accounts could work just as they do now, except allowing the money to be rolled over. The same companies that currently manage such accounts could also manage when the catastrophic deductible has been reached and bill the government when it is exceeded.
The deductible itself could be means tested, lower for people with lower incomes and higher for those that are richer. The lowest income people could even be given a tax credit to help pay part of their deductible. The point is to let people spend their own money and allow the market to truly function. Competition for each patient’s dollars is essential to lowering costs. But the catastrophic insurance guarantees that no one will ever worry about pre-existing conditions again, and very few people would face bankruptcy due to medical costs. And think of the savings of getting rid of the middle man — the health insurance companies.
September 1st, 2009 at 7:55 am
While I agree on mostly of the problems of the US system, I don’t see European grass greener. Quite frankly my experience of European health system has been less than idyllic. I am an Italian who lived in France, the UK and the US. All the countries where I lived have all shown big pitfalls in the health system. When they tell me that the Brits have the best healthcare I beg to differ; they do if you live in an upscale area otherwise they are quite poor in service. The daughter of a friend of mine who works for a famous architects company in London when she needs a doctor for something serious flies back to Italy. True in Europe they fix a broken leg for nothing but if you need a simple cat scan you will be put in a waiting list of six months or more; by then you are probably dead if you need some quick intervention… and that will contain the cost of health care isn’t true? So is that the improvement? I live in MA, mandatory H.I. here, and every year my health insurance goes up at rates higher than the rest of the country – and even the one provided by the state is quite expensive and following the rates of private sector too… I seriously doubt that this administration will be able to fix the problem.