Why "Healthcare Reform" Is Not Reform, Part II

"Healthcare reform" is a pathetic facsimile of reform because it does nothing to address the structural causes of runaway costs. The system is careening toward insolvency and this "reform" merely hastens the coming systemic bankruptcy.

There are five primary reasons why sickcare (a.k.a. "healthcare") costs will bankrupt the nation as they spiral ever higher:

1. Sickcare costs are rising three times faster than the underlying economy, and have done so regardless of goods times or bad, or which party is in political power. This is unsustainable; sickcare will soon consume 20% of the GDP, on its way to 30%.

2. The sickcare system diverts ever greater sums of national income to a handful of cartels, in essence diverting trillions of dollars away from preventive medicine and public health and into for-profit private hands.

3. The "fee for service" model creates perverse incentives for phony billing, fraud, needless tests and procedures and sky-high charges for generic items, i.e. the $100 aspirin and the $2,000 "recovery room" (patient sits in a chair for a few minutes. I know about this because my 80-year old Mom was recently billed over $13,000 for a one-hour out-patient procedure on her toe; the bill paid by Medicare included this absurd "recovery room" charge, among other insane fees. Of course no one complained; the procedure was "free.")

4. The "employer-pays" model distances the end user (patient) from the actual costs and eliminates the only sustainable limit on spiraling costs, competition. When services appear "free" then they are naturally abused. When the consumer has no knowledge of the actual costs and no real choice on where to spend their money, then responsibility goes out the window along with competition.

5. As small businesses are burdened with these skyrocketing sickcare costs, they either stop hiring or are crushed out of business. The nation's economy is thus destroyed from within by the uncontrolled costs of sickcare which funnels ever-larger sums to private cartels even as the nation's health continues declining.

The present generation of Americans is the first in history with shorter life expectancies than the previous generation. This shocking reality should be sparking a revolution but instead the same old cartels are essentially writing legislation which continues feeding trillions to the cartels while ignoring public health and the causes of the nation's declining health. (See yesterday's entry for more on that: Why "Healthcare Reform" Is Not Reform, Part I )

There is a competitive, low-cost healthcare system around--it's just not in the U.S.Clinics in Mexico, Thailand and India provide dental, cosmetic and other procedures for 10% or 20% of the cost in the U.S. This so-called "medical tourist" trade is expanding rapidly, and since the care is generally on par (or better) than that offered in the U.S., U.S. insurance companies are wising up and sending patients overseas.

When employees can't get fired, their level of service can drop to near-zero without consequences. I have heard so many horror stories of abysmal care in U.S. clinics and hospitals (yes, alongside stories of superb care) and seen enough to grasp the uneven quality and lack of competition in the U.S. sickcare system.

The arrogant assertion that "the U.S. healthcare system is the finest in the world" is only true if you're a congressperson or equivalently privileged being. If you're a mere citizen, it's more like a lottery in which losers end up with care much worse than that available for cash in Thailand and India. (I've been to the big "medical tourism" hospitals in Thailand: the service and facilities are equal to anything I've ever seen in the U.S. You don't have to wait, the employees are actually attentive, and of course care is actually affordable.)

I think it is self-evident that it's the U.S. which has "third world" medical care. This is not a slam on overworked U.S. healthcare workers, many of whom are tasked with the impossible by a system which is ruled by perverse incentives. It is simply a statement about a system in which competition, patient responsibility/control (yes, they go together) and transparency play no role whatsoever.

I have witnessed hospital staff--not one or two employees, but entire floors-- which went through the motions of "providing care" in between gossiping with co-workers. I have waited hours for some staffer to become "free" from his/her crushing schedule to go get a wheelchair from another floor. (If everyone is so busy, why are they standing around so much?) If this is "first world" care, then I'll take so-called "Third World" cash-only care in Thailand any day.

Let's talk about a forbidden topic: responsibility. So-called "medical insurance" (it's so-called because we all get sick and die, so how is that "insurance"? It's not like we're insuring against the risk that one house in a hundred may burn down) has a peculiar trait: responsibility plays no factor in its cost.

If you ignore traffic rules and behave recklessly while operating your vehicle, your auto insurance will rise very quickly to match the risks created by your behavior. Eventually you will be unable to get insurance and will not be able to drive legally. This is common-sense and no one complains that the system is "unfair."

Yet if you recklessly drink and smoke and eat to excess, without regard for basic rules of "operating" your own body, then it's your "right" to get cheap insurance coverage without regard for your own conduct in the matter. Even mentioning this is verboten; why?

Medical care also has a peculiar trait: nobody can tell you what it costs. The actual costs are opaque, obscure, or simply unknown until the bill is printed. How can anyone effectively compare costs and services when the system has no transparency?

The central tenet of the Survival+ critique is that no problem can even begin to be solved without an integrated understanding of the interlocking chains of causality which create the problem. So what does this mean in this context?

Once you remove all responsibility, transparent pricing and competition, then you have also eliminated all patient inputs and all controls on costs and quality. The patient's "choice" is effectively reduced to a phony simulacrum of choice: which member of the insurance cartel would you like to "choose"?

I have already presented the "impossible" solution which is working outside the U.S.: The "Impossible" Healthcare Solution: Go Back to Cash (July 29, 2009).

This is "impossible" because it places responsibility and control completely on the citizens themselves and creates an open market for services. Just as in totalitarian states dominated by State propaganda, "responsibility" and "competition" have been elevated to the state of supreme emptiness. They are worshipped because they no longer exist to threaten the status quo.

If reform were not a facsimile, the first step would be to strip the power of the sickcare, agribusiness, pharmaceutical, fast food, etc. etc. cartels to shape policy and control the media. Educating the public rather then enabling cartel propaganda would be a good second step, along with making the citizenry responsible for their own health once again rather than cede it to the Savior State and its "private partners," the cartels.

Here are a few books/documentaries of interest on these topics:

Food, Inc. (film)

King Corn (film)

Super Size Me (film)

The China Study: The Most Comprehensive Study of Nutrition Ever Conducted and the Startling Implications for Diet, Weight Loss and Long-term Health

The End of Overeating: Taking Control of the Insatiable American Appetite

The Omnivore's Dilemma: A Natural History of Four Meals

Diet for a Small Planet

Rats in the Grain: The Dirty Tricks and Trials of Archer Daniels Midland, the Supermarket to the World

The Informant: A True Story

Fast Food Nation (book)

Permanent link: Why "Healthcare Reform" Is Not Reform, Part II


Order Survival+: Structuring Prosperity for Yourself and the Nation from your local bookseller or from amazon.com or in ebook and Kindle formats. A 20% discount is available from the publisher.

Expanded free eBook now available (85,300 words, 136 pages):
in HTML: Survival+ in PDF: Survival+

NOTE: the Kindle reader for PCs is now available for free which means you can read the Kindle version of Survival+ on your PC.

Of Two Minds is now available via Kindle: Of Two Minds blog-Kindle

Thank you, Monica S. ($10), for your much-appreciated generous contribution to this site. I am greatly honored by your support and readership.