Perspective For All (It's Free!)

Sometimes perspective is helpful.

Even when given just a little bit of it.

Presidential candidate, Sen. Bernie Sanders, has recently released his “Medicare-for-All” plan. Similar to his make college education free plan, there are a number of things admirable about it. No healthcare deductibles. No co-pays. No fighting with insurance companies. We all get, seemingly for “free,” whatever the government thinks we need.

And, I get it. In 4th-grade, I once ran for student council touting a “No Homework For All!“ slogan. I’m not even saying this is the same strategy being used by Sen. Sanders. Instead, I’m just trying to imagine the ideal:

A world where all of us have (1) the healthcare we need, (2) when we need it, (3) at the most reasonable cost to all of us, collectively.

WHAT WE NEED

We must first establish that this requires a value judgement.

Someone is going to have to make one.

And, there are generally two pathways: (1) we can decide what value is for ourselves, or (2) we can let someone else do it.

Deciding for ourselves is what we do with most of our commodities.

For example, in a market economy, corporations aren’t really maximizing profits at all. Consumers are doing it for them. You and I get to decide. Corporations either receive a profit or a loss based upon our own assessment of their value.

Of course, we can always let someone else decide what we should value. But, who is best qualified to do that in medicine? The government? The insurance company? Healthcare policy experts? And, how?

These are challenging questions.

But, this is more straight forward: whenever you involve others, it costs money.

External judgements can be expensive. That’s one reason healthcare is so pricey today. Layers upon layers of entities hold a stake in what you should value. Weasel them away and prices will go down. And, yes, this includes many government regulations.

WHEN WE NEED IT

This entire concept really means without a delay.

A scenario where supply and demand are perfectly harmonized. No shortages. No surplus.

Although no system seems capable of eliminating all waiting lines, being able to successfully orchestrate supply and demand is a near impossibility for a central authority. Why?

Because the authority is too far removed from where the transaction takes place.

Most of you don’t know this, but even now, in our partially (yet rapidly increasing) centralized healthcare system, we frequently have rather bizarre shortages of simple medical items like normal saline.

If you don’t know, normal saline is a bag of salt and water. Mixed together.

Say what?

It’s true.

How can there be a shortage of salt and water at the nearest hospital? Well, there often is, and it frequently reminds those of us within this environment how a heavily consolidated and bureaucratic machine tends to function.

AT THE MOST REASONABLE COST

Someone told me recently that healthcare is not amenable to market forces.

To the contrary, I have my best conversations about value when a patient has no health insurance. In these moments, we instinctively only talk about value-added.

Here’s one thing we all should understand:

“From the 1930s onward, the more the U.S. government has subsidized healthcare, the less affordable it has become.” –Dr. Michel Accad

It’s really the the theory of bureaucratic displacement moving slowly, slowly, slowly, at work.

This is the observed scenario we frequently see within a bureaucracy. It’s where increased expenditure is oddly matched by a fall in production.

In healthcare, for example, we continue to input more variables into the system–more administrative committees, more quality metrics, more regulations, more costs–without an apparent increase in production or health.

Sen. Sanders hopes to solve these problems. How? By doing more of them, especially when it comes to adding costs.

* * *

Ms. Jones was recently admitted to the hospital for a three day stay.

She got one CT scan. A few X-rays. Numerous blood tests. She received two minimally invasive imaging procedures on her heart. All of these tests were appropriate for her condition because uncertainty about her condition remained throughout her hospitalization.

She was ultimately sent home with reassurance that a potentially life-threatening condition was not found. No medication changes were made. Her only instruction was to avoid drinking the tap water at her house. I’m not making this up. It’s based upon a true story.

Government dollars paid about the national average for a three day hospital stay, plus the cost of a few specialized tests. Her paid bill exceeded $10,000, with $400 of this sum being paid to me, the major doctor involved with her hospital care.

Now, this is not meant to be a discussion of whether or not Ms. Jones needs or deserves financial help. I’m just telling you that often we never think about the healthcare we currently pay for with our collective monies.

Instead, we just think the “government” is paying for it. And, since some of us believe medicine is not amenable to market forces, we surmise that Sen. Sanders and his government plan will be the best value for our dollar.

Maybe.

But, here is your perspective.

Had government dollars not paid for Ms. Jones to be in the hospital for three days, they could have flown her and a guest to a Caribbean island. I priced it.

She and her friend could have stayed for a week at an all-inclusive resort. Luxurious accommodations on the beach. Private plunge pool outside her suite. Butler service. Gourmet meals. Daily spa treatments. A seven day stay.

Thinking more about her case, I even wonder if such Caribbean “wellness” therapy would have even done more for her health.

Regardless, according to the Committee for a Responsible Federal Budget, Sen. Sanders appears to be $3 trillion short paying for his “Medicare-for-All” plan. And, when you treat people like Ms. Jones in our current system every day, it’s not the least bit puzzling why. In fact, an alternate analysis found Sen. Sanders plan to be lacking by $14 trillion.

Most of us don’t even understand what a trillion means. But, we should, it’s our tax dollars.

Just start with a million. It seems like a big number. Count backwards for one million seconds. Do you remember what you were doing back then? It was 11 days ago.

What about a billion seconds? Were you still alive? It was 31 years ago.

Okay, now to a trillion. Go ahead. Count back one trillion seconds. You curious what year that would be?

It’s something like 30,000 B.C. Twenty-four millennia before the earliest civilizations began to take shape.

And, that’s just one trillion seconds.

Folks, this isn’t a fourth-grade student council election. It’s about a country, still with children going hungry, funding a single-payer system that very well could be more cost efficient by just sending patients to the Caribbean instead of the hospital.

Why is healthcare so expensive, you ask?

I told you. Bureaucratic displacement. Having input without the output.

And, the more the government subsidizes it, the less affordable it becomes.

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Jawaralal_Schwartz

Sure, government is inefficient. Especially Congress. The executive agencies, tho not talented in things like building websites, run rings around health insurance companies. Just look at Medicare’s administrative expenses compared to the big private insurers and the Blues. Whoops, there is a lot of Medicare fraud. Where did that come from? Legions of practitioners, mainly doctors and people they hire. We all wish the Feds were better at finding and stopping them. Look in your average hospital, the bigger the better to find wasteful staffing, millions spent on lousy IT systems, built by vendors to the trade. Nonprofits pay their administrators much more than privately held companies. Look at the fixed number of MDs in this country; must be a union or something that caps the supply of this labor, eh? Look at all the phony charges made by the biggest providers, some of our “best” nonprofits and university hospitals, who have mastered the tricks and predatory practices of the billing codes. Healthcare is America’s largest Jobs Programs. We all pay for it, through private and public orgs, including our tax bills. We need it, but by anyone’s measures, it is far from the best in the world in terms of outcome measures and cost-efficiencies. Some providers blame it all on the government, which, again, is often slothful and ineffective and adds cost. But the biggest adders of cost are the providers themselves; more than could ever be controlled and forced out of the system.
- Rocky D. Bilhartz
  
  Regarding “the biggest adders of cost are the providers themselves”…
  
  I agree that providers are a “cartel” in the healthcare game, just as the other entities you mentioned. For example, to be a provider, you must overcome massive educational/regulative barriers to enter the industry, you must maintain onerous licensing requirements, etc… all to retain your “monopoly” of prescribing medications, ordering certain tests, etc… Yes, this is a cartel. And, it contributes to higher costs for the patient participating in the system.
  
  One solution, of course, is to relax these barriers. For example, make it easier for differing providers (of various or even limited training) to prescribe certain medications. Limit the FDA’s monopoly on regulating “prescriptions,” allow outside (international) competition to exist in the pharmaceutical industry (e.g. import certain drugs more cheaply when so-called “price gouging” exists)… things like this would overwhelmingly lower costs.
  
  Then, the patient would regain some power… if a Harvard education proved itself to be market trustworthy, the patient could still seek out the provider who received her training from there… but the patient would suddenly have more affordable options in seeking care. Moreover, if an “FDA approved” seal resulted in true market value, the individual patient might preferentially seek out a drug labeled in this manner. But, many drugs would suddenly become easily affordable.
  
  Most people in the general public, however, live with the belief that these “cartels” are actually improving our quality of service in some way. I think this is really just because we usually don’t stop to think about it being able to exist any other way.
  
  From your own comments, you seem like you may actually think differently than most people do… e.g. you state that “legions of practitioners” are involved with fraud, so you seem to agree that our current system of various “cartels” is not resulting in the desired outcome of preventing it.
  
  Yet, as a whole, we continue to impose more and more regulatory measures on the system. In fact, paradoxically, these measures may just be strengthening the hold of “cartels.”
  
  On this issue, I may actually hold more of a moderate opinion than you think. For example, since greater than 9 out of 10 providers are not engaging in Medicare fraud, is our system of providers really that bad? Indeed, it appears like the “cost” of non-provider factors remains more astounding.
  
  As I’ve said before, 92% of total healthcare spending is not related to provider salaries at all. Our providers could work for free and we would still have healthcare spending crisis.
DrRajHealth

Right on!

“…in a market economy, corporations aren’t really maximizing
profits at all. Consumers are doing it for them. You and I get to
decide. Corporations either receive a profit or a loss based upon our
own assessment of their value.”

-Except in healthcare. There is not price transparency, thus, consumers’ dollar cannot drive value.

“Yet, as a whole, we continue to impose more and more regulatory measures
on the system. In fact, paradoxically, these measures may just be
strengthening the hold of “cartels.”

-Exactly. Yet, what I see from most of the presidential candidates’ are proposals to build on this broken foundation–adding patches to an already complex system. Without healthcare financial reform, there is no healthcare reform.

@Jawaralal_Schwartz:disqus You bring up some good points. A discussion not being had in the public forum is that of providers’ role in price escalation subsequent to enactment of Medicare in 1965. Medicare as proposed by Lyndon B. Johnson was a dead duck in the water. No one on the provider side or private insurer side wanted this product in the market. It was vehemently opposed. The enticement made by LBJ, in order to gain buy in from providers, was that the government would pay providers whatever the providers say their services were worth, no questions asked. So, in year one following Medicare enactment, providers submitted claims for services worth $ and the government paid it, no questions asked. Year two, claims became $$, and the government paid it, no questions asked. Years 2, 3, 4, etc., $$$$$. Price escalation. Vendors and medical support services saw what was going on with income increasing on provider side and followed suit by escalating the cost of their products and services. The entire healthcare economy was on a rocket ship of price escalation. Then one year Medicare said they will stop paying all claims submitted without question and will try to rein in prices. That became known as the Medicare Volume Performance Standard (MVPS) which was later replaced by the Medicare Sustainable Growth Rate (SGR) which was in turn recently replaced by the Medicare Access and CHIP Reauthorization Act of 2015.

We can fault providers for “exploiting” Medicare open check book promise, but really the market followed behavioral economics. Imagine if you said to a plummer that you will pay “whatever” he thinks fixing a leaky faucet is worth and you do, would you be surprised that his prices keeps going up on subsequent call outs to your home? Behavioral economics.

Providers’ role in price escalation subsequent to Medicare being signed into law July 30, 1965 is our taboo family secret. No one on the provider side talks about it ever. It’s kept in the closet.

Which would you rather do? Keep it complex or make it simple?
https://www.linkedin.com/pulse/keep-simple-complex-rajesh-harrykissoon-md-cpe