Healthcare – A Root Cause Analysis

 

Ten years ago, I knew a woman who died of breast cancer, simply because she couldn’t get health insurance in time to save her life.

I know people who in the past could not get permanent employment simply because of a pre-existing condition (that had already been treated and they were again healthy) could have placed too high a burden on their prospective employers healthcare insurance plan.

Along came a government plan that tried to stop these situations from happening. Millions of people could get healthcare, and the government system was called the Affordable Care Act (ACA) and was quickly given the derogatory (or respectful) name of Obamacare.

Obamacare was an attempt to bridge the gap between the needs of healthcare product providers and the simple need of the USA population of not dying from stuff that the rest of the western world were protected from. It was a flawed first pass at the issue, but rather than fixing it, the opposition used it as a way of trying to destroy the first black president. Calls for making Obama a one-time president as the primary objective of the opposition became a rally cry, and hundreds of attempts were made to repeal the ACA. No attempt was made to improve it, and so the USA population limped along with a flawed, but slightly improved but very expensive healthcare system. Millions more people would receive healthcare, but the costs were crazy, and were underwritten by tax increases (which no one really likes).

Through all of this, the simple fact that the cost of healthcare in the USA is dramatically more expensive than any other western country was not addressed.

The laws in the USA favor health insurance companies and drug and device manufactures. Unlike any other contract entered, healthcare contracts in the US are legal when signed under stress or duress. It’s common for patients entering a hospital to have to sign blanket contracts that demand they will pay all charges that the healthcare provider decides to point their way, and if the insurance companies decide not to pay any part of it, the patient is directly responsible for it. Even the smallest medical procedure can lead to many thousands of dollars in unexpected charges, that the patient has to negotiate on a one to one basis with the legal behemoths employed by the healthcare industry.

The ACA did not do anything to change the closed-market, uncompetitive nature of healthcare.

It is illegal for a USA resident to purchase drugs from overseas. Even though these drugs may well be the same at the ones available in the USA, even in the same packaging from the same vendors, but just available at a significantly lower price.

It is against the law for the US government to negotiate lower prices on drugs or medical devices, by buying in volume.

Doctors in the USA must pay for very expensive indemnification insurance, because there is no control on what types of law suits anyone can file for medical malpractice, even though it is widely recognized that medicine is generally high risk. Costs which must be passed on to the consumer.

Medical professionals in the USA must spend hundreds of thousands of dollars to become registered professionals, and with a for-profit education system and for-profit student loans, they must spend decades paying it back. Costs which must be passed on to the consumer.

Healthcare in the USA is not just big business; it is the biggest of businesses. Generating billions of profits from trillions of revenues every year.

The “pay for influence” USA political system allows, and encourages the whole healthcare industry to spend a very small fraction of their revenue to buy influence at every level, ensuring that the preferential legal framework they have currently, continues.

The fix to the USA healthcare system is quite simple to see, but incredibly difficult to achieve. The costs must be taken out of the healthcare system. Government subsidies in the forms of tax breaks, and payments to consumers and healthcare companies must be reduced and so must the actual charged costs of healthcare. This means healthcare businesses will need to make a lot less money. This means changes to many parts of the law to cap costs, reduce the legal exposure for doctors and hospitals, change the education system, reduce the cost of drug and device development, and place strict cost goals on all purchased products that ensure that pricing is globally competitive. These things will take money out of the pockets of businesses that have been used to getting it, and will not happen without a fight. But while politicians can be effectively paid to take a position, it is virtually impossible.

Healthcare must be a human right. When you are sick you are not able to negotiate. It must be the most basic right of a civilized society. Healthcare must be part of a civilized society, it is social, and the word socialism has been usurped to mean evil and anti-American. Obviously social is not anti-American, unless you believe that the military is anti-American, along with fire departments, the police, power and water services are anti-American (and some people do believe this of course).

This is not a partisan issue; every party currently agrees. Unfortunately, they agree that it’s great that healthcare companies pay politicians huge amounts of money to stand with them and maintain the current model.

Who knows, maybe having a crazed orange thin-skinned self-centered egotist is exactly what is needed to destroy this status quo. Clearly having a Kenyan Muslim didn’t do it…… (you have to love (and laugh at) the propaganda of politics sometimes.

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US healthcare Makes Me Angry

The US has possibly the worst healthcare system in the world. Some may not agree, but here’s how I calculate the quality of healthcare:

  1. Is the population kept healthy?
  2. Is healthcare affordable?

Simple really, but for the US the answer to both questions is a resounding NO!

Let’s put the affordable healthcare act (ACA aka Obamacare) to the side for a second, and just look at the basics of US healthcare. Firstly, it is a for-profit system, which means that the system itself is designed to make healthcare as costly as possible, and where possible to provide the least amount of service, as these are the parameters used to maximize profit.

In the US, healthcare services are considered an exception to the normal rules of contract law. If you buy a product or service and at a point of no–return in the buying process the vendor sticks you with crazy last minute terms on a contract, the fact that the contract is not equitable is considered to have made the contract invalid, and yet when you enter a hospital for treatment, the hospital, your doctors, and a plethora of ancillary service staff are able to decide not to accept the payment from your insurance company and instead bill you for anything they like and you will be asked to sign this contract prior to them cutting you open to fix what is broken or you will die. There can be little doubt that an operating table signed contract is the ultimate form of stress and duress, and yet it is normal in the US. A whole industry exists to sue patients or their surviving relatives after medical operations, and anyone who has had even the smallest procedure must spend the following months fighting lawyers to protect themselves from health induced bankruptcy.

Tens of thousands of dollars a night for hospital stays are normal billing rates, and bills will explicitly list every single cotton bud and sheet of toilet paper at incredibly high prices, and while insurance companies may well negotiate significant discounts on the parts they cover, the patient is expected to pay list price for their responsibilities. And there is little advocacy available to help patients unless they choose to hire their own legal team to fight back.

Any company that is used to providing products or services to the US government is very aware of the standard clause in all contracts that states the US government will always be charged the lowest price for a product, wherever it is sold. But of course, this does not apply to healthcare products, where vendors can charge whatever they like with impunity. Every countries healthcare system in the world (except the USA) negotiates centrally, dramatically reducing the cost of products (drugs, devices etc.) as well as standard services. The US has no such central control on healthcare products, and so the costs in the US are exponentially higher. It doesn’t matter if it’s over the counter, Medicaid, Medicare or through insurance, the costs are much higher in the USA than anywhere else in the world. It makes no sense. Oh and (of course) the US government has made it illegal for someone in the USA to buy their drugs form abroad, because that would be free and open and we can’t have that!

Malpractice and medical mistake lawsuits in the USA also pay much higher payouts than anywhere else in the world, which drives up medical malpractice insurance, which in turn drives up healthcare costs. And there is a whole sector of the US legal marketplace focused on healthcare related class actions, pushing up the costs of healthcare related products with most of the costs going to just the lawyers.

Education costs much more in the US, and medical degrees are long, and so the loans doctors and nurses carry are very large, meaning they must earn a lot more to pay them off, again driving up healthcare costs.

Everywhere you look in the USA, healthcare costs are higher than anywhere else, and the whole ecosystem is designed to move money, not to provide quality and length of human life (the primary goal of healthcare).

While every other western country focuses on making and keeping people healthy as a way of driving down healthcare costs, the US does not. Doctors do not visit patients and preventative healthcare is seen as a cost to insurance companies and so is much more limited than anywhere else, so the population is generally less healthy than anywhere equivalent.

Drug development processes in the US are very similar to the rest of the world, but are used as an excuse to drive up costs. While the drugs and devices used may cost a lot less in the rest of the world, the US population is in effect subsidizing everyone else’s use of these products. Why you ask, because the US government has been paid by the healthcare industry to allow this to happen. There are no poor politicians in the USA, their salaries are not that large, and yet they all are wealthy, I wonder how that happened?

And then you have the ACA. A start at trying to change the healthcare in the USA. It started by putting controls on insurance companies to mean they couldn’t stop insuring people when then become ill, or refuse them cover because they had previously been ill, and provided a number of mechanisms to get more people insured. But it didn’t fix the for-profit nature of the US healthcare industry, and so made little long term sense. Ideally it would have been a start and would have gone through year after year of improvements, until it become more workable. And yet it was an easy task for healthcare companies to pay for access to politicians and push a for-profit agenda, which they have done incredibly effectively, to stop any real change that would drive down the overall cost of USA healthcare.

Healthcare in the USA today is more expensive and less efficient than anywhere else in the Western World. You can still go bankrupt from the cost of healthcare if you or anyone in your family becomes seriously ill.

People in the USA still die daily from curable conditions due to lack of available healthcare. If you are rich it may seem great, but if you are rich, healthcare everywhere in the world will be great. If you are not rich, the US system becomes a drag on your life and your family. Sick people will pay anything to not be sick, and the US system exploits this.

The frustration is that the amount of money involved is far too great for anyone to not want to take a slice of that action. Donkeys, Elephants and everyone in between has shown absolutely no interest in fixing this massive problem, just shuffling a couple of the pieces and trying to make it look like they are just good enough to vote for as opposed to the other person. The republican fixation with repealing Obamacare seems to be much more about earning their paychecks from lobbyists than providing a viable long term solution. And while the democrats talk a better game, they have shown no real interest in solving the underlying financial problems associated with healthcare.

The GOP make a very good point when they say that a country should run in the black not the red, but they also have no plan to make it happen. Cutting federal spending, just means that state spending goes up, and cutting state spending just means city spending goes up. So the family living in the burbs still ends up paying more every year. Anytime anyone suggests that healthcare companies make too much money, every politician’s head explodes with paid-for anger.

Until healthcare is considered a social right available to all and costs are controlled to make it affordable and of high quality nothing good can or will happen. And neither of the major parties have shown any sign of moving in that direction. Oh I know “socialism” is that big evil word, but insurance is a social mechanism, it demands high volume to make it work. If everyone pays in and only some need to use it, it’s cheaper per person, that’s just basic math. It’s not like there is some other type of math you can use to make it work differently.

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When gambling can be the best option

Imagine a roulette wheel with a million numbers on it. Spin the wheel and if you get double zero you will die of a terminal disease. Sounds like a stupid game doesn’t it, why would you play?

Now imagine that instead of betting on one number coming up, you bet on every number, and everyone bets on every number. The wheel is spun and someone’s version of double zero pops up.

Luckily for that person all the bets placed on every number went into a pot to pay for the treatment of those who are unwell, so now the unlucky soul will either be saved or at least be treated.

Everyone plays the game because in this way everyone is covered.

Now imagine that the wheel has 300,000,000 slots, one for every citizen in the USA, and imagine there are lots of people’s numbers that will come up every day. So long as there is enough cash in the pot, those who get sick can get covered.

But if some people choose not to play the game for whatever reasons, then the pot gets smaller, and it can become too small to pay for those who are sick.

And imagine if the croupier starts to charge a fee to allow you to place a bet, a really big fee. Suddenly it gets a lot harder to take care of everyone.

Some people decide to stop playing roulette and instead create a series of smaller games of craps, with very few people playing each game. Each game really doesn’t have enough cash to deal with those who lose. But more games means more croupiers, which is great if you happen to be a croupier. And each game can decide who can play, keeping those most likely to lose out of their games, or place really high limits on how much they can win.

As a casino, this is not a place worth going to play. As a healthcare system, it looks like a scam.

Well that’s what we have.

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