Sunday, August 4, 2013

The Real Healthcare Scam

It's time for a healthcare rant.

As two of those sad souls who don't have health insurance through through a government program, union affiliation, an employer, or one of the increasingly rare rare corporations that still offer healthcare coverage to retired employees, you would think that we would be delighted about the promises of Obamacare.

Unfortunately, Obamacare will not solve ours or this nation's healthcare problems and will just serve to perpetuate the pricing issues that are at the root of the problem.

For example, from Bloomberg News:
Shetty is not a public health official motivated by charity. He’s a heart surgeon turned businessman who has started a chain of 21 medical centers around India. By trimming costs with such measures as buying cheaper scrubs and spurning air-conditioning, he has cut the price of artery-clearing coronary bypass surgery to 95,000 rupees ($1,583), half of what it was 20 years ago, and wants to get the price down to $800 within a decade. The same procedure costs $106,385 at Ohio’s Cleveland Clinic, according to data from the U.S. Centers for Medicare & Medicaid Services.
“It shows that costs can be substantially contained,” said Srinath Reddy, president of the Geneva-based World Heart Federation, of Shetty’s approach. “It’s possible to deliver very high quality cardiac care at a relatively low cost.”

No, it shows that our existing model in the United States is a scam that is promulgated by the so-called "health care" companies, doctors, "insurance" companies, pharmaceutical companies, hospitals, and others all of whom conspire together to lobby for monopolistic pricing protections from our political leaders so they can steal everything that isn't nailed down and half of what is.

And it's not just heart surgery.  If you took the price of having a baby in 1963 and inflated it by the CPI you could walk into any hospital, have that child, and spend under $1,000 -- including three nights in the hospital.  Today you're lucky to get 12 hours and the price is 10x as high as it should be.

From the same Bloomberg News article:
“The current price of everything that you see in health care is predominantly opportunistic pricing and the outcome of inefficiency,” Shetty, 60, said in an interview in his office in Bangalore, where he started his chain of hospitals, with the opening of his flagship center, Narayana Hrudayalaya Health City, in 2001.

"Opportunistic pricing" is just a nice way of saying legalized extortion. That can only exist one way....when firms, individuals and everyone involved in doing it has to go to the government and get laws passed to protect them from competition, otherwise someone will come in just like Shetty and completely destroy their existing healthcare model by undercutting the price by 90% or more.

There is no crisis of health care and its cost in the United States or anywhere else.  There is a manufactured system of theft that is maintained only through legalized extortion by everyone involved in it, and absent their special protections that they have lobbied for, all of it and everyone involved in it would be able to be prosecuted under existing laws -- specifically, the Sherman and Clayton Antitrust Acts.

We have spent much of the last two years searching for healthcare alternatives that are reasonably and transparently priced, do not involve insurance, and enable us as individuals to take personal responsibility for our healthcare choices.

The dental profession tends to be among the best for open and competitive pricing. Perhaps the best example is in the laser eye surgery field where a lack of insurance coverage led to both improvements in service and lower prices as firms had to compete for patients. In lab testing (PrivateMD Labs) and even medical scanning (MRIs, etc.Wecaremedicalmall), it is becoming possible to search for providers on the Internet that offer these services at 1/10th of the prices usually charged through insurance companies (and often cheaper than if you went through your insurance company and paid your share of the coinsurance for the procedures). Another example is the Oklahoma Surgical Center, a group of doctors who do not take insurance and charge dramatically lower prices for common surgical procedures. However, these free market examples are few and far between, the existing laws and anti-trust protections making it difficult for the individual to find affordable healthcare options like these.

The simple fact of the matter is that roughly one quarter of all economic activity in this nation is tied to this monopolistic pricing scam, directly and/or indirectly. One quarter of every dollar earned (or more usually borrowed) and spent, and of that, ninety percent or more, is simply stolen through these pricing machinations. This scam is larger than any other, and yet there is not one political party or organization that has taken this up as their headline issue.

The reason is simple:
They are all in on it and profiting from it, even the so-called Libertarians whose political beliefs in general I tend to lean towards.

We can start with the political claim that Medicare is "necessary" for older people to get reasonable medical services when the proof is right here that you can have your heart fixed for under $2,000 and in fact you could fly to India and back plus have the procedure done for less than $5,000.

Any person, institution, corporation or lawmaker who supports, advocates for or otherwise keeps in place the "special protections" that are the only reason healthcare pricing exists at more than 70 times the market level (including travel costs) and claims that this model is sustainable in this country on a long term basis is simply lying to us. The worst part is that so many of us want to desperately believe the lie and won't demand the real solutions.

And before anyone out there starts claiming that we pay more in this country because our healthcare services are so far superior to the rest of the world, do your research first. That may have been true 30 or 40 years ago, but not now.
And for those of you who believe that our rule of law and malpractice laws makes our healthcare system more consumer friendly than the rest of the world and therefore presumable worth more money. Just ask yourself, "If something goes wrong with my surgery, is it worth paying 70 times more for that surgery in the US just so my family can have an easier time suing someone?"

And finally, those of you out there who believe you are immune from this issue because your government, union, employer or former employer provided health plan will take care of you....well you are fooling yourself, have your head in the sand, etc. The healthcare pricing structure in this country is becoming increasingly unsustainable. Obamacare, and nothing proposed thus far by the Republicans, will solve our problem.


  1. Marvelous post. It is hard to understand how this scam just keeps growing and growing. Will it eventually be 50% of the GDP?

    1. It's hard to believe, but at the long term annual growth rate of 9% per year in healthcare costs and an annual growth rate of 2.5% in GDP, this country will be spending 50% of its GDP on healthcare within 15-16 years. Of course, the system would collapse before then unless we were willing to double or triple tax rates and reduce spending in other areas by 40%-50%. If the minor cuts from "The Sequester" were considered so horrible, imagine what angst real cuts would cause. That's why I always get a chuckle out of people who think they are "safe" because they are on Medicare or soon will be and won't have to worry about any of these issues. Guess what? Your rates will be going up a lot and/or your access to care will be significantly reduced over the next 15-16 years. There's no way out at this point.

  2. So right on!
    I have been considering surgery outside the USA for years (if and when I need it) because of the proliferation of quality, USA educated doctor on staff and luxurious private rooms. That major surgery takes place in another country at pennies on the dollar makes it a paid vacation. The problem is emergency care...a car wreck or something unexpected like a heart attack...we still need to have insurance to cover those bases and thus we are trapped with an over priced system (extortion). Great ideas...I would like to see us move toward at least a blended system...emergency services here in the states, and planned surgeries where it's affordable. The Health Care Companies need to "see the handwriting on the wall," and be scared straight.
    Box Canyon Mark

    1. Making matters worse, the new healthcare law eliminates a true health-related "insurance" product. That is, a policy that is inexpensive, carries a high deductible, and is intended to cover unexpected health emergencies. A health insurance policy like that in conjunction with the ability to transparently comparison shop for cash pricing on routine medical procedures and annual maintenance would go a long ways toward solving the cost issues. What we will have now isn't really insurance, it's really paying ridiculous premiums to get access to a huge variety of services many of us will never need.

  3. I wonder how single payor would have worked out? Of course, we will likely never know in our lifetimes.

    Most people that I know that are on Medicare seem to like it and the expense side in managing it beats any private insurers that I know of. I will get to see how it works in the not too distant future.

    In my view, access to affordable medical care is such a fundamental need that it would seem to demand single payor.

    I have, unfortunately, had too much exposure to the healthcare system in the last five years over a broad area of the country and have not been impressed, especially with dental care. It is impossible to be an informed consumer when dealing with elective procedures as there is no transparency and in an emergency you are at the mercy of your provider at a time when you can't make an informed choice.

    Anyway, enjoyed your post on the topic.


  4. We've had the same issues with healthcare providers as we've traveled the country. The single payer model would go a long way to help the problem, especially if the single payer model was limited to unexpected medical events. Combine that with true transparent cash pricing and medical provider competition to well care and planned/elective procedures, and we would be well on our way to solving our problems. Unfortunately, as you know, these solutions wouldn't have a chance against the insurance and pharmaceutical company lobbies.

    By the way, we found out about the site from your blog. That was a great tip!

  5. I found your blog today via Boonie's blog . I am curious to learn what direction you may take with health care for 2014. My husband and I are self-employed and travel ful-time. We have few medical needs and carry a high deductible plan for roughly $350 per month. My sense is that we will be forced to pay twice that amount with the new ACA plans. We're in our early 50's. We have benefited from employer paid healthcare plans in the past, but I have always been baffled, and at times outraged, by the high cost of medical care in the US. If you have insights regarding ways that we might minimize premiums or expenses, please share!

    1. We're in the same spot as you are. Being residents of a state that didn't open a State exchange (South Dakota), we need to go through the Federal exchange (we are true Obamacare/ACA guinea pigs). Unfortunately, there aren't too many solutions out there. I actually can't comment on the ACA solution because I have been trying to log on to the site every day since October 1st and have been unable to do so (12 days and counting). I don't know yet what our mandatory options for healthcare coverage will be, but the general information I have seen is that it will be $10k to $15k per year in just premiums alone. If that's the case, we may just pay the penalty and continue to "self insure" by finding medical professionals who accept cash payments for services at lower prices. This seems to work with planned medical expenses, but prescriptions, emergency room services, or the unexpected major disease will still eat you alive financially. There are links above to three medical service providers that are reasonable. I spend a lot of time on Google trying to find doctors who will accept reasonable cash payments for 15-20 minutes of their time each year. If what I'm hearing is true, there may be more and more medical professionals every year who start opting out of the medical insurance marketplace that is the US system and will be opening up affordable cash-based practices. We'll see.