Health Care: Sadism?

Expensive health care concept caduceus on US money

In a word, bah!

You may have already read or heard about Steven Brill’s excellent, long article in Time magazine, called “Bitter Pill: Why Medical Bills Are Killing Us.” If you think it doesn’t concern you, don’t be so sure. Brill documents how a trip to the emergency room for chest pains that turn out to be indigestion can exceed the cost of a semester of college, how simple lab work done during a few days in a hospital can be more expensive than a new car, and how a drug that requires $300 to make and that the manufacturer sells to a hospital for $3,000–3,500, can cost the patient to whom it is prescribed $13,702. He looks closely at the outrageous prices on itemized hospital bills and finds that individual services listed on them have been priced at double and triple what those same services cost separately—for reasons neither the patient understands nor the hospital can explain. And he recounts the horror stories of people reduced to penury after a brief hospital stay, even though they had some health insurance, money in the bank, and suffered from only minor ailments.

Put simply, Brill says, these bills tell us there’s no free market in our healthcare system, that hospitals set their rates knowing that someone in pain or in fear for his or her life is not going to ask to see the price list first before agreeing to some test or treatment. It’s no wonder that 60 percent of our fellow Americans who file for personal bankruptcy each year do so because of medical costs.

Charles Simic started out well with these two paragraphs. But then he immediately descends into the common lefty shibboleths that, unfortunately, are false when it comes to health care.

What makes articles like this so outrageous is that the facts are available to anyone who cares to look.  The data on health expenditures via the Federal Government, for example, are easily found in the Monthly Treasury Statements (MTS), public documents available going back for a very long time — as they are, after all, public.

This is where one finds the $1 trillion in total federal health spending, which incidentally is about $100 billion more than is counted in the various budget documents, even the so-called “as-spent” ones.

The argument that somehow Medicare is a “solution”, that is, a “government option”, is one of those common lefty shibboleths that is utterly devoid of factual basis.  The fact of the matter is the Medicare and Medicare are federal government medical spending — nearly all of it in fact — and it is rapidly driving the federal government into insolvency!

This is “restraint”?

That may sound harsh. But Brill’s article makes one comprehend not just the talk in Washington about the supposed absolute necessity of replacing Medicare and Medicaid with “market-oriented” health care, but also the full human cost such a change would bring. If the elderly and the poor are stripped of the few protections these government programs give them, they’ll be left at the mercy of a medical industry and insurance companies whose already huge profits, so they imagine, will then get even bigger. Despite the claims that these are high-minded proposals that will fix our national debt, and despite their veneration as such by the political establishment and the media, what is being offered to the American people is nothing more than thinly-disguised money-making scams.

Well, in that Charles is right, but for the wrong reasons.  And when you’re right for the wrong reasons then your prescription for change is wrong too.

The reality of the health situation in the United States is that cost escalation is driven by a few rather simple facts, all of which happened and continue to happen specifically due to government protectionism and intervention, not the market and not “sadism” or “the profit motive.”

It is the cartel-like behavior that causes this problem.  Hospitals buying out independent imaging centers (think MRI) and then tripling their charges would be an utterly stupid act but for the ability to stop someone from setting up another one next door, undercutting their price by 90% and instantly putting them out of business.  To prevent this you haveCON laws in a significant number of states and where those are not present you still have active interference with the market, including forcible licensing and inspection routines along with subtle (and not-so-subtle) threats of refusal to allow doctors who are not “affiliated” presence in these hospitals.

Then there is the blatant “in your face” game-playing with drugs.  A drug made in Mexico and available over the counter for $100 is sold to a hospital here in the United States for $4,000 and is then marked up nearly 10x to almost $40,000 when sold to a patient.  Not only is it illegal for you to possess that drug without a prescription, which of course you can’t get without a member of the medical cartel writing it, but it’s also illegal for you to go to Mexico and buy it over the counter for $100 and then bring it back to the United States and undercut the hospital by selling it for $200 to anyone who wants or needs it.

Note that nowhere is an element of forgery, counterfeiting or misrepresentation present — this is simply collusive cartel behavior that is specifically enabled and given legal force (without which it would instantly collapse) by an industry who lobbied government to get special laws passed that prohibit the forces of the market from working.

Likewise, anti-gouging laws prohibit me from selling gasoline for $3/gallon every day of the year, except when there’s a hurricane coming, at which point I charge $6.  I can make a clean argument that such “anti-gouging” laws are wrong, in that the market price for gasoline in a hurricane might well be $6, and if it’s $3 instead everyone who drives by will buy up all my gas — which means the guy who really needs it will get none since I’ll run out!

But that’s not what happens here.  In the gasoline example there are 4 gas stations on pretty much every exit on the highway and they all have signs up posting the price before you pump the gas.  And these “anti-gouging” laws don’t require collusion — a singular and unjoined decision to boost your price is enough to get in trouble.

In the medical example not only is there no posted price anywhere, with the price being retroactively determined after the service is provided but there is active collusion between providers and overt acts to remove lower-priced competitors by buying them out or, if they refuse to cooperate, freezing them out of their practices through various means.  These sorts of actions in virtually any other line of work are rank violations of the Sherman and Clayton acts — laws that proscribe such anti-competitive behavior and attach felony criminal penalties along with treble-damage civil liability to violations.

The final shibboleth is that there was something immoral about what Ron Paul said in Tampa, when he made the comment that taking your own risk might mean that someone who is uninsured because he accepted his own risk might die as a consequence for lack of the ability to pay and obtain care.  What’s left unsaid by Ron Paul or anyone else for that matter, including the author of this piece, is that the reason everyone considers such “insurance” mandatory is because of the cartel behavior that leads prices to be FIVE TIMES what they would be in a free market.

The Oklahoma Surgical Center points this out quite clearly.  There prices are posted before the procedure is undertaken and they are quite-typically one fifth of what is often charged uninsured people in “conventional” hospitals.  For the same procedures.

The solution is not to further ensconce cartel behavior into the government and then try to “restrain” it while leaving the basic structure alone that led to the problem in the first place.

Rather, it is to first remove all such special protections from this industry en-masse and then prosecute any and all medical providers, irrespective of whether they are doctors, hospitals or drug and device makers who act in an attempt to restrain the market, de-capitating the medical cartels and imprisoning all involved from doctors to CEOs.

THAT will solve the problem.

Trying to place a cartel inside the government, which is what Charles proposes, is not only ethically bankrupt it will financially bankrupt our nation if we don’t cut that crap out.

Discussion (registration required to post)